Minister of state for railways and textiles Darshana Jardosh, as part of her Kolhapur tour, on Thursday visited the Ichalkaranji Powerloom Mega Cluster. Jardosh was apprised about the textile hub and the ongoing activities by local MLA Prakash Awade. “Kolhapur has contributed immensely to the textile industry and the use of automation and modernisation to produce superior quality textile fabrics and apparel are impressive,” Jardosh said. On being told of the challenges being faced by the textile unit operators, Jardosh said, “Officials from the textile ministry will soon look into the concerns. I appeal to the textile operators to participate in the upgradation scheme for which funds have been made available. The scheme provides funds to improve textile manufacturing by introducing advanced machinery.” Earlier, on Wednesday, Jardosh had criticised the Congress for merely introducing schemes and not implementing them. “The textile upgradation scheme was in place before 2014 when BJP came to power at the Centre. However, back then, the Congress government had not allocated funds,” she said.
Source: Times of India
The discount on tradeable scrips has gone up from 3% to about 20%, benefitting importers who are taking undue advantage at the cost of exporters, says industry The Indian textile industry will rapidly lose its global export competitiveness if imbalances in the Rebate of State and Central Taxes and Levies (RoSCTL) scheme are not addressed immediately, said Apparel Export Promotion Council (AEPC). RoCTL was launched in 2021 with the intention of making India’s textile industry competitive and strengthening its exports. However, the scheme in its current form is eroding the export margins of the domestic textile industry, AEPC said in a statement. The RoSCTL scheme provides rebate against the taxes and levies already paid by exporters on inputs. This rebate has been converted into tradeable scrips that exporters can sell scrips to importers who, in turn, can pay import duty with these scrips instead of paying import duty in cash. “While it was in discount earlier also, now the discount has gone up from 3 per cent to about 20 per cent. This discounting of scrips benefits importers, who are taking undue advantage at the cost of exporters,” said Vijay Jindal, Member, Export Promotion, AEPC, and President, Garment Exporters and Manufacturers Association (GEMA). The council said in a statement that though the scheme was launched with the aim of making India’s textile industry export-competitive, these changes are acting against the government’s goal of benefitting exporters, and are instead benefitting importers. “This defeats the very purpose and intent of this entire scheme of promoting the government’s stated policy of ‘Make in India,” a statement said. Based on estimates, of the total $16 billion in apparel exports, about 5 per cent (roughly Rs 6,000 crore) is in the form of reimbursement. At a broader level, given a discount of 20-25 per cent on this, there is a direct hit of about Rs 1,500 crore on the feeble margins of companies operating in the apparel sector, it added. “At present, demand for such scrips is very low as exporters are finding it difficult to find enough importers who can buy the scrips obtained under the RoSCTL scheme. Lack of demand means that importers offer to buy scrips only at a steep discount of up to 20 per cent. If not addressed, India may lose its edge in global textile markets,” said Harish Ahuja, Executive Member.
Source: Business Standard
Indian commerce and industry minister Piyush Goyal recently said implementation of the proposed Bilateral Trade and Investment Agreement (BTIA) with the European Union (EU), negotiations for which started in 2007 and were halted in 2013, would help unleash the significant untapped potential for enhancing economic ties between the two sides. India and the EU formally resumed negotiations over BTIA in Brussels on June 17 after a gap of over eight years. ''We have our teams in place...It will further strengthen our relations. Our bilateral trade has grown significantly in the last few months...There is a significant untapped potential which we will hope to unleash with the execution of these three agreements -- trade , investment and GIs,'' Goyal told reporters in Brussels. Goyal said India wishes to engage with the world on modern products and look at areas where it can gain in terms of new technology and investments. ''All cards are on the table and we are coming with an open heart and an open mind... Agreements do not have to always be about gain or demands, I think agreements also have to be which is good for both negotiating teams and for the people,'' he said. He added that there was a time when India was ‘'super sensitive'’ on issues like gender and sustainability, but in the last few years, the country has demonstrated to the world ''very deep commitment on these subjects''. ''We are looking at technology, we are looking at long term larger finance and low cost in order to transition much faster on the sustainable side,'' he added. ''The next round of negotiations will take place from June 27 till July 1 in New Delhi. We are pursuing an ambitious timeline and we aim to conclude the talks by the end of 2023,'' European Commission executive vice president Valdis Dombrovskis said. The EU is India's third largest trade partner, accounting for almost 11 per cent of Indian trade in 2021. India is the EU's 10th most important trading partner, accounting for just over 2 per cent of EU trade in 2021. This relatively small share of overall EU trade in goods points to a large untapped potential, Dombrovskis added.
