INTERNATIONAL
The Federation of Surat Textile Traders Association (FOSTTA) has strongly urged the ministry of textiles to propose anti-dumping duty on the fabrics imported from China and other countries to rescue the domestic man-made fabric (MMF) sector in the country. In a letter addressed to Union Textile Minister Santosh Gangwar, FOSTTA office-bearers stated that almost 50 per cent of the MMF sector in Surat is observing a total shutdown from the past one month. The manufacturing of polyester fabric by the powerloom weavers has been stopped due to the weak demand of fabrics and the onslaught of the cheap imported fabrics from China. "We have urged the Central Government to impose anti-dumping duty on the imported fabrics. Compared to the fabrics produced indigenously, the imported fabrics are almost 100 per cent cheaper. In the last one year, crores of meters of fabrics has been imported into the country, thereby paralyzing the MMF sector," said president of FOSTTA, Manoj Agarwal. The Central Government should open customs & excise facility at Surat airport to monitor the exports directly from Surat airport. The custom and excise office in Surat should be authorised to export. According to Agarwal, the benefits under the Technology Upgradation Fund Scheme (TUFS) should be extended to the textile processors as well as the traders. At present, the TUFS benefits are only for the powerloom sector. "We have also demanded cargo service form the Surat airport at the earliest. This will help our textile exporters to directly export the fabrics to various destinations, instead of diverting them from Mumbai and Delhi" said Agarwal.
SOURCE: The Times of India
The cotton prices may trade higher today as there are reports on lower supplies of good quality stock for mills, according to a report of Angel Commoditites. The Angel report noted that in the 3rd advance estimate by government, production of Cotton estimated at 30.52 million bales (of 170 kg each) is also lower by 4.28 million bales than its production of 34.805 million bales during 2014-15. Earlier, Cotton Association of India (CAI) has cut production estimate to 341 lakh bales (of 170 kg each) of the fiber in the 2015/ 16 season that started on October 1, from 342 lakh bales estimated last month. The arrivals of cotton during the ongoing 2015-16 season continue to lag last year. CAI data revealed the arrivals during 2015-16 season up to the end of March 2016, which are estimated at 280.15 lakh bales are lower by about 12 percent than 318.45 lakh bales arrived till the same period last year. The country had exported 6.7 million bales (of 150 kg each) in the 2014-15 marketing year (October-September). Major export destinations include Bangladesh, Pakistan and Vietnam. As per Indian Cotton Federation (ICF), cotton supply in the current season is around 415 lakh bales after estimating opening stock of 52 lakh bales and the imports of 11 lakh bales. Total cotton consumption/ demand for the season estimated to be around 380 lakh bales this season, report said.
On the global scenario, Angel Commodities reports informed that cotton futures rose on Monday as market participants’ increase their position due to chart based trading at lower prices. In its monthly World Agriculture Supply and Demand Estimate report, USDA raised its outlook for US inventories of cotton to be carried into the 2016/17 crop year but forecast world stocks to decline next year. Speculators cut net long position to 24,306 from 30,397 in the latest week as prices sank ahead of the U.S. Department of Agriculture’s monthly crop report. Chinese officials may auction up to 2mt of cotton from its reserves, between the start of May and the end of August, when the domestic harvest begin. As per latest ICAC press release, world cotton production expected to increase slightly by 4% from 22 mt in 2015/16 to 23 mt in 2016/17. Cotton production in the US may decline by 21% to 2.8 mt in 2015/16. Cotton consumption is projected to remain at 23.7 mt in 2016/17, the report said. The report informed that Cotton Corporation of India (CCI) was active in selling cotton as supplies are dwindling in the physical markets. There are expectations of revival in on export demand, the report pointed out.
SOURCE: The Tecoya Trend
The Textile Ministry has decided to rope in large public sector banks such as the United Bank, UCO Bank, Canara Bank, Bank of India and PNB to partner under the Pradhan Mantri Mudra Yojana scheme to extend concessional loans up to ₹5 lakh to handloom weavers in all States, Alok Kumar, Development Commissioner, Handlooms said. The Centre has decided to discontinue the Weaver Credit Card scheme, which provides a maximum loan of ₹2 lakh and from July, handloom weavers will be extended credit only under the Weaver Mudra scheme, which will have the additional feature of allowing them to withdraw the sanctioned amount from ATMs using RuPay cards. The decision has been taken encouraged by the huge success of the pilot project under the ‘PNB Weaver Mudra Scheme’ in Varanasi and Bhubaneswar as the average credit disbursed doubled to ₹50,000 for the 500 weavers covered as opposed to an average of only ₹23,000 under the existing Weaver Credit Card scheme.
