High volatility in Indian cotton yarn prices in recent months has disrupted the entire value chain of the textile industry. So, to improve price predictability, the Textile Advisory Group (TAG) has proposed development of Yarn Index System. The proposal was discussed at the second interactive meeting of the TAG held in Mumbai on Thursday. The TAG comprises senior officials from the Union ministries of textiles, agriculture & farmers’ welfare, commerce, as well as senior officials from the Cotton Corporation of India, R&D experts and stakeholders. The first meeting of the TAG was held on May 30, 2022, also in Mumbai, under the chairmanship of textiles and commerce minister Piyush Goyal. Earlier, when cotton prices were touching new highs, high prices squeezed profit margins in downstream industries amid poor demand of end products in international and domestic markets. But the market trend reversed in June 2022, when cotton prices dropped drastically. This placed the upstream industry in a sticky situation. Industry representatives raised their concerns and said that such volatility is not good for the textile industry. After detailed discussion, TAG proposed development of a Yarn Index System to improve predictability and reduce fluctuations in prices. It was also acknowledged that data was critical for improving policy formulation process. There were suggestions of penal action to be taken on units not onboarding the textile commissioner’s portal. Confederation of Indian Textile Industry (CITI) had advised on this issue last month. TAG decided that steps should be taken for faster approval of new Bt cotton seed varieties to improve cotton yield. The meeting also suggested for a policy to discourage poor quality cotton and to provide premium for cleaner cotton. It was decided that the Cotton Association of India (CAI) will formulate a policy to encourage ginners to adopt better ginning practices. Further, steps will be taken for state-of-the-art testing to ensure quality and traceability of cotton products. The meeting also discussed the long-pending demand from downstream industry to ban or discourage future trading in cotton. TAG will suggest the government to reduce speculative activity in MCX through industry and farmer representation in the product group and transparent specific delivery contracts.
Source: Fibre 2 Fashion
Union Minister of Textiles, Commerce & Industry, Consumer Affairs and Food & Public Distribution, Shri Piyush Goyal held second interactive meeting with the Textile Advisory Group (TAG), in Mumbai, on 14.07.2022 to review progress of work. Shri Goyal emphasized that supply of good quality cotton seeds is the vital necessity for improving productivity of cotton. He also emphasized the need to introduce advanced technologies related to high yielding cotton seeds and innovative agronomy such as High Density Planting System to enhance productivity of cotton. He directed the Cotton Corporation of India to lend Agricultural Extension Services in co-operation with Indian Council of Agricultural Research (ICAR) to our farmers through its network of branches all over India. Shri Goyal wishes industry to focus on quality consciousness across the value chain and assured that initiatives for supporting modern facilities would be facilitated. Textile Value Chain needs to strengthen traceability technologies and testing facilities in the country. While deliberating on the approaches for use of coloured fertilizers bag to avoid contamination in cotton, Shri Goyal directed TAG to address the long pending issue on priority with a solution which does not lend itself to any cost escalation. Addressing the need of specific delivery based contract and open position limits on MCX, Shri Goyal directed the Ministry, Textile Commissioner, CCI and TAG to engage with MCX/SEBI and find structured solutions on ‘contract’ front. Any possibilities of manipulations on price front to the disadvantage of cotton textile value chain have to be contained. Shri Goyal, on the suggestions of the industry, directed the Textile Commissioner that the penal provisions under the relevant Sections of Collection of Statistics Act be invoked for compliance to address the need of accuracy of statistics across the value chain. The action may begin with the Ginning segment immediately. He directed the Textile Commissioner to utilize services of CCI personnel for data collection from Ginning segment under Collection of Statistics Act. On suggestions to evolve yarn national index, Shri Goyal directed to examine its objectivity, feasibility and reliability for industry. For mechanized cotton picking, he stressed that a dedicated effort be done by Central Institute for Research in Cotton Technology (CIRCOT) and the Southern India Mills’ Association - Cotton Development & Research Association (SIMA-CDRA) to make an indigenous, cost effective and efficient device validated by our user farmers. Union Minister of State for Textiles and Railways, Smt. Darshana V. Jardosh, Shri Upendra Prasad Singh, Secretary Textiles, Senior Officials from the Union Ministries of Textiles, Agriculture & Farmer’s Welfare, Commerce, Officials from Research and Development sector, Senior Officials from the Office of the Textile Commissioner & the Cotton Corporation of India Ltd., and stakeholders were present. The whole of textile value chain was represented in the consultations through lead associations and experts in the meeting. The actions initiated subsequent to the points that emerged from the last interactive meeting held on 29.05.2022 at Mumbai were deliberated followed by presentation by Shri Suresh Kotak, Chairman of the TAG & renowned veteran cotton person. Shri Suresh Kotak elaborated initiatives in the direction to augment supply, crop protection and cotton productivity, which are essential for strengthening cotton textile value chain from farm to fashion to foreign. The meeting was co-ordinated jointly by the Textile Commissioner and Cotton Corporation of India Ltd.
Source: PIB
Joe Biden has welcomed the economic initiatives of the United Arab Emirates which comprises the recent signing of Free Trade Agreements (FTA) including India On Saturday, United States President Joe Biden has welcomed the economic initiatives of the United Arab Emirates, which comprises the recent signing of Free Trade Agreements (FTA) with various nations including India. According to a statement from the White House, Biden “welcomed the UAE’s economic initiatives throughout the Middle East and beyond, including its recent Free Trade Agreements signed with Israel, India, and Indonesia as well as new investments in Jordan and Egypt.” This statement came at a time when US President Biden visited President Sheikh Mohamed bin Zayed Al Nahyan, President of the United Arab Emirates (UAE) in Jeddah, Saudi Arabia, as a part of the summit between the US and the Gulf Cooperation Council (GCC), Egypt, Iraq, and Jordan. Further, it is pertinent to note that this year, the UAE inked three trade agreements, one each with Israel, India, and Indonesia. In addition to this, the two Presidents reaffirmed their dedication to advancing the broad security cooperation that has made both nations safer and made a significant contribution to regional peace and stability in defence.
