Officials told ET the new SOP will also allow the board to closely monitor the GST probe, including its progress and the line of investigation adopted, which will make officials more accountable and the process more transparent The Central Board ofIndirect Taxes and Customs (CBIC) will soon come out with a detailed standard operating procedure (SOP) for serving summons and notices under the goods and services tax (GST) regime, to prevent harassment of businesses. Officials told ET the new SOP will also allow the board to closely monitor the GST probe, including its progress and the line of investigation adopted, which will make officials more accountable and the process more transparent. They said that so far, it had been difficult for the department to draw the line in the absence of a clear code of action for officials. "We don't have any SOP under the GST for summons and notices, and these are two troublesome things," said one official, who did not wish to be identified. "Once there is an SOP in place, we can question any breach." The draft is almost final, the official said, adding that there have been detailed discussions with field formations and stakeholders, including businesses. In the past few months, there has been a surge in the number of tax notices being served by GST officials, summoning CXOs, finance chiefs and even chief executives to be physically present for a hearing. Businesses also ended up getting repeated summons. The official said the proposed SOP will also ensure there is no overlapping of notices between the central and state jurisdiction. Businesses had complained that sometimes they receive multiple notices on the same issue, making compliance difficult for them, apart from consuming a lot of their time. CBIC had been issuing circulars to officials from time to time in this regard. In May, the board directed its field formulations that tax authorities would face action if a taxpayer is forced to make a voluntary payment of tax during a search, and that recovery of dues should follow the due legal process after issuance of adjudication order, and not during searches. The move came after increasing complaints against the use of force and coercion by tax authorities for making "recovery" during searches or inspections
Source: Economic Times
There are no immediate indications about the impact of the recent political developments in Britain on the advanced India-UK negotiations for a free trade agreement, an official said There are no immediate indications about the impact of the recent political developments in Britain on the advanced India-UK negotiations for a free trade agreement (FTA) which aims at further strengthening economic ties between the countries, an official said. On July 7, British Prime Minister Boris Johnson announced his resignation as Conservative Party leader following an unprecedented mutiny from within his Cabinet and after being abandoned by his close allies in the wake of a series of scandals that rocked his government, triggering a leadership election for a new Tory leader who will go on to become his successor. In January, both countries formally launched talks for a free trade agreement, which aims to boost bilateral trade and investments. In such pacts, two countries either eliminate or significantly reduce customs duties on the maximum number of goods traded between them, besides easing norms for promoting investments and services trade. The development in the UK has happened very recently We have not received any indications about having any effect of resignation on the ongoing FTA talks. Since the Conservative Party is still going to be in the government, we do not see any immediate problem and we have not heard of any reason which may affect the strong bilateral partnership between India and the UK, the official said. The official added that the talks are at an advanced stage and both sides have agreed on many chapters of the proposed pact. Getting a good, fair and equitable trade deal that would boost exports and create numerous jobs across India is the priority, the official said. When asked about meeting the deadline of concluding talks, the official said: FTA negotiations are very complex area and they involve a lot of careful assessment of different elements of FTAs and we continue to do that in right earnest both sides and we will put in our best effort to meet these very challenging deadlines. In April, Prime Minister Narendra Modi and his UK counterpart, Boris Johnson, had set the deadline for Diwali for the negotiating teams to conclude the FTA talks. Diwali falls on October 24 this year. The UK is also a key investor in India. New Delhi has attracted foreign direct investment of USD 1.64 billion in 2021-22. The figure was about USD 32 billion between April 2000 and March 2022. India's main exports to the UK include ready-made garments and textiles, gems and jewellery, engineering goods, petroleum and petrochemical products, transport equipment and parts, spices, metal products, machinery and instruments, pharma and marine items. Major imports include precious and semi-precious stones, ores and metal scraps, engineering goods, professional instruments, non-ferrous metals, chemicals and machinery. In the services sector, the UK is one of the largest markets in Europe for Indian IT services.
Source: Business Standard
Due to high input cost, paying hefty funds for cleaning the discharged water and increased rates of the raw material, the Ludhiana Dyeing Association has decided to increase the rates of dyeing with immediate effect. The dyeing of polyester and acrylic is increased to Rs 5 per kg while PC dyeing will be increased Rs 8 per kg. The move has jolted the knitting and textile industry as the cost of yarn will further witness a sharp increase. Ashok Makkar, president of the association, said the step had to be taken as it was being very difficult for dyeing units to run the show with increased input cost, paying too heavy for cleaning the CETP water etc. “We have already put in so much efforts in bringing common effluent treatment plant (CETP). In addition, the units are paying for cleaning of discharged water. How can we bear this much financial burden? At times due to shortage of power, we run the dyeing units on generators, which is highly expensive. After holding several meetings, we have come to the conclusion of increasing the dyeing rates,” said Makkar. Another dyeing unit owner, Bobby Jindal, said dyeing units had to spend in crores in getting the CETP. “On top of it, the cost of raw material, dyeing colours etc has also increased. We are also here to do business and can not put from our pockets. But yes ultimately, the consumer will have to pay for it as yarn rates will be increased. The end buyer is the customer, who will bear the brunt”, said Jindal.