Through this new scheme, cash-starved small handloom weavers across the country are set to get almost double the credit available now in a move aimed at helping them increase their productivity and gain independence from master weavers. The Weaver Mudra Scheme, too, will provide credit at concessional rates as the credit card scheme. It has been modified from the original Mudra scheme to incorporate the 3 percent interest subvention provided to handloom weavers for three years. The Centre plans to cover five lakh weavers under the Mudra scheme over the next three years and has sought the assistance of States. They will ask States to take a number of weaver clusters, talk to banks and then saturate the clusters in one year so that it has a sizeable impact and monitoring is easy. There are over 23 lakh looms in the country and about 43 lakh workers engaged in the sector. Despite a fall in overall exports from the country, export of handlooms has been more or less flat at around ₹2,300 crore per annum.
Kumar is keeping track of success stories emerging from the pilot project with weavers getting access to more working capital. Dasrathi Patra, Surendra Mati and Bata Patra are all weavers at Manibandha in Cuttack who availed themselves of a loan of ₹50,000 each last December under the Mudra scheme and successfully managed to cut ties with the master weaver, as they had enough capital to buy raw materials on their own. Kumar said that in the case of these three weavers, income has gone up from 60 percent to 200 percent in four months. Credit under the older scheme was just not enough to meet the requirement. But, if you put enough money in the hands of weavers, they can benefit immensely.
SOURCE: Yarns&Fibers
Chief Minister N Chandrababu Naidu is likely to visit the Brandix apparel city at Atchyuthapuram in Visakhapatnam district later this month, probably on Saturday, to familiarise himself with the problems faced by the workforce, especially women, according to authorities. The Brandix apparel park is in the news of late, as the women workers have been agitating for a minimum wage of Rs. 10,000 a month against Rs. 5,000 at present. They went on strike for a few days but were persuaded to resume work. The issue remains unresolved. There has been widespread support for the women workers. It is expected that the Chief Minister’s visit may result in some decision to resolve the issue. According to sources, the Chief Minister is also likely to review other projects such as the projects in the health city and the water supply to the Visakhapatnam Steel Plant. The steel plant has been facing severe water scarcity for some time and earlier this month production was disrupted. However, some steps were taken, including diversion of water from the Thandava reservoir, to mitigate the problem. But the diversion of water is being criticised by some political leaders.
SOURCE: The Hindu Business Line
Most of the reforms that address the ‘doing business’ environment are essentially related to procedural and transactional issues on the ground. In other words, these are micro-level issues that are often not in the public eye or part of the bigger narrative of reforms agenda. Trade facilitation is a classic example. In the larger narrative, the WTO Bali Trade Agreement is seen as a game-changer. In reality, most of the key challenges related to clearance of goods at the border in India go much beyond the Bali-related obligations. A discussion of some of the main trade facilitation challenges facing business in India would illustrate this.
Some challenges
Many products require clearances from agencies other than customs: for example, pharmaceuticals require clearance (or ‘no objection’) from the Additional Drug Controller (ADC). Such clearances often take up a lot of time, especially if the process requires collection and testing of the products. The newly launched ‘single-window’ initiative of customs aims to address this problem by having a single common declaration for both customs and these other agencies, and having these agencies give their ‘no objection’ or clearance online through this electronic single window. The problem is that these agencies still require a separate submission of physical documents and do not have processes in place that would use the information already available in the customs declaration to clear the goods in advance, prior to their arrival at the port or airport. For example, ADC could use the information in the common declaration to determine in advance whether samples would need to be collected and inform the trader and make arrangements for the same, thereby saving precious time in the clearance process. But this is not possible in the current system. It is also important to note that the customs and excise systems have not been integrated. Separate declarations for the same customs clearance transaction are still required for these two wings of the same department. Hopefully this will be addressed in the future and the proposed GST Network (GSTN) is integrated with IceGate, the e-commerce portal of the Central Board of Excise and Customs.
