• The Rebate of State and Central Taxes and Levies (RoSCTL) scheme, introduced in October, provides rebate against taxes and levies already paid by exporters on inputs The government is looking to overhaul a new-look tax rebate scheme for exporters merely eight months after launch, two officials aware of the matter said, after complaints from the industry that the scheme is eroding their margins. The Rebate of State and Central Taxes and Levies (RoSCTL) scheme, introduced in October, provides rebate against taxes and levies already paid by exporters on inputs. The rebate is not given as cash but as tradeable scrips, which exporters can sell to importers. Importers can then use these scrips to pay customs duty, instead of paying in cash. However, exporters complain these scrips are trading at a steep 20% discount, defeating the purpose of the scheme. As of now, these scrips can be traded even before export realization, with the liability falling on importers. The government feels the scrips are trading at a discount because of this risk component and plans to make them tradeable only after full export payments are received, which would eliminate the risk factor. It is also likely to double the eligibility of these scrips to 24 months from 12 months now. “We are aware of the issues faced by exporters under the RoSCTL scheme and the fact that they are unable to fully benefit from the scheme. We are analysing the reasons and discussing options to address these. Suitable changes will be made in the current scheme after consultations and review," a government official said on condition of anonymity. Another official said one of the options is to allow transfer of scrips only after export realization, to address the issue of liability falling on importers who buy these scrips. “If the trading happens only after export realization, the eligibility period of the scrip could be increased from 12 months to 24 months. That way, the government’s outgo would also get spread over two years," he said. The Apparel Export Promotion Council (AEPC), in a statement, said the scheme in its current form is eroding export margins of the domestic textile industry. Garment units say they are facing losses of ₹1,200 crore with the discount on tradeable scrips rising from 3% to about 20%, benefitting importers who are taking undue advantage at the cost of exporters. Representatives from the Federation of Indian Export Organisations, an apex body of exporters, met finance minister Nirmala Sitharaman a couple of weeks ago to request changes to the RoSCTL scheme. Ajay Sahai, director general and CEO, FIEO, said the government is looking into the issue and it is likely to be resolved soon. “It is logical to allow trading after export realization. That way, the government will not even have to monitor the foreign exchange. Scrips should not be allowed prior to realization," he said. Exports payments are generally realized in two to three months. In a letter to textiles secretary U. P. Singh, AEPC chairman Naren Goenka said the main objective of the scheme was to refund embedded central and state taxes and levies in the value chain to exporters. However, the implementation of the scheme in terms of disbursement of the rebate in the form of scrips as against cash refunds has caused “undue difficulties to exporters". AEPC said as the state and central levies are collected in cash, reimbursement or rebate on such levies should also be made in cash. The letter also flagged that the scrips are being traded at discounts of 15-20%, because of which exporters are not getting the intended value under the scheme. “Because of this, importers are reaping all advantages of the scheme at the cost of exporters," said the letter, seen by Mint. Goenka recommended that the provision in the scheme that makes the importer or the buyer of the scrip liable for non-realization or excess availed of by the exporter should be scrapped. “The said provision should be deleted for the already existing scrubs. It is suggested that a mechanism may be worked out whereby the scrubs already issued can be endorsed, based on the exporter submitting proof of realization of export proceeds," said the letter.
Source: Livemint
The GST Council in its meeting next week is likely to consider a proposal for making changes in the monthly tax payment form -- GSTR-3B, which would include autopopulation of outward supplies from sales return and non-editable tax payment table, officials said. The move would help curb the menace of fake billing, whereby sellers would show higher sales in GSTR-1 to enable purchasers to claim input tax credit (ITC), but report suppressed sales in GSTR-3B to lower GST liability. Currently, GSTR-3B of a taxpayer includes auto drafted input tax credit (ITC) statements based on inward and outward B2B supplies and also red flags any mismatch between GSTR-1 and 3B. As per the changes proposed by the Law Committee of the GST Council, there will be autopopulation of values from GTSR-1 into GSTR-3B in specific rows to establish one-to-one correspondence to a large extent between rows of the two return forms, thereby providing clarity to the taxpayer and tax officers. The change would minimize the requirement of user input in GSTR-3B and ease the GSTR-3B filing process, an official said. The tax payment table in Form GSTR-3B will be auto-populated from other tables in the form and will be non-editable, as per the amended form recommended by the Law Committee of the Council. Noting that amendment in Form GSTR-3B, as far as feasible, should flow from amendment in Form GSTR-1, with regard to outward liabilities, the Committee suggested that for giving more clarity to the taxpayers, separate amendment table (for liabilities) may be introduced in GSTR-3B, so that any amendment made in Form GSTR-1 gets reflected in GSTR-3B clearly. Similarly, an amendment table may also be incorporated in GSTR-3B to show any amendment in the ITC portion, the Committee suggested. Once the changes proposed by the Law Committee gets an in-principle approval of the GST Council, the revamped form will be put in public domain for stakeholder consultation. The GST Council in a meeting later will then approve the final form. Currently, taxpayers file statements of outward supplies in GSTR-1 by the 11th day of the subsequent month, while taxes are paid by filing GSTR-3B between 20th, 22nd and 24th of every month for different categories of taxpayers. Commenting on the proposed changes in GSTR-3B, AMRG & Associates Senior Partner Rajat Mohan said tax filings are set to change for e-commerce operators rendering passenger transportation services, accommodation services, housekeeping services, and cloud kitchens. Such e-commerce players would now be made liable to report supplies on behalf of suppliers in their GSTR -1 and GSTR-3B in separate cells. "E-commerce players like Uber, Swiggy, Zomato and MMT would see few changes in monthly tax filings that will ensure more data points for the government system for big data analytics," Mohan added.
