With a view to boost exports and job creation in the textile sector, the government has approved the continuation of the Scheme for RoSCTL till March 31, 2024. The government has approved the extension of the scheme for Rebate of State and Central Taxes and Levies (RoSCTL) till March 31, 2024 for export of apparel, garments and made-ups with the same rates, the Ministry of Textiles said in a press release on Thursday. Chairman of Apparel Export Promotion Council (AEPC), Naren Goenka, said so far the scheme has helped a large number of MSMEs to join the apparel export business. “It has helped India to improve cost efficiency and the export competitiveness of Indian textiles and garments in the international market. And, also promoted growth of start-ups and entrepreneurs in the domain,” he said. “RoSCTL is a forward-looking and growth-oriented scheme which has provided a stable and predictable policy regime, helping boost exports and employment.” After the introduction of GST in 2017, the RoSL (Rebate of State Levies) scheme was replaced by a new scheme – Rebate of State and Central Taxes Levies (RoSCTL) in March 2019.
Source: Economic Times
Among high-value segments, the rise in exports in June was led by petroleum products (119%), followed by electronics (61%) and garments (50%). Merchandise exports rose 23.5% in June from a year before even on an unfavourable base but a steep 57.6% jump in imports on the back of elevated global commodity prices drove up trade deficit to a new monthly record of $26.2 billion. With this, trade deficit in the June quarter jumped to a record $70.8 billion, way above that of $31.4 billion in the same quarter last fiscal, according to the provisional data released by the commerce ministry on Thursday. This will likely inflate the country’s current account deficit for the first quarter of FY23 to more than 3% of GDP, compared with 1.5% in the previous quarter, according to some analysts. Given the fears of recession in top markets (US and the EU), which have contributed immensely to India’s stellar export performance in FY22, external demand for Indian merchandise may falter in the coming months. The global supply chains, despite some improvement in recent weeks, still remain tangled. Of course, with softening commodity prices, some pressure on the CAD front is expected to ease in the second half of this fiscal. Moreover, the dramatic rise in imports for a second straight month (even without oil and gems & jewellery, imports jumped as much as 38.3% in June) signals improving domestic demand that had remained subdued for months in the wake of the Covid outbreak. Exports increased to $40.1 billion in June, a record for the third month of any fiscal, and the growth is slightly higher than May’s 20.6%. Core exports grew 8.7% in June, against 8.6% in the previous month but well below 19.9% in April. But imports spiked to $66.3 billion from $42.1 billion a year before, driven by a 99% jump in purchases of oil and petroleum products, 261% in coal and 183% in gold. A spurt in prices inflated petroleum and coal import bill substantially, while massive gold imports were partly driven by jewellers’ bid to build inventory to cater for some pent-up demand. This is partly because many marriages were last year postponed to 2022 due to the pandemic, as pointed out in the finance ministry’s economic report for June. Fitch Ratings has already warned of a doubling of India’s CAD in FY23 to about 3.1% of GDP. Of course, senior government officials have assuaged concerns about financing the CAD. Among high-value segments, the rise in exports in June was led by petroleum products (119%), followed by electronics (61%) and garments (50%). Aditi Nayar, chief economist at Icra, said while the elevated trade deficit for June poses some upside risks to the CAD for Q1FY23, “the correction in commodity prices has softened the outlook for the ongoing quarter, even though export growth may undergo a slowdown amidst a weaker outlook for the global economy. She projected a modest downsides to our FY23 CAD forecast of $105 billion or 3% of GDP.” A Sakthivel, president of the apex exporters’ body FIEO, said the spike in imports is a matter of concern. However, the decent export growth “indicates the strength of the export sector amidst challenging ongoing geo-political and rising global uncertainties”.