Another key proposed reform is the development of a paperless clearance system. To be effective this would mean that all supporting documents required for customs clearance would be submitted online and physical paper copies would not be required. For example, a scanned copy of commercial invoice with a digital signature affixed to it would be acceptable and a physical copy would not be required. The paperless system implementation process needs to ensure that officers on the ground do not continue to ask for paper copies, and at no stage of the process is there a requirement for a paper copy duly signed and endorsed by a customs officer. If implemented with zero tolerance for any exceptions, this reform would revolutionise the customs clearance environment and take care of a significant portion of rent-seeking that happens due to the collusion between dishonest elements in customs administration and trade.
Avoiding delays
A critical trade facilitation reform announced in this year’s budget by the finance minister is to provide deferred duty payment facility to certain ‘trusted entities’. This essentially means that the ‘trusted entity’ would have the ability to pay duty after the goods have been cleared and received by the importer. Since a significant portion of the delay in clearance happens at the duty payment stage, this could help substantially cut clearance time and transaction costs. But in order to be effective, deferred duty payment should be extended to as many categories of ‘large and trusted’ entities and should cover all major manufacturers. This would provide a much needed push to the global supply chain integration for Make in India. Another crucial item in the reform agenda relates to risk management systems (RMS) integrated into customs online clearance platform. RMS ensures that only a small portion of the shipments that are being cleared are selected for further inspections and checks based on robust risk parameters, while the rest are cleared automatically.
An efficient RMS is critical in an environment where volume of trade has increased much faster than number of officers deployed. A large number of shipments marked for further processing would put an increasingly high workload on a small number of officials, leading to delays. India’s RMS still picks a relatively large number of shipments for further processing. This needs to be changed and a target of 90 per cent automatic system-based clearance needs to be set. It also needs to be noted that while customs has implemented RMS, the other border agencies have not. This discrepancy leads to delays in clearance by other agencies. The IT and RMS systems of the other agencies need to be brought up to speed. These reforms seem like minutiae. But the path to actual trade facilitation is essentially a matter of detail and effective implementation on the ground. For example, a paperless electronic system can be stymied by constant demands for paper copies due to ‘doubts’ of the officer. The behaviour of an individual officer is a ‘micro’ issue which adds up to a ‘macro’ challenge in overall systemic reforms.
About policy
Another example is the frequent IT-related glitches in the customs online platform that lead to a hold-up in clearances and temporary falling back on ‘manual’ clearances with its attendant lack of transparency. The overall downtime of the system may be less than 5 per cent, but it is enough to create a poor ‘doing business’ image for the country. The actual shape of the final policy is also important. For example, deferred duty payment could only be extended to a chosen few due to vested interests. Thus a ‘trusted’ freight forwarder who gets such a facility would be in a position to corner a large share of the market. Thus, it is important that the top leadership in government, including the customs department, do not take their eyes off the ball. India has taken bold steps in trade facilitation in recent months that go much beyond the Bali obligations. It is time to show that these steps are towards real and meaningful changes on the ground.
SOURCE: The Hindu Business Line
Improving ease of doing business being its top priority, the Centre will soon enter into investment agreements with states in order for them to honour bilateral investment treaties (BITs) that New Delhi will sign with foreign countries for investment protection. States which enter into such back-to-back agreements with the Centre will be more attractive destinations for foreign investors, economic affairs secretary Shaktikanta Das tells Prasanta Sahu in an interview. Excerpts:
What is the idea behind the proposed Centre-state investment agreement?
Certain actions (like regulations promoting local industry) which are in the domain of state governments, at times get attracted under BITs, leading to disputes and arbitration. So, we want to have back-to-back agreements with states so that the states are fully on board for effective implementation of BITs. States which sign this agreement will definitely be far more attractive destinations for foreign investors. The text of the bilateral agreement with states has been prepared. It will be discussed upon by an inter-ministerial group before taking it to next stage.
When will the NIIF be operationalised?
The CEO of the National Investment and Infrastructure Fund (NIIF) will be appointed shortly. In parallel, we are in discussions with various sovereign wealth funds, pensions funds, etc. Some of them have shown interest to invest in NIIF directly while some others have shown interest in co-financing of individual projects. I would say in the next quarter, you will see lot of action.
What will be the terms of reference (ToR) for the proposed FRBM committee?
The ToR will be made flexible enough so that the committee has complete freedom to engage with the various stakeholders and give its recommendations. It’s already 10-11 years since the Fiscal Responsibility and Budget Management Act (FRBMA) was implemented.