Source: Fibre2 Fashion
India has been able to secure a favourable outcome at the WTO after many years, despite a strong global campaign against our farmers & fishermen, said Union Minister of Commerce & Industry, Consumer Affairs and Food & Public Distribution and Textiles, Shri Piyush Goyal, after conclusion of the WTO 12th Ministerial Conference in Geneva today. Terming the just concluded MC12 as an “outcome oriented” success, Shri Goyal said the Indian delegation, guided constantly by the Prime Minister Shri Narendra Modi, has been 100 percent successful in portraying before the world the priority issues for India and the developing world. Shri Goyal said the Indian delegation leveraged India’s strong relationship with the world, which the Prime Minister Shri Narendra Modi has nurtured over the last few years. “Few countries attempted to create false campaign, initially on Sunday and Monday, that India is obstinate due to which no progress is being made. The real situation has emerged before us all, the issues raised by India, on which Prime Minister had asked us to focus upon, now the whole world acknowledges that was the correct agenda and ultimately India played a vital role in arriving at all solutions,” Shri Goyal told a press conference in Geneva. Stating that it is a proud day for 135 crore Indians at the WTO today, Shri Goyal said India took the lead and was at the center of the conference. “It turned the tide of negotiations from full failure, gloom & doom to optimism, enthusiasm and consensus based decision. India’s efforts to bring members on a table to discuss issues irrespective of the existing geopolitical order has ensured that the world order is not broken,” he said. Admitting that India and the Developing countries accepted certain compromising decisions when the WTO was established 30 years ago and during the Uruguay Round of negotiations, Shri Goyal said India today bats on the front foot rather than being fearful on various issues be it Environment, Startups, MSMEs or gender equality. This is a result of the confidence of New India. India is able to build consensus & get a Win-Win outcome for the world, he said. “Today as we return India there is no issue on which we have to be the least concerned, whether it is related to Agriculture such as MSP, reinforcing the relevance of the Public Stockholding Programme towards fulfilling the National Food Safety Programme or PM Garib Kalyan Scheme, TRIPS Waiver, e-Commerce moratorium, response to covid and fisheries,” said Shri Goyal, adding, “Similarly there have been no restrictions on fishing that our fishermen were deeply concerned about, that would bind artisanal and traditional fishermen of India in the future. India has been cent percent successful; no restrictions or terms have been placed on India or the Government, rather we have been successful in introducing checks on illegal fishing, under-reporting or outside regulation, viz IUU fishing.” Shri Goyal said India remains committed to supporting the World Food Programme (WFP). Citing India’s recent wheat supplies to Afghanistan, he said the Government has imposed no export restrictions on WFP purchases for food security in other countries; however, domestic food security takes priority. On the global fight against the Covid19, Shri Goyal said the Trade-Related Aspects of Intellectual Property Rights (TRIPS) decision will boost vaccine equity, accessibility & affordability. It will enable ease of authorisation for production of patented vaccines and India can produce for domestic requirements and exports. On the WTO Reforms agenda, Shri Goyal said the basic structure and core principles of WTO including Consensus, S&DT provisions, SDG goals, will be retained while making it more contemporary. “I believe it will be good for the WTO, and will be good for the Developing and Under-Developed countries in the future and foster global trade through transparent means,” he said. Shri Goyal said India’s motto of ‘Vasudhaiva Kutumbakam’ echoes in the WTO, India not only raised its issues but raised the issues of other developing countries, Least Developed Countries (LDCs), poor & vulnerable with sensitivity and fought bravely for their cause.
Outcomes at the WTO MC 12 Meeting ▪ On fisheries, there would be a check on illegal unreported and unregulated fishing in our waters and elsewhere. There would be very strict controls on overfished areas so that fish stocks are restored. Additionally, no subsidies to be provided for fishing in areas outside EEZ or RFMOs ▪ The TRIPS decision will boost export, vaccine equity, accessibility & affordability. A country can authorize production of vaccines patented elsewhere and there would be no consent required as well as there would be no limit on exports. A decision on Diagnostics/Therapeutics would be taken in 6 months. There would be faster pandemic response in future and there would be fewer trade barriers in pandemics ▪ The agenda decided on WTO reforms will make the WTO a more efficient, agile body. The dispute settlement body will be revived and play its expected role in settling trade disputes. The reform would deliver better trade outcomes for developing countries. A reference to Gender, Environment & MSME has been made in the WTO reform agenda. ▪ On e-Commerce, while agreeing to the temporary moratorium, India asked for intensifying discussions on the moratorium including on its scope, definition and impact for taking an informed decision on the same. ▪ The Food Security Declaration, focusses on making food available in developing countries while working towards increasing productivity and production ▪ As regards, the World Food Programme (WFP), there would be no export restrictions on WFP purchases for food security in other countries; However, domestic food security will take priority.