Source: Business Standard
India is going the whole hog on Free Trade Agreements (FTAs) once again to give a renewed push to its bilateral trade and increase exports. After signing free trade deals with the United Arab Emirates and Australia this year, it is preparing to conclude two key trade pacts with the United Kingdom and the European Union. 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. The FTA with the EU would be the one of the most significant deals for India as the bloc is its second. With the UK, the trade is expected to be finalized by Diwali on October 24 this year. It is also coming at the most opportune time when India is committed to get 50% of its energy from renewable sources by 2030. The UK is a world leader in the renewable energy sector and could play a key role in India’s transition to clean energy. Reducing tariffs on green exports such as solar, onshore and offshore wind could open new opportunities for firms in India. The UAE is India’s third-largest export destination and India is hoping that the FTA signed this year will open duty free market access for export of gems and jewelry, textiles and garments and engineering goods. Soon after taking over in 2014, Prime Minister Narendra Modi set an ambitious target of almost doubling goods and services exports to $900 billion by 2020. This could not see the light of the day. Now India aims to achieve a $500 billion export target in the financial year 2022-23, nearly $100 billion more than last year. Experts say that the FTAs could help India move faster and boost its exports. They, however, also warn that India must tread cautiously while signing the bilateral deals, which must be renewed negotiations, according to Commerce Minister Piyush Goyal, will open up the EU markets, not only for India’s textiles, leather, pharmaceuticals and sports goods, but also some agricultural products, handicrafts and handlooms. It is also expected to help India boost services exports to the EU, he said. The FTAs open up new markets for exports and imports as well as help in creating jobs. But the key lies in negotiating the terms and conditions well. India did not benefit much on this count from its earlier FTAs. India’s first bilateral FTA with Sri Lanka came into effect in March 2000. Since then India has signed as many as 13 FTAs. But four key FTAs with ASEAN, Korea, Sri Lanka and Japan – analysed by the Niti Ayog – shows that though bilateral trade increased post signing of the deals, imports from the partner countries into India increased more than India’s exports to partner countries. As imports shot up, India’s trade deficit with these countries also increased since then. Of these countries, only exports to Sri Lanka have increased much more than imports into India from Sri Lanka. India’s trade deficit as a percentage of bilateral trade with the ASEAN worsened to over 27% from 15% before the FTA was signed. With Japan, the trade deficit nearly doubled. The Niti Ayog findings suggested that quality of trade also deteriorated under the IndiaASEAN FTA. There was a sense that India’s manufacturing sector, the key to ‘Make in India’ initiative, got impacted due to the FTAs. It was therefore, in 2019, the Centre began reviewing the existing FTAs and taking steps to make them more favorable for India. The Economic Survey of 2022 pitched for giving a renewed push to the FTAs as such pacts could help diversify the country’s export basket and destinations, create more jobs and spur post-pandemic economic recovery.
Source: Deccan Herald
• Move aims to give further boost to manufacturing and exports of apparel, commerce and industry minister Piyush Goyal said at an industry event on Saturday The Union government is set to come out with a second production linked scheme (PLI) for the textiles sector, to give further boost to manufacturing and exports of apparel, commerce and industry minister Piyush Goyal said at an industry event on Saturday. On possibility of extension of customs duty on cotton, he said that that with global cotton prices easing, government did not see the need to extend the customs duty waiver beyond September. However, if needed, it may look at extending it by another month. The finance ministry had in April waived the 10% customs duty on cotton imports till September 30 in a bid to ease price for the textiles industry and end consumers. "Cotton prices have already started easing...and cotton is becoming more affordable. So I don't think there is a need need to extend customs duty waiver beyond September.. if at all required, we may extend it by a month or so," said Goyal. He said that the government will soon seek cabinet approval for the second PLI scheme on textiles. "The textiles sector has a production linked incentive scheme... we are thinking of coming up with one more PLI scheme for the textiles sector. The details of which will be shared with all of you very soon," said Goyal at the textile fair in Coimbatore. He said that the government is still engaging with the industry on that. "We are keen to support the apparel manufacturing sector... Dialogue is going on between textiles ministry, DPIIT, and Niti Aayog. After consultation with the industry, we will be devising a second PLI scheme and putting before the Cabinet and with the support of Prime Minister..." said Goyal, who is on a two day visit to Coimbatore and Tirupur to interact with industry. The government had in the first edition of the textiles PLI scheme approved 61 applications of companies including Trident Ltd, Kimberly Clark India, Monte Carlo Fashion, and Arvind Ltd with an investment potential of over ₹19000 crore. The government had in December approved the PLI scheme for textiles, offering incentives worth ₹10,683 crore over five years for manufacture of man-made Fibre apparels-jerseys, overcoats, trousers, shifting, etc., man-made Fibre (MMF) fabrics and products of technical textiles. The scheme is focused on expanding Manmade Fibres and technical textiles segments’ value chain to help India regain its dominant status in global textiles trade. The scheme is operational from 24 September, 2021 to 31 March 2030. The second edition of the scheme is likely to focus on segments under textiles not covered in the earlier scheme. Goyal said that the government has made focused efforts to ensure growth of the textiles sector. "We have set before us a target of doubling textiles production to ₹20 lakh crore in five years and triple textile exports to ₹8 lakh crore during this period," said Goyal. He reiterated that the textiles sector in an integral part of the free trade agreements being entered into by India. "We have signed an FTA with UAE, Australia, and in negotiations with the EU, the UK, Israel, and the Gulf Cooperation Council," said Goyal. H
Source: PIB