There has been tangible gains both at the Central and state levels. So, the time has come to review it: whether we can have a range in terms of fiscal deficit target and whether it can be aligned with credit expansion or contraction.
When will the monetary policy committee (MPC) be set up?
The MPC selection committee will meet shortly to decide on modalities and procedure for selection of candidates. The MPC should be in place by September.
Are you planning any changes to the gold monetisation scheme?
There is some issue relating to tripartite agreement to be signed between the banks, refiners and the collections and testing centres. Some of the banks are asking for very high guarantees from the collections and testing centres, which are receiving gold on behalf of banks and will be in the custody of gold during the transit period. We have asked the banks to review that based on client relationship.
When do you think GST will be implemented?
The endeavour is now to pass the GST Constitution Amendment Bill in the monsoon session. If it gets passed, we are definitely looking at its implementation from April 1, 2017.
SOURCE: The Business Standard
The recently released national IPR policy does a reasonably good job of striking a balance between public interest on the one hand and the need to protect and incentivise innovation on the other. However, the backdrop is not to be overlooked: the developed world, particularly the US, has put India’s IPR laws under ‘watch’ for not protecting innovation and discouraging research and investment. Mega trade blocs are pushing a WTO-plus agenda which does not allow for domestic elbow room in the case of IPR. Yet, the policy has by and large maintained the existing sui generis position by asserting that India’s patent laws are fine because they are benchmarked to WTO rules. By saying so, it has, in effect, ruled out changes in Section 3 (d) of the Patents Act, which disallows the extension of a patent on the basis of ‘frivolous’ changes — staving off global pressure on this score. This also implies that compulsory licensing, or the right to waive patents in the event of a health emergency, will stay. Yet, global observers have been tactfully assured that our IPR laws will evolve over time, thereby seeking to address India’s obdurate image on the world stage.
That said, there can be no denying the need for improvements in the IPR ecosystem to protect the returns of genuine innovators. The policy acknowledges systemic flaws and moots governance changes, which will boost ‘ease of doing business’ and spur research. A staggering 2.4 lakh and 5.4 lakh patents and trademark applications, respectively, were pending as on February 1. The Centre’s move to reduce the processing time for patents to18 months (against over five years at present) is a welcome initiative. Processing time for trade mark applications also needs to reduce sharply. Apart from improving the capacity of patents offices, the move to unify the administration of all aspects of IPR — patents, copyrights, trademarks, industrial designs, geographical indications, plant varieties, integrated circuits and biodiversity — under the department of industrial policy and promotion is a step in the right direction. Allied to this is the effort to remove inconsistencies between sector-specific laws. The policy has emphasised codification of traditional knowledge to protect the communities concerned.
Yet, it misses the big picture. It sees IPRs as an end in itself, assuming a simplistic, linear link between intellectual property and creativity. It is all very well to encourage ‘commercialisation’ of IPRs as they add to the intangible wealth of a business concern, but intellectual property is meant to be used, not hoarded. The role of patent trolls worldwide is instructive here. Commercialised IPRs alone cannot spur creativity, given the current state of science education. An IPR-driven milieu should also seek to create a level playing field between big and small players, providing the latter with access to both funds and infrastructure. Technological progress has historically occurred as a product of sweeping social change. Guaranteeing intellectual property rights alone may not be enough.
SOURCE: The Hindu Business Line
For the first time in nine years, India's consumer confidence index has soared to levels of 134 for the March 2016 quarter, pointing to optimism that people here feel about job prospects, personal finance and spending. It was in the first half of 2007 that India had achieved a consumer confidence index of 135 ahead of Norway, which was then ranked second globally with an index of 132. While Nielsen, the market research agency that measures global consumer confidence, has moved to a quarterly reporting structure since 2009, India's 134-point index comes after three successive quarters of a score of 131 for it. In the post-Lehman era, India has been topping Nielsen's consumer confidence index for the last eight quarters, despite signs of a slowdown. The index is prepared after surveying 30,000 respondents with internet access in 63 countries. For the March 2016 quarter, Nielsen has reported consumer confidence levels for 61 countries, with the Philippines (119) and Indonesia (117) coming second and third globally in terms of consumer confidence after India.