Source: Tribune India
The report revealed that since the onset of 2020, the textile industry has been experiencing massive losses as the industry is unable to raise product prices due to the pandemic. Due to the shrinkage of global markets and subsequent fall in demand, Chinese Textile Industries suffered profit erosion throughout the pandemic period and will continue to bear the loss due to rising raw material prices, read a report by First Finance and Economics Daily of China. The report revealed that since the onset of 2020, the textile industry has been experiencing massive losses as the industry is unable to raise product prices due to the pandemic. Moreover, orders are 40 per cent lower than last year, the report added. According to the estimate of the China Chamber of Commerce for Import and Export of Textiles, the scale of China's textile and apparel order transfer was about 6 billion US dollars in the first half of 2020, of which the cotton textile order transfer scale was about 1 billion US dollars. Twenty-six per cent of companies underlined that the proportion of outbound customer orders was more than 30 per cent, and 39 per cent of companies said that the proportion of outbound customer orders was between 10 per cent and 30 per cent, the report by First Finance and Economics Daily of China stated. Meanwhile, more than 90 per cent of the enterprises said that the current order schedule has been shortened compared with the second half and fourth quarter of last year and almost 59 per cent of the companies' orders are scheduled for 13 months. As per the import and export data, the growth rate of China's apparel and home textile products showcased a relatively obvious slowdown trend as the Industry insiders revealed that this year most garment factories' orders will be completed by September. Due to industrial transformation and upgrading, changes in the layout of the industrial chain, and the impact of tariffs imposed by the United States on China, there was an outflow of Chinese export orders before the outbreak of the COVID epidemic, however, the production continued only till November. According to data from the US Department of Commerce, China's share of US cotton textile and apparel imports in 2021dropped from 23.5 per cent in 2019 to 17.1 per cent, and its share of cotton apparel imports dropped from first place in 2019 to second place, and Vietnam became the second major supplier. China's share of US cotton textile and apparel imports slipped to 15.3 per cent, which has been surpassed by Vietnam, Bangladesh followed by India. In fact, the main reason for the poor market was the lack of demand as the consumer market was frozen due to epidemic prevention and control and the shrinkage of foreign markets. Cotton textile orders are mainly transferred to India, and clothing orders are mainly transferred to countries such as Bangladesh, Vietnam, India, Indonesia, and Cambodia. The China Chamber of Commerce for Import and Export of Textiles recently conducted a survey on enterprises, and 85 per cent of the enterprises indicated that the outward migration of customer orders was obvious, the report read.
Source: Economic Times
The federation has plans to bring together such mills across the country to collectively address the needs of the industry, identify markets in different parts of the world, and direct its members to cater to places that need their products and services, Jayabal said. More than 200 small mills involved in recycling cotton waste into yarn and fabrics across Tamil Nadu have come together and formed a recycle textile federation. "Creating awareness among our members on the markets where our products and services have demand is our top focus," said president of Recycle Textile Federation Jayabal in a statement on Sunday. Headquartered in Coimbatore, the federation presently has 230 members representing various mills from Tamil Nadu, he said. The fedeartion has plans to bring together such mills across the country to collectively address the needs of the industry, identify markets in different parts of the world, and direct its members to cater to places that need their products and services, Jayabal said. Stating that there are 400 mills in Tamil Nadu that process/recycle cotton waste and PET bottles into yarns and garments, with Coimbatore and Tiruppur having 180, he said the federation would first strive to bring them together and function as an entity that would represent their common needs and demands and would also go for national and international coordination. Sathyaseelan was elected vice-president and Manoharas as secretary, Raghu as joint secretary and Ranganathan as treasurer, he pointed out.
Source: Economic Times
Sale of the Indian national flag, irrespective of whether machine made or of polyester, is exempt from the Goods and Services Tax (GST), the finance ministry said on Friday. Hand-woven, hand-spun national flags made of cotton, silk, wool or Khadi are already exempt from GST. In an office memorandum, the Revenue Department clarified that polyester or machine-made tricolour too would be exempt from the levy following amendments to the 'Flag Code of India, 2002' in December last year. "It has been clarified that the sale of the Indian National Flag, adhering to the Flag Code 2002 and its subsequent amendments, is exempt from GST," Finance Minister Nirmala Sitharaman's office tweeted. The clarification from the finance ministry comes in the backdrop of the 'Har Ghar Tiranga' initiative under the 'Azadi ka Amrit Mahotsav' -- celebrating 75 years of India's independence. It envisages inspiring Indians everywhere to hoist the national flag at their home. The idea behind the initiative is to invoke the feeling of patriotism in the hearts of the people and promote awareness about our national flag. The Flag Code of India brings together all laws, conventions, practices, and instructions for the display of the national flag. The Flag Code of India, 2002 was amended in December 2021, and tricolour made of polyester or machine-made flags have been allowed. Now, the tricolour can be made of hand-spun and hand-woven or machine-made, cotton/polyester/wool/silk/khadi bunting.
Source: Live Mint
RBI governor says effort has been to ensure a ‘soft landing’ Retail inflation will likely ease gradually in the second half of this fiscal, “precluding the chances of a hard landing” or recession, Reserve Bank of India (RBI) governor Shaktikanta Das said on Saturday. “Our endeavour has been to ensure a soft landing (a moderation in inflation closer to targets with only a moderate slowdown in output growth),” Das said, indicating that cooling price pressure may reduce the need for aggressive monetary action. Delivering a speech at the first edition of the Kautilya Economic Conclave in Delhi, the governor said the RBI will continue to calibrate its policies with the overarching goal of preserving and fostering macroeconomic stability. “In this endeavour, we will remain flexible in our approach while being cogent and transparent in our communication,” he added. At this point of time, the supply outlook appears favourable and several high-frequency indicators point to resilience of the recovery in the June quarter, the governor said. Das’ statement may lead to expectations of revisions in inflation projections in coming policy updates. The central bank last month raised its inflation projection for FY23 to 6.7% from 5.7% earlier. It had said inflation could stay above 6% in the first three quarters of this fiscal. About three-fourths of the revision in June was triggered by geopolitical spill-over to food prices, Das said. Retail inflation in India dropped to 7.04% in May from an eight-year high of 7.79% in the previous month. It still remained above the central bank’s tolerance band of 2% to 6% for a fifth month. As for growth, the RBI had in April revised down its FY23 forecast for the country to 7.2% from 7.8%, which was more conservative than the International Monetary Fund’s projection of 8.2%. Central banks across the globe continue to grapple with runaway inflation, exacerbated by supply-chain disruptions in the wake of the Russia-Ukraine war that caused the commodity prices to spike. The RBI, too, acted by raising the benchmark lending rate by 90 basis points since May. The governor highlighted that the impact of global factors on Indian inflation has risen over the past three years—initially due to the pandemic and now due to the Ukraine war. “While global factors have always been an important driver of domestic inflation, what we have witnessed over the past three years is the more protracted and sizeable role of global factors in proportions not witnessed in decades. These factors have an even more conspicuous effect on net commodity importing countries like India,” Das said. These global factors, Das stressed, present difficult policy trade-offs between price stability and stabilising economic activity, especially when the economy is recovering from repeated shocks. They exacerbate macroeconomic and financial stability challenges from volatile capital flows in a financially globalised world. These recent developments “call for greater recognition of global factors in domestic inflation dynamics and macroeconomic developments, which underscore the need for enhanced policy coordination and dialogue among countries to achieve better outcomes”, Das said.