Source: Financial Express
In the fabrics segment, India is likely to dominate the global market in coming months for the same reasons,” says Bharat Chhajed, former president of Powerloom Development & Export Promotion Council (PDEXCIL), set-up by the Government of India. Decreasing global prices of cotton coupled with depreciation of the Indian rupee against US dollar have provided much needed succour to the ailing textile industry. Textile traders are anticipating fresh export orders, especially for fabrics in the next couple of months. Currently cotton prices are at a 20-month low and they are likely to go further down following large scale sowing in cotton producing states including Gujarat, Maharanee’s, Madhya Comradeship, Easthampton, Punjabi, Hardpan, Carnation, Permanganate, Tamil Nada and Andorra Comradeship. In fact, cotton brokers are anticipating a cooling off of cotton prices to below Rs 65,000 per candy (356 kg per candy) once the fresh cotton crop hits the market in October this year. “Export demand for fabrics and ready-made garments is likely to witness growth in the wake of gradual reduction in cotton prices,” said an industry observer. As far as garments are concerned, Bangladesh and Vietnam are the major gainers in international markets compared to India. These two countries are benefiting from China-plus-one policy adopted by European nations and the US. Besides, disturbances in Sri Lanka too have resulted in diversion of exports business to both these nations, according to industry sources. “In the fabrics segment, India is likely to dominate the global market in coming months for the same reasons,” said Baccarat Chhajed, former president of Powerloom Development & Export Promotion Council (PDEXCIL), set-up by the Government of India. Depreciation of the rupee against the US dollar is likely to bring windfall gains for Indian textile exporters as compared to their Chinese counterparts, claims Chhajed. According to him, at present units working in the entire textile value chain are making losses due to existing raw-material inventories they have purchased at higher rates. Vinay Thadani, CEO of Vishal Fabrics Limited, one of the leading denim makers in the country, said that competitiveness of denim exporters from India has improved significantly following continuous fall in cotton prices. “Denim exporters were finding it difficult to stand against Chinese competitors as raw material (cotton) rates went up from Rs 40,000 to Rs 50,000 to as high as Rs 1.10 lakh per candy in a span of the last 18 to 20 months. Cotton sowing figures are encouraging and the textile industry is expecting an increase in cotton harvest this season. “Raw material will be available at cheaper rates and ultimately production cost will also go down,” says Thadani. He however said that textile demand is likely to remain muted for a period of a month or two but after that the price of cotton is likely to stabilise. Spinners, however, are not likely to benefit from falling cotton prices as prices of cotton yarn are decreasing faster than cotton, claimed Gautam Dhamsania, adding, “In this declining trend of cotton prices, weavers are demanding yarn at lower prices in anticipation of further fall in cotton rates. As far as spinners are concerned, they will be able to operate with profitability only after October once fresh stock of cotton will hit the market, ” he said. He was however bullish over overall prospects for the textile industry as a whole including that of spinning segment in the long run following increase in cotton acreage under cultivation.
Source: Financial Express
Demand for textile products is expected to improve from the end of this month, according to Prabhu Dhamodharan, convenor of Indian Texpreneurs Federation. According to a press release, the textile and apparel sector is facing uncertainty and challenges in demand and operational profitability for the last three months. Capacity utilisation has dropped across the textile value chain, especially for yarn and fabric, since May. “We believe that the current trend is transitory in nature and the vibrant domestic consumption will support demand in the coming months along with revival of volumes in exports,” he said. At present, Indian retail inventories are low. With festival season approaching, domestic demand for yarn and fabric is expected to increase. Further, with fall in price of raw materials, the entire manufacturing value chain has exhausted its stocks. This low supply trend will create a demand in the upcoming cycle. There are strong signals that buying will revive. Even after accounting for the inflationary trend, fashion domestic consumption will grow nominally due to expansion of GDP and opening up of the economy. “We believe that the current size of $ 85 billion will expand at least by 5 % to 7% in this year,” he said. On the international front, the US trade data for May indicates strong import trend. The US imported ₹ 66,000 crore worth of apparels in May, which is higher 5 % compared to the previous three months average. Reduction in freight and raw material cost will also help boost overseas demand for textiles, he said. Medium term outlook is good for textile exports mainly due to the continuous challenges emerging in China, one of the major producing countries. Buyers are steadily expanding their sourcing base to India, he added.