The Government of India wants to create 75 Textile hubs like Tiruppur which will not only support textile product exports and ensure inclusion of sustainable technology, but will also generate huge opportunities for employment, said Union Minister of Textiles, Commerce & Industry and Consumer Affairs, Food & Public Distribution, Shri Piyush Goyal at an event in Tiruppur today. Shri Goyal said that Tiruppur has made country proud and is home to textile production of worth 30,000 crore every year. He said that the sector provides direct employment to 6 lakh people and indirect employment to 4 lakh people, therefore, collectively providing employment to 10 lakh people. He said that in 1985, Tiruppur was exporting ₹15 Cr worth of textile products. In the year ended March 2022, the estimated exports from Tiruppur are ₹30,000 Cr which is about two thousand times growth. Considering the unprecedented growth of the textile sector in the region, in over 37 years, the compounded annual growth rate at Tiruppur comes to 22.87%. He said that Tiruppur has immense employment avenues and called upon youngsters to grab the opportunity. Adding on he said that the youngsters will also be trained. He mentioned that presently, nearly 70% of those employed in the textile sector in Tiruppur are women and those from the marginalised sections Shri Goyal said that all over India, roughly 3.5-4 crore people are engaged in the total value chain of Textile sector alone. Textiles is the second largest provider of work after agriculture. The industry size is about ₹10 lakh Cr. The export is about ₹ 3.5 lakh crore. He reiterated that the Textile sector has the potential to grow to ₹20 lakh Cr industry in the next 5 years with exports of ₹10 lakh Cr. Even then, a modest export target of 7.5-8 lakh crore and production target of about 20 lakh crore which is doable in next 5 years has been set. Shri Goyal said that if India grows at 8% every year on a Compounded Annual Growth basis, the economy will double in about 9 years’ time to be a $6.5 trillion economy. Similarly, in 18 years from now, the economy of India predicted is $13 trillion economy. In 27 years from now, the economy growth can be calculated as $26 trillion and hence after 30 years, it can be confidently put that India will be a $30 trillion economy. He said that Tiruppur is the leading source of Hosiery, Knitted Garments, Casual Wear, Sportswear and is a traditional centre for cotton ginning. He said during his visit to SITRA yesterday, he saw many innovative projects. He mentioned that the Centre will work with Health Ministry on the Sanitary Napkin Machinery in SITRA to provide low cost sanitary napkins under the PM Jan Aushadhi Yojana. He talked about the challenges faced by India in terms of COVID as well as war between other countries. However, he stressed that despite the challenges, under the guidance of Prime Minister, India is one of the fastest growing economies in the world. Shri Goyal participated in the Exporter’s Meet cum Felicitation Function at Tiruppur. He had an interactive meeting with representatives of Federation of Indian Export Organisations (FIEO) & Apparel Export promotion Council (AEPC). Dr. L Murugan, Union Minister of State for Information and Broadcasting, Dr. A Sakthivel, President, FIEO, Shri Sudhir Sekhri, Vice Chairman, AEPC, Shri TV Chandrasekharan, Past Chairman, HEPC, Shri Raja M Shanmugam, President, TEA, Shri Geethanjali S Govindappan, Vice Presient, SIHMA, Shri Akhil S Rathinasamy, President, KNITCMA and Shri V Elangovan, MC Member, FIEO. More than 350 exporters apart from RMG sector form Tirupur , Engineering, Agri and Process Food, Textiles, Yarn sectors form Coimbatore, Karur, Madurail Erode, and others participated in the program. Shri L Murugan, Union Minister of State for I &B in his address highlighted benefits of newly signed FTAS which will help the country to grow in many fold. For reducing the logistics cost, revolutionary measures such as PM Gati Shakti, the National Master Plan, would help improve infrastructure planning and ensure the implementation of projects within time and budget. Setting up of Multi Modal Logistics Parks, focus on container manufacturing, East West and North South freight corridors are steps in the same directions. Dr A Sakthivel, President, FIEO in his welcome address appreciated the efforts of the Government of India in addressing the issues of exporters quickly and opening up vistas of market opportunities which helped the country in crossing export of USD 422 Billion during the last financial year. Dr. Sakthivel appreciated the untiring efforts of Union Minister of Commerce and Industry in concluding FTAs with UAE and Australia and opined that on-going negotiation with UK, EU, GCC, etc will throw open new opportunities for Indian exporters. FIEO President also requested Hon’ble Commerce and Industry Minster’s attention on suggestions including linking issuance of RoSCTL and RoDTEP with export realization for better value, including left over sectors like Iron & Steel, Pharma, Chemicals etc in RoDTEP, extending the benefits to EOU/SEZ unites, AAA/DFA users, announcing revised TMA for Agri Sector, solution on money struck for export made to Sri Lanka, implementation of Rupee Payment System for export to Russia, Creation of MSME Market promotion fund, market access for emerging sectors in services, etc. Shri Sudhir Sekhri, Vice Chairman, AEPC in his address requested for announcement of new Technology Upgradation Fund Scheme (TUFS) scheme, announcing Production Linked Incentive Scheme (PLI- 2) for the Apparel Sector and requested for export of cotton and cotton yarn should be suitably calibrated to ensure that cotton and cotton yarn is available to the exporting units at competitive prices.
Source: PIB
Textile industry has huge potential to generate jobs in coming years, said Union Minister of Textiles, Commerce & Industry and Consumer Affairs, Food & Public Distribution, Shri Piyush Goyal at an event in Coimbatore today. While inaugurating SIMA Texfair 2022, 13th edition in its series, an international textile machinery, spares, accessories & services exhibition conducted by The Southern India Mills’ Association (SIMA) at CODISSIA Trade Fair Complex, Coimbatore on 25th June, 2022, Shri Goyal emphasised that the Centre is promoting both cotton and man-made textile sector so that it gets larger share of world market thereby increasing jobs opportunities as well as investment. “In all sectors, we want to become a global industry. We want to capture the world market” he said adding on that under the guidance of PM, the Centre is working actively with different countries to finalise free trade agreement which will give zero duty access to textile sector in world market. It’s because of the good relations of PM with world leaders, India is getting global respect today. In his inaugural address, Shri Piyush Goyal appreciated the invention capabilities and entrepreneurial skills of Tamil Nadu especially the twin cities viz., Coimbatore and Tirupur. He stated that Tamil Nadu would become the largest hub for textiles, pumps, wet grinders, critical components manufacturing etc., in the world and boost the economic growth of the Nation. Shri Goyal highlighted the various policy initiatives taken by the Government and the hard work put in by the industry to achieve 440 billion US dollars exports. He stated that the country would reach 30 trillion economy from the level of 3 trillion economy and the government has been aggressively addressing all the structural issues including the tariff barriers, issues in taxation, global competitiveness, etc. He advised all the stakeholders in the value chain to strive hard, stand united and thereby become the largest manufacturing country in the world. He invited all the young and women entrepreneurs to come forward to make investments and contribute for the growth of the Nation. He highlighted from Farm to Fabric, Fabric to Finished Products, Finished Products to Fashion products and then finally to Foreign Products, India has a major share in the entire value chain. He said that he admires the entrepreneurial skills of people of Coimbatore. The city has many MSMEs & large scale industries for textiles, Kovai Cora cotton Saree is GI tagged and is world famous. He said that the city is fast emerging as a major supplier for Defence sector as well. “We have decided to support SITRA so that they can produce more defence related products which will help our jawans at the border. The uniforms are to be manufactured in India instead of importing them. Some clinical trials are required for some products. I have agreed to support this under National Technical Textile Mission. They will soon put in proposal,” he said. Shri Goyal mentioned that when he visited SITRA, he saw a manufacturing facility for sanitary napkin. He said that it’s the priority of Modi government to provide affordable sanitary napkins to women. He said that plans are in place to provide affordable sanitary napkins to the women folk of Tamil Nadu under PM Jan AushadhiYojana. He said that under Samarth scheme 2 lakh beneficiaries