Roosevelt D'Souza, Nielsen's India region managing director, pins down the three-point jump seen by the country in the quarter under review to the positive environment around. "The Union Budget presented by the finance minister at the end of February this year revealed the government's commitment to fiscal consolidation as well as paving the way for sustained and inclusive growth. In the days following the announcement, an improvement in various macroeconomic indicators was evident, which is optimal for improved consumer spending," he says.
Specifically, 83 per cent of urban Indian respondents remained optimistic about job prospects in the country for the quarter under review, which was the highest globally. When it came to the state of personal finances, 85 per cent of urban Indian respondents were optimistic again, while 66 per cent Indians felt that it was a good time to spend. Consumer confidence at 9-year high Indians, however, continue to be conscious of their purchase wallets, with 63 per cent saying they would save spare cash after covering essential living expenses; 47 per cent saying they would spend their spare cash on taking a vacation, while 46 per cent said they would spend spare cash on new clothes. At the global level, consumer confidence moved up one index point to 98 in the March 2016 quarter versus the three months ended December 2015. US consumer confidence, Nielsen said, showed resilience amid a strong job market and a rise in consumer spending intentions as well as an intent to pay off debts. While most of Europe (including UK and Germany), Latin America, Saudi Arabia, United Arab Emirates, Japan, Canada, China and Hong Kong saw confidence levels decline. "While the global consumer confidence index has been largely unchanged over the past several quarters, beneath that we see a fair amount of variation in the confidence of individual countries," said Louise Keely, senior vice-president, Nielsen. "There is no one cause behind these rises and falls in confidence; the reasons are market-specific," she said. In the quarter under review, consumer confidence improved in 33 per cent of measured markets (20 of 61 markets), compared with 43 per cent of measured markets showing an increase in the fourth quarter of 2015.
SOURCE: The Business Standard
Commerce and industry minister Nirmala Sitharaman will lead a CEO delegation to Myanmar from May 18-20. India is organising an India Myanmar Business Conclave in Yangon on 18-20 May 2016 as part of its Act East policy. "The two days are expected to witness live and involved sessions on various sectors including agriculture, manufacturing and employment, IT, health, education, skill development , power, renewable energy, connectivity (air, sea, land), tourism and hospitality, SEZs, industrial zones and finance," the commerce ministry said in an official release. This is the first visit of any minister from India after the change of regime inMyanmar which witnessed a landslide victory by the National League for Democracy led by Daw Aung San Suu Kyi in the elections held in November last year. Sitharaman will lead a 25-member delegation comprising CII president Naushad Forbes, Bharti Enterprises' Rakesh Mittal and State Bank of India chairperson Arundhati Bhattacharya, among others. The minister is also scheduled to have bilateral interactions with U Win Khaing, Myanmar Minister for Construction, Dr. Than Myint, Myanmar Minister for Commerce and U Khin Maung Cho, Myanmar Minister for Industry.
SOURCE: The Economic Times
The US has a “very special relationship” with India and it will continue to work with the country in various areas of mutual cooperation, a top official has said ahead of Prime Minister Narendra Modi’s expected visit here next month. “This is a very special relationship,” State Department Spokesman John Kirby told reporters at his daily news conference. He made the remarks in response to a question on the expected visit of Modi to Washington early next month. “It’s one that we are very committed to. We look forward to continuing to work with Prime Minister (Narendra) Modi on all the different areas in which the United States and India will and must work together,” Kirby said.
SOURCE: The Financial Express
In order to enhance exports, the Pakistan Readymade Garments Manufacturers and Exporters Association (Prgmea) recommends announcement of zero-rated regime by the prime minister; release of stuck up refund payments against sales tax, duty drawback and drawback on local taxes and levies (DLTL); No payment no refund system; tariff of electricity, gas and water for export sectors should be brought down; and incentives on exports as per the competitors countries. According to the association, finished textile goods are the only viable solution to boost the country’s exports. At present, total exports of Bangladesh is $33 billion, of which textiles contribute $27.5 billion, which includes $26.5 billion of garments only. Bangladesh’s exports are now increasing at $3.5 billion per annum and it is expected to reach $50 billion by 2020. Pakistan ranks 138 out of 189 on the ease of doing business, while last year it was 136. The cost of making garments in Pakistan is almost double ie, $2.7 in Pakistan and $1.5 in Bangladesh. The 60 percent cost component of wages has a vital impact, which is two times in Pakistan, the other costs that includes energy and financials also burdened due to high tariff, said Shaikh Mohammad Shafiq, central chairman of Prgmea. The government must realize that exports could not be increased by selling raw materials in foreign markets. This trend is not going to continue and it is the reason Pakistan is facing serious downfall. The country should utilize raw materials and exports only possible in the form of finished products.