Source: The Hindu
CAD will deteriorate if crude prices don't come down With global prices set to soften due to fears of a recession, the pressures caused by inflation in the Indian economy may weaken as well, the finance ministry’s economic division said in its monthly economic report for June. The report said that most local indicators were proving to be resilient in the face of the global macroeconomic upheaval, and that the healthy goods and services tax (GST) collections and the new windfall tax would reduce the pressure on the budget deficit this year. “If recession concerns do not lead to a sustained and meaningful reduction in the prices of food and energy commodities, India's current account deficit (CAD) will deteriorate in 2022-23 on account of costlier imports and tepid exports on the merchandise account,” it said, adding that while the rupee had depreciated against the dollar, it had performed better than other currencies. The review released by the ministry also said that global headwinds would continue to pose a downside risk to growth ‘as crude oil and edible oils, which have driven inflation in India, remain the major imported components in the consumption basket.’ “At the moment, their global prices have eased as recession fears have dampened prices. This would weaken inflationary pressures in India and rein in inflation,” the report said. It, however, added that as long as the headline retail inflation continued to be above the Monetary Policy Committee’s (MPC) medium-term target upper limit of 6 per cent, policy measures would need to continue, walking the tightrope of balancing inflation and growth concerns. Consumer Price Index-based inflation (CPI) for June came in at 7.01 per cent, the sixth straight month of headline inflation being above the MPC’s target of 4 (+/-2) per cent, thus signalling further rate hikes by the Reserve Bank of India (RBI). “Almost five months into the Russian-Ukraine conflict, economic activity in India continues to show resilience despite dealing with the twin challenges of inflation and widening trade deficit,” the report stated. It said that agriculture and manufacturing sectors were picking up momentum, the financial sector was in good health and private sector investment was coming back in. investment proposals hit a record 85 per cent in the April-June quarter, rising from an average 63 per cent in the preceding four quarters. According to the report, the share of the Indian private sector in total. The report stated that the Centre’s sustained focus on capital expenditure may appear to pose a challenge to maintaining the budgeted fiscal deficit to gross domestic product (GDP) ratio, particularly when union excise collections during April-May 2022 declined, following a cut in excise duty on petrol and diesel. “However, robust GST collections, increase in customs duties, and imposition of windfall tax are expected to boost government revenues and assist in keeping the fiscal deficit to GDP ratio unchanged from its budgeted level,” it said. The FY23 fiscal deficit target is 6.4 per cent of GDP. In the last six weeks, at the margin, thanks to several measures taken by the Centre and the RBI, including rate hikes, and due to global recession fears that have caused oil prices to decline, India’s macro risks have receded, the report said, adding that prices of industrial metals were lowest in sixteen months and some food items had also come down from their peaks. “These are early days in the financial year and there are many challenges to overcome. The Federal Reserve continues to tighten. Global liquidity conditions will tighten and asset market declines can dampen sentiment and curb spending. Geopolitical risks, near and afar, are rife. For now, we will take the good news, at the margin, while remaining on guard and ready to tackle anticipated and present risks,” the report stated. Key points of the report • CAD will deteriorate if crude prices don't come down • Private sector capex proposals up to record levels in Q1FY23 • GST collections, windfall tax will help fiscal deficit • Inflation above MPC target biggest concern.
Source: Business Standard
The presence of open network for digital commerce, a Unified Payments Interfacetype protocol, will be gradually expanded to more cities after the successful launch of its pilot phase, Union Minister Piyush Goyal has said. Open network for digital commerce (ONDC) is a set of standards for voluntary adoption by sellers or logistics providers or payment gateways. The objective is to democratise the fast-growing e-commerce sector in the country to help small retailers and reduce the dominance of online retail giants. It provides small retailers the freedom to choose any logistics player and seller platform based on different parameters like location and rates. "Yes, certainly," the commerce and industry minister said when asked whether they are planning to expand the ONDC to more cities as the pilot phase in five cities is going well. "ONDC is going to be gradually scaled up because it's in beta testing (phase now). We would like to keep scaling it up to figure out how robust the technology is, how simple it is to operate, and the kind of capacities we will require for data storage and management of the entire process as we grow. So, it is still a work in progress," Goyal told. The initiative is also aimed at curbing the dominance of two large multinational ecommerce players -- which control more than half of the country's e-commerce trading, limit access to the market and give preferential treatment to certain sellers and squeeze supplier margins. The ONDC was launched in five cities in April - Delhi-NCR, Bengaluru, Bhopal, Shillong and Coimbatore. "ONDC is a democratisation of the digital commerce world. It can trigger off many startups to bring technology into the remotest corners of India," the minister said. He visited an ONDC-led store in Coimbatore last month. As many as 20 organisations of national repute have confirmed investments of Rs 255 crore into the ONDC. Lenders, such as the NSE 0.99 % , NSE 0.90 % , NSE 0.44 % , NSE 0.56 % and NSE 0.95 % , have already committed investments. When asked about the proposed e-commerce policy, Goyal said that a lot of interministerial consultations are going to align the views of different ministries and ensure that a robust e-commerce ecosystem is developed in India, which is transparent and fair and that can provide equal opportunity to all the stakeholders.
