The Goods and Services Tax (GST) Council’s two-day meeting concluded on Wednesday without any decision on extending compensation to states – for revenue loss on account of the regime’s implementation five years ago – beyond June 30. This was despite at least two dozen states raising the issue. The Council, however, took significant measures to simplify the structure of GST by revising rates on some goods and services and removing exemptions on several mass-consumption packaged items with effect from July 18. It deferred the proposal to tax online gaming at flat 28 per cent, on a par with gambling, and asked a group of ministers (GoM) to re-examine the matter by July 15. The Council will meet again in the first week of August, in Madurai, to take a decision on this. On the issue of compensation cess, while the Centre had agreed in principle to extend it until March 2026, many states (including some ruled by the Bharatiya Janata Party) had sought an extension of the regime for a few more years, or changes in the revenue-sharing formula to meet the shortfall. “Sixteen states spoke on issue of compensation cess. They broadly stated that the compensation can be continued for at least a few years, if not five years,” Finance Minister Nirmala Sitharaman said after the GST Council meeting. “Not all of them asked for an extension. Three or four spoke of evolving their own revenue stream to break from the compensation mechanism.” Chhattisgarh Finance Minister T S Singh Deo told Business Standard that the Council should have given a road map or guidance on the compensation, and not left the matter undecided. Since the compensation regime is to be discontinued from June 30, he said, the Council was expected to take it up on priority. Deo had written to Sitharaman on Tuesday, stating that the Council should rework the method for sharing of revenues by the Centre and states. Even states like Uttarakhand and Puducherry – both ruled by the BJP – had appealed for a relief, as their Budgets were severely stressed. Kerala Finance Minister K N Balagopal said the GST compensation mechanism for states should be extended to make good the revenue loss. “Despite a pitch from almost all states, there was no conclusion. We are expecting the Centre to come back with some solution to this,” he said. According to revenue growth data collated for the Council meet, only five of the 31 states and Union Territories – Arunachal Pradesh, Manipur, Mizoram, Nagaland, and Sikkim – had registered a higher revenue growth rate than the protected revenue rate for states under GST in 2021-22.However, overall revenue shortfall of all states had narrowed in FY22 when compared with the previous year. Puducherry, Punjab, Uttarakhand and Himachal Pradesh had recorded the widest gap between protected revenue and post-settlement gross state GST revenue in FY22. A senior government official explained that the compensation regime was ending on June 30 under law. “Now for any extension, the Constitution needs to be amended. That cannot happen overnight.” When GST subsumed 17 central and state levies from July 1, 2017, it was decided that states would be compensated for any revenue loss for five years (that ends on June 30, 2022). However, during the pandemic, states suffered losses and sought an extension for compensation cess, and the Centre is known to have decided to extend it until March 2026. This is to repay Rs 1.1 trillion borrowed in FY21 and Rs 1.59 trillion in FY22 to meet a part of the cess collection shortfall. On rate rationalisation and removal of exemptions on some packaged mass-consumption items like curd, lassi, buttermilk, foodgrains, cereals, honey, papad and a host of other packaged food items, the Council decided to make these taxable and put them in the 5 per cent bracket with effect from July 18. Hotel rooms with tariff below Rs 1,000 per night and hospital rooms with a daily tariff of over Rs 5,000, will not attract GST. The Council also suggested phasing out of tax exemption on services provided by the Reserve Bank of India (RBI) and the Securities and Exchange Board of India (Sebi). It also recommended withdrawing GST exemption available for cheques – loose or in the book form – and favoured a GST rate of 18 per cent. And, it agreed to hike rates on items like tetrapack, knife, printing ink, LED lights, and so on. On rate rationalisation and removing exemptions on Packaged curd, lassi, buttermilk, foodgrains, cereals, honey, papad and a host of packaged food items, the Council decided to make it taxable and May put them in 5 per cent bracket. Besides hotel rooms with a tariff below Rs 1,000 per night and hospital rooms with a daily tariff of over Rs 5,000, will not also attract GST. On apprehensions over these rate hikes and the withdrawal of exemptions, Sitharaman said: “Inflation is not the concern of any particular state. All ministers are aware. They are all looking at a system while keeping that in mind. So, the Council’s decisions have not been taken in isolation. Elected representatives who are part of the GST Council are fully conscious of the decisions taken.”