Leaders of US and UAE discuss variety of subjects during bilateral meeting According to the White House’s statement, in order to combat financial crimes and illegal money flows, the UAE has taken measures to tighten its laws and enforcement systems, which have been acknowledged by President Biden. Both Presidents emphasised the vast and longstanding collaborations in the fields of education, culture, and health between the two nations. The leaders even agreed to keep using their combined diplomatic standing to defuse and end problems in other parts of the region. They talked about how crucial it is to maintain the prospect of a two-state solution and make sure that Palestinians too benefit from the Abraham Accords. Besides this, President Biden also offered his "personal condolences to President Sheikh Mohamed bin Zayed and all Emiratis on the loss of His Highness Sheikh Khalifa bin Zayed al Nahyan," as per the statement. He even extended an invitation for the UAE President to visit the US later this year and congratulated him on his recent election as President. The statement further highlighted that during the summit, the leaders of the United States, the Gulf Cooperation Council (GCC), Egypt, Iraq, and Jordan discussed a variety of opportunities and obstacles on the regional and international levels that call for close cooperation between the US and the UAE as strategic partners. “On economics, commerce, and trade relations, President Biden noted that the UAE is one of the fastest growing U.S. economic partnerships globally, the largest U.S. trading partner in the Middle East, and a significant investor in the U.S. economy,” the statement read. Moreover, the UAE has long been a dependable and responsible provider of energy, and President Joe Biden applauded this commitment. He also acknowledged the UAE's leadership in pushing climate action, the energy transition, and the development of clean energy technology.
Source: Republic World
Key policymakers from India and African nations will brainstorm on strategies on trade, investments and knowledge exchange to create shared value for business and industry between the two nations at a two-day conclave scheduled to be held here from Tuesday. External Affairs Minister S Jaishankar and Minister of Commerce & Industry, Consumer Affairs, Food & Public Distribution and Textiles Piyush Goyal are also expected to attend the 17th CII–EXIM Bank Conclave on India-Africa Growth Partnership. ''The conclave will focus on project exports, trade, investments, exchange of knowledge and expertise creating shared value for business and industry at large between India and Africa,'' CII said. The conclave will feature 40 ministers from 21 countries including Burkina Faso, Republic of Congo, Cameroon, Eswatini, Ethiopia, Equatorial Guinea, Gabon, Ghana, Malawi, Niger, Mauritius, Namibia, Nigeria, Sudan, Sierra Leone, The Gambia, Togo, Zimbabwe, Zambia, among others. As many as 185 project profiles from more than 30 countries covering Agriculture, Infrastructure, Defence, Water & Irrigation, Manufacturing, Healthcare & Pharmaceutical, Power & Energy, ICT & more have been shared by various African Governments and Industry for prospective investment, CII said. Over 600 representatives from government and industry have registered as delegates for physical participation from more than 45 countries from Africa. More than 400 senior representatives from leading Indian companies will also participate in the conclave, the chamber said.
Source: Dev Discourse
Textile minister Piyush Goyal has said that possibilities of manipulations on price front to the disadvantage of cotton textile value chain have to be contained and that the penal provisions under the relevant Sections of Collection of Statistics Act be invoked for compliance to address the need of accuracy of statistics across the textiles value chain. Goyal held the second interactive meeting with the Textile Advisory Group (TAG) in Mumbai on Thursday to review progress of work. Addressing the need of specific delivery based contract and open position limits on NSE 0.50 % , Goyal directed the ministry, Textile Commissioner, Cotton Corporation of India (CCI) and TAG to engage with MCX/SEBI and find structured solutions on ‘contract’ front, according to a release issued by the textiles ministry on Friday. Any possibilities of manipulations on price front to the disadvantage of cotton textile value chain have to be contained,” the ministry said. Renowned veteran cotton person Suresh Kotak is chairman of the TAG. “Goyal, on the suggestions of the industry, directed the Textile Commissioner that the penal provisions under the relevant Sections of Collection of Statistics Act be invoked for compliance to address the need of accuracy of statistics across the value chain,” the ministry said, adding that the action may begin with the ginning segment. Goyal also directed the Textile Commissioner to utilize the services of CCI personnel for data collection from Ginning segment under Collection of Statistics Act. On suggestions to evolve yarn national index, Goyal directed to examine its objectivity, feasibility and reliability for industry. For mechanized cotton picking, he stressed that a dedicated effort be done by CentralInstitute for Research in. Cotton Technology (CIRCOT) and the Southern India Mills’ Association - Cotton Development & Research Association (SIMA-CDRA) to make an indigenous, cost effective and efficient device validated by our user farmers.
Source: Economic Times
The paper takes into consideration various suggestions of both taxpayers and administrators, including auto-population and amendment in GSTR 3B, Jain added. The finance ministry on Friday released a paper suggesting changes in the monthly GST paymentform and sought industry comments by September 15. The GST Council in its meeting last month recommended that the changes in GSTR3B or monthly tax payment form be placed in public domain for seeking inputs and suggestions of the stakeholders. "Accordingly, general public and the trade at large are hereby informed that a detailed Concept Paper on comprehensive changes in FORM GSTR-3B is enclosed. All members of trade/ stakeholders are requested to kindly furnish their views/comments/suggestions on the Concept Paper latest by 15th September 2022 at gstpolicywing-cbic@gov.in so as to facilitate finalization of the matter," the ministry said. Abhishek Jain, Tax Partner, KPMG in India, said GSTR-3B is a return form capturing the summary of outward and inward supplies for a particular month. The paper takes into consideration various suggestions of both taxpayers and administrators, including auto-population and amendment in GSTR 3B, Jain added. AMRG & Associates Senior Partner Rajat Mohan said the proposed changes would facilitate ease of compliance for taxpayers and arrest revenue leakage for tax administrators. On the demand of trade and industry, new GSTR-3B may permit amendment, reporting of negative values, and clarify manner of reporting ineligible input tax credit. "On the other hand, tax administration has demanded auto-population of values from GSTR-1 into GSTR-3B in specific rows, restricting the editing of values auto-populated in GSTR3B from GSTR-1 and creating a distinction between permanent vs. temporary NSE 0.93 % reversal," Mohan added.