Source: Economic Times
Minister of state for commerce and industry Anupriya Patel has told visiting deputy premier of Western Australia province Roger Cook that the amendment should be done at the earliest to stop taxing the offshore income of Indian firms providing technical support there, the commerce ministry said on Thursday. India has asked Australia to expedite amendments to regulations pertaining to the Double Taxation Avoidance Agreement (DTAA), in accordance with an understanding reached between the two sides in April, as Indian information technology (IT) companies that operate in that country continue to be forced to pay more taxes than they should. Minister of state for commerce and industry Anupriya Patel has told visiting deputy premier of Western Australia province Roger Cook that the amendment should be done at the earliest to stop taxing the offshore income of Indian firms providing technical support there, the commerce ministry said on Thursday. Both the sides also acknowledged the need for an early ratification of the interim trade deal, or the India Australia Economic Co-operation and Trade Agreement (ECTA), which was signed in April. Canberra’s decision to tweak its domestic law to stop such taxation is a part of the India-Australia ECTA. Once implemented, the move will correct a costly anomaly in the 1991 DTAA between the two countries and enable IT and ITeS (IT-enabled Services) players to substantially scale up their operations in Australia. The anomaly is expected to have cost Indian IT companies about $1.3 billion since 2012, according to an industry estimate. Using the provisions of the India-Australia DTAA, Canberra has been taxing income generated from offshore IT services rendered from India as royalty, even when the same income is being taxed in India as well.
Source: Financial Express
China's exports rose to a record $97.9 billion in June as export growth accelerated after the easing of COVID-19 control measures that temporarily shut down Shanghai and hit trade. Exports rose by 17.9 per cent to $331.2 billion, up from May's 16.9 per cent, according to customs data. Imports rose by 1 per cent to $233.3 billion, implying weak domestic demand. With close to nil growth in imports, China's global trade surplus swelled by 90 per cent compared with a year ago. Exports to the United States rose by 19.3 per cent over a year ago to $56 billion despite tariff hikes. Import of American goods too increased by 1.7 per cent to $14.6 billion. China's trade surplus with the United States widened by 26 per cent from a year earlier to $41.4 billion, according to official Chinese media. Estimates for China's economic growth has been forecast as low as 2 per cent this year, well below the ruling Communist Party's target of 5.5 per cent. It is expected in some quarters that activity will shrink in the quarter ending in June before a gradual recovery begins.
Source: Fibre 2 Fashion
The positive effects of unprecedented policy stimulus, combined with the advantages of a highly flexible economy, have resulted in the US unemployment rate getting back to end-2019 levels, according to the International Monetary Fund (IMF), which said US output is now close to its pre-pandemic trend and wages have increased rapidly for lower income workers. Poverty has fallen and 8.5 million jobs have been created since the end of 2020, said the IMF executive board, which concluded the Article IV consultation with the United States recently. However, the rapid recovery of demand and associated depletion of slack, rising energy prices and ongoing global supply disruptions have led to a significant acceleration in inflation, IMF noted. Wage and price pressures are broad-based had have spread quickly across the economy. Longer-run measures of inflation expectations have started to drift higher and shorter horizon measures of inflation expectations have increased significantly. During the pandemic, the overall general government deficit rose by close to 9 per cent of gross domestic product (GDP) with the $1.9 trillion American Rescue Plan—passed in March 2021—slowing the pace of fiscal contraction in 2021-22 but not forestalling it, IMF said in a release. The fiscal deficit is now declining rapidly but, despite this, public debt is markedly higher than its pre-pandemic levels and is expected to continue to rise as a share of GDP over the medium term.