Source: Financial Express
In a veiled reference to the 1991 reforms in the wake of the balance of payment crisis, which, critics argue, had to be undertaken out of compulsion, the Prime Minister said: “Earlier reforms used to take place when the governments of the day didn’t have any other option. Reform, for us, is not a necessary evil but a win-win choice in which lies the larger interest of the country.” Prime Minister Narendra Modi on Friday asserted that his government has been promoting the private sector as a ‘partner in progress’ and that this trust for both the private and public sectors has brought about immense optimism about the India growth story. Speaking at the first Arun Jaitley memorial lecture, the Prime Minister stressed that his government hasn’t allowed ‘populist impulses come in the way of policy-making’. It has shown the difference between what it means to make policies for the greater good of the country and what it means to resort to mindless populism, he added. “When the Covid broke out, many countries in the world announced bailout packages for a demand-driven recovery. There was immense pressure on us. But we took a different approach,” he said. “We adopted a ‘people-first’ approach, under which we sought to protect the vulnerable individuals as well as MSMEs… Now, we can clearly see the difference between the recovery in India and that in other countries,” he added. Several advanced countries, including the US and in Europe, that had rolled out massive bailout packages to spur demand are not just witnessing runaway inflation but are staring at recession. In a veiled reference to the 1991 reforms in the wake of the balance of payment crisis, which, critics argue, had to be undertaken out of compulsion, the Prime Minister said: “Earlier reforms used to take place when the governments of the day didn’t have any other option. Reform, for us, is not a necessary evil but a win-win choice in which lies the larger interest of the country.” This government isn’t undertaking reforms under compulsion; rather they are matter of conviction for it, Modi said. So, in the past eight years, whatever reforms the government has undertaken, those have created scope for newer reforms, he said. He listed out a series of reforms, including the roll-out of the goods and services tax, the Insolvency and Bankruptcy Code, opening up of critical sectors, especially space, for private participation and reduction in India Inc’s compliance burden. Stressing the government’s resolve to focus on inclusive growth, Modi asked: “Is real growth possible without inclusion? Can inclusion be thought of without growth?” He highlighted steps taken by his government to promote inclusive growth including nine crore free cooking gas connections, construction of 10 crore toilets and opening of 45 crore Jan Dhan bank accounts in the last eight years.
Source: Financial Express
Loans amounting to Rs 3.32 trillion were sanctioned under the scheme, and till April 30, 2022, Rs 2.54 trillion had been disbursed. The Emergency Credit Line Guarantee Scheme (ECLGS) has helped revive credit growth to the MSME sector that was hit hard due to the pandemic. Loans amounting to Rs 3.32 trillion were sanctioned under the scheme, and till April 30, 2022, Rs 2.54 trillion had been disbursed. Private sector banks took the lead in disbursal. While the gross nonperforming assets ratio in the MSME sector has moderated to 9.3% in March 2022 from 11.9% in June 2021, stress in the sector remains.
Source: Financial Express
Arunachal Pradesh governor's wife Neelam Misra visited Oyan and Sille in East Siang district Arunachal Pradesh governor's wife Neelam Misra visited Oyan and Sille in East Siang district on Friday to celebrate the Azadi Ka Amrit Mahotsav through the traditions of loin loom weaving. She visited MG Community Skill Development & Training Centre, Oyan and Sille Farm of the Textiles and Handicrafts department and interacted with the local weavers, who are practising the age-old skill of loin loom weaving. Speaking on the occasion, Mishra said that she is reaching out to the womenfolk of the state particularly, the weavers to celebrate the special occasion of Azadi Ka Amrit Mahotsav. Paying tributes to the unsung heroes of the freedom movement of the state, particularly in the Anglo-Abor War, Mishra said, "Our celebrations become more meaningful when we integrate it with our culture and attire. In our State, loin loom cloths being the soul of our culture enhance the value of our celebrations." She said that advanced knowledge of textiles has been there with the people since the Indus Valley civilization as India was the Viswa Guru in the field of textiles also. "This pursuit, largely practised by women, has been the foundation of our economical growth. Since time immemorial, loin loom weaving has been an important source of the socioeconomic empowerment of women," she said and appealed to the people not to let this tradition fades away at the pace of modernization. Mishra added that the traditional practice of loin loom weaving by using natural fibre would contribute to nation-building and with the concerted effort of every woman; it would give a strong foundation to the Atma Nirbhar Bharat vision. She exhorted the people to promote and popularize loin loom and contribute towards creating world-class textile products for our sustainable development. Impressed by Eri Silk weaving, Mishra said that Eri Silk products have a huge market, a Raj Bhawan communiqué informed here on Saturday.