Source: Economic Times
After implementation of a free trade agreement, India's exports to the UAE rose by 16.22 per cent to USD 837.14 million during May-June this year, sources said. After implementation of a free trade agreement, India's exports to the UAE rose by 16.22 per cent to USD 837.14 million during May-June this year, sources said on Friday. Exports during the same period of the previous year stood at USD 720.31 million. The Comprehensive Economic Partnership Agreement (CEPA) between the two countries came into force from May 1. Under the pact, domestic exporters from various sectors like textiles, agriculture, dry fruits, gems and jewellery are getting duty-free access to the UAE market. "India's exports to UAE which were in negative growth trajectory post the outbreak of Covid-19 to April 2022 have witnessed a rebound since May 2022, that is, post the signing of the agreement," the sources said. Post the signing of the CEPA, exports grew by 16.22 per cent to USD 837.14 million in May-June 2022, one of the sources said. Shipments of plain gold jewellery increased by 62 per cent and 59 per cent in May and June to USD 135.27 million and USD 185.78 million, respectively. Colin Shah, Chairman, GJEPC (Gems and Jewelery Export Promotion Council), said that plain gold jewellery exports have been the immediate beneficiary of the India-UAE CEPA. "I urge all exporters to maximise their returns and make optimum use of the benefits available through this pact," he has said.
Source: Republic World
Currencies of competitors like S Korea, Bangladesh & Malaysia, too, have weakened sharply A 6.9% depreciation of the rupee against the greenback since January will “certainly help” exporters but a potential demand slowdown in key markets — mainly the US and the EU — due to recession fears has turned out to be a major worry for them. The rupee recovered 8 paise to settle at 79.91 on Friday, having almost hit the psychological 80- per-dollar mark on Thursday. Exporters that FE spoke to also stressed that currencies of some of India’s competitors, too, have weakened against the dollar, blunting the advantage for India. For instance, the South Korean won has depreciated by 10.3% against the greenback since January, while Bangladeshi taka weakened 8.3% and Malaysian ringgit by 6.4%. The greater fall of the currency of Bangladesh, India’s biggest competitor in garments, on top of its dutyfree access to the US and the EU markets, will substantially bolster its export competitiveness. Of course, the currencies of countries like Indonesia, Singapore and Vietnam have depreciated at a slower pace than the rupee. However, Vietnam, particularly, enjoys greater cost advantage than India in labour and logistics and with its attractive incentives, it has already emerged as a major electronics export hub, leaving New Delhi far behind. Moreover, import-sensitive export segments, including petroleum, gems & jewellery and even electronics, will face upward pressure on input costs, said the exporters. The order flow from the US and the EU has already started to slow down in certain segments—a sign that may get more pronounced in the coming months. The two markets alone made up 31% of India’s merchandise exports in FY22. Also, the US (and Canada) and Europe (including the UK) made up 56.2% and 30.1%, respectively, of India’s software services exports worth $134 billion in FY21, according to a RBI report released in September 2021. Of course, the dollar still is the preferred currency, with a 72% share. Ajay Sahai, director general of the apex exporters’ body FIEO, said: “The depreciation has to be seen in perspective. The currencies of many of our competitors have depreciated against the dollar at a faster pace than ours.” “Moreover, exporters are facing a triple whammy. First, there seems to be a consumption shift towards services from goods. Second, given high inflation across countries, purchasing power of consumers (in key markets) has been hit. Third, inventory level of domestic exporters remains high,” Sahai said. Narendra Goenka, chairman of the Apparel Export Promotion Council, said: “Demand for garments from the US is expected to drop by 10-15%, as stores there are selling less. The rupee depreciation will definitely help but demand slowdown is expected to be sharper. Moreover, buyers are offering lower rates for products. Some relief is coming from the raw material front, as prices (of cotton, yarn, etc) have come down recently, albeit to a very limited extent, and they are still way above the usual level.” R Uday Bhaskar, director general at the Pharmaceutical Export Promotion Council, said: “The rupee depreciation will offer some relief but at the same time, the pharmaceutical industry imports inputs worth about $6 billion a year. So, on these imports, we have to pay more. Of course, the exports are higher —$24.5 billion in FY22.” The World Trade Organization in April slashed its merchandise trade volume growth forecast for 2022 to 3% from its previous prediction of 4.7%. It also expects only 3.4% growth in 2023. There are apprehensions that that global trade body may further trim its forecasts. This will impact India’s export prospects as well. According to an earlier Nomura report, every 1% depreciation in the REER (the RBI’s real effective exchange rate index, based on the export-weighted average of dozens of currencies) raises export growth by just 0.9 percentage point in the same quarter, whereas every 1% of global GDP growth drives up export growth by 2.7 percentage points with a lag of one quarter. This means global growth or lack of it can potentially impact export opportunities for India than its own currency movement.