Source: PIB
No consensus on final report within GoM on tweaking slabs The Group of Ministers (GoM), constituted to review the current rate slab structure under the Goods and Services Tax (GST) regime, will prepare an interim report and will seek an extension of its tenure in the upcoming GST Council meeting on June 28-29. Discussions held so far on GST rates, inverted duty structure for sectors, except textiles, and some exemptions will be part of the interim report but a consensus on a final report could not be reached in the absence of a complete agreement within the GoM members on tweaking the tax slabs, officials said. In a meeting held on Friday, the GoM agreed upon putting together an interim report detailing the discussions held so far. “The report has not been finalised yet. Extension will be sought for the GoM. Textiles inverted duty structure has been left like that, it will be taken up in the next meeting,” a state finance minister, who is part of the GoM, told The Indian Express. In its 46th meeting in December, the Council had deferred the proposed hike in tax rate for the textiles sector to 12 per cent from 5 per cent, which was to be implemented from January 1. “Status quo will be maintained for the GST rate for textiles as of now and a ministerial panel will review the rate structure by February,” Finance Minister Nirmala Sitharaman had said after the meeting. An inverted duty structure arises when the taxes on output or final product is lower than the taxes on inputs, creating an inverse accumulation of input tax credit which in most cases has to be refunded. The GoM has had three meetings so far. In its meeting last November, it had discussed various proposals for rate rationalisation and measures to shore up revenues. While an officer-level fitment committee is learnt to have recommended raising of tax rates from 5 per cent to 7 per cent and 18 per cent to 20 per cent, some state finance ministers had then flagged potential concerns over the impact of such major rate changes. Some states had cited concerns about the inflationary impact of any such major rate hikes, especially in the aftermath of the pandemic. The panel, headed by Karnataka Chief Minister Basavaraj S Bommai, was formed in September last year with an overarching mandate: an evaluation of “special rates” within the tax structure, rationalisation measures that include “a merger of tax rate slabs for simplifying the rate structure”, alongside a review of instances of inverted duty structure and an identification of potential sources of evasion to shore up revenues. Though GST revenues have shown buoyancy in recent months, rate changes are also under purview as the compensation to states for revenue losses under GST will come to an end in June 2022.
Source: Indian Express
A panel of state ministers on GST rate rationalisation on Friday failed to reach a consensus as some members opposed changes to tax slabs and rates, sources said. The Group of Ministers will, however, present a status report to the GST Council on the consensus which was arrived at the previous meeting of the GoM on November 20, 2021, they added. The GoM will seek an extension to submit its final report, they said, adding issues of tax rates will also be raised in the upcoming Council meeting later this month. The GST Council, chaired by Finance Minister Nirmala Sitharaman, is scheduled to meet on June 28 and 29 in Srinagar. The Council had last year set up a seven-member panel of state ministers, headed by Karnataka Chief Minister Basavaraj Bommai, to suggest ways to augment revenue by rationalising tax rates. The GoM has been mandated to review items under inverted duty structure to help minimise refund payout, and review the GST exempt list with an objective to expand the tax base and eliminate breaking of input tax credit ( NSE 1.00 % ) chain. Under GST, a four-tier structure exempts or imposes a low rate of tax 5 per cent on essential items and levies the top rate of 28 per cent on cars and demerit goods. The other slabs of tax are 12 and 18 per cent. Besides, a cess is imposed on the highest slab of 28 per cent on luxury, demerit and sin goods.
Source: Economic Times
Union Minister for Commerce & Industry Piyush Goyal will inaugurate the 13th edition of TEXFAIR 2022, an international textile machinery, accessories and spare exhibition here on June 24. The four-day expo will showcase the modern developments in the sector, in which more than 225 world’s leading textile machinery, accessories manufacturers, will exhibit their products, Southern India Mills’ Association (SIMA) chairman Ravi Sam told reporters here on Friday. Besides, textile machinery, spares and accessories, testing equipment, electrical and electronics components, humidification plans, air compressors, solar panel and manufacturers and suppliers from various states across the country and nations including Switzerland, Belgium, Italy, Japan and China will display their products, he said. Being the largest textile manufacturing hub in the global map, Coimbatore produced over 70 per cent of the textile machinery, spares and accessories manufactured in India, SIMA deputy chairman Dr S K Sundararaman said.
Source: Daily Excelsior
The Russia-Ukraine war and COVID-19 restriction in China are threatening further disruption to already stretched global supply chains in terms of delayed deliveries, rising fuel prices, and an impending raw material crisis. The European Union (EU), United Kingdom (UK), and the United States (US) have closed their airspaces for Russian airlines and vice-versa. The ongoing global logistics disruptions continue to impact businesses and consumers as the flow of consumer goods into key markets such as North America, Europe and China are facing various bottlenecks in the form of continued shutdowns or congestions at major global ports and airports. According to Dun & Bradstreet data, Ukraine has more than 1.5 million active businesses while Russia has 3.5 million active businesses. At least 374,000 businesses worldwide rely on Russian suppliers, out of which over 90 per cent are based in the US. Similarly, at least 241,000 businesses across the world rely on Ukrainian suppliers and over 93 per cent of these businesses are based in the US. Other countries with impacted supply chains include Canada, Italy, Australia, China, and Brazil.1 Any major disruption to their operations could affect the global economy. The removal of Russian financial institutions from the Society for Worldwide Interbank Financial Telecommunication (SWIFT) may also likely disrupt the cash flow of these businesses. While Russia and Ukraine account for only 1.9 per cent and 0.3 per cent of the global merchandise export value respectively, these countries are the world’s largest exporters of particular commodities like sunflower oil, iron or non-alloy steel, wheat, etc. Russia has blocked key ports on the Black Sea and Azov Sea and hijacked Ukrainian grain shipments. Russia also has been destroying agricultural infrastructure in Ukraine, thereby disrupting the entire supply chain. Russia’s invasion has coincided with planting season in Ukraine as most of the seeds are sown in June. As a result, crop yield is expected to decline in Ukraine.