Source: Sentinel Assam
The tax authorities will also be able to better analyse the trends and availment of input tax credit across sectors and weed out fake ITC claims, which had emerged as a major issue for the government. Fake ITC worth over Rs 50,000 crore was detected in the past one-andhalf years alone. The GST e-invoicing will likely be mandatory for firms with a turnover of over Rs 5 crore from January 1, 2023, down from the current threshold of Rs 20 crore to further plug leakages, ensure better compliance and policy formulation, Central Board of Indirect Taxes chairman Vivek Johri told FE. “I think expanding the coverage to over Rs 5 crore will give us very good data for policy making. We can analyse the data at the level of four-digit HS (Harmonised System) and get some sense of which are the sectors which are contributing more to the GST, which have higher potential but are not contributing enough,” Johri told FE. The tax authorities will also be able to better analyse the trends and availment of input tax credit across sectors and weed out fake ITC claims, which had emerged as a major issue for the government. Fake ITC worth over Rs 50,000 crore was detected in the past one-and-half years alone. E-invoicing for business-to-business (B2B) transactions started with a very high threshold from October 1, 2020, when firms with a turnover of over Rs 500 crore came under its ambit. In the second phase, businesses with a turnover exceeding Rs 100 crore were mandated to issue e-invoices from January 1, 2021. In the third phase, firms with a turnover of over Rs 50 crore had to generate e-invoices from April 1, 2021. It has been extended to firms with a turnover between Rs 20 crore to Rs 50 crore from April 1, 2022. The e-invoice has resulted in bringing in more taxpayers into the net which rose from about 1.25 crore in October 2020 to about 1.38 crore at present. “Once one can construct all the returns based on e-invoices, the need for invoice matching itself goes away and yet have a foolproof system of return filing. So, that is a very big advantage. E-invoice will (eventually) become universal,” Johri said. These system reforms have played a big role in the recent surge in GST collections from an average of Rs 0.9 trillion in FY18 to Rs 1.23 trillion in FY22 and it may average Rs 1.4- 1.5 trillion in FY23, giving some relief to states as a five-year guaranteed GST compensation for shortfall has ended on June 30. One of the criticisms of GST after it was rolled out on July 1, 2017 was that the tax authorities have not been able to streamline the return filing process and were not able to do invoice matching between the buyer and supplier because of which there was a fear that there may be revenue leakages and non- compliance was going undetected. “With an intent to widen the scope of e-invoicing and promote automation of GST returns, the government is planning to reduce the threshold of raising e-invoices from 20 crore 5 crore. This phased move may burden small enterprises, however, it would deter the generation of fake invoices, thereby leading to better tax compliance and collections,” said Tanushree Roy, Director-Indirect Taxation, Nangia Andersen LLP. The lowering of the threshold for e-invoicing would also significantly expand the number of GST registrants as the number of entities in the bracket of Rs 5 crore to Rs 20 crore would be very high, said MS Mani, Partner, Deloitte India. “This would help in expanding the base of taxpayers, which is one of the stated objectives of GST,” Mani added.
Source: Financial Express
An independent law firm investigated the circumstances and motivations that led to the data irregularities in EODB 2018 and EODB 2020. The preliminary findings of the EODB 2018 had revealed that China had dropped seven places from the prior year’s report to the rank of 85. “Magic mirror on the wall, who is the fairest one of all?”— a line from Snow White typifies the countries’ reactions each time the World Bank (the Bank) released its Ease of Doing Business (EODB) report. The authors have earlier written that the methodology of the EODB report lay more in the de jure than in the de facto zone (bit.ly/36V7HEg). Indisputably though, the EODB report had a global knock-on effect. Governments or their oppositions capitalised on a favorable or unfavorable rank. The focus of policymakers was to design policies that would improve their rankings. The EODB rankings determined aid and investment inflows in countries. This stimulated, in the words of Høyland et al, a ‘rank- seeking behavior’. It was exactly this behavior that caused the data irregularities in both EODB 2018 and EODB 2020. An independent law firm investigated the circumstances and motivations that led to the data irregularities in EODB 2018 and EODB 2020. The preliminary findings of the EODB 2018 had revealed that China had dropped seven places from the prior year’s report to the rank of 85. Various methodologies to boost China’s ranking were discussed. One method discussed was to include data from Taiwan, China and Hong Kong SAR, China into China’s data. By incorporating Hong Kong SAR, China’s ranking in EODB 2018 would rise to 70, eight spots higher than the previous year. However, this idea was shot down for “political reasons”. Another method discussed was to use the higher scoring of the two cities included in China’s data (Beijing and Shanghai) rather than a weighted average as was typically used for countries with data collected from two cities. However, this would increase the ranking for China, and other peer countries. It was finally decided to unlock the report’s underlying data tables and give higher scores to China for the three indicators of starting a business, legal rights—getting credit, and paying taxes. These changes boosted China’s scores and ranking by seven places to 78, the same ranking that the country had in EODB 2017. The pressure from China worked because at this time the Bank was consumed with a capital increase campaign. The Bank would be in “very deep trouble” if the campaign had missed its goals. Reimbursable Advisory Services (RAS) contracts played the focal role in the irregularities of the EODB 2020. The RAS projects are paid advisory and analytic services provided by the Bank to middle- and high-income countries upon request from the member countries. RAS projects focus on a wide variety of subjects related to economic development. Some RAS projects focus on improving economic conditions underlying the indicators that comprise the EODB report. This was a clear conflict of interest situation. Saudi Arabia had executed a series of significant RAS contracts with the Bank, some of which were focused on issues germane to the EODB report. By elevating Saudi Arabia to first place in the Top Improvers list, the Bank would demonstrate the effectiveness of its efforts and validate the amount of money that Saudi Arabia had spent on RAS projects. In August 2019, the Doing Business team generated a draft of its Top Improvers list for EODB 2020 that had Jordan as the top reformer with Saudi Arabia placed second. On September 30, the Doing Business team altered Saudi Arabia’s data to boost the country’s ranking past Jordan. The score of Legal Rights index was increased to 4 from 3, by adding a point regarding the treatment of debts. The team also reduced the compliance time for the newly enacted Value Added Tax. The Bank’s action, which catalysed the independent probe of the data irregularities by an outside law firm, is undoubtedly commendable and assuring. However, the irregularities and ethical issues thrown up by the investigation had damaged the legitimacy of the EODB report. In September 2021, the Bank announced its decision to discontinue the EODB report. Houndmouth’s lyrics summarise the situation, “you’re gone but you’re not forgot, … you flipped the script, and you shot the plot…I remember when your neon used to burn so bright and pink”. The Bank is now working on a compendium of indicators to assess the business and investment climates of economies worldwide until the launch of the new Business Enabling Environment project. The interim period should not cause a torschlusspanik (fear) of a door closing in countries that are keen to invite FDI and ODA. Countries can build their own matrices for reform and their impact assessment. India’s Department of Industrial Policy and Promotion already undertakes such an exercise for the states and the UTs. This can be scaled up to include central government reform schemes. Trade units of Indian missions abroad, manned by business/academic experts, can use these matrices to market India to foreign businesses. The authors are confident that with their own benchmarks and without the ‘tyranny’ of international ranking systems, India may come across as a more attractive destination for foreign businesses. The authors are respectively, chief commissioner, CBIC, and director, International Anti-Corruption Academy, Austria.