Source: Financial Express
Companies in some other sectors, where import reliance for inputs is very limited, are not perturbed by the rupee fall. With the rupee nearing 80 per dollar, companies in import-sensitive sectors remain on edge, as they apprehend that a further input price escalation will erode their margins at a time when a demand slowdown has impaired their ability to raise prices of finished goods. Senior executives that FE spoke to said companies in sectors — ranging from oil, power and steel to chemicals — are expected to feel the pinch, as imports of commodities like crude oil, coal and chemicals are set to turn more expensive. Some of them were also worried about “imported inflation”, given that India is a net commodity importer. Smaller firms, with limited ability to hedge, are hit harder in times of currency fluctuations than the large ones. Of course, the latest easing of global oil and other commodity prices will somewhat soften the blow of a weak rupee, they conceded. The magnitude of the impact of the rupee fall on firms, however, varies across sectors, depending on their import reliance. Interestingly, the country’s largest car maker, Maruti Suzuki, sees gains from the rupee movement, as the domestic currency has actually appreciated against the Japanese yen. However, steam coal import from Indonesia, which makes up roughly a half of India’s total purchases of the commodity from overseas, will cost more. This will feed into electricity rates, said an official with state-run NTPC. However, while the currency depreciation is unlikely to raise the costs for NTPC, which awarded Adani Enterprises contracts worth Rs 8,308 crore last month for 6.25 million tonne of (imported) coal, it may bite into Adani’s margins. Similarly, while Coal India, which has awarded contracts to Baradaya Energi to source about 6 million tonne of coal, remains insulated as the tenders are priced in the rupee, the supplier is set to take a hit. Lalit Beriwala, managing director, Shyam Steel, said, the weakening rupee will inflate the landed price of the South African coking coal, which has already doubled to about Rs 24,000 per tonne from a year before. Steel firms may have to fork out 15-18% more for key inputs, with hedging costs, too, going up, he said. The cost of oil imports by downstream companies like Indian Oil Corporation, BPCL and Reliance Industries will go up. However, upstream oil companies like ONGC may stand to benefit from the rupee fall. As the crude oil is priced in the dollar, the depreciation by every one rupee against the greenback can potentially drive up ONGC’s revenue by about Rs 1,200 crore and profit by about Rs 650 crore annually, according to a company spokesman. Moreover, the rupee depreciation will likely have a bearing on the recent power ministry directive to blend 10% imported coal to tackle domestic shortage of the raw material. Natubhai Patel, managing director at Gujarat-based chemicals firm Meghmani Organics, said elevated costs of imports will push up finished product prices as well, even though entire cost increase can’t be passed on to the consumers. Some segments of the pharmaceuticals industry source as much as 60% of their input requirements from abroad. Similarly, the import dependence for inputs in select agro-chemicals segments is 40%, Patel said. Already, corporate profitability likely dropped 200-300 basis points in the June quarter from a year earlier, according to a Crisil analysis of the financials of over 300 firms (excluding those in the financial services, and oil and gas sectors). Alok Sahay, secretary general, Indian Steel Association, said, the rupee fall would drive up input costs. However, “there would be no immediate impact on the domestic steel prices, as it comes with a lag of two months or so”. Companies in some other sectors, where import reliance for inputs is very limited, are not perturbed by the rupee fall. Shreevar Kheruka, managing director and chief executive, Borosil, said: “I do not see too much of an impact on the manufacturing sector. If anything, a weaker rupee helps exports and combined with the China + 1 factor, I believe this is a large opportunity for the entire manufacturing sector. For Borosil, a weaker rupee can only improve margins, as we manufacture a large chunk of our goods in India and compete with imports from the rest of the world,” Kheruka added. B Thiagarajan, managing director at Blue Star, said, “Some of the commodity prices are coming down drastically and that will partly offset the impact of the rupee depreciation. I am more worried about inflation than the drop in rupee. We keep 45-day inventory of finished goods in the system, raw material is maintained for three months and we also hedge against currency risks. So, as a manufacturer, these daily changes in currency are not so much of a concern to me,” he added. Shashank Srivastava, senior executive director (marketing and sales) at Maruti Suzuki India, said: “It also depends on what you are importing and in which currency you are importing. For Maruti, a lot of imports are in yen. Therefore, more than the dollar-rupee rate, it is the yen-rupee rate that matters to us.” Since the yen has depreciated against the rupee, it has turned out to be ‘beneficial for us’, he added. Vimal Kejriwal, managing director and chief executive at KEC International, an engineering, procurement and construction firm, said, “For most of the project exporters like us, the fall in rupee would definitely be beneficial. In our case, about 50% of our total revenues are from overseas operations, and in a way, we are not different from an IT company”.
MSME focussed digital lenders have brought inclusion and formalisation of credit by providing widespread access to information India is now a country of over 100 million micro, small and medium enterprises (MSMEs) following the inclusion of retail and wholesale trading in the MSME category by the government last year. This means the fortunes of over 25 per cent of the households are linked to any policy changes related to MSMEs. Over 47 per cent of micro enterprises and 53 per cent of SMEs have adopted digital sales platforms according to a CRISIL report. Another report assessed that over 65 per cent MSMEs have incorporated WhatsApp and video conferencing like digital tools into their daily business operations. Use of digital mediums for payment collections, online sales by MSMEs, GST transactions have seen between 50-100 per cent growth over the last few years. Despite all this, the fact is that over 90 per cent MSMEs in India are Micro in nature (turnover of less than ₹5 crore), don’t have enough turnover to fall under the GST or other taxation ambit and don’t maintain formal record keeping of their finances. They still rely on savings, friends, family and money lenders for meeting seasonal exigencies for working capital or growth capital and fall short of requirements most of the time. As per a Global Findex report, only 8 per cent of India’s population borrowed money from formal sources and this may not be a result of choice, given that informal funding is costly and at times considered embarrassing. Over the last five to six years, digital lending has gained significant prominence, bolstered by the success of strong government payments infrastructure, burgeoning ecommerce sales and customer base and thus, more than 50 per cent of the new Bank accounts opened in the last five years, have been by Fintechs. The RBI has promoted multiple sandboxes to propel innovation in the MSME space. Further, NITI Aayog’s recommendation on digital banking for businesses are examples of policy level thinking for the betterment of the MSME sector. The digital lenders have truly brought inclusion and formalisation of credit to the fore by providing widespread access to information, availability, transparency and hassle free experience. They use data backed surrogate underwriting tools and cash flow based assessments to sachetise the lending size and use cases. MSMEs can now access loans based on their purchase and sales, discount their invoices, borrow against their machinery or even pledge bullion digitally. Data suggests that digital lending is one of the fastest-growing fintech segments in India and it grew exponentially from a volume of $9 billion in 2012 to $110 billion in 2019 and is expected to grow to $350 billion by 2023. According to the Global Findex report 2021, distance to financial institutions, lack of trust, and lack of need were the most commonly cited reasons for formal banking account inactivity in India. Adequacy and timeliness of funds are equally prominent reasons. India’s private debt to GDP ratio is amongst the lowest in the world and needs to really expand to contribute to the GDP per capita. Digital lending has both the potential to solve most of the challenges mentioned in the aforementioned report due to the ability to use the new age ML and AI architecture to disseminate credit efficiently, minimising frauds and errors.