Impact on Freight In addition to the continuing war, global supply chains have remained clogged due to sustained COVID-19 related restrictions in China. Congestion at Chinese ports increased in March-April 2022 as coronavirus restrictions were implemented in Shanghai. According to S&P Global Commodities at Sea, total dry bulk congestion levels at ports in mainland China increased by 30-40 per cent in March and April months.2 However, in May 2022, the congestion at the Shanghai port showed signs of easing, as traffic was diverted to alternative ports throughout northern and southern China. Still, overall congestion levels remained high and longer vessel queues were seen at Tianjin and Zhoushan ports. The reason behind these delays and congestion is that many ships were operating at less than full capacity. Ships operating at partial capacity means that additional ships are required to move the same volume of cargo. More ships at ports lead to loading and unloading delays which results in ships making fewer stops and operating at less than full capacity. Port congestion and container capacity have been especially bad in China and the US. Reuters reported that delay in shipments from China to Europe is subsequently causing shortages of containers to take European goods to the US East Coast.3 Container shipping costs departing from Asia also remained substantially high. This increase in freight costs, along with severe delays at ports, has discouraged carriers from taking shipments from the US, Europe, or elsewhere to Asia. The most recent Freightos Baltic Index average price for the week ended June 10, 2022 for a 40-foot container from ports in China/East Asia to North America East Coast was $11,908. In contrast, the price from ports in North America East Coast to ports in China/East Asia was $766. The average rate from ports in China/East Asia to ports in North Europe was $10,697, compared with $755 in ports from North Europe to China/East Asia. The average rate from ports in China/East Asia to ports in the Mediterranean was $12,874, and only $1,301 in the opposite direction. In the latest Global Port Tracker published by National Retail Federation and Hackett Associates in the US, it is suggested that import demand at the US major retail container ports has seen near-record volume in May 2022 as retailers work to meet growing consumer demand and protect themselves against potential disruptions at West Coast ports. It is anticipated that the imports from China will start growing again as the Chinese government has relaxed its zero-COVID policy and begun normal economic activities after two months-long lockdowns.4 Meanwhile, the US President Joe Biden has signed the Ocean Shipping Reform Act into law in June 2022, designed to keep US exports moving even during times of peak imports, to bring equity and transparency, and strengthen the Federal Maritime Commission (FMC). The Panama Canal Authority has also put forward a tolling plan which would charge ships that are carrying empty containers. The current tolling system is often criticised for being overly complicated, and the proposed change is part of a broader effort to make the tolling plan “simple and transparent”. According to Panama Canal deputy administrator Ilya Espino de Marotta, the new fee on empty containers “recognises the repositioning value of empty containers”.2 There were some signs of improvement in Shanghai in May 2022 as some warehouses started re-opening, and trucking from and to Shanghai began gradually, but in June Shanghai and Beijing were locked again due to a surge in COVID-19 cases. Highway closure in Shanghai has severely affected trucks and created a shortage of raw materials. These trucks were unable to reach the Shanghai terminal and were diverted to other areas including Ningbo, Qingdao, Xiamen, Shenzhen, and Guangzhou.5 Meanwhile, South Korea’s truck drivers went on strike for eight days in June 2022 in protest of the rising fuel prices. Several airports in Europe are also facing problems due to strikes and labour shortages. European workers are demanding a raise in their pay as the cost of living has increased in Europe due to rising inflation. According to Air Cargo Market Analysis by the International Air Transport Association (IATA), air cargo volumes declined further in April 2022 due to the omicron wave spreading in China and the ongoing Ukraine-Russia war, which caused supply chain and capacity issues that limited the movement of air cargo. In April 2022, industry-wide cargo tonne-kilometres were down by 11.20 per cent year-on-year (YoY) basis, and the seasonally adjusted volumes contracted by 2.7 per cent from March 2022. However, airline companies remained optimistic and continued adding to their air cargo capacity despite widespread inflation. African airlines saw cargo volumes decrease by 6.3 per cent in April 2022 compared to April 2021. All regions except for Latin America posted declines in April 2022 compared with a year ago, with the most notable drop seen among the Asia Pacific and European airlines, down 15.8 and 14.4 per cent respectively. Latin America stood with a strong 40.9 per cent increase from a year ago, after large additions to capacity and services which enabled satisfying the pent-up demand for cargo to and from the region.6 The jet fuel price was 128.1 per cent up at $176.56/barrel on June 10, 2022, compared to the same period in 2021, while Brent crude reached $119.0/barrel. Russia’s invasion of Ukraine at the end of February acted as a catalyst to push the already fragile oil market higher. United States’ oil shot to the highest level since 2008 on March 7, 2022, topping $130 per barrel. Russia is the largest oil exporter in the world, and the European Union relies on it for natural gas. Almost 44 per cent of electricity generation in Europe is based on natural gas and coal, with about 41 per cent of natural gas imports from Russia alone. The EU decision to ban 90 per cent of oil imports from Russia comes at a cost as cutting off Russian oil imports has put upward pressure on prices. Consumer Price Index in the Eurozone rose by a record 8.1 per cent in May 2022 from 7.4 per cent in April. The most significant factors contributing to the dramatic increase in prices were directly or indirectly related to energy costs involved in transport, production, and agriculture. Many countries faced growing food insecurity even before Russia’s war as coronavirus restrictions and climate shocks have worsened the supply chains, raising prices of both commodities and crops. On June 1, 2022, the Global Agricultural Price Index was 40 per cent higher compared to January 2021, according to the World Bank. World Bank also estimated that the global food, fuel, and fertiliser prices will remain elevated up to 2024. Almost all the economies around the world have been experiencing higher food prices in 2022. United Kingdom’s inflation rate has already hit a 40-year high. Almost 90 per cent of emerging markets and developing economies have experienced food price inflation greater than 5 per cent this year. Ukraine and its allies in the West have accused Russia of this situation, saying that its blockade of Ukraine’s Black Sea port is the primary reason for the rising prices while Russia has blamed Western sanctions for the crisis.