have been trained in the state, out of which 1.7 lakh candidates have been provided placement opportunities. Shri Goyal reiterated the capability of India to become the second largest manufacturer of PPE kits that not only protected the people of the Nation, frontline workers, but also helped several countries through exports. He stated that India could manufacture PPE kits with highest quality at an affordable price. He appreciated the contribution made by the South India Textile Research Association in various R&D activities and also the lead role played in manufacturing, testing and certifying PPE kits. He assured extending necessary support to strengthen the R & D activities of SITRA. Shri Piyush Goyal has highly appreciated the efforts taken by SIMA in organizing the Texfairevent with world-class standards and providing opportunities for several hundreds of MSME manufacturers to develop import substitution and enhance the competitiveness of the Indian textile industry. He advised the textile machinery and spares manufacturers to achieve 100% self-sufficiency by manufacturing all the machinery from ginning to garmenting indigenously. He also appreciated the efforts taken by CITI, SIMA and export promotion council for guiding the industry and government in resolving various issues and also enhancing the global competitiveness. He said that India has already finalized two FTAs-Australia & UAE and negotiating with UK, Canada & EU. The FTAs will benefit business hubs like Coimbatore and Tirupur. In his address, Dr.L.Murugan, Union Minister of State for Information & Broadcasting, portrayed numerous policy initiatives taken by the NDA Government led by Hon’ble Prime Minister, Shri Narendra Modi. He stated when the entire world was reeling under grave recession due to the ill-effects of COVID pandemic, the unique policy measures taken by the Union Government could not only make the country to fight the war against Corana, but also to achieve a record export 440 billion USD. He also reiterated the initiatives taken by the Government to stabilize the cotton prices by removing 11% import duty on cotton and also allocation of one Textile Park for Tamil Nadu. Shri R.Gandhi, Minister for Handlooms & Textiles, in his address appreciated the support extended by the Union Government, especially Hon’ble Minister of Textiles for the growth of the handlooms and textile industry in Tamil Nadu, especially the removal of 11% import duty on cotton. He requested to allocate more funds for the growth of the industry in Tamil Nadu. He highlighted the various policy initiatives taken by the Hon’ble Chief Minister, Shri M.K.Stalin for the growth of textile industry and retain Tamil Nadu as the numero one State in the country. Shri Gandhi also thanked the Union Government for allocating one PM MITRA park for Tamil Nadu. In his address, Shri R.Sakkarapani, Minister Food & Civil Supplies highlighted the contribution made by Tamil Nadu in terms of GDP, industrial production, exports especially by MSME clusters in Coimbatore, Tirupur, Erode and Dindigul. He requested Union Textile Minister to resolve the cotton crisis, provide necessary funding support for cotton development across the country. Shri T.Rajkumar, Chairman, Confederation of Indian Textile Industry, briefed about the continuous efforts made by Shri Goyal for making Indian textiles & clothing industry to achieve 44.2 billion dollars exports during the year 2021-22 despite unprecedented challenges, a record growth in the history of textile industry. He stated that under the leadership of Shri Goyal, the industry would be in a position to grow leaps and bounds. He pointed out the formation of Textile Advisory Group under the Chairmanship of Shri Suresh Kotak, a senior most expert and veteran in cotton, who has already formed two Sub-Committees to augment cotton production and improve seed technology in the country. Shri Ravi Sam, Chairman, SIMA appreciated and thanked the Hon’ble Prime Minister and Hon’ble Union Minister of Textiles for taking several path breaking policy initiatives and enhancing the global competitiveness, foster the growth of the textiles and clothing industry and made the industry to create a record of achieving 44.2 billion US dollars during the year 2021-22 despite unforeseen challenges posed by COVID pandemic. He stated that certain policies like removal of anti-dumping duty on MMF and its raw materials, refund of embedded taxes through RoSCTL / RoDTEP, unique policy measures announced for MSMEs including the relaxation of eligibility criteria, production linked incentive scheme, PM MITRA scheme etc., fueled the growth of the industry. Shri Ravi Sam has also thanked the Hon’ble Chief Minister & Hon’ble Minister for Handlooms & Textiles, Shri R.Gandhi and the Government of Tamil Nadu for removing the Agricultural Market Committee Fee on cotton and cotton waste that prevailed since 1959, creating a separate Textile Department with dedicated Commissionerate to fuel the growth of textile industry in Tamil Nadu and also announcing a Scheme for sustainable cotton mission in Tamil Nadu. Dr.S.K.Sundararman, Deputy Chairman, SIMA while proposing the vote of thanks, highlighted unique policy measures and time-bound actions taken by Shri Goyal for the textile industry.
Source: PIB
This ground report from Agra captures the overall sentiment that GST credit is like working capital for an MSME and it is increasingly getting stuck in the system Agra has long been known for the Taj Mahal, but it is also a manufacturing hub filled with micro, small and medium enterprises (MSMEs) that make everything from electronic components to metal products, from paints and chemicals to footwear. And five years after the introduction of the Goods and Services Tax (GST), the MSMEs here complain that while the indirect tax regime has been transformative, cutting out the need to file multiple taxes, its biggest drawback has been the delay in credit refunds.
Source: Business Standard
Based on a (conservative) compounded annual growth rate of 8%, the country’s economy will double in about nine years, he said. India will emerge as a $30-trillion economy in the next 30 years, commerce and industry minister Piyush Goyal said on Sunday, highlighting that the country remains the world’s fastest-growing major economy. Based on a (conservative) compounded annual growth rate of 8%, the country’s economy will double in about nine years, he said. India’s nominal GDP stood at $3.3 trillion in FY22. “In another nine years, that is 18 years from now, we will be about a $13-trillion economy. In another nine years after that, that is 27 years from now, we will be a $26-trillion economy… then obviously, in 30 years from now, confidently we can all expect that the Indian economy will be a $30-trillion economy,” the minister said. He was addressing exporters and other textile industry stakeholders in Tiruppur, which houses the country’s largest garment cluster. Some “naysayers” who have raised doubts over these numbers should visit Tiruppur to gauge the significant growth potential that the country has. Exports from Tiruppur, which has emerged as a global apparel hub, jumped to Rs 30,000 crore in FY22 from just Rs 15 crore 37 years ago, recording a phenomenal compounded annual growth rate of about 23% over such a long period, Goyal said. The Indian economy has grown at a fast pace after the pandemic and is expected to do well despite the ongoing war between Ukraine and Russia. Even though the war has impacted global supply chains and caused a spike in commodity prices, especially of oil, the government has managed to keep inflation at a reasonable level, the minister said. Calling on the textile and garment industry to identify and help develop 75 Tiruppur-like clusters across the country, the minister exuded confidence that this labour-intensive sector will lead the country’s export growth and create huge number of jobs in the coming years. (The report.