Embedded finance and ONDC Embedded finance, as a category, now enables merchants to take real time loans during the purchase and sale journeys. It is becoming a boon to many small outlets that can stock more, sell and pay to the lenders once sale is done versus requirement of upfront cash in the past. Payment collections in industries like Textiles and Chemicals have significant challenges and invoice backed financing propositions by the Trade Receivables Discounting System (TREDS) ecosystem and digital lenders are bringing discipline and unlocking significant cash flows stuck in the working capital. The recently announced Open Network for Digital Commerce (ONDC) is a promising framework that can take MSME credit and their effectiveness to the next level. The RBI is taking measured steps in both encouraging digitisation of the lending processes and at the same time checking on the data and customer centricity components to ensure sustainable growth of the ecosystem. That said, the penetration of formal credit for MSMEs has fallen significantly short of potential. The MSME credit culture in the country has a history of higher delinquencies that have further precipitated with demonetisation, GST, IL&FS crisis and the continuing Covid pandemic, breaking the backbone of this segment. Cost of funding for the digital lenders remain elevated as banks and NBFCs are charging significantly high rates for such onlending, making low cost funding to MSMEs difficult. The availability of consent based digital data like GST, banking information, transaction data is still in its nascent stages, making it difficult to underwrite thin files, even with surrogate data. The Business KYC process is still a high friction process versus the consumer KYC and is an area that needs attention to viably expand small size credit to MSMEs. The prospects for MSMEs getting affordable access to finance are bright due to continued governmental focus on making these enterprises competitive, digitisation of trade records like GST and digital payments, and schemes like Mudra and CGTMSE by SIDBI. Fintech players are now tapping low cost funds via the co-lending mechanism and this can be the game changer in the near future for MSMEs. A lot more support is required from the government and the stakeholders in encouraging digital lenders and digital lending on the lines of priority sector lending and initiatives like UPI. Digital lending can unlock a very strong culture of formalisation in the economy that has far reaching benefits. The industry needs to focus on MSME education relating to benefits of formal finance, better litigation mechanisms for managing wilful defaulters and early warning signals, stronger banking-fintech partnerships to provide inclusive finance as enablers for the digital credit revolution for MSMEs. This is very important for propelling the country towards the goal of becoming a $5 trillion dollar economy and beyond.
Source: The Hindu Businessline
• The manner in which the finance ministers of all the states have distorted the basic nature of GST without consulting stakeholders, it is clear that the Council has no interest in simplifying the tax system and enlarging the scope of the tax net in a healthy manner, CAIT said The Confederation of All India Traders (CAIT) on Sunday said that it would launch a nationwide agitation from July 26 demanding rationalization of GST rates on grounds that it is causing an adverse impact on trade and commerce. The traders' body stated that bringing unbranded food and other products under the GST tax would increase the compliance burden on the traders. Moreover, a hike in rates of daily use items such as textiles and footwear will add to the inflationary pressure, CAIT said. “The manner in which the Finance Ministers of all the states have distorted the basic nature of GST without consulting stakeholders, it is clear that the Council has no interest in simplifying the tax system and enlarging the scope of the tax net in a healthy manner," CAIT said in a statement. CAIT National President Shri BC Bhartia and Secretary General Shri Praveen Khandelwal said that the national agitation will begin from Bhopal on 26th July. and more than 50 thousand trade organizations in the country will aggressively participate in the national movement. Several tax rate changes, including on low-cost hotel accommodation, expensive hospital room rent, solar water heaters, coal bed methane, cheques and select farm equipment, will take effect from 18 July. As per the changes brought in GST rates, tax exemptions have been withdrawn on a few items, and these will now be taxed as per the GST Council’s decisions. These include cheques at 18%, pre-packaged and pre-labelled items such as curd, lassi and buttermilk at 5% and maps at 12%. Also, capital goods used in petroleum and coal bed methane exploration will now be taxed at 12% instead of 5%. The Council also decided to raise tax rates on items such as ink, knives and pumps from 12% to 18% and solar water heaters and leather from 5% to 12%. In addition, cut and polished diamonds will attract 1.5% GST, up from 0.25% now. Also, hotels with rent below ₹1,000 a night will attract 12%, and non-ICU hospital rooms with rent above ₹5,000 will be taxed at 5% without the input tax credit.
Source: Live Mint
Turkish Ambassador to Bangladesh Mustafa Osman Turan has called for investment in joint ventures in the apparel and textile industries in Bangladesh and his country. The envoy paid a courtesy call on Bangladesh Garment Manufacturers and Exporters Association (BGMEA) President Faruque Hassan in Dhaka Sunday. They discussed various issues, including potential areas for enhancing trade and investment between Bangladesh and Turkiye. Faruque said there are many opportunities for Bangladesh and Turkiye to complement each other on issues related to mutual interests, particularly in boosting the apparel and textile businesses. Turan and Faruque also expressed interest in facilitating sharing of knowledge and expertise in the apparel and textile industries through collaboration between the BGMEA University of Fashion and Technology and leading Turkish fashion institutes. Interactions between designers and technical experts through the exchange of faculties and students will help develop knowledge and skills and benefit both countries, they said. BGMEA First Vice-President Syed Nazrul Islam, Vice-President Miran Ali; directors Asif Ashraf, Barrister Vidiya Amrit Khan, Chair of BGMEA Standing Committee on Foreign Mission Cell Shams Mahmud and Chair of BGMEA Standing Committee on ILO issue ANM Saifuddin were also present at the meeting.