Textile and Clothing Industry Russia and Ukraine have a minor share in global textile and apparel production and trade, but it doesn’t mean the textile and apparel industry is immune to the ripple effects of the war. In Ukraine, the textile industry occupies one of the leading positions in the manufacturing sector. Prior to the war, Ukraine had over 2,500 manufacturing plants operating in the textile industry, with 80-90 per cent of all production bound for export markets. In 2021, Ukraine exported over $866 million worth of textile and apparel. Russia imported $13.05 billion of textile and apparel products in 2021, of which 33.82 per cent of import was from China. Russia imported approximately $400-600 million worth of textile and clothing every month from China before the war. The decline in Russian imports of textile and clothing from China due to the ongoing war had cost China close to $250 million in March 2022. Ukraine is one of the biggest markets for used clothing in Eastern Europe, but since the war has started the second-hand clothing market in Ukraine has collapsed. Businesses selling second-hand clothing in Ukraine are now having to look for alternative markets. This could mean increased supply of second-hand clothing in other markets and increased amounts of waste in these countries In 2021, China was the leading exporter of textile and clothing to both Ukraine and Russia and exported over $701.69 million and $4,414.28 million worth of textile and clothing respectively. China has been bearing the impact of the ongoing Russia-Ukraine crisis more as its share of textile and apparel export to both countries declined since the war started. The war has made textile and apparel shipment to both Russia and Ukraine difficult as shipping companies like Maersk and Mediterranean Shipping have stopped their operation to and from Russia. Shipments to Ukrainian ports have also been affected due to the Russian blockade in the Black Sea region. The textile and apparel industry is also being hit by the rising oil and food prices. Increased expenditure on oil will make synthetic fibres like polyester (that are derived from petroleum) expensive. An increase in the price of synthetic fibre will increase the demand for natural fibres which could lead to an increase in the prices of natural fibres too. This will put further pressure on cotton prices which are already at their highest levels since 2011 due to drought in the US and the possibility of an export ban in India.
Source: Fibre2 Fashion
In a joint event held at the Headquarters of the European Union (EU) at Brussels yesterday, Union Minister for Commerce and Industry, Consumer Affairs and Food & Public Distribution and Textiles, Shri Piyush Goyal, and Mr. Valdis Dombrovskis, Executive Vice-President of European Commission formally re-launched the India-EU Free Trade Agreement (FTA) negotiations. Besides, negotiations were also launched for a stand-alone Investment Protection Agreement (IPA) and a Geographical Indicators (GIs) Agreement. Last year, in the India and EU Leaders’ Meeting held in Porto on 8th May 2021, an agreement was reached for resuming negotiations for a balanced, ambitious, comprehensive and mutually beneficial FTA and starting fresh negotiations on the IPA and a separate agreement on GIs. Both partners are now resuming the FTA talks after a gap of about nine years since the earlier negotiations were left off in 2013 due to difference in the scope and expectations from the deal. The Delhi visit of the European Commission President Ms. Ursula von der Leyen in April 2022, and the Prime Minister Shri Narendra Modi’s recent visit to Europe accelerated the FTA discussions and helped in defining a clear roadmap for the negotiations. This would be one of the most significant FTAs for India as EU is its second largest trading partner after the US. The India-EU merchandise trade has registered an all-time high value of USD 116.36 Billion in 2021-22 with a year-on growth of 43.5%. India’s export to the EU jumped 57% in FY 2021-22 to $65 billion. India has a surplus trade with EU. Considering that both partners have similar fundamental values and common interests and are two of the largest open market economies, the trade deal will help to diversify and secure the supply chains, boost economic opportunities for our businesses, and bring significant benefits to the people. Both sides are aiming for the trade negotiations to be broad-based, balanced and comprehensive, based on the principles of fairness and reciprocity. There will also be discussions on resolving the Market Access Issues which are impeding the bilateral trade. While the proposed IPA would provide a legal framework for cross-border investments to enhance the confidence of investors, the GI pact is expected to establish a transparent and predictable regulatory environment, to facilitate trade of GI products including handicrafts and agri-commodities. Both parties are aiming to negotiate all the three agreements in parallel and conclude them simultaneously. The first round of negotiations for all the three agreements will be held from 27th June to 1st July 2022 in New Delhi. India earlier this year has concluded FTAs with Australia and the UAE in a record time. The FTA talks with Canada and the UK are also underway. The FTA negotiations are part of India’s broader strategy to forge balanced trade agreements with key economies and revamp existing trade pacts to improve trade and investment.