Suspense on online gaming
On the taxing of casinos, online gaming, horse racing and lottery at 28 per cent, the GST Council asked the GoM headed by Meghalaya Chief Minister Conard Sangma to re-examine the proposal, pending a consultation with stakeholders. The panel was asked to consider submissions of stakeholders again on the valuation mechanism and submit its report by July 15.
The GoM had recommended that online gaming be taxed at the full value of the consideration, including the contest entry fee paid by a player to participate in a game. In cases of race courses, it had suggested that GST be levied on the full value of bets pooled in totalisators and placed with bookmakers. It had also recommended that all games be taxed at the highest GST rate of 28 per cent – without any distinction between games of skill and games of chance.
Besides these, the Council also decided on Wednesday to form a separate GoM to examine the framework of a GST tribunal in view of pending litigation of GST-related matters.
Source: Business Standard
Several industries including textiles have hopped on to the gig economy bandwagon in India as per a special report on India’s gig and platform economy. The gig workforce is forecast to reach 2.35 crore workers by 2029-30. The role of technology, especially in the form of widespread smartphone use, in the rise of the gig economy was also highlighted. A gig worker is defined by the Indian Ministry of Labour as “a person who engages in income-earning activities outside of a traditional employer-employee relationship, as well as in the informal sector.” The gig economy has extended its presence noticeably in a host of industries like textiles, banking and financial services, electricity, gas and water, real estate, IT and ITES, education, and personal services, according to the India Brand Equity Foundation, which was quoted in the paper titled ‘India's Booming Gig and Platform Economy’. Vertical mobility can be enabled by the gradual upskilling of workers via digital platforms, which renders a positive impact on the ecosystem. The study, which was conducted by public policy think tank NITI Aayog, gives the example of fashion sellers on Myntra, a major Indian fashion e-commerce company. These fashion sellers are trained via an inhouse entrepreneurship programme and are able to become more successful as a result of their now-enhanced skills. The study also stressed on the need to improve transferable skills like effective communication and financial literacy, so that workers are provided with the opportunity for horizontal mobility as well. Among the several recommendations put forth by the study, transformational and outcome-based skill-building via digital platforms and socially inclusive measures like gender sensitisation and accessibility awareness programmes were emphasised for the benefit of gig workers.
Source: Fibre 2 Fashion
Polyester value chain felt pressure as the prices of raw materials like PTA, monoethylene glycol (MEG) and MELT decreased in India, after a decline in China. Down trend in crude oil and weaker demand from downstream industry weakened market sentiments. As a result, the prices of polyester and blended yarn decreased by ₹5-10 per kg in Ludhiana. A Ludhiana based trader Ashok Singhal told Fibre2Fashion, “Demand remained very weak as buyers do not want to take risk in current volatile market. Uncertain market conditions and fall in raw material prices led to ease in prices of polyester and blended yarn.” Yarn prices fell by ₹5-10 per kg in last couple of days. Weaker cotton also dampened sentiments in polyester value chain. Singhal said that the price of PTA, MEG and MELT came down further, following the declining trend in China. Indian companies follow Chinese prices of these material. Polyester staple fibre (PSF) may also ease by ₹5-6 per kg due to drop in raw material prices. In Ludhiana market, polyester-cotton blended yarn and virgin and recycled polyester yarn prices dropped by ₹5-10 per kg. 30 count PC combed yarn (48/52) was sold at ₹280- 295 per kg (GST inclusive), according to Fibre2Fashion’s market insight tool TexPro. 30 count PC carded yarn (65/35) was priced at ₹260-270 per kg. 20 count PC (recycled-O/E) PSF yarn (40/60) was traded at ₹190-200 per kg. 30 count poly spun yarn was sold at ₹185-195 per kg and 30 count recycled poly spun yarn at ₹170-175 per kg. High tenacity recycled fibre was priced at ₹95 per kg. The price of PSF steadied at ₹131 per kg. But the prices are likely to increase next month. India’s dominant manufacturer Reliance Industries Limited fixed prices of raw material as: PTA ₹96.80 (-2.70) per kg, MEG ₹58.50 (-5.10) per kg and MELT at ₹103.14 (-4.05) per kg, as per TexPro. Meanwhile, cotton prices improved in north India by ₹200-400 per maund of 37.2 kg after a sharp rise in futures trading. According to traders, cotton was sold at ₹8,800- 9,200 per maund in Bathinda, ₹8,400-8,800 per maund in Hissar and ₹9,000-9,200 per maund in Sriganganagar market.