Cost is one of the key factors that Pakistan’s garment exports is only 10 percent of Bangladesh woven garment sector, which shows keen interest of Bangladesh government and other low-wage countries to boost up this sector and to offer different incentives and schemes to further enhance growth of this industry. Labour is one of the major cost components of the industry and Bangladesh goes in favour of employers where minimum wage stands at around $68 as compared to Pakistan, which is $125 and rising. Additionally, the lower utilities cost further benefits the manufacturers. The Prgmea urged the government to develop a coherent plan that should allow some sort of exemption / concession to the garment sector with positive frame of mind, as the growth rate of this industry is continuously declining.
SOURCE: Yarns&Fibers
Last week, the president of the Botswana Textile and Clothing Association, Mohammad Shahid Ghafoor told Mmegi Business that the institution, called Textile and Clothing Institute of Botswana (TCIB), is expected to open its doors next month. It will offer one year certificate courses in clothing manufacturing in a wide variety of skills. Industry players told Mmegi Business that the establishment of an institution of this kind bodes well for the country’s shortage of skilled manpower. Refilwe Jobe, manager of Mahalapye-based Window Décor and Fabrics Designers said the institution is a welcome development, especially if it focuses more on practical education than theory. “Most of the students who come to us as interns seem to have limited skills when it comes to textiles and apparels manufacturing,” she said. In her company, Jobe said they face challenges when it comes to finding people with cutting skills, noting that the institution could be the answer to their shortage. She also assured that her company will be watching the progress of the institute to see if it produces quality graduates with the intention of enrolling workers for further studies. Window Décor and Fabrics Designers, which is situated at Botalaote Ward in Mahalapye, specialises in manufacturing women’s and men’s attire, dresses, suits, curtains, beddings and interior décor. Currently, the company supplies its products to the local market. Shawn Ntlhaile, who owns Rinimy Enterprises in Jwaneng said the training centre would be more beneficial if it will improve the quality of the textile personnel. His firm manufactures and supplies school uniforms, protective clothing, sports and corporate wear and promotional gift items. “We have been complaining a lot about our education system, which does not assist in curbing the shortage of skilled workers,” he said.
According to Ntlhaile, who is also the Jwaneng/Mabutsane legislator, the lack of skilled manpower has adverse effects on the quality of locally-produced goods. He stated that the local textile and clothing industry faces fierce competition from large chain stores that are mostly South African. “The government should protect the local industry by coming up with laws that make it compulsory for foreign business people to partner with locals in setting up enterprises locally,” he said. For other industry players like Pinnie Maruatona, director of Task Manufacturers Botswana, the establishment of the institution should be scrutinised to see if it will really serve its purpose. “The fact that the institution is being established by private business people raises questions because you might find that the whole idea behind it is to make profit,” she cautioned. Maruatona, however, acknowledged that there is a serious shortage of skilled manpower in the textile industry, noting that something had to be done to overcome the situation. The local clothing and textile industry will soon get a boost as the Botswana Qualifications Authority (BQA) has approved the establishment of a training institution for the sector. Meanwhile, the founder of the institution is adamant that it will be a renowned training and technical service provider to cater for the growth and needs of the textile and clothing industry.
SOURCE: The Mmegi Online
All Pakistan Textile Mills Association Chairman Tariq Saud has urged the government to wake up from a slumbering mode and save the textile industry in order to save economic growth of the country. He said availability of 24/7 energy to the industry would only be useful when viability of the industry is restored. He condemned the indifferent attitude towards prevailing state of affairs of the textile industry, which is a mainstay of Pakistan economy with backward and forward linkages, biggest employer and the highest export earner in the country. He further said that if this unfriendly attitude of the government would be continued, the industry would move towards the position of no return. He said the first nine months' financials of listed companies of the textile sector suggest that the industry is heavily under pressure. "Only 30 percent of the listed companies of textile industry performed marginally well while remaining 70 percent companies showed closure or negative results," he added. Saud said financials of the non-listed textile companies are even worst and the exports of the sector are showing negative trends over the last two years, which APTMA has been putting on record time and again. Unprecedented cotton crop failure caused 35% drop in production this year. "The textile industry has been left unattended and no responsible figure is there in the textile ministry to look after its issues and problems," he deplored. "No one takes responsibility in the government and there is no clue as to what is in the offing for the industry in the upcoming budget," he added. He pointed out that the remaining part of the textile industry package has yet to see daylight, as most of the decisions are lying unrested despite firm assurance by the prime minister. "PM assured to introduce rating regime for industry, ensuring 'No Tax No Refund' for the entire textile value chain and only the consumption of finished textile fabrics and garments for domestic consumption be taxed. Similarly, he added, the inputs and outputs of the entire textile supply chain should be zero-rated. He warned that any increase in the input tax on the textile value chain would prove last straw on the industry's back. Industry will out rightly reject any such move, if introduced in the budget, he added.