Source: PIB
India has completely protected the interests of its farmers, fishermen and MSMEs in the recently-concluded 12th ministerial conference of the World Trade Organization (WTO) in Geneva, commerce and industry minister Piyush Goyal said on Sunday. India has completely protected the interests of its farmers, fishermen and MSMEs in the recently-concluded 12th ministerial conference of the World Trade Organization (WTO) in Geneva, commerce and industry minister Piyush Goyal said on Sunday. “In the WTO ministerial conference, we fully protected the interests of farmers, MSMEs and fishermen. There will be no burden on them. We protected their interests,” the minister was quoted as saying by PTI at an event where Prime Minister Narendra Modi dedicated to the nation the main tunnel and five underpasses of Pragati Maidan Integrated Transit Corridor Project. The fishery subsidy, the continuation of which India has been keen on, has been retained. The scrapping of the subsidies on illegal fishing will have no adverse bearing on India as such practices are absent in the country’s territory. Further, there will be no threat to subsidies being given to farmers, calculated as the excess of minimum support prices (MSPs) over bench-marked international price. Goyal, who led the Indian delegation for the WTO talks, also said that the decisions taken in the conference will further strengthen the role of the multi-lateral body in promoting global trade and India championed the cause of the developing and under-developed countries. There hadn’t been any major headway in the WTO over the last decade due to divergence of views among members on key issues and rising protectionist tendencies. Members of the Geneva-based WTO on June 17 secured a ‘Geneva Package’ which included agreements on curbing harmful fishing subsidies and temporary patent waiver for production of Covid-19 vaccines. Talks on including therapeutics and diagnostics, as proposed by India and South Africa, under the purview of this waiver would start after six months. India’s demand for a permanent solution to the issue of public stock holding for food security will be taken up later and the extant peace clause will continue to protect its current procurement programmes. As for food security declaration, the WTO members agreed to focus on making food available in developing countries while working towards increasing productivity and production. As for the World Food Programme (WFP), there would be no export restrictions on its purchases for food security in other countries. However, domestic food security will take priority over supplies to the WEF. “Checks are being placed on illegal fishing in the high seas and our fishermen will have full freedom in our EEZ (exclusive economic zones). Similarly, we have ensured the minimum support price stays and our farmers interests have been protected,” he said.
Source: Financial Express
According to Wazir Textile Index, almost all the top companies in the sector saw an increase in sales during the last financial year After seeing a rise of 41 per cent in India’s textiles and apparel exports to $44.4 billion in 2021-22, the increase in cotton and yarn prices is leading to a demand drop of at least 10 per cent so far during the current financial year, say industry sources. According to Wazir Textile Index, almost all the top companies in the sector – including Welspun, Vardhman, Arvind, Trident, KPR Mills, Indo Count, RSWM, Filatex, Nahar Spg, and Indorama – saw an increase in sales during the last financial year. Industry bodies say that this demand has declined during the first two months of the financial year. “Last year’s rise in exports was owing to pent-up demand in the US and Europe and China Plus One Policy followed by several countries. Factories in India were also not much affected by the pandemic last year. Even the unlisted companies have performed well. This year, demand has slowed down as raw material prices are too high,” said Narendra Goenka, chairman of the Apparel Export Promotion Council (AEPC). The industry body is of the view that the sector is seeing a demand drop of at least 10 per cent during the first two months of the fiscal, compared to the same time in 2021-22. Among the companies, Welspun saw a 13 per cent increase in sales, Vardhman around 60 per cent, Arvind around 65 per cent, and Trident nearly 54 per cent rise in sales in 2021- 22, compared to the pandemic-hit 2020-21. During the last financial year, the majority of the rise came from the United States, which contributed to 27 per cent of India's textiles and apparel exports, followed by 18 per cent by the European Union, 12 per cent by Bangladesh, and 6 per cent by UAE. The price of cotton in India had more than doubled to cross Rs 100,000 mark per candy during the current financial year, leading to an increase in yarn prices too. Industry bodies had approached the government seeking a ban on the futures trading of cotton and restrictions on cotton and yarn exports. “The crisis due to the rise in raw material prices is evident this year and hence, it may not be the same as last year. Those who had large stocks of cotton or yarn taken at old rates will still benefit from this current rise,” said Sanjay Kumar Jain of Delhi-based TT Ltd, which has its main manufacturing unit at Tiruppur in Tamil Nadu. AEPC also blamed the Ukraine crisis that resulted in a rise in energy prices as one of the major reasons for the dip in demand from the US and Europe this year. According to the media reports, new garment companies from countries like the Czech Republic, Egypt, Greece, Jordan, Mexico, Spain, Turkey, Panama, and South Africa have started negotiating with the Indian companies following the lockdown in China. However, industry players say such orders are minimal compared to last year
Source: Business Standard
The exports of textiles and apparel from the United States were up by 12.83 per cent yearon-year in the first four months of this year. The value of exports stood at $8.124 billion during January-April 2022 compared to $7.2 billion in the same period of 2021, according to data from the Office of Textiles and Apparel, US department of commerce. Category-wise, apparel exports increased by 22.32 per cent year-on-year to $2.251 billion, while textile mill products rose 9.57 per cent to $5.872 billion during the first four months of 2022. Among textile mill products, yarn exports increased by 21.49 per cent year-on-year to $1.449 billion, while fabric exports were up 4.09 per cent to $2.947 billion in the same period. Made-up and miscellaneous articles exports grew 10.21 per cent to $1.426 billion. Country-wise, Mexico and Canada together accounted for half of the total US textile and clothing exports during the period under review. The US supplied $2.308 billion worth of textiles and apparel to Mexico during the four-month period, followed by $1.952 billion to Canada and $0.546 billion to Honduras. In recent years, the US textile and clothing exports have remained in the range of $22-25 billion per annum. In 2014, they stood at $24.418 billion, while the figure was $23.622 billion in 2015, $22.124 billion in 2016, $22.671 billion in 2017, $23.467 billion in 2018, and $22.905 billion in 2019. However, the value decreased to $19.330 billion in 2020 because of the COVID-19 pandemic. In 2021, US textile and apparel exports stood at $22.652 billion. The increase in value of textile exports was due to higher per unit price because of costlier cotton and other raw materials.