Source: Fibre 2 Fashion
Bangladesh's forex reserves have dipped below $40 billion for the first time in nearly two years after its central bank recently settled import payments worth $1.99 billion with the Asian Clearing Union (ACU). The reserves, which stood at $46.15 billion in December last year, have been under stress in recent months and are at $39.80 billion now. India, Bhutan, Iran, the Maldives, Bangladesh, Myanmar, Nepal, Pakistan and Sri Lanka are members of the Tehran-headquartered ACU. The central banks of these countries make payments to settle import bills every two months. As exports and remittance flow failed to keep pace with rising import bills, between July and May in the last fiscal, imports increased to $75.40 billion, up by 39 per cent year on year when exports grew by 33 per cent to $44.58 billion, according to Bangladeshi media reports. In fiscal 2021-22, remittances too contracted for the first time in six years as many remitters opted for informal channels to send in money. The country’s central bank is now injecting US dollars on a regular basis into the money market, helping banks settle import bills. It supplied $7.62 billion in fiscal 2021-22 and $209 million in this fiscal.
Source: Fibre 2 Fashion
Investors are cashing in on the strong prospects of Sri Lanka’s apparel and textile exports sector, the country’s main export industry, which caters to some of the leading fashion brands globally. Although the South Asian Island announced that it would default on its foreign debt earlier this year, the country’s exports and Foreign Direct Investment (FDI) inflows – both overall and relating to the apparel sector – have ‘bucked the trend,’ showing remarkable resilience. Sri Lanka’s cumulative national merchandise exports for 2022 up to the end of May exceeded US$5.1 billion, a nearly 10% increase from the same period of 2021 and a 46% increase from the corresponding period of 2020. Similarly, the apparel and textile sector recorded US$2.25 billion in export earnings during the same period of 2022, reflecting an 86% increase year-on-year. FDI inflows to Sri Lanka have mirrored the positive performance of its exports sector. Overall, Sri Lanka has attracted more than US$ 228 Million in FDI during the first quarter of 2022, a 17% increase compared with the corresponding period of last year. FDI inflows to the apparel sector – considering the value of agreements signed with investors too as increased fourfold up to the end of June 2022 in comparison to January – June of the corresponding period in the previous year. “Considering the challenges that Sri Lanka has overcome in the past, investors remain confident of the country’s prospects and resilience,” said Renuka M. Weerakone, the Director-General of Sri Lanka’s Board of Investment (BOI), the country’s dedicated investment promotion and facilitation agency. “Due to strong interest, especially among apparel industry investors, we recently set up three new re-investment teams to support investors. We have been receiving multiple queries regarding the availability of suitable land from investors looking to further expand their apparel manufacturing plants in Sri Lanka since many of them have seen an increase in orders.” The BOI has thus far signed agreements worth US$76 million for both new investments and expansions in the apparel sector in 2022. The total pipeline – together with pending approvals for investments and expansions in apparel – currently stands at US$165 million. Besides expanding apparel manufacturing facilities, some investors are also eyeing lucrative opportunities in raw material production and backward vertical integration in the Sri Lankan apparel industry. On this front, the BOI has seen strong investor interest, especially in the Eravur Fabric Processing Zone. The zone is a significant initiative that aims to strengthen the Sri Lankan apparel sector’s backward vertical integration, enabling the industry to make greater use of preferential tariff concessions in its exports to the European Union (EU), its second-largest market, as well as reduce industry lead times. Recently, the BOI formally signed the agreement for the first FDI in Eravur, a $35 million investment by Jay Jay Mills Lanka, a supplier to globally-renowned infant apparel brands. Overall, the fabric processing zone is expected to attract significant FDI’s. The infrastructure for the zone is now being constructed, including external roads and the provision of utilities such as power and water. The zone seeks to be a regional benchmark in sustainable manufacturing and is envisaged to create over 3000 direct and 5000 indirect job opportunities which would contribute towards the socioeconomic development of the area. In line with increasing investor interest, the BOI has also significantly revamped its processes, making the investment process faster and more convenient for investors. “We’ve strengthened our digitization efforts, to eventually make the processes completely paperless,” Weerakone explained. “We have introduced new features in our web portal to assist investors with a web-based “Partnership finder database” which will also assist investors in linking with potential partners. These include companies that are looking for funding partnerships or viable business opportunities, as well as innovative start-ups. We will also soon unveil a dedicated Investor Facilitation Centre.” (IFC) To enable the Investor Facilitation Centre to function effectively, during the last two years the BOI has signed agreements with 13 state agencies which will play a key role in the investment approval process. The BOI will be sending the investor’s application to these agencies and will be taking proactive action to expedite the approval process. The digitization efforts of the BOI now enable investors to obtain a range of services online, without having to visit the BOI office. Such services include approvals from the Customs Department for capital goods imports, obtaining visas for investors, etc. In addition, complementing such improvements in investment facilitation, the Sri Lankan apparel industry presents an attractive proposition. The industry has successfully built long-term partnerships with and catered to the world’s leading fashion brands for decades, built a strong reputation globally for ethical and sustainable business practices, and has developed capabilities in research and development (R&D), innovation, and product development, that far exceed that of many of its peers.