Source: TBS News
The embargo on 10 types of goods has been lengthened till August-end as per a notice published in the Nepal Gazette. The government has extended an 81-day-old import ban on 10 types of goods for another one and a half months, citing lack of improvement in the country's foreign currency reserves. The entry of mobile sets costing more than $300, motorcycles with a capacity of over 150 cc, liquor, tobacco, diamonds, television sets larger than 32 inches, automobiles, toys, playing cards and snacks, which have been designated to be luxury items, has been disallowed since April 26. The embargo has been lengthened till August-end as per a notice published in the Nepal Gazette on Sunday. Market insiders say the extension would only benefit certain businessmen and spur market distortion. The import ban has also raised concerns among Nepali traders who are in the process of stocking up on inventory for the Dashain and Tihar shopping season in September. Merchants normally start importing stock two months in advance for Nepal's biggest festivals. “The ban which has been extended till August 30 will hit festive sales of automobiles,” said Dhurba Thapa, president of the Nepal Automobile Dealers’ Association. The delivery of imported vehicles takes nearly three months after the letter of credit is opened, according to him. “The decision is causing worry to everyone.” Thapa said that international automobile makers are losing trust in Nepali traders and banks too. Around 50 percent of the annual automobile sales take place during the Dashain and Tihar shopping season as dealers offer schemes and discounts, Thapa said. Would-be bike buyers wait for the festive season to take advantage of the sales discounts, he said. According to the Department of Customs, Nepal imported 257,636 motorcycles worth Rs25.59 billion in the first 11 months of the last fiscal year. Automobiles worth Rs93.64 billion entered the country during the review period. Experts say the government has utterly failed to revive the economy. People are travelling abroad in droves due to the lack of employment opportunities in the country. Tens of thousands of farmers across the country are facing shortages of chemical fertilisers. Inflation is rising to double digits. The government’s capital expenditure slowed to a near all-time low of 57.23 percent. There is currently no dedicated finance minister in the country. Janardan Sharma resigned as the finance minister on July 6 after charges that he invited outsiders to tweak tax rates on May 28, a day before he presented the budget in Parliament. A parliamentary probe committee, formed hours before Sharma resigned, is looking into the allegations. With none of the economic indicators looking good, the government’s move to restrict import will create market distortion, insiders say. “Nepal is not North Korea. Nepal has agreements with the World Trade Organisation and South Asian Free Trade Area and other international trade groups and has to follow discipline,” said trade economist Posh Raj Pandey. “Banning goods is not a solution to the problem.” Pandey, chairman of South Asia Watch on Trade, Economics and Environment, said the import ban was a violation of Nepal’s international commitments. “Unless the International Monetary Fund says there is a problem in the balance of payments, Nepal cannot impose restrictions on imports.” According to Thapa, the government has banned the import of motorbikes in the range of 150 cc to 200 cc capacity when demand for these models is the highest and grows further during the festival season. “The ban will be in place until August 30. Even if it is lifted on September 1, traders will have no time to open letters of credit to import goods. There is no meaning in importing goods after the festival.” Nepal’s annual import bill in the last fiscal year ended Saturday has been expected to reach close to Rs2 trillion, largely due to a steep rise in global prices spurred by volatile oil prices and the Russia-Ukraine war. In April, the government announced a complete ban on the import of mobile sets worth more than $600 and motorcycles with a capacity of over 250 cc. Mobile imports in the first 11 months of the last fiscal year were valued at Rs39.13 billion. Nepal imported motorcycles worth Rs26.66 billion during the review period, according to the Department of Customs. “The ban on smartphones costing more than $300 will fuel the grey market,” said Sanjay Agrawal, vice-president of the Mobile Phone Importers' Association. “The earlier decision to ban mobiles costing more than $600 had already impacted the market. The latest move would destroy the market and business confidence.” Demand for mid-range smartphones costing between Rs30,000 and Rs45,000 is high. “The ban will hit the government’s revenue collection. It will increase black marketeering too,” Agrawal said. According to the Department of Customs, Nepal imported 5.58 million mobile sets worth Rs38 billion in the first 11 months of the last fiscal year, up from Rs34.14 billion in the previous corresponding period. As per the notice banning imports, the move is intended to safeguard the country’s external financial position and foreign exchange stash that has been receding at a fast rate, posing a potential threat to the economy. But experts and consumers say the decision is ill advised as it will encourage market cartels. They have described the government decision to ban goods as a move to hide its shortcomings and lack of action to revive the ailing economy. “The list of banned goods has been influenced by cartels, protectionists, traders sitting on huge stocks and those who thrive on smuggling. #irrationality rules,” tweeted Sujeev Shakya, founder chair of the Nepal Economic Forum, a Kathmandu-based private economic policy and research institution. As of the first 11 months of the last fiscal year 2021-22 ended July 16, foreign exchange reserves had sunk by 19.6 percent, from $11.75 billion in mid-July 2021 to $9.45 billion in mid-June 2022, according to Nepal Rastra Bank. Central bank data show there has been a slight improvement in remittance inflows, the largest source of foreign exchange for the country. “As key sources of foreign exchange such as remittance, export, tourism and foreign aid have not helped the economy as expected, the government currently has no other option,” said senior economist Keshav Acharya. Acharya said that the country had not received remittances in the amount expected despite a massive surge in Nepali migrant worker departures. Remittance inflows rose by 1.5 percent to $7.51 billion in the first 11 months of the last fiscal year. “It is a time of urgency, we have to take all measures to maintain adequate foreign exchange reserves to prevent the country from heading in the direction of Sri Lanka,” said Acharya.