Source: Fibre 2 Fashion
Easing compliance for taxpayers, the Goods and Services Tax (GST) Council has also given relief to the transport sector and small online sellers by waiving mandatory registration norms for small businesses. Changes in the law will come into force on January 1, 2023. The move will benefit approximately 120,000 small traders, officials said. For the transport sector, the council lowered GST to 5 per cent from 18 per cent on ropeways, renting of goods carriage, including fuel cost, and even exempted the foreign component of the tour package from GST. It also allowed composition dealers to undertake intra-state supplies via e-commerce operators, sources said. Composition dealers are those with a turnover of up to Rs 1.5 crore. They are required to pay GST at flat rates with input tax credit. At present, sellers supplying through e-commerce operators must be registered even if their aggregate annual turnover is below the threshold limit of Rs 40 lakh or Rs 20 lakh. Sellers who operate offline are allowed exemption from registration for supply of goods and/or services up to Rs 40 lakh or Rs 20 lakh. “Such a move will ensure parity between online and offline suppliers and will give a major push to ease of doing business. This is especially true for micro and small businesses, artisans and women entrepreneurs working from home,” one official said. E-commerce players favoured the move, saying these would boost the digital India agenda of the Centre.
“This decision by the council to bring parity for sellers on e-commerce platforms is commendable. This decision will boost the digital India agenda of the country. It would also allow small businesses to prosper,” said Rajneesh Kumar, chief corporate affairs officer, Flipkart Group. “With an estimated Rs 5 crore, small and medium industries are unable to sell online due to compulsory GST requirements. This game-changing measure can be an enabler for millions of small units, including artisans, boutiques and mom-and-pop stores, said Vidit Aatrey, chief executive officer (CEO) and founder, Meesho. First, such businesses would be required to declare their permanent account numbers (PAN) and principal place of business. Second, for each PAN, such unregistered entities can only declare principal place of business in only one state. Such businesses will not be permitted to make inter-state taxable supplies. The move also addresses revenue concerns. The availability of information on supplies being made by unregistered persons (based on their PAN) through various e-commerce operators, along with other requisite checks, will only boost compliance. It would lead to revenue augmentation, the official said.
Source: Business Standard
To make the Indian textile industry truly Atmanirbhar the government needs to set up Product Boards in the specific areas such as knitwear board in Tiruppur, home textiles board in Karur with industry representatives, said Raja M. Shanmugham, President, Tiruppur Exporters’ Association (TEA). He told KNN that India has everything which is required to become the world’s leading sourcing destination for textiles and apparel, however the industry is largely represented by the MSMEs and such support is much needed. According to me, it is the lack of connection between industry and decision makers that has been holding us back, which has hampered quick and effective action,” said Shanmugham. The TEA chief suggested that the existing structure of the export promotion councils should to disband as it has proved ineffective.