Source: Financial Express
During the speech, Modi also shared his government's achievements and said India will not be left behind in the fourth Industrial Revolution India has come a long way and is leading the “way of innovation”, Prime Minister Narendra Modi said while addressing the Indian diaspora in Munich, Germany on Sunday, various media reports stated. India, which already has over 100 unicorns, is witnessing one unicorn every 10 days, Modi added, according to the reports, which quoted him as saying, “There was a time when India was nowhere in the race of startups. Today, we are the third-largest startup ecosystem.” During the speech, Modi also shared his government's achievements and said India will not be left behind in the fourth Industrial Revolution. He said that now every village in India is open defecation free, has electricity and 99 per cent of the villages also have clean cooking fuel. India has been providing free ration to 800 million poor people since the last 2 years. “This list of achievements is very long. If I keep speaking, your dinner time will be over. When a country takes correct decisions with correct intentions on time, then it is destined for development," he said, amid chants of “Modi, Modi” from the crowd. “In IT, digital technology, India is making its presence felt. Forty per cent digital transactions in the world are from India. India is making new records in data consumption. India is among the countries where data is cheapest,” he said. In the 21st Century’s new India, the fast way people adopt technology is exciting. “India is ready, prompt for development, for its dreams. Today, India believes in itself and its capabilities. That’s why we’re breaking old records and achieving new goals,” he said Modi said that 90 per cent adults have taken both doses of Covid vaccines in India and 95 per cent have taken at least one dose. Made in India vaccine has saved crores of lives across the world, he added. Modi said that climate change is just not a matter of government policies in India. “Sustainable climate practices have become a part of the lives of India's ordinary people,” he added. Terming Emergency in 1975 as a "black spot" on the vibrant history of India's democracy, Prime Minister Narendra Modi on Sunday said that democracy, which is in DNA of every Indian, was trampled and suppressed 47 years ago, but the people answered in a democratic way all the conspiracies to crush it. "Today is June 26 which is also known for the day when India's democracy, which is in the DNA of every Indian, was trampled and suppressed 47 years ago,” Modi said. "The people of India answered all the conspiracies to crush democracy in a democratic way. We Indians take pride in our democracy wherever we are," Modi said in his over 30 minutes speech at the massive diaspora event held at the Audi Dome stadium here. Modi, who is visiting Germany to attend the G7 Summit, said that Indians are proud of their democracy. "Today, we can proudly say that India is the mother of democracy. The diversity of culture, food, clothes, music and traditions makes our democracy vibrant. India has shown that democracy can deliver and has delivered."
Source: Business Standard
Our recent surge in trade performance was due to numbers enlarged by worldwide inflation more than a sign of real success After stagnating at about at level of about $300 billion for almost a decade, India’s merchandise exports increased strongly to an all-time high of $421 billion in 2021-22, rising from 11% of gross domestic product (GDP) each in 2019-20 and 2020-21 to a sevenyear high of 13.3% of GDP in 2021-22. This implies an annual growth of 44.7%, the highest ever since independence. Although this export surge in is very impressive, it must be considered in the light of a sharp increase in commodity prices. Therefore, we must understand real export growth before being swayed by nominal numbers.
Source: Livemint
The parameters include various areas such as construction permit, labour regulation, environmental registration, access to information, land availability and single window system. Finance minister Nirmala Sitharaman will on Thursday release a ranking of states and Union Territories (UTs) on ease of doing business under the Business Reforms Action Plan (BRAP). The exercise is aimed at triggering competition among states to improve the business climate to attract domestic and global investors. "It has been decided to release the assessment of states/UTs under BRAP (Business Reforms Action Plan), 2020, on June 30 by Sitharaman," a government official said. The parameters include various areas such as construction permit, labour regulation, environmental registration, access to information, land availability and single window system.
Source: Economic Times
Will international trade help rein in inflation and boost resilience? Leading economies have been afflicted with new problems over the past year. The United States is struggling with both supply-chain blockages and a critical shortage of baby formula. The European Union faces the threat of scarce energy supplies, owing to sanctions on Russian fossil-fuel exports. And almost all countries are experiencing high inflation. Some have blamed these problems on excessive dependence on international trade, that is, globalisation. Deglobalisation, fragmentation, reshoring, friend-shoring, decoupling, and resilience have become now-familiar buzzwords. There is a widespread sentiment that individual countries would have been less exposed to recent shocks had they been more self-sufficient. The argument goes beyond observing that supply chains generate diminishing returns for private firms. Government policies that economists label as protectionist have gained political support – beginning, notably, with then-US President Donald Trump’s trade war in 2018. The impression is that trade barriers could help protect us all. But the problems listed above are in fact examples of how trade barriers erected by governments have reduced resilience. In each case, liberalisation could help mitigate the problem. Start with the bottlenecks in US shipping. The remedy here is to repeal the Jones Act, which requires that all shipping between US ports use American carriers and employ crews that are at least 75% American. This legislation was originally enacted in 1920, with the aim of enhancing US self-sufficiency and national security. But the US maritime industry’s inability to cope with sudden surges in demand, like for merchandise imports over the past year, has contributed to supply-chain delays. Without the Jones Act, American firms could hire foreign-owned vessels to handle such a surge, and logistics would be more resilient. As to US overland transport disruptions, a shortage of truck chassis has been part of the problem. The solution is to roll back the US tariff that impedes imports of chassis from abroad, which could help fill the gap. The US baby formula shortage calls for a similar approach. Abbott Nutrition, one of only four major US producers of baby formula, recalled some of its products in February following the discovery of traces of bacteria in one factory. Recalls are common. But the resulting acute shortage illustrates how international trade could have made up most of the shortfall. After all, there was no lack of infant formula on international markets. But the US has steep protectionist barriers against dairy imports. These include tariffs as well as unnecessarily restrictive administrative hurdles and “Buy American” rules that constrain the federal government’s Special Supplemental Program for Women, Infants, and Children (WIC), which distributes half of the infant formula consumed in the US. Trump even raised barriers on imports of infant formula from Canada when he renegotiated the North American Free Trade Agreement. The US Food and Drug Administration recently agreed to cut some red tape to let in imports temporarily. But there should not be barriers in the first place. One can draw a general conclusion from the baby-formula episode. It is true that exposure to international trade can sometimes be a source of volatility when shocks arise abroad. For example, Germany’s willful increase in dependence on Russian natural gas over the past ten years made it highly vulnerable when Russia invaded Ukraine in February. But free trade can also mitigate volatility when the shock originates domestically. Meanwhile, the EU and the US want to substitute renewable energy sources for fossil fuels, especially those purchased from Russia. One policy that could help further reduce the cost of solar and wind power is to lift the barriers in place to restrict imports of solar panels and wind turbines. On June 6, US President Joe Biden’s administration announced a two-year pause on pending new tariffs on imports of solar panels. That is good for both the environment and America’s ability to cope with higher global energy prices. But the US has the old tariffs to this day. So does the EU, where cutting demand for Russian fossil fuels will be much more difficult. Rolling back tariffs and other barriers to importing renewable energy equipment would be a step in the right direction. Finally, one remedy for the current inflation problem is to lower import barriers generally. What is true of truck chassis, infant formula, and solar panels is also true of tradable goods as a whole —commodities as well as manufactured goods. Tariffs on US imports of softwood lumber from Canada have exacerbated the rising cost of housing construction. Trump’s tariffs on steel and aluminum have increased the prices paid by US firms, which in turn have contributed to higher prices paid by consumers for nails, automobiles, and many other products containing the two metals. In a recent study, the Peterson Institute for International Economics estimated that a feasible package of trade liberalisation could deliver a one-time reduction in US consumer price index inflation of around 1.3 percentage points, amounting to $797 per US household. The Biden administration is reportedly now considering rolling back some of Trump’s tariffs on imports from China in particular, as one of the few concrete steps it can take that would immediately help alleviate inflation. The effect on inflation will be less than 1.3 percentage points, because the full “feasible package” will not be adopted. But it would be an encouraging step. To be sure, trade liberalisation will not be nearly enough to eliminate inflation. But the broader lesson is the same as for baby formula, transport bottlenecks, and energy security: Openness to trade can be a source of resilience.