Source: Kathmandu Post
The Bangladesh Bank recently allowed importers to extend corporate, personal or thirdparty guarantees to foreign lenders making payments to suppliers under buyer's credit against imports on sight letters of credit to facilitate short-term import finance under buyer's credit, a loan facility extended to an importer by an overseas lender to finance purchase of capital goods, services and other items. The total value of import letters of credit (LCs) opened by authorised dealer banks between July 2021 and May 2022 was 43.10 per cent higher than that of the same period of the previous year. Import LCs were worth $84,852.07 million during this period and $59,297.49 million during the same period the previous year, said a press release from the central bank. The value of LCs settled during July 2021-May 2022 totalled $75,133.30 million—47.59 per cent higher than that of the same period of the previous year ($50,907.04 million), Bangladeshi media reported.
Source: Fibre 2 Fashion
A six-member delegation of the European Parliament arrived in Dhaka yesterday to learn about the country's trade with Europe and its progress in adapting to more demanding trade standards. The trade committee led by Heidi Hautala also includes José Manuel García-Margallo, Sven Simon, Agnes Jongerius, Jordi Cañas and Maximilian Krah, according to a statement of the European Parliament. They will meet ministers of commerce, labour, justice and foreign affairs, and will hold discussions with relevant parliamentary committees. They will talk to employee associations, trade unions and civil society organisations and visit a textile and a pharmaceutical factory to assess compliance levels before departing on July 20. They will also discuss Bangladesh's status as a beneficiary of the EU's Everything But Arms (EBA) trade preference scheme through which all Bangladeshi exports can enter the EU duty- and quota-free. The six will also look into how the country has prepared for its upgrade to GSP-plus, a programme that requires that 27 international labour, social and environmental conventions are in place. Bangladesh currently enjoys the generalised system of preferences (GSP) facility, under which it exports can enter EU duty- and quota-free. The country will be upgraded to GSP-plus once it graduates from least developed country (LDC) status in 2026. To avail the GSP-plus facility, Bangladesh would start to pay duties on its clothing exports which constitute over 90 percent of its merchandise sold to the EU. "The European Union is committed to a partnership with Bangladesh to support the country's socio-economic development. The EU is the most important export market for Bangladesh and ready-made garments represent 83 percent of those exports," Hautala was quoted as saying in the statement. "Strengthening respect for human rights, freedom of expression and labour rights underpins this cooperation. I look forward to discussions in Dhaka on how Bangladesh can fully comply with the requirements of EBA and best prepare to meet the criteria for possible future GSP+ status." She said they would also highlight the importance of the forthcoming EU Corporate Sustainability Due Diligence Directive to the country. "It will make sure that European companies will not be complicit in violations of labour rights in their supply chains. The government of Bangladesh has all the reasons to speed up the reforms to which it is committed," said Hautala before the visit.
Source: The Daily Star
The United States and Saudi Arabia signed 18 agreements and memoranda of understanding for joint cooperation in the fields of energy, investment, communications, space and health during a visit by U.S. President Joe Biden to the Kingdom, Saudi state TV al-Ekhbariya reported. Some of the agreements were signed between Saudi ministries of energy and investment; Royal Commission for Jubail and Yanbu; and some private sector companies and U.S. companies including Boeing and Raytheon in the defence industry; Medtronic, Digital Diagnostics, IQVIA in the healthcare sector; and a number of other American companies in the fields of energy, tourism, education, manufacturing and textiles, according to Saudi state news agency (SPA).
Source: KFGO
Domestic slump, combined with the decline in exports, as well as the US ban has put China’s once booming textile industry in trouble. China’s textile manufacturing industry, which is the largest in the world and accounts for 7 per cent of the country’s GDP, is in a downward spiral, reported Financial Post. The COVID-19 pandemic proved the major reason for decline in demand besides the increase in raw material prices. There are gloomy days ahead as China is losing its space in textile exports to other Asian countries like Vietnam and India. However, things are going to get much worse as the UK and US banned cotton imports amid allegations of forced labour in China’s Xinjiang even as the European Union is mulling a similar move, reported Financial Post. There has been a massive loss to the textile industry in China since 2020 while the demand in 2022 has lowered by 40 per cent from the last year. After the Uyghur Forced Labour Prevention Act (UFLPA) came into force, US companies stopped buying cotton from China. This has come as a big blow to the Chinese economy which is already facing multiple headwinds. The US ban has choked the supply chain of China’s textile industry as over 3 million tonnes of cotton remained unsold in Xinjiang despite the new harvest season a couple of weeks away. “Xinjiang cotton used to be the most expensive cotton in the world. Now it has become the cheapest, and still, no one buys it,” said a Chinese cotton-ginning mill owner. Further, human rights activists are urging Canada, European Union and other major countries to ban products manufactured by forced labour in China, reported Financial Post. Laura Murphy, a human rights professor at UK’s Sheffield Hallam University, said “The EU also needs to be a leader in passing mandatory human rights due diligence. Both these tools are necessary to ensure that companies address the forced labor and other abuses in their supply chains.” The ban on such products especially cotton is going to hurt China seriously since the textile industry’s contribution to China’s total exports is over 11 per cent. The impact of all these factors is quite visible. According to China National Cotton Information Centre, the rate of machines actually turned on at textile factories was 79.7 per cent, which showed a decline of 13.3 percentage points year-on-year, reported Financial Post. Also, China’s loss is other Asian countries’ gain. India, Vietnam, Bangladesh and Indonesia are getting new clothing orders, which include USD 6 billion worth of textile orders that were originally meant for China. The Chinese loss of orders is around 90 per cent within a year, said the China Chamber of Commerce for Import and Export of Textiles. Vietnam has set a record in exports of clothing material. In the first half of 2022, it exported textile products worth 22 billion, which is 23 per cent higher than the corresponding period last year.