Source: Colombo Page
Mrs Kosi Yankey-Ayeh, the Chief Executive Officer of the Ghana Enterprises Agency (GEA), says there is the need to formalize the Micro Small Medium Enterprises (MSMEs) sector to make the enterprises attractive for investors. He said the formalisation of the sector would support the growth and development of their operations and not necessarily for taxation purposes. She said this would also help them access funding and access markets for their goods and services easily. Mrs Yankey-Ayeh was speaking at the Information sharing workshop on a baseline study of micro small and medium enterprises (MSMEs) in Ghana in Accra. In total, 84,592 firms were surveyed and predominantly operating within the: Agroprocessing and industrial, handicraft, textiles, and garments sectors. The study, conducted by the Palladium Group Ghana is to create a comprehensive dataset of all MSMEs (carrying out at least minimal value addition) in Ghana, establish a baseline to inform subsequent periodic data collection of these MSMEs to support the need for evidence-based policy initiatives to this sector. She said formalisation of the sector was needed if “we are going to address the challenges of accessing finance, because it is important to business linkages.” She said it was critical for stakeholders to appreciate the role that data played in the development of MSMEs and the national economy. She said the study also established a baseline to inform subsequent periodic data collection of these MSMEs’ to support the need for evidence-based policy initiatives in the Sector. The CEO said the call for the study was timely as GEA aspired to be the data hub of MSMEs in Ghana and they believe that it would trigger many more studies which would help the Government and other MSME development stakeholders to appreciate the challenges confronting the Sector and guide the design of intervention to address them. She said the baseline was to collect background information that was essential to determine the requirement for a policy intervention for MSMEs both from the technical point of view, and from the MSMEs perspective. Mrs Yankey-Aryeh said currently, MSMEs in Ghana contribute significantly to the Ghanaian economy, as they provide the stimulus to economic growth, foster backwards and forward linkages, develop human assets and entrepreneurial skills in the society. The CEO said despite the contribution of the MSME Sector towards the development of the Ghanaian economy, its growth was contained by a few factors. These include the inadequate lack of a comprehensive database on MSMEs, Inadequate access to credit, inadequate access to technology, inadequate access to the market, regulatory and legal constraints. Others are the uncoordinated efforts of agencies and institutions on MSME Development Institutions, resulting in duplication of efforts. She said to achieve a vibrant and sustainable MSME Sector, these issues needed to be addressed. She emphasised that the Sector had the potential to increase employment and income, as well as reduce poverty in both urban and rural areas. Mrs Yankey-Ayeh for the sector to thrive, the playing field must be levelled in terms of policies and strategies that would help it achieve its full potential. Professor Ebo Turkson, the Lead Researcher said Most of the surveyed firms were from the Ashanti Region (23,123, equivalent of 27.3 per cent) and Greater Accra (18,856 equivalent of 22.3 per cent). He said all 16 regions had a significant proportion of their operating enterprises being informal, with the Western North region recording the least proportion (86 per cent 0 MSMEs being informal firms. Prof Turkson said the majority of micro (33 per cent), small (35 per cent), and medium-sized (24 per cent) enterprises operated within the handicraft sector, while most large firms were in agro-processing, textile, and garments. “A significant number (39 per cent) of micro-enterprises sampled were less than 5 years with relatively larger MSMEs surviving longer years or are more mature compared to smaller,” he added. He said average turnover increases with firm size with small and medium-sized enterprises observed marginal increases in their average turnovers, while the agro-industrial firms reported the highest turnover.
Source: News Ghana