Source: Fibre2 Fashion
Growth momentum may slow down next year as production cost swells. The large-scale manufacturing sector grew 10.7% in the first 10 months of current fiscal year – a momentum that may be lost in the next fiscal year due to the increasing cost of production and the policy to slow down the economy. The Pakistan Bureau of Statistics (PBS) on Thursday released the data but did not give the breakdown of three main sources of LSM data, further compromising transparency. Fingers have already been pointed at the PBS that in recent weeks has allegedly manipulated the inflation figures by reporting the wheat flour price at Rs980 per 20 kg across Punjab. PBS stated that the sugar, cigarette, textile and chemical sectors contributed positively to the LSM sector, which kept growth in double digits. The annual increase in LSM was recorded at 15.4% in April over a year ago, as a low base impact also helped in keeping the growth rate high. However, on a month-on-month basis, the growth rate slumped 13.3% in April over the preceding month. The coalition government has decided to revive the stalled International Monetary Fund (IMF) programme and has announced plans to implement tight fiscal and monetary policies. Excluding the expenditure on interest payments and defence, the government has either allowed a nominal increase or cut the expenditure in many areas for the next fiscal year. The Pakistan Business Council (PBC) on Thursday suggested to the central bank to avoid a further increase in interest rate, arguing that the higher fuel cost and devaluation of the rupee was sufficient to dampen demand. The higher fuel cost and devaluation of the rupee would have a significant demand dampening effect. Therefore, “further increase in policy rate is unnecessary,” said the PBC in a tweet. It added that higher rates would cause the risk of loan impairment, besides raising the government’s debt servicing cost. Banks still expect the central bank to raise the interest rate in the next month’s monetary policy announcement. They gave the government Rs732 billion in the T-bills auction for a three-month period at a rate of 15.25% compared to the policy rate of 13.75%. The cut-off yield on three-month treasury bills remained unchanged at 15.25% and banks gave Rs732 billion in loans for three months against the government’s target of Rs250 billion. But they showed little interest in six-month and one-year treasury papers. The federal government has estimated a budget deficit of Rs4.6 trillion in the next fiscal year, which appears to be on the lower side and there are chances of slippages. After the ban on borrowing from the central bank, the government is now heavily dependent on commercial banks to remain afloat. The previous government had targeted 4.8% economic growth for the current fiscal year while the provisional results showed that the growth stood higher at 6% - an outcome of expansionary fiscal and monetary policies. PBS omitted details of the three main sources of LSM data collection. Earlier, it used to give a bifurcated summary of the data collected by the Oil Companies Advisory Council (OCAC), Ministry of Industries and provincial Bureaus of Statistics. This table is now missing from the summary. Chief Statistician Dr Naeemul Zafar was not available for comments. The industries that posted growth in the first 10 months (July-April) of the current fiscal year included textile, which registered a 3.7% expansion in the index. Textile is the largest sector in the LSM index, having 18.2% weight. The production of apparel wear increased 41% while the output of food industry rose 11% during the period under review. Beverages sector’s production grew marginally by 1.5%. Coke and petroleum products’ output grew over 1% while the chemicals’ output rose 8.3%, according to the national data collecting agency. The output of the automobile sector increased 48% while the iron and steel sector saw a growth of 16.3%. The manufacturing of leather products rose 1.6%. The paper and board sector grew 8.2% and the production of wood products expanded 135% but their weight is very low in the overall index, having little impact on the growth rate. Three sectors remained in the red during the July-April period. These were rubber products whose output decreased 19%, transport equipment which shrank 11% and minerals which contracted slightly during the current fiscal year.