Source: Financial Express
Envoy stresses need for expanding trade with Pakistan beyond traditional goods. Indonesian Ambassador Adam Mulawarman Tugio has said that Indonesia can play a significant role in providing economic and trade opportunities for Pakistan and help connect it with the huge market of Association of Southeast Asian Nations (Asean). “There is a need for trade expansion with Pakistan beyond traditional products and focus on other sectors, and simultaneously for Islamabad to expand its presence in the Asean market,” the envoy said during a meeting at the Lahore Chamber of Commerce and Industry (LCCI). Tugio emphasised that regional trade connectivity was vital for the global economy and the conclusion of a free trade agreement (FTA) would provide benefits as well as improve economic growth. He underscored the need for exploring the potential of Islamic economy since one-quarter of the world population was Muslim. “Action must be taken to capitalise on the benefits of D-8 cooperation among eight Muslim countries which include Indonesia, Pakistan, Bangladesh, Egypt, Iran, Malaysia, Nigeria and Turkey.” The envoy emphasised that there were significant opportunities to strengthen bilateral trade between Indonesia and Pakistan. Along with the import of palm oil, “we should also improve our mutual trade cooperation in textile, pharmaceutical goods, herbal medicine, spices and other important areas”. Speaking about Indonesia’s ban on the export of palm oil, Tugio stated that Jakarta temporarily imposed restrictions due to price spike and shortage of palm oil in the domestic market, which made it extremely difficult for the locals to purchase cooking oil. “The restriction has now been lifted and palm oil export has resumed to the entire world, including the immediate supply of 10 containers of edible oil to Pakistan.” The ambassador announced that the first “Indonesia Corner” would be established at the University of Peshawar and another such corner may be set up in Lahore to strengthen cultural ties and collaboration in the education sector. He stated that the Indonesian Embassy, in partnership with the National Institute of Folk and Traditional Heritage (Lok Virsa), would host a cultural exhibition titled “A Night at Museum” to showcase the confluence of civilisation between Indonesia and Pakistan. He declared that every effort would be made to assist the business community in fostering closer trade and economic ties. In his remarks, LCCI President Mian Nauman Kabir urged the two Islamic nations to further develop their trade and commercial ties, particularly in the fields of pharmaceutical products and surgical equipment. He stressed the need for cooperative ventures between Pakistan and Indonesia to develop bilateral trade. Kabir suggested that Pakistan-Indonesia trade and economic relations could be further strengthened through the exchange of business delegations, organising joint trade exhibitions and taking equal benefit of each other’s experiences.
Source: The Tribune
The British government, through the UK-Ghana partnership for Jobs and Economic Transformation (JET), is supporting the government to transform sectors of high potentials, including the garments and textiles industry, the British High Commissioner to Ghana, Harriet Thompson, has said. She added that the programme was helping to create the policy environment to drive investments into those sectors to operate at their fullest potentials, generate wealth for the country and most importantly create the needed jobs for the people. Speaking on Tuesday during a facility tour of the Volta Star Textiles Limited (VSTL) in the North Tongu District of the Volta Region, she said her team was helping to lead the discussions to identify the right investors for the factory in area of financing to enable the factory return to its former days of full operations and production. The factory, whose fortunes had been dwindling in the past years, employed 750 workers instead of about 2,000 workers at full plant capacity. Member of Parliament for North Tongu Constituency, Samuel Okudzeto Ablakwa, said discussions were far advanced with UK investors who had expressed interest in revamping the facility to provide jobs for not only people of North Tongu area, but the nation at large for national transformation as workers of the factory came from across the country. He said the factory, which sits on a 65 acres of land with about only 30 per cent workforce, was under utilised due to lack of capital injection, hence there was the need for space expansion to boost the industrialisation drive of the country. He disclosed that the British High Commissioner had also indicated that the neighbouring Akosombo Textile Limited (ATL) would also feature under the British Trade Portfolio which they were seeking to increase under the new Ghana-UK trade agreement. He expressed optimism that the strategic investors would soon arrive from Britain to help revamp the factory to create more jobs for the people. Chief of Dorfo Traditional Area, Togbe Agbohla VI, said the collapse of the factory had had negative impact on livelihood in the community, especially women and children, forcing some to drop out from schools while the youth engaged in various social vices. He appreciated Mrs Thompson for the visit to Juapong to assist in addressing the current unemployment challenges in the district and by extension the nation. Togbe Agbohla VI and his elders pledged their support to assist the initiative by Mrs Thompson to help alleviate poverty in the area.
Source: Business Ghana
A year after the UK-Vietnam Free Trade Agreement (UKVFTA) came into effect in early 2021, trade between the two countries has shown significant growth despite the impact of the Covid-19 pandemic, said an official of the Ministry of Industry and Trade (MoIT). Accordingly, trade between Vietnam and the UK reached US$6.6 billion in 2021, an increase of 17% on the year and equivalent to the pre-pandemic period. While Vietnamese export to the UK rose 16.4% year-on-year to US$5.7 billion, UK’s export to Vietnam also witnessed a gain of 23.6% to nearly US$850 million. In 2021, products imported from the UK with the highest growth rate respectively were common metals (426%), phones and components (219%), textile, garment and footwear materials (24.7%), pharmaceuticals (35.4%), and cars (28%), according to data from the General Department of Vietnam Customs. Vietnamese products with a sharp growth in shipments to the UK market were fruits and vegetables (67%), coffee (17%), pepper (49%), iron and steel (1,269%), and toys and sports equipment (19%). “The results showed that the UKVFTA is like a two-way high-speed train, helping us to boost exports to the UK and vice versa, the UK also increases exports to Vietnam”, Ngo Chung Khanh, deputy head of Multilateral Trade Policy Department, at a webinar on “Promoting the strengths of businesses - Utilising opportunities from the UKVFTA.” This helped equalise the trade balance between the two countries, he added. Data from the General Department of Vietnam Customs showed that in the first half of 2022, the country exported US$2.9 billion of commodities to the UK while importing more than US$372.5 million. This shows the activeness and initiative of enterprises in exploiting new opportunities from the agreement.