Source: KNN India
Sharp fall in ICE cotton has changed market scenario in India. ICE cotton has registered decline of up to 27.67 per cent in last week. Speculative selling in ICE cotton has turned the market from bullish to bearish. Premium on Indian cotton widened due to steep fall in ICE cotton, but short supply in next three months will limit the fall in cotton prices. ICE Cotton July 2022 contract declined by 27.67 per cent during last week. Other contracts also fell up to 18 per cent. According to market experts, free fall on Friday was due to sell-off by speculators. According to an analysis by the Confederation of Indian Textile Industry (CITI), the gap between Indian and ICE cotton has widened due to a sharp fall in the American market. On Friday, the price difference of MCX June contract and ICE July contract was 47.30 cents per pound. MCX cotton was costlier by 17.26 cents a pound against ICE cotton. This week, ICE cotton October 2022 contract further declined to 100.06 cents a pound on Tuesday. The December contract fell to 94.12 cents a pound. Therefore, ICE cotton October contract when converted to Indian currency was at around ₹62,000 per candy of 356 kg. In comparison, the price of India’s benchmark Shankar-6 cotton variety is currently ruling at ₹88,000-97,000 per candy in the spot market of Gujarat. In north India, the price of cotton is between ₹84,000 to ₹92,000 per candy depending on the quality. Chetan Bhojani, a Gujarat-based trader told Fibre2Fashion, “Indian cotton prices for October 2022 and later delivery are likely to feel pressure. But the prices may not see steep fall for spot and next 2-3 months delivery deals. June, July and August contracts of MCX cotton have seen upside trend in last few trading sessions, which shows good demand for the next few months.” According to Bhojani, while spinning mills will need cotton for regular consumption, there will be no supply of new cotton in the country till September. The supply of summer crop is also expected to be very meagre. The Indian government tried to give relief to the industry by removing the import duty, but it did not result in providing the much-needed relief from costlier cotton. According to trade sources, around five lakh bales of cotton was contracted for import after duty removal. Most of the import deals were done by south India based mills at around ₹90,000-100,000 per candy, which is much higher than the current price. The mills are getting supplies of imported cotton when domestic prices are easing now. According to Fibre2Fashion’s market insight tool TexPro, India imported 3.24 lakh MT fibre valued at $806 million during October 2021-March 2022. Monthly import noted at 48,760 MT in March, 42,007 MT in February, 52,254 MT in January 2022, 70,979 MT in December, 58,412 MT in November and 51,949 MT in October 2021.
Source: Fibre 2 Fashion
• India's current export growth momentum is unlikely to continue, given global headwinds emanating from the Russia-Ukraine conflict, disrupted global supply chains, and rising interest rates across economies India's merchandise exports may well have touched a record high in 2021-22 in value terms, but volumes grew at a slower pace, as per a study by India Ratings showed. Four categories including plastic and rubber articles, gems and jewellery, and optical, medical and surgical instruments reported a decline in exports in volume terms. Outbound shipments form these categories, however, reported a high double-digit growth in volume terms. “Analysis of merchandise exports data shows that value growth was more pronounced than volume growth in FY22…the export growth in the aforesaid four items was driven solely by higher value/prices, not volume/quantity…," said India Ratings in its study. While gems and jewellery reported a 50% growth in exports in value terms in 2021-22, volumes fell 30%. Similarly, exports of plastic and rubber articles in value terms grew 35.2%, but declined 18.6% in volume terms. Outbound shipments of optical, medical, and surgical instruments were up 21.6% in value terms but fell 8.8% in volumes, on a year on year basis. While the ‘Others’ category reported a 36.5% growth in 2021-22 in value terms, export volumes fell 25.1%. Ores is the only category, where exports grew in volumes, up 69.2%, but fell in value terms, down 23.2%. "However, while the value growth is more pronounced in case of items such as minerals and petroleum products, paper and related products, base metals, chemicals and related products and textiles and allied products, volume growth is more pronounced in case of items such as project goods, machinery and electronics items agriculture and allied products, transport equipment, sports goods and articles of stone/plaster/cement/ ceramic/ glass and glassware products," the report said. It said the current export growth momentum is unlikely to continue, given global headwinds emanating from the Russia-Ukraine conflict, disrupted global supply chains, and rising interest rates across economies. "Pent-up demand due to COVID-19 related lockdown, counter cyclical monetary/ fiscal stimulus in advanced countries, implementation of interim trade pacts with select countries, and rebate schemes all helped India’s merchandise exports to reach a record USD421 billion in FY22. However, the global environment is unlikely to remain supportive in view of the recent past," said the report. It added that the policy support and proactive measures such as the signing of new free trade agreements and expanding the Refund of Duties and Taxes on Exported Products scheme to other sectors such as pharmaceuticals, steel, organic/inorganic chemicals may provide succour to the ongoing merchandise exports growth momentum.