Source: Economic Times
With the bursting sound of a whistle, cargo ship Dongchen Qingdao set sail on June 18 from Qingdao in East China's Shandong Province, carrying about 150 standard containers, including textiles, electronic products and precision parts and other goods. After a 36-hour journey, the ship arrived at Osaka South Port in Japan, marking the first successful voyage of the China-Japan marine "golden channel" from Qingdao to Osaka. This is the first fast logistics route between a city in northern China and Japan. The opening of the Qingdao-Osaka express line reflects the close economic ties between the two countries and the strong demand for cooperation, as the bilateral trade amounted to $371.4 billion last year.
Economy not tied to politics After the RCEP came into effect, the Indo-Pacific Economic Framework (IPEF) was officially launched during US President Joe Biden's visit to Japan, aiming to counterbalance RCEP. Ueda told the Global Times that the implementation of RCEP has laid an important foundation for China-Japan trade in terms of tariff concessions, market access and regional supply chain adjustment, providing more opportunities for the development of comprehensive free trade, which will greatly promote the bilateral economic and trade cooperation. "As a businessman, I don't want to see politics tied to economics. The RCEP provides a platform for most Asian countries to participate broadly in free trade, which is full of enthusiasm and common development," Ueda noted. Honda also said that Japan cannot just have good relations with the US. Japan and China have close economic and cultural ties and the country must demonstrate a balanced stance between Washington and Beijing. "There are various economic networks in the world such as RCEP, IPEF and CPTPP (Comprehensive and Progressive Trans-Pacific Partnership). As a company, we should take the initiative to establish contacts with various countries and should not just join one certain circle," he noted. China always has a number of new business opportunities and Japan lacks this vitality, Honda told the Global Times, noting that the opening of the "China-Japan RCEP Express" and the implementation of RCEP are just the beginning, and he is willing to stay in China, working with many excellent Chinese enterprises to forge an "extraordinary development path."
Source: Global Times
In an economic sense, should China be unnerved by neighboring Vietnam? Well, Vietnam today reminds me of yesteryear developing countries when their economies had just started to grow at a notable pace. Its labor-intensive industries like textiles, processing and manufacturing are booming, fueled by abundant and low-cost labor. This has led many to question whether the Southeast Asian nation will have a bearing on China's position in the world's industrial chain sooner or later. No, I'd argue. Close competition and complementarity characterize the dynamic between the two neighbors. From the perspective of competition, the pressures they face from each other are asymmetrical. China boasts a mature cross-border e-commerce industry, a complete industrial chain, agglomeration advantages, innovation vitality, well-developed logistics and supporting systems. In terms of complementarity, the export structures of the two countries are different, and their supply chains are interdependent. For example, when China fought the COVID-19 outbreak in 2020, the supply chains of many industries in Vietnam also came to a standstill. China's direct investment and industrial transfer to Vietnam have strengthened business ties between China and Vietnam, resulting in the international division of labor. Some of China's surplus with European countries and the United States has turned into China's surplus with Vietnam. In a sense, Vietnam's growth is an extension of China's economic growth. The two countries' industrial chains are closely integrated. As a neighbor, a developed Vietnam is more beneficial to China than an underdeveloped economy. China does not have to worry too much about the challenges posed by the rise of Vietnam's manufacturing industries. For instance, Zibo, Shandong province-based Luthai Textile Co Ltd, which runs more than 40 factories and regional branches in countries including the US, Italy and Japan, announced earlier this year that it will invest $210 million to build a manufacturing base to make woven and knitted fabric products in Tay Ninh province, Vietnam. The new plant is meant to supply local garment and textile businesses, another step to further expand its market presence after the Regional Comprehensive Economic Partnership took effect on Jan 1. In this context, it's India that should be the hot topic. Among China's neighbors, India boasts a competitive labor source, vast market hinterland, increasingly complete electronics industrial chain and a highly developed IT industry. Its human resources are said to have an advantage in terms of English-language skills, comparable to HR in Europe and the US. India may well have the potential to emerge as not only the next factory for the world but also a challenger to China. Over the long term, India will seek an economic growth rate higher than that of many countries in the Asia-Pacific region. When its economy becomes half China's size, it will likely have a substantial impact on China. Even though Vietnam's substitution effect on China is greater in the short term, India's effect in a similar context will be greater in the longer term. Constrained by a limited local market, Vietnam plays more of a role as a processing and transshipment hub in the global electronics industrial chain, and its products are exported to North America, Europe and other regions. The reason why India can attract a relatively more complete electronics industrial chain is due to tariff adjustment and its vast local market. A large number of electronic products manufactured in India can be directly sold in the country, leaving less room for exports. To cope with these factors, China has already begun to foster high-quality development on its original industrial track and implement the dual-circulation development paradigm that allows the domestic and overseas markets to reinforce each other. China has an edge in being a major consumer market in the world. This has become valuable in breeding and developing new technologies. Although the industrial revolution started with technologies, the implementation of technology cannot be separated from specific market demands and application scenarios. In the new round of industrial revolution, China should not only reinforce the resilience of its own industrial chain structure, but also work closely with neighboring countries via bilateral and regional free trade agreements, and become a driver of shared development. This will be an important task for the country to sustain its foreign trade and seek fresh growth points in the years to come.