While listing down already pending issues of the industry, the APTMA chairman said the government has not yet released pending refunds of sales tax. He said the input cost of cotton farmers be reduced to encourage cotton production. Also, the funding provided by the textile industry for cotton research should be spent prudently on cottonseed technology. He said the whole textile value chain should be zero rated in the budget as over 80 percent of all fibres consumed were exported in one form or the other. Saud also demanded immediate withdrawal of sales and import duty on cotton import. He said the import of synthetic specialty fibres including viscos and acrylic should be zero rated to undertake product and market diversification. He expressed wonder on a dilly-dallying approach of the government towards not imposing 15% regulatory duty on the subsidised and dumped import of Indian synthetic yarns and fabrics entering into Pakistan's market for domestic consumption. The APTMA chief said the cotton stranded at the Wagha border should be immediately released to operationalise the industry, which is closed due to shortage of cotton, adding that the government should patronise the industry by resolving important pending issues of industry. Already, Pakistan's industry is miserably lagging behind immediate competitors Bangladesh, Vietnam and India. He appealed the government to save the flagship industry of Pakistan for the sake of national economy by taking concrete steps in the upcoming budget.
SOURCE: The Daily Times
The Ministry of Commerce has delayed permission to import over 0.5 million cotton bales from India via land route at the Wagha border, a situation hitting the textile industry's viability hard. The textile industry sources said a large quantity of cotton imported from India has stuck up with the border terminal at the Wagha, as the Commerce Minister Khurram Dastgir has not yet decided the fate of repeated requests for enhancing the quantity of cotton imported through land route at the Wagha border. The industry sources further said the government has restricted import of cotton to 500,000 bales through land route while there is no such limit on the import of cotton through air and sea. "The storage charges are piling up fast, having already touched to Rs 5 million and the ministry is not ready to pay heed to repeated requests," said one textile miller. An official at the Wagha border terminal, requesting anonymity, has also confirmed stocking of large quantity of bales at the terminal, causing heavy demurrages to the textile millers. "Many importers have submitted written applications to waive off the demurrage but we are unable to do so until the ministry allows us," said one official at the Wagha terminal. The federal government has allowed import of cotton bales through Wagha border to the extent of 0.5 million bales under the Trade Policy 2012-15. There was no hue and cry on the policy until an unprecedented cotton crop failure this year, putting spinning industry into a troublesome situation which started looking for availing all sources of cotton including India through Wagha Customs Port. The limitation of 0.5 million bales through Wagha border has exhausted and the import activity has come to a halt. The All Pakistan Textile Mills Association has also requested the ministry to intervene and avoid any untoward situation. It has asked for necessary amendment in the trade policy and increase the quantity to one million bales to let the textile industry meet its requirement without delay. It is learnt that the ministry has expressed its inability to enhance the limit until the policy is approved by the Economic Co-ordination Committee. However, the Commerce minister has assured of exercising his special discretion of allowing to enhance the limit to 0.2 million bales on one-time basis. The textile millers have urged the Commerce minister to remove the restriction on import of cotton bales through land route at the Wagha border.
SOURCE: The Business Recorder
Ethiopia’s textile export earnings in the past 9 months has shown significant decline by only generating 65 million USD. The target for the period was 110 million USD. According to Ethiopian Textile Industry Development Institute, income generated in the 9 months has dropped by 18 million USD when compared to the same period last year. Commenting on the issue Taddese Haile, State Minister for Industry, said the slip was because of low performance, failure to expand market and business administrative issues of larger companies. Low quality and quantity along with investment projects’ failure to commence production as per planned were other reasons for the decline in performance, he added. Currently there are 60 companies, out of which 32 are foreign companies, operate in Ethiopia’s textile and apparel sector.