Source: Live Mint
Uzbek President Shavkat Mirziyoyev has directed the government to generate an additional $9 billion in revenue per year by processing yarn into finished products and attracting foreign brands, the President's press service said. The Uzbek leader set a goal to attract 50 popular foreign brands to the country's textile industry and announced new subsidies and incentives for exporters of textile products, Xinhua news agency reported. Mirziyoyev said on Wednesday that after an international boycott on Uzbek cotton was lifted early this year, foreign companies have been showing great interest in products produced in Uzbekistan. "If (foreign) brands are not brought to our regions, it will be difficult for domestic products to compete in the world market," he added. Since 2016, the country's volume of textile production has increased by five times, and exports by four times, reaching almost $3 billion, the press service said, adding that during this time reprocessing of cotton has risen to 100 from 40 per cent. However, the degree of processing yarn into finished products still remains low at 23 per cent, meaning the industry "is missing a $9 billion opportunity every year," the report said. Uzbekistan produces around 3 million tonne of cotton annually and plans to increase production by implementing new agricultural technologies, including drip irrigation.
Source: Investing
Many Vietnamese exporters that had procured orders for 2022 are concerned over a possible shortage of raw materials due to supply disruptions in China. The worst sufferers are the textiles, footwear, electronics and wood industries. Around 50-55 per cent of raw materials and accessories for the textile, garment and footwear industries originated from China. Phan Thi Thanh Xuan, vice chairwoman and general secretary of the Vietnam Leather, Footwear and Handbag Association, said businesses in the industry had to slow down export deliveries as their Chinese partners lacked empty containers for transporting raw materials and accessories. The supply of raw materials from China also decreased as many factories had to suspend operations, she added. Escalating fuel prices has also forced plastic materials prices to go up, influencing input costs of plastic product manufacturers. Some garment companies have had to postpone delivery of orders due to the lack of raw materials, according to Vietnamese media reports. "The most important task of enterprises at this time is to restructure production soon, find alternative sources of supply to offset the shortage of the current raw materials and outdated equipment. Enterprises also need to promote linkages, support and use madein-Vietnam products in production and business activities to reduce dependence on external resources," the ministry of industry and trade said. The ministry asked manufacturers to find new sources of supply outside China besides negotiating with partners to share risks and extend the delivery time.
Source: Fibre 2 Fashion
Bangladesh’s apparel exports to the United States may be hit due to a US import restriction on goods having any link to China’s Xinjiang region, according to industry insiders. The concern followed a recent directive by the Bangladesh Garment Buying House Association (BGBA) asking its members to be cautious about sourcing raw materials from the Xinjiang region. Tim Armstrong and Reza Patwary, who are conducting a regional assessment on behalf of the Indo Pacific Opportunity Project implemented by International Development Group and funded by USAID, met BGBA president Kazi Iftekher Hossain and general secretary Aminul Islam, according to a BGBA statement. The delegation informed the BGBA leaders that any garment produced in Bangladesh could not enter the United States if it is produced from imported fabric using Xinjiang cotton, it said. "The products will be seized if any connection to Xinjiang cotton is found," it said, adding exporters would not get their payments against their shipped goods if seized. They also held a meeting with the Bangladesh Textile Mills Association (BTMA). Former president of Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) Fazlul Hoque, however, said manufacturers are strictly monitoring the issue and many of them have already found alternatives to source yarn and fabric. Domestic knitters source yarn and fabric from the local market, he said. “But the woven sub-sector that meets the majority of its demand for fabric through import might face some challenges," he told an English-language daily in the country. He also claimed that the spinners would not face any challenges as they import raw cotton mostly from African countries, India and the United States.