In his inaugural address as the 32nd president of the United States, Franklin D. Roosevelt was very categorical about his path to economic recovery and growth. This address, delivered on Saturday, March 4, 1933, was coming at a time when America had endured more than three years of economic depression. As such, millions of Americans were out of employment, banks were collapsing and the US dollar was performing poorly. Untold, is how Roosevelt made it a tradition for all future American presidents to spell out what they seek to achieve in their first 100 days in office. True to his word, he passed 76 laws in his first 100 days in an attempt to save the economy. But two things stand out from Roosevelt’s inaugural address. First, and that which is known to many, is when he said that the only thing Americans have to fear is fear itself. This famous expression, which has been used to inspire hope, was used by Roosevelt to mean that the only thing that was holding Americans back from building back better was their fear. Second, and what forms the basis of our line of reasoning, is when Roosevelt indicated that even though international trade was vastly important to the US, it sometimes comes secondary to the establishment of a sound national economy. And such was the time. As such, he claimed that of necessity to Americans was to have practical policies that overemphasise on the building of their economy and that when the time was right he would spare no efforts in restoring world trade. Four score and nine years later, Kenya finds herself facing a similar dilemma: Whether we should focus on building a sound national economy or open ourselves to unrestricted entry of goods from all over the world.
National interest Now, this article avoids taking an economic tangent of either or. We are not entirely against globalisation and neither are we fully advocating for a protectionist approach. What this article calls for is to rethink Kenya’s participation in the global economy given our national interest. It also calls upon those Kenyans who have been lucky to get the benefit of education and enlightenment to make a conscious choice about whether they want to betray their calling, and thus be judged by history, or be honest to the country and fellow countrymen and provide guidance. Instructively, it is this group that leads or misleads the country. Bearing in mind that Kenya is in a political season, these highly educated Kenyans can either disabuse the collective ignorance of our politicians by standing with the truth or say things that will make ‘their’ candidate win. Today, unemployment is a ticking time bomb in Kenya. Therefore, if we don’t deal with this crisis now, the army of unemployed and poor Kenyan youth will, like Jean-Jacques Rousseau would have said, one day eat the rich. Consider these arguments. When Raila Odinga launched his manifesto, he seemingly touched a raw nerve when he spoke about the future of mitumba. He has received criticism and support in equal measure. Those who have criticised him have singled out the affordability and employment opportunities presented by mitumba. On the other hand, those who have supported him have done so because of either their sycophantic support of Raila or the existential threat that mitumba poses to Kenya. And even though William Ruto, his main rival, had spoken about the same matter earlier, his sentiments on the mitumba issue didn’t elicit discussion, anger and criticism as Raila’s sentiments have. It must be noted that Ruto and his economic advisor David Ndii have been playing politics on how to build a sound national economy using the poor. For instance, when it came to the public that KFC imports potatoes from Egypt, Ndii called out the government for allowing the importation of potatoes yet the local farmers were struggling to find a market. However, when Raila wonders out aloud why the government would allow the importation of mitumba to the detriment of the local textile industry and our dignity as a people, they accuse him of wanting to focus on local manufacturing at the expense of menial jobs created from importation. How oxymoronic can one be?
Classical conditioning Their sentiments notwithstanding, the next government must initiate the process of banning the importation and sale of mitumba. For starters, no sane government can ban mitumba in their first 100 days in office. Banning the importation and sale of mitumba is a process more than an event considering a value chain has to be established and operationalised first. But Kenyans can’t hear any of this. Like the bell used by Pavlov in explaining the classical conditioning of his dog, Kenyans have been conditioned to believe that without the importation and sale of mitumba, a majority of them will not only lose a livelihood but also go without affordable clothing. Unbeknownst to them, this conditioning has negatively affected their perspective on everything including self. Psychologically, the continued use of mitumba affects the image of self and dignity. As such, Kenyans have been conditioned to see no value in anything new because their markets are awash with anything and everything second hand. This ‘mitumba is king’ mentality not only erodes personal dignity but that of the nation too. Ever wondered how we are viewed by those countries that dump here all manner of plastic electronics, substandard linen, mitumba cars, expiring food and, recently, expiring vaccines? How do they view our men and women knowing all too well that a majority of them are dressed in mitumba inner wears? Better yet, how are these men and women made to view themselves? At the national and personal level, the highly informal mitumba business goes against the decent work agenda. This agenda, which sums up the aspirations that people have for their working lives, calls for a fair income with security and social protection, safeguarding basic rights, offering equality of opportunity and treatment, and also prospects for personal development and to have their voice heard. Furthermore, the ‘mitumba is king’ mentality has gone deep to affect our political system. It is the reason Kenyans tolerate even ‘mitumba’ leadership. This explains why Kenyans would overlook virtue and integrity on the ballot and worship the corrupt. First-class leadership is greatly detested by Kenyans. They want something second hand. As a consequence, Kenya has basically become a country of mitumba.
Sustainable industrialisation On the bright side, this election presents a chance for the next government to take a bold step in the right direction. For instance, a departure from the importation and sale of mitumba and a focus on sustainable industrialisation will save Kenya from imminent collapse. Investing in local textile industries hold key to dealing with the high rates of unemployment, urban poverty and a shrinking economy. And these three pose an existential threat to Kenya. Noteworthy, the value chain of textile alone, from the input, processing and final products, can absorb thousands upon thousands of Kenyans into employment. Much more importantly, and to the fear of many Kenyans, this value chain will still heavily rely on the local distribution networks, used by the current mitumba sellers, to get the goods to market. Simply put, by banning the importation and sale of mitumba, our focus will shift from consumerism to production. And like in any market that produces goods or offers services, the laws of supply and demand will ultimately determine the quality, pricing and quantity.
Source: Standard Media