Source: China Daily
The European Union’s Generalised System of Preferences plus (GSP Plus) monitoring mission has discussed in detail the developments and progress made on the implementation of 27 international conventions concerning GSP+ with the All Pakistan Textile Mills Association (APTMA) leadership. The mission, including Guido Dolara, director general, Trade Service; Guus Houttuin, External Action Service; Andreas Striegnitz, External Action Service; and Srefan Schroeer, Employment Service; visited the APTMA House on Friday where it was received by APTMA Chairman Abdul Rahim Nasir, APTMA North Zone Chairman Hamid Zaman, Senior Vice Chairman Kamran Arshad, Aamir Fayyaz, former APTMA chairman, senior textile leaders and APTMA Secretary General Raza Baqir. Houttuin said that the European Commission has published the legislation for the GSP scheme (2024/34) on September 22, 2021 for the new GSP Scheme. The EU had added six new conventions along with assessing the situation of human rights, press freedom, gender equality and child labour-related issues last year, while extending the GSP Plus status for Pakistan. Members of the visiting delegation informed APTMA members that the newly-proposed scheme aims at improving the key features of the scheme to better respond to the evolving needs and challenges of the GSP countries, as well as, reinforce the scheme’s social, labour, environmental and climate dimensions. It will be in place for 10 years. There is an expansion in the list of international conventions from 27 to 32 that beneficiary countries will have to ratify and implement, he added. Rahim Nasir said that since the grant of GSP Plus status to Pakistan, the country’s textile and clothing exports to the European Union have increased 63 per cent, while the overall exports have increased 45 per cent. The government had already approved the Textiles and Apparel Policy (TAP) 2020/25 to double Pakistan’s export target up to $42 billion, he said, adding that the Textile Policy approved by the Cabinet contemplated a three-year target, as textile exports will be jacked up to $27 billion in the fiscal year 2022/23, $34 billion in 2023/24 and $42 billion in the fiscal year 2024/25, he noted. The textile sector alone represents 46 per cent of the total manufacturing sector and around 40 per cent of the total labour force, he said, adding that the textile exports of $15.4 billion registered in FY21 are expected to fetch $20 billion by the close of the current financial year. The performance of textile exports during May this year was highly recommendable, recording an upsurge of 50 per cent over the last year and it was encouraging to note that the value-added sector in textiles has shown unprecedented growth, he added. The APTMA North chairman Zaman highlighting the effects of GSP plus on Pakistan and said the GSP Plus has boosted Pakistan’s competitiveness and provides an edge to the Pakistani exports over regional competitors, besides an increase in employment, investment and upgradation of technology, enhanced foreign investment and opened window for Pakistani exports, especially when China is losing the market due to higher cost of production and other factors. According to him, the facility has also uplifted Pakistan economically, socially and environmentally, as the compliance to the 27 conventions relating to human rights, environment, labour rights, narcotics control and corruption control has improved the working conditions and the image of Pakistan. Meanwhile, he added, compliance with the six new conventions was in progress. Zaman added that any withdrawal of GSP Plus is fraught with risks of plummeting Pakistani exports by removing edge and competitiveness for exports and lead to not less than Rs1 trillion/annum loss to the industry. Any withdrawal of GSP Plus would create massive unemployment, large-scale closure of mills and an increase in poverty with a domino effect on the banking sector, as more than 40 per cent of the bank loans are obtained by the textile sector. The real estate, goods transport and allied industries will suffer adversely, causing massive unrest, he added. In his vote of thanks, APTMA Senior Vice Chairman Kamran Arshad informed the visiting EU delegation that Pakistani exporters are heading towards diversification of exports, which requires major overhauling and upgradation of industry, BMR, research, training and HR, especially for the SME sector and continuation of the regionally competitive energy tariff. He expressed the hope that the European Union would extend the GSP Plus status for another 10 years to provide support to the textile and other industrial sectors of Pakistan. He thanked the delegation for sparing time to visit Pakistan.
Source: BOL News
High net worth individuals will also be subject to a "poverty alleviation tax," Sharif announced after chairing a meeting of his economic team on the federal budget for the next fiscal year 2022-23. Pakistan Prime Minister Shehbaz Sharif on Friday announced a 10 per cent super tax on large-scale industries like cement, steel and automobile, a move he said was aimed at tackling spiralling inflation and saving the cash-strapped country from going "bankrupt." High net worth individuals will also be subject to a "poverty alleviation tax," Sharif announced after chairing a meeting of his economic team on the federal budget for the next fiscal year 2022-23. Our first motive is to provide relief to the masses and to reduce the burden of inflation on the people and facilitate them, Sharif said, Geo TV reported. Our second motive is to protect the country from going bankrupt," he said, adding that it has been devastated due to the "incompetency and corruption" of the previous Imran Khan-led government. The sectors on which this super tax will be levied include cement, steel, sugar, oil and gas, fertilisers, LNG terminals, textile, banking, automobile, cigarettes, beverages and chemicals, according to the Dawn newspaper. Sharif explained that other motives included stabilisation of the economy. These aren't just words, this is the voice of my heart and InshaAllah we will be able to achieve all these targets, he said. He said history had witnessed that in difficult times, it was the poor people who always made sacrifices. "Today, it is time for the affluent citizens to do their part. It is their turn to show selflessness. And I am confident that they will contribute fully to play their part," Sharif said. He said the institutions whose job is to collect tax should take from the rich and give to the poor. Those whose annual income exceeds Rs 150 million will be subject to 1 per cent tax; for Rs 200 million, 2 per cent; Rs 250 million 3 per cent; and Rs 300 million will be taxed 4 per cent of their income, the Dawn report said. Meanwhile, the Pakistan Stock Exchange's benchmark KSE-100 index witnessed a 4.81 per cent drop after Sharif's announcement, it said. The premier on Thursday had warned that the country may witness more difficult times as it struggles to steer itself out of the ongoing economic crisis. Sharif said that his government faced an uphill task to revive a stalled assistance programme by the International Monetary Fund (IMF) due to the broken promises with the global lender by the previous Imran Khan-led government. Sharif, who came to power in April after Khan's government was toppled through a noconfidence vote, made it a priority to revive the IMF programme as it would unlock several avenues to access loans from different sources. After many meetings and hiccups, the two sides on Tuesday night reached a broader understanding to restore the package, providing a much-needed boost to Pakistan's economy. The premier, however, said that the economic situation would not improve overnight once a deal with the IMF was signed. "Will prosperity come overnight after an agreement is signed? Not at all, (but) we have to strengthen our financial position, he said.