Source: Fibre 2 Fashion
Bangladesh needs to align its business strategies with changing trends in the fashion industry and develop our capabilities to sustain the global competitive market. Our focus should be on capturing our share of the growing MMF-based products market Would it be an overstatement to say non-cotton is the future of fashion? No, according to current data, this claim is strongly backed by existing trends in the fashion world and the rising demand for clothing made from man-made fibres (MMF). Although 30 years ago, the share of cotton-made yarn was about 75% in the global market and 25% for the artificial one, the scenario has completely reversed. The demand for cotton has continuously declined over the years while the popularity of MMF or polyester has gradually gone up, changing the current global ratio of cotton to MMF to about 26:74. This clearly indicates a brighter prospect for artificial fabrics in the global fashion market in the coming days. This situation became more apparent to me during a recent trip to Germany, where I visited one of the largest international trade fairs for technical textiles and nonwovens in Frankfurt. I had the opportunity to lead a delegation of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) in the exhibition titled 'Techtextil'. The delegation, composed of BGMEA member factories including TRZ Garments Industry Ltd, Urmi Group, Khantex Fashions Ltd and Snowtex Group, which are specialised in manufacturing technical textiles-based garments, joined the four-day trade exhibition. Unlike other trade fairs where we generally plan to have business interactions and bag orders from new buyers, taking part in 'Techtextil' was about more than making business connections. It was about experiencing the realm of non-cotton fabrics and products, as well as technologies that are reigning in the fashion world. International exhibitors presented a wide range of technical textiles, functional apparel textiles and textile technologies, at the exhibition held from 21 to 24 June 2022. We saw manufacturers from all over the world showcasing their leading products and technologies for the apparel industry and other textile processing segments in the trade show, including textile products from high-tech fibres, functional apparel fabrics and smart textiles, to composites and nonwovens. It was a really tremendous experience for us as it provided us with the opportunity to grasp and gain valuable insight into the latest trends and technologies relevant to MMF product segment, while representing Bangladesh to the global buyers who came to the exhibition. We visited Techtextil at a time when our RMG industry is putting increasing emphasis on product diversification, especially encouraging a shift to non-cotton from cotton, because the growth of cotton-based products seems to have reached its peak in Bangladesh with little room left for growth, while the global demand for synthetic products is on the rise. Massive changes in consumer lifestyle, attitudes and eco-consciousness are driving the demand for MMF globally. Consumers increasingly prefer MMF-based products because of their 'easy-care taking' nature, functionality and competitive price. A recent fashion trend known as athleisure has created a demand for clothing designed for workouts and other athletic activities. Yet, they can be worn at the workplace or during casual/social occasions. This trend of cross-functional clothing is also driving the demand for polyester. Another reason for the preference for synthetic products is related to sustainability. MMF-based garments are durable, recyclable and reusable; thus, it meets the criteria of sustainable clothing. Even plastic bottles, which are harmful to the environment, are recycled to produce artificial fibres which are considered as green textiles. But the picture in our RMG industry is different, as around 75% of our products are cotton made, whereas the share of MMF-based products in international apparel markets is around 74%. According to a report titled "Scaling up Technical Textile and PPE in Bangladesh", the global technical textile market is projected to grow from $179.2bn in 2020 to $224.4 billion by 2025, at an average annual growth rate of 4.2%. If we look at our export basket, we find that 73% of our exports are limited to five basic items -- trousers worth $10.68 billion, T-shirts worth $7.24 billion, underwear worth $1.79 billion, sweaters worth $4.05 billion, and shirts worth $2.05 billion were exported in the financial year 2020-2021. These top five products account for 82.04% of Bangladesh's total RMG export earnings. These figures reveal that we have an immense potential of diversifying our high-value products like suits, blazers, lingerie, jackets, swimwear, sportswear, uniform, work-wear etc. We need to align our business strategies with changing trends in the fashion industry and develop our capabilities to sustain in the global competitive market. We have to focus more on capturing our share of the growing MMF-based products market. To do that, we have to put emphasis on gathering technical know-how about MMF product manufacturing. We need to have a supply of raw materials, upgrade our operations with proper technologies and have a management system. Besides this, we need to enhance our capability in innovation, design input services, trend analysis, product research and development. At this juncture, we need investment in technical textiles. We also need investment in the area of re-skilling and up-skilling our workers. Our share is only 6.26% of the global market (as per the WTO data in 2020), meaning Bangladesh has enormous potential to increase its share. For instance, if we produce and export high-value-added MMF products right now, it's possible to increase our total export by around 25% in value, which will gradually go up. So, considering both the local and global context, it's high time we took a turn from quantity to quality, from volume to value, by shifting to non-cotton value-added products to sustain in the long run.