Source: The Print
Demand for logistics services in most container ports in China is growing, buoyed by trade demand, especially at Ningbo-Zhoushan Port in Zhejiang province, Qingdao Port in Shandong province and Tianjin Port, according to a report released by the Centre for Forecasting Science, which said the total container throughput of ports in China will continue to grow this year, supporting foreign trade and global supply chain operations. The centre is part of the Chinese Academy of Sciences. Seven of the world's top 10 container ports this year will be in China with Shanghai Port topping the list, the ‘Outlook of Global Top 20 Container Ports’ said. The report predicted that the country will continue to play an important role in the stable development of the world's container ports and logistics. It is expected that Shanghai will have a container throughput of up to 48.2 million twenty-foot equivalent units (TEUs) this year, a year-on-year (YoY) increase of 2.5 per cent, official Chinese media reported. Although overall container volume at Shanghai will decline due to COVID-19 this year, the port's average daily operating volume will remain above 100,000 TEUs, according to the report. Ningbo-Zhoushan Port, which is expected to rank third, will see a rapid rebound in total container throughput, likely reaching up to 33.4 million TEUs this year, an YoY rise of 7.5 per cent, the report said. However, there may be a slower growth rate of total container throughput compared with that of last year, it added. China's foreign trade rose by 8.3 per cent YoY to 16.04 trillion yuan ($2.38 trillion) in the first five months, said the general administration of customs. Its exports grew by 11.4 per cent on a yearly basis to 8.94 trillion yuan, while imports increased by 4.7 per cent from last year to 7.1 trillion yuan.
Source: Fibre 2 Fashion
It is now well known that Europe has a massive textile waste problem - currently 7 to 7.5 million tons are generated annually (mainly in private households), but only about 30 to 35 percent is collected separately and less than 1 percent of textile waste is currently recycled into new clothing. European waste legislation aims to change that, and accordingly, all EU member states will have to collect textile waste separately over the next two and a half years. While some countries are already developing systems to meet the waste collection challenge, there is currently no large-scale plan for processing this waste. This is where the new study “Scaling textile recycling in Europe - turning waste into value” by McKinsey & Company comes in, supported by Euratex's ReHubs initiative, which aims to achieve fiber-to-fiber recycling for 2.5 million tons of textile waste by 2030. One-fifth of textile waste could become new garments According to the McKinsey study, at least one-fifth of textile waste could become new clothing, and a circular economy for textiles could create 15,000 new jobs in Europe by 2030 and reach a market size of 6 to 8 billion euros. However, this would require kickoff investments of 6 to 7 billion euros. In a webinar on Thursday evening, four authors of the study - Karl-Hendrik-Magnus, Jonatan Janmark, Nikolai Langguth and Moa Strand - presented different scenarios of how textile waste volumes and collection and recycling rates will develop by 2030. They also showed the potential of the recycling industry in Europe and came to the positive conclusion that “Europe will lead the way for the world”. “If the full technical recycling potential were realised and more textiles were collected, between 18 and 26 percent of textile waste could be recycled to make new garments as early as 2030,” said Magnus, senior partner and head of fashion industry consulting at McKinsey in Germany. “Scaled textile recycling would not only save four million tons of CO2, but also create a profitable industry with 15,000 jobs in Europe.” Value through recycling.The authors emphasised that the expansion of the textile value chain - i.e. textile recycling - not only has social and environmental benefits, but also economic ones. Therefore, they answered the question posed by the participants as to whether this value chain could be sufficiently monetised and made profitable with a clear ‘yes’. “The investment in fiber-to-fiber recycling is worthwhile not only for sustainability reasons. New raw materials can be created during recycling that would enable more fashion production in Europe. This could generate even more value for this recycling industry,” said Janmark. However, to realise the full potential of textile recycling, a total of around 6 to 7 billion euros in investments will be needed by 2030, and this throughout the value chain, for example for collecting and sorting textile waste and the establishment of recycling facilities. Challenges However, there are also a number of other challenges to overcome - for one, the massive fragmentation of feedstock and the fact that it consists of largely mixed fibers. These still pose a problem, as fiber sorting is currently still largely manual and at an immature stage. Technical upgrades and greater automation are the need of the hour. “However, this is not doomsday, but means great opportunities,” agreed the authors. One figure that impressed participants was a 70 percent fiber-to-fiber recycling rate that could be possible by 2030. The authors explained that this figure was the result of an indepth analysis that took into account the current nature of textiles in circulation and their composition. “This so-called fiber-to-fiber recycling, where textile fibers are turned into new fibers for fashion, is the most sustainable way to generate something new with value from waste,” explained Janmark. To achieve this, the collection rate could be increased to 50 to 80 percent by 2030, or the circular economy that produces new fibers for fashion from textile waste could be scaled up to 18 to 26 percent. Currently, it is less than 1 percent. Different recycling technologies This move towards a circular economy is made possible by new technologies, such as mechanical recycling of materials like cotton, thermo-mechanical recycling, which creates polymers, and chemical recycling for the reuse of polyester, which is currently at a trial stage. Thermo-chemical recycling is also a possibility, generating syngas. Each technology also needs to consider energy efficiency and the ability to produce virgin-like quality, which is often antiproportional. “Here's the good news: the multiple types of recycling technologies and innovations are not in conflict with each other, but we need them all,” explained Langguth. “However, the collection and processing of old clothing and textiles still faces major challenges due to fragmented, small-scale structures and still mostly manual work processes. Clothing waste has to be sorted according to quality criteria, buttons and zippers removed and fiber compositions clearly identified. Many products made of mixed fibers still pose an unsolved problem for fiber-to-fiber recycling,” finds the study. Keyword nearshoring Here, nearshoring is the keyword and an opportunity for Europe. After all, recycling should take place where the waste material is generated. Afterwards, the recycled material can be forwarded - for garment production in Asia, for example - as transport becomes more efficient after the recycling process. The webinar participants - including brands, investors and government organisations - wondered if consumers would be willing to engage and pay more for recycled/sustainable products. The answer has to do with the different target groups: the younger they are, the more willing to seek out and purchase recyclable or sustainable materials. But circular design will also play a big role and minimise waste from the beginning.
Source: Fashion United