Source: The Star
Chinese industries are planning to relocate their labour-intensive industries like textiles to Pakistan to take advantage of reduced production costs. hinese industries are planning to relocate their labour-intensive industries like textiles to Pakistan to take advantage of reduced production costs. However, Pakistan may yet welcome some Chinese industries - and foreign investment from other global destinations - as Beijing is shifting its industrial units beyond borders to remove the "Made in China" label from many products to win back US markets, reported The Express Tribune. The study highlights hurdles in Pakistan like law and order, labour productivity as it has failed to woo Chinese industries and many Chinese industries have gone to Cambodia, Laos and even Ethiopia, though their cost of labour is higher than the cost in Pakistan and their markets are far smaller in terms of population. Pakistan Business Council (PBC) - a business policy advocacy platform - has published a detailed study titled "Catalysing Private Investment in Pakistan: Leveraging Chinese Investment in CPEC" in May 2022 to highlight the hurdles to foreign investment in Pakistan, reported The Express Tribune. The PBC study says it is aimed at providing guidance to policymakers on addressing the fundamental issues, which have resulted in low investment in Pakistan. It makes the comparison of key indicators with Pakistan's peer economies and highlights the obstacles faced by Chinese investment under the China-Pakistan Economic Corridor (CPEC) framework. The report highlights a number of broad issues hindering investment decisions in Pakistan. These include the political risk impeding long-term investment, an unfriendly tax and regulatory regime for businesses, low labour productivity, weak intellectual property rights, uncompetitive energy prices, high logistic costs, limited comparative advantage in accessing external markets through bilateral or regional trade agreements, etc. The study says Chinese manufacturers appear to have moved part of their capacity offshore to avoid the "Made in China" label, most notably to the countries in Southeast Asia such as Vietnam, Thailand, Indonesia and Malaysia, reported The Express Tribune. "Smaller countries in the region, such as Cambodia and Laos, also appear to have received significant amounts of Chinese FDI (foreign direct investment)." The flow of FDI into Pakistan has remained low as a percentage of gross domestic product (GDP) and in relation to its market size compared to the surge in investment in peer countries. Pakistan attracted FDI worth USD 1.8 billion in 2020 compared to USD 5.1 billion by Laos, USD 3.6 billion by Cambodia and USD 5.5 billion by Vietnam. Bangladesh, however, received lower FDI at USD 1.5 billion, according to the study. Pakistan's labour productivity has continued to deteriorate for quite a long time. Now, it is less than the level in Bangladesh, Cambodia and Laos. When compared with China and Vietnam, the productivity level is far lower. The country also lacks the attraction for becoming a regional production base for any high potential investor. Pakistan is lagging behind in a number of investment parameters and the gap has widened over the years with the peer nations.
Source: Dev Discourse
Despite soured diplomatic relations between the two, China continues to enjoy dominant position in textile and apparel imports by Australia. In the first five months of this year, over 60 per cent of textile products (apparel and home textiles) imported by Australia originated in China. In 2021 too, China took over 50 per cent share in Australian imports. Considering Australian apparel imports during January-May 2022, China accounted for 63.15 per cent of total import of $2.726 billion. The other countries among top five suppliers were Bangladesh with 11.03 per cent share, followed by Vietnam with 6.1 per cent, India 3.53 per cent, and Indonesia 3.13 per cent, according to data from Fibre2Fashion’s market insight tool TexPro. Last year, China share was 62.82 per cent in Australia’s total apparel imports of $7.382 billion. The other countries in top five suppliers were Bangladesh, Vietnam, India and Indonesia. In terms of home textiles imports by Australia during the first five months of 2022, China supplied 54.09 per cent of total import of $836.959 million, as per TexPro. India stood a distant second with 11.49 per cent share, followed by Singapore with 8.73 per cent, Pakistan 5.17 per cent, and Bangladesh 3.07 per cent. In 2021, Australia’s home textiles imports stood at $2.374 billion, of which 58.32 per cent of suppliers came from China. India, Pakistan, United States and Bangladesh were the other suppliers among top five.
Source: Fibre 2 Fashion
European manufacturers of equipment ranging from embroidery machines to textile cutters are seeing a growing interest in nearshoring from apparel producers. Strained global supply chains are prompting some to bring back production closer to Europe. "People are looking for capacity close by. Factories around Europe, North Africa and in the Middle East are trying to build up and modernise their capacities," said Artur Kitta, head of sales for Europe and Africa at Dürkopp Adler GmbH. The sewing machine manufacturer from Bielefeld, Germany, is itself surprised by demand from the garment sector in and around Europe, as well as the Middle East, which currently even exceeds that of the tech sector, Kitta said at the Texprocess trade fair in Frankfurt at the end of June.
More local and flexible Since the beginning of the pandemic, supply chains have been in turmoil and the situation hasn't calmed down so far. Shipping container prices remain elevated and fashion companies are struggling with the uncertainty of how much merchandise to pre-produce when speedy replenishment and delivery are no longer guaranteed. These uncertainties are prompting some to look into producing closer to demand and also with more flexibility - that is, quickly and in smaller quantities. These developments emerged even before the outbreak of the pandemic, but have gained in urgency again over the past two years. "In the fashion sector, the trend towards made-to-measure, that is, the individualisation of garment sizes, continues unabated," said Rolf Köppel, Segment Manager Textiles at the cutting machine manufacturer Zünd Systemtechnik AG. At the same time, there is a trend towards nearshoring, which can be explained by the unstable supply chains between Asia and Europe. Many companies are looking for technologies that enable them to produce more efficiently and automatically in Europe or America, Köppel said. "Such trends also trigger corresponding investments in digital cutting technology."
Technical innovations are reducing costs The nearshoring is facilitated by technical innovations. Increasing automation makes it possible to produce faster and with fewer workers. Machine builders are also advertising this fact. The machines from Zünd from Altstätten, Switzerland, are an example: the D3 cutter has two heads to cut the laid-on textiles and can thus finish more in the same amount of time. The cutter automatically supplies the rolls of fabric, while the cutting heads control the textiles with the help of a robot. In the apparel sector, it is mainly sportswear manufacturers and companies specialising in made-to-measure that use the single-layer cutters from Zünd. They are more precise and can handle and cut a wide variety of textiles. The machines from the Krefeld-based company ZSK Stickmaschinen GmbH are also becoming more efficient. At Texprocess, an embroidery machine is on display that can stitch thick sewing threads and thin embroidery threads in one single process. One machine has thus replaced the two that were previously necessary. The stand also features a prototype that will not be released until the end of the year: an embroidery machine whose patented technology allows 2,000 stitches a minute, twice the current market standard. "This means we can produce things faster in Germany and no longer have to send them to Asia," said Frank Giessmann, Sales Director USA, at ZSK Embroidery Machines. "We have a lot of customers coming back now, from Turkey or Asia, to Germany." But he did not want to reveal more about the names of the manufacturers in conversation, yet.