Source: TBS News
UKFT, with support from Scottish Development International and the Department for International Trade, will be highlighting the sustainable and innovative solutions that UK textiles can offer buyers at Première Vision in Paris from July, 5-7, 2022. The United Kingdom is on an ambitious journey towards a circular fashion and textiles system. UK industry and researchers are co-creating innovations along the entire supply chain, pushing boundaries to create a planet and people-positive future. Through an eye-catching new stand design and digital content, one can learn more about the UK's unique craftsmanship, skill and heritage and creativity, as well as explore how UK textile designers, manufacturers and innovators can help companies across the globe achieve the UN’s Sustainable Development Goals in just eight years, UKFT said in a press release. A team of consultants and fashion experts will be available during the three days of the show to help buyers organise their visit, answer their questions and identify their problems, in order to guide them towards the right choices of materials and suppliers, and to assist them in building their collections.
Source: Fibre 2 Fashion
The war in Ukraine is stifling trade and logistics of the country and the Black Sea region, increasing global vessel demand and the cost of shipping around the world, according to a new report by the UN Conference on Trade and Development (UNCTAD). Ukraine’s trading partners are forced to turn to other countries for the commodities they import. The shipping and transport hurdles in the Black Sea region can be attributed to disruptions in regional logistics, the halting of port operations in Ukraine, the destruction of important infrastructure, trade restrictions, increased insurance costs and higher fuel price, UNCTAD said in its report entitled ‘Maritime trade disrupted: The war in Ukraine and its effects on maritime trade logistics’ published on 28 June. Shipping distances have also increased, along with transit times and costs. Grain prices and shipping costs have been on the rise since 2020, but the war in Ukraine has exacerbated this trend and reversed a temporary decline in shipping prices. The report added that between February and May 2022, the price paid for the transport of dry bulk goods such as grains increased by nearly 60 per cent. The Russian Federation is also a leading oil and gas exporter. “Confronted with trade restrictions and logistical challenges, the cost of oil and gas has increased as alternative sources of supply, often at more distant locations, are called upon,” the report said. Daily rates for smaller-size tankers, which are key for regional oil trading in the Black Sea, Baltic Sea and Mediterranean Sea regions, have dramatically increased. The higher energy costs have also led to higher marine bunker prices, raising shipping costs for all maritime transport sectors. According to the report, by the end of May 2022, the global average price for very low sulphur fuel oil had increased by 64 per cent since the start of the year. Taken altogether, these increased costs imply higher prices for consumers and threaten to widen the poverty gap. As part of the policy actions needed to keep global trade flowing, UNCTAD has called for urgent action to open Ukraine’s ports to international shipping so the country’s grain can reach overseas markets, at lower shipping costs. The organisation further said that continued collaboration is needed among vessel flag states, port states and other actors in the shipping industry to maintain all necessary services, including bunkering supplies, health services for sailors and certification of regulatory compliance. This will help to keep to a minimum the negative impacts on costs, insurance premiums and operations. Alternative ways of transport must be pursued and easing transit and the movement of transport workers – even temporarily – can reduce the pressure on cross-border trade and transit, as per UNCTAD. The organisation has also called for more investment in transport services and trade and transit facilitation as well as more international support for developing countries, especially the most vulnerable economies, as the war in Ukraine adds to the challenges posed by the COVID-19 pandemic and the climate crisis.
Source: Fibre 2 Fashion