Source: Business Standard
China displaced the US to gain top position in terms of apparel retail market size during COVID-19 years of 2022 and 2021, mainly owing to milder impact of the pandemic compared to the world’s largest economy. It is projected that China would gain further lead over the US by 2025 because the market size growth will be more than double for the Asian giant. The US was much ahead of China in 2017, when apparel retail market size was $327.61 billion for the US and $235.30 billion for China. American market size grew to $332.86 billion in 2018 and $337.52 billion in 2019. But the market size shrunk to $252.90 billion in 2020 due to the pandemic and frequent lockdowns, according to Fibre2Fashion’s market insight tool TexPro. The market size recovered to $282.89 billion in 2021 and is likely to reach $290.40 billion till 2025, growing at a CAGR of 2.80 per cent during 2020- 2025. China’s apparel retail market size increased to $258.83 billion in 2018 and further to $283.42 billion in 2019. The pandemic had disrupted the Chinese economy too and its market size fell to $264.92 billion in 2020. But China bounced back to $284.70 billion in 2021, due to milder impact of COVID-19, as per TexPro. The market size is expected to reach at $372.13 billion in 2025, growing at a CAGR of 7.03 per cent during 2020-2025. Global apparel market size was $1387.66 billion in 2017, which grew to $1450.90 billion in 2018 and $1518.81 billion in 2019. It shrunk to $1263.67 billion in 2020. But the market size increased to $1352.42 billion in 2021. It is projected to reach $1574.88 billion in 2025, growing at a CAGR of 4.5 per cent during 2020-25.
Source: Fibre 2 Fashion
Pakistan’s Finance Ministry on Sunday said that their deal with International Monetary Funds (IMF) will be sealed by tomorrow as the organization plan to hand over the economic and financial policy for the renewed deal providing economic relief package to Islamabad. Pakistan Finance Minister Miftah Ismail in the National Assembly said that although the country is common with the negative comments made by the financial quarters it looks very likely that the restoration of the IMF programme is in the offing, ARY News reported. Moreover, Prime Minister Shehbaz Sharif had asserted that the terms with the International Monetary Fund (IMF) had been finalised and the deal will close soon, barring any other conditions set by the global lender. Earlier on Friday, the Shehbaz Sharif government increased the tax rates for the salaried class to fulfil the demand of the IMF. It had withdrawn the tax relief to the salaried class announced on June 10 and the Federal Board of Revenue (FBR’s) collection target was increased to Rs 7,470 billion, reported Geo News. On Personal Income Tax (PIT), the government raised a tax amount of Rs 80 billion as first, the government abolished tax relief of Rs 47 billion and then raised a tax amount of Rs 35 billion, so the FBR was going to collect Rs 235 billion from salaried class in the next budget against a collection of Rs 200 billion in the outgoing fiscal year. The Ministry of Finance high-ups disclosed to The News that all IMF’s demands on the fiscal front were almost fulfilled and now it was expected that the Fund staff would share a draft of the Memorandum of Financial and Economic Policies (MEFP) next week on Monday. The IMF and the Ministry of Finance as well as the State Bank of Pakistan are holding parleys continuously. Finance Minister Miftah Ismail also chaired a meeting related to the government’s strategy for hiking power tariffs, reported Geo News. The government slapped a 10 per cent super tax on 13 big industries including cement, sugar, steel, oil and gas, RLNG Terminal, textiles, banking, auto industry, tobacco, fertilizer, aviation, chemicals and beverages. The Fund has objected to the government’s estimates of allocating Rs 225 billion for Price Differential Claims (PDCs) for the next budget as the IMF assessed that it might escalate to over Rs 350 to Rs 450 billion. The government has proposed a tax on jewellery shops as on-premises of shops, it has been fixed at Rs 40,000 per shop of jewellery. There are nearly 30,000 jewellery shops and only a few shops are registered. The Withholding Tax on the sale of gold by consumers was cut to 1 per cent from 4 per cent, reported Geo News. The Imran Khan-led PTI government had made a commitment with the IMF for raising the tax amount of Rs 335 billion through an increased rate of slabs for the salaried class but the PDM-led coalition government convinced the IMF for collecting Rs100 billion less than agreed by the previous PTI-led government with the IMF.
Source: The Print
A new report from the International Labour Organization (ILO) highlights trends in employment, wages and productivity the Asian garment, footwear and textiles industry. Asia remains the garment factory of the world, yet the sector faces an array of challenges many of which have been accelerated by the COVID-19 pandemic, according to a new ILO report. Employment, wages and productivity in the Asian garment sector: Taking stock of recent trends reviews employment, wages and labour productivity in the Asian garment sector over the 2010-19 period. It highlights how the industry still accounts for 55 per cent of global textiles and clothing exports and employs some 60 million workers. However, challenges such as rising labour costs, production and process automation, ‘reshoring’ and ‘nearshoring’, as well as increased pressure to transition towards a more sustainable business model, with improved wages and working conditions are creating an uncertain future for the industry and workers alike. The situation has been exacerbated by the impact of COVID-19. “While in many countries the sector has seen growth in both wages and productivity, the relationship is not always clear and simple, as government policies and external forces can play a big part in shaping outcomes for workers and businesses,” noted David Williams, manager of the ILO’s Decent Work in Garment Supply Chains Asia programme . The report highlights how the sector’s evolution is following different trajectories across the region. While economic diversification and upgrading have reduced its importance in countries like China, Thailand and the Philippines, it remains the key economic driver in nations like Cambodia and Bangladesh. For decades, the sector has relied heavily on low labour costs to secure global market advantages. Real wages in the sector have increased in most countries although working conditions remain challenging in general, including long and intense working hours, poor occupational safety and health as well as violations of fundamental rights at work. Despite the high share of wage and salaried employment and the dominance of larger firms in most countries, a significant proportion of the sector’s workers also remain highly vulnerable, due to widespread informality and the temporary nature of their working arrangements. Gender pay gaps persist across the Asian garment sector. Female employees are overrepresented among the sector’s low pay workers, and countries with the lowest shares of female workers also have among the highest gender pay gaps in the garment sector. While labour productivity in Asia’s garment sector has risen in recent decades, it remains low relative to other manufacturing sectors. Few garment producing countries have successfully moved up the value-chain in apparel production, with most manufacturers remaining engaged in low-skilled ‘cut-make-trim’ operations. Data in the report does reveal a positive association between growth in labour productivity and wages in the sector, suggesting that investments in labour productivity may play an important role in helping elevate worker pay. Ultimately though, Williams argues that the industry’s future success will depend on mutually reinforcing investments. “Backed up by genuine support for social dialogue and collective bargaining and concrete incentives from brands, the industry can create a virtuous cycle in which higher wages drive higher productivity, and vice-versa,” he added.
Source: International Labour Organization