A recovery in demand When the coronavirus broke out in 2020, there was strong demand from textile manufacturers from Zünd because they switched to mask production, Köppel said. Later, demand subsided during the pandemic, but at Zünd, business was booming in the interior and home decoration segment because many people were redecorating their homes with sofas, curtains and other textiles. But now Köppel is observing more demand from the fashion industry again. Business for textile machinery manufacturers has been recovering since last year, according to figures from the German Engineering Federation (Verband Deutscher Maschinen- und Anlagenbau e.V.). Between May 2021 and April 2022, new orders for German producers rose by 66 percent, and sales by 0.1 percent. Exports grew by eight percent to 442 million euros. Italian machinery manufacturers also recorded a 12 percent increase in exports to 271 million euros. "Stable new orders after the pandemic-related slumps give reason for hope," Elgar Straub, chief executive of the VDMA Textile Care, Fabric and Leather Technologies trade association, said in a statement. "However, the consequences of the war in Ukraine, which are still unforeseeable, represent a major factor of uncertainty." He added that a relaxation of the situation was not yet in sight given rising raw material prices, massive delivery delays and difficult transport conditions.
Slow shift Garment companies are also still holding back from investing in new equipment. "Our customers are all busy, however, they are not buying new, but revamping the machines they have," said Giessmann. "We see that in spare parts sales, which have gone up in the past two years, but rather fewer new machine sales." Among fashion companies, the willingness to invest is increasing, but orders have yet to come in. "People are coming and showing specific interest, and many are expecting an offer in the week after the fair," said Kitta. It remains to be seen, however, how many orders will come in. Machine makers are betting on the trend towards nearshoring, but they also know that this development will take time. "The topic is very important, that's where business is emerging," said Köppel. He notes a high willingness to invest within the fashion sector, but it is not yet "the big change" that upholstery manufacturers may be already in the midst of.
Hesitations It is not only the apparel industry that is hesitant. More than 70 supply chain managers of leading companies were surveyed by the consulting firm McKinsey at the end of 2020. 40 percent said they were planning to shift to a more local supplier base, but only 15 percent had put the plan into action a year later. One of the few, but prominent, clothing manufacturers that have moved their production back is the apparel company C&A, which is once again producing jeans in Mönchengladbach. But the fashion industry is still a long way from widespread manufacturing repatriation. Even if production at C&A in Mönchengladbach reaches full capacity, it would only account for three percent of the denim sold in Europe. "It is an illusion to assume that the companies will all return to Europe in the next five years, there are simply not the people to do it," said Köppel. "But you see them buying individual lines and reconfiguring manufacturing - here in Europe and North Africa you see investments being made in the new technologies."
Longer delivery times The outbreak of the coronavirus first led to a drop in orders from apparel companies, and now the surge in demand is already causing longer delivery times for some. "The pandemic really brought us to our knees in the clothing sector, so we were lucky that the automotive sector stayed up and running," said Kitta. "And now we realise that we can't even keep up with the orders in terms of delivery times." The order backlog at Dürkopp Adler is currently increasing so rapidly that the company cannot increase its capacities as quickly, which were reduced during the pandemic. This is due to the surprisingly high order volumes, but also due to delivery problems, noted the sales manager. The waiting time differs depending on the product, but it is currently between three and twelve months. Before, the average was three months.
Source: Fashion United
Some member states said to play protectionism. The region is split on preferential Rules of Origin and tariffs on textile and apparel, sugar and sugar products, goods produced in Special Economic Zones (SEZs). •The other sector is automotive as trade experts call for a harmonized deal. Protectionism is playing out among the East African Community (EAC) member states that could expose the region to unfair trade practices under the African trade pact, latest developments indicate. The region is split on preferential Rules of Origin and tariffs on textile and apparel, sugar and sugar products, goods produced in Special Economic Zones (SEZs) and automotive sector, fresh details show, with trade experts calling for a harmonised deal. For instance in the sugar sub-sector, the AfCFTA (African Continental Free Trade Area) secretariat has proposed a value-added standard–manufacture in which the value of non-originating materials does not exceed 60 per cent of the ex-works price of the product, subject to a mandatory review after five years. This has failed to generate the requisite level of consensus among member states, a report by the East African Business Council (EABC) indicates. EAC Partner States are divided in their preferences where Kenya, Burundi and the DRC are in support of the Secretariat’s position. Rwanda is undertaking internal consultations with a view to joining them. Tanzania and South Sudan are split on the review terms as they seek to allow more imports. Local content requirement is currently at 40 per cent, which is considered too steep for sustainable production. On SEZs, the draft ministerial regulation states that goods produced in these zones shall be treated as originating goods provided that they satisfy the rules of origin. Member states are however yet to agree on import duties being paid on the inputs of these products. The EAC private sector attributes the divergence between the EAC partner states as due to the lack of a regional policy on goods produced in SEZs. It makes economic sense to treat such goods as originating, provided they satisfy the AfCFTA rules of origin, the private sector says. “This is due to the fact that goods produced in SEZs are already circulating freely in COMESA and SADC, and that the same will apply to the Tripartite Free Trade Area once the agreement establishes the TFTA enters into force,” EABC secretariat says in its report. Regional states have also differed on imports of raw material for the local textile and apparel industries, as they seek to curb cheap imports. This, even as the enjoy a huge export markets under agreements such as AGOA. There are at least 44 elements on textile that are yet to be agreed touching on among others, natural fibres, man-made staple fibres chemical materials and textile pulp. The fact that Rules of Origin alone will not solve all the historic challenges facing the textile and apparel sector, a deliberate industrialisation strategy that puts in place the right policy mix and environment to support the development of a vertically integrated value chain is needed, experts at EABC say. This should include affordable credit, affordable energy, updated technology, a highly skilled and productive workforce, and a favorable regulatory and policy environment. It proposes for the provision of preferential market access for African textiles and garments in the uniformed market including police, military, schools, hospitals among others. Garment companies should also be allowed to import fabric that is not available in Africa from the global market, textile mills to import yarn that is not available within the continent from the global market while spinning mills to import fiber that is not available within the continent, EABC says. “Stringent rules of origin will lock out trade in textiles and apparel in the continent against the objectives of AfCFTA,” EABC, led by chief executive John Bosco Kalisa, notes. On the automotive industry, a Council of Ministers meeting held in January narrowed down to two options, with the possibility of a middle ground, to the outstanding rules of origin. The first one was the adoption of a higher Value of Non-Originating Material (70%) to enable new industries in the auto sector to grow. The other one is to have it at 60 per cent to ensure that at least 40 per cent African content is added to vehicles that qualify for tariff preferences, in order to create jobs and grow industrial output on the continent. The rules of origin for this sector are intended to help limit importation of used secondhand vehicles imported from outside the continent. The regional states currently have different age limits with Kenya at eight years, Uganda (15 years) while Tanzania has it at 10 years, but older units have been entering at an extra tax. Rwanda, Burundi and South Sudan have had no limits for years, despite recent efforts to put a cap. EAC member states have since been urged to harmonise their different tariff rules and negotiate at the AfCFTA as a pact. “Given the fact that the EAC Partner States as customs union had submitted a joint EAC Tariff offer under AfCFTA,it is important for the region to negotiate with a harmonised position that will grant preferential tariff treatment on goods that will be imported into EAC markets,” Kalisa said. As of May 2022, 87 per cent of the AfCFTA rules of origin provisions had been agreed upon.
Source: The Star
South Africa is well-positioned to be the leading digital economy on the African continent and even in the developing world. In doing so, it can bridge many of the social and economic divides both within the country and with the rest of the world. That’s going to be crucial, especially as digital plays an increasingly large role in the global economy. But getting to that point will require extensive investment in innovation and digital skills as well as partnerships between state players, enterprise-scale corporations, and small, medium, and micro enterprises (SMMEs). Fortunately, as the speakers at Huawei’s Eco Connect 2022 event which took place on Friday demonstrated, there is an unprecedented commitment to ensuring that the vision for a digitally transformed and inclusive South Africa becomes a reality. That commitment starts with the government. “Our department is acutely aware of the need for digital transformation in both the private and public sectors,” said Philly Mapulane, Deputy Minister in the Department of Communications and Digital Technologies. “We in the DCDT subscribe to the vision of being ‘a leader in enabling a connected and digitally transformed South Africa,’” he added. “In our mission, we see the department “leading South Africa’s inclusive digital transformation journey through creating an enabling environment towards a digital society to foster socio-economic growth.’” The deputy minister outlined the government’s vision for South Africa to be the number one economy in Africa and the wider developing world across a number of technological fields including mobile connectivity, mobile broadband, cloud, software development, and talent building. He acknowledged that partnerships are crucial to achieving this ambition and singled out Huawei for the various initiatives it has in developing these fields. “As the Department of Communications and Digital Technologies, we would like to take this opportunity to appreciate and thank Huawei for its continuous partnership and involvement in South Africa over the years,” he said, pointing to the company’s investments in digital infrastructure and skills development. The latter includes Huawei’s Seeds for the Future, ICT Academy Programme, and 4IR talent training initiatives. Ryan Ding, Global President Huawei Enterprise Business Group, provided a commitment that these kinds of investments would continue. “Huawei is actively investing in South Africa,” he said, adding that it will “continue to focus on ICT and digital innovation, facilitating digital transformation.” As Leo Chen, President of Huawei Southern Africa pointed out, this is because Huawei sees the country’s clear potential, particularly within a global context. “The global digital economy is growing twice as fast as GDP,” he said “Africa’s digital economy is also poised to explode”. Chen pointed out that, by 2025, one in six of the world’s internet users will be African and that the South African government plans for the digital economy to make up 50% of GDP by 2025. “South Africa is well poised to make that transition,” he said, pointing to the country’s 85% mobile broadband penetration, growing cloud and artificial intelligence (AI) capabilities), and the promising developments taking place in the energy sector. But, he added, realising that potential requires a combination of collaboration and longterm vision. “We need to work together, just like we worked together in the past two years,” he said, speaking to the work Huawei and its partners did through the course of the COVID-19 pandemic, including providing connectivity to more than 3 000 schools and 600-plus hospitals. Chen also announced that Huawei Cloud’s third availability zone (AZ) is set to go live later this year, three years ahead of schedule. Once live, the AZ will halve cloud latency. “South Africa is an important strategic market for Huawei Cloud,” he said. He also outlined Huawei’s commitment to helping drive South African innovation through initiatives such as its Open Lab, Joint Innovation Center, and POC Lab. “We want our partnerships to help South African companies build South African solutions,” he said. Huawei South Africa CEO Spawn Fan further underlined the importance of partnerships to what Huawei has been able to achieve through its 24 years of operation in South Africa. “We’ve supported South African operators to build more than 2800 5G base stations and have more than 1000 registered SMME partners,” he said. “We need to enable local partners and people to get the most advanced technology.” Some 96% of Huawei South Africa’s sales are also done through partners, a number it wants to increase to 100% in the near future. As it looks to further cement and grow its partnerships, Huawei is increasing the incentives it offers partners and will increase by 35% its funded hand (FH) in partners. Fan also announced that Huawei Cloud will invest R100 million in 1000 startups over the next three years. The fruits of the relationships Huawei has with its customers in both the public and private sectors are paying off too. “On 22 June, we launched the first phase of the State Information Technology Agency (SITA) innovation center in partnership with Huawei,” said Ntutule Tshenye Executive: State Information Technology Agency. The innovation center is aimed at fostering ICT talent and growing small, medium and micro enterprises (SMMEs) in the sector. Vumatel CEO Dietlof Mare, meanwhile, pointed out that Huawei technologies and solutions have been crucial to its ability to connect 1.5-million South African homes with fibre, including the launch of its pre-paid fibre offerings which is crucial to closing the country’s digital divide. “Huawei was with us from the beginning,” he said. “You need a company with the focus and the skillset and for us that was Huawei.” Robert Gumede, founder of IT technology firm Gijima technologies meanwhile pointed out that it hadn’t lost a single client when partnering with Huawei on projects. “It is good for business to have a partner like Huawei,” he said. “They are there to walk with you to the clients and put together a superior proposition.”
Source: IT-online