SOURCE: The 2Merkato
China's economy kicked off to a good start this year, through optimizing economic structure and improving people's livelihoods. Due to initiatives to expand domestic demand and strengthen supply-side reform, efforts have been made to help the world's second largest economy run smoothly, according to an article in the government's official website. “Under the context of the New Normal, the nation's economic growth mainly depends on consumption. In the first four months, total volume of retail sales increased 10.3 per cent year on year, and contribution rate of consumption rose 22 per cent compared with the same period in 2015,” it said. Amid structural transformation, the service industry became the largest in the country. Service industry production index witnessed an 8.3 per cent year-on-year growth in April. In the first quarter, the tertiary industry increased 7.6 per cent, 1.8 percentage points faster than the secondary industry. Accounting for 56.9 per cent of GDP, the contribution rate of tertiary industry to economic growth reached 63.5 per cent, 29.3 percentage points higher than the secondary industry. Furthermore, tax revenue from the service industry grew 12 per cent and accounted for 56.5 percent of all tax revenue. “Reform initiatives, including streamlining administration and delegating power to lower-level governments, optimizing administrative services, investment approval and business systems reform, value-added tax reform, and supply-side reform, are working together to inject dynamism into the market,” it said. From January to April, the number of newly registered enterprises reached 1.57 million, a 27.5 per cent year-on-year growth. Nearly 13,000 enterprises were registered each day over the past four months. Supply-side reform efforts to address overcapacity, reduce inventory, deleverage and lower costs have been paying off, too, the government claimed.
SOURCE: Fibre2fashion
US factory output expanded in April as makers of machinery and cars posted solid increases in production, a sign that the country’s manufacturing sector was resisting the downward pull from sputtering global growth. Manufacturing output rose 0.3 percent, the Federal Reserve said on Tuesday. The reading matched the gain expected in a Reuters poll of economists. Overall industrial output rose 0.7 percent last month, beating the consensus forecast of a 0.3 percent gain, as utilities output rebounded from March when it was restrained by warmer-than-usual weather. Mining output, another component of total industrial production, fell 2.3 percent in April. The gain in factory output, coming after recent strong retail sales data, bolsters the view that the U.S. economy could re-accelerate in the second quarter after growing sluggishly in the first three months of the year. The industrial sector has been undermined by a slowing global economy and robust dollar, which have eroded demand for U.S. manufactured goods. Manufacturing output has been flat or negative in four of the last six months. But there are signs the worst of the industrial sector’s downturn is over, with recent manufacturing surveys turning higher. In addition, the dollar’s rally has fizzled and oil prices appear to be stabilizing.
Last month, production of long-lasting manufactured goods increased 0.6 percent. The largest gains in manufacturing came from producers of machinery, who increased output by 2.4 percent. Production of motor vehicles and auto parts increased 1.3 percent. With output increasing last month, industrial capacity use jumped 0.5 percentage point to 75.4 percent. Officials at the Fed tend to look at capacity use as a signal of how much “slack” remains in the economy and how much room there is for growth to accelerate before it becomes inflationary.
SOURCE: The Financial Express
After being on a downtrend since June 2014, crude oil prices have been on the rise since January 20, 2016. While Brent has declined from the highs of $115 a barrel to a low of $26.39 a barrel in January, on Tuesday it surged close to $50 a barrel - an 83 per cent increase from January lows. The fall in crude prices has accrued immense benefit to India, its industry and its people. For a country highly dependent on imports for fulfilling its energy requirement, not only has the decline helped government control its current account and fiscal deficits, but also in taming inflation that had been a posing as a serious challenge to the economy. However, the recent spike has again raised concerns on current account deficit as rising oil prices have the potential to push up inflation besides increasing costs for the Indian industry. Uday Kotak, vice-chairman and chief executive officer of Kotak Mahindra Bank, had tweeted: "As oil touches $50, India's honeymoon on inflation, current account may be over. Micro needs to improve faster as macro tailwinds slow down." What's worse, experts feel oil prices will remain volatile with an upward bias. By the end of 2016, analysts expect natural demand-supply balancing to lead to higher crude prices. Crude oil nears $50 Ambareesh Baliga, an independent market expert, feels crude prices can touch $60 a barrel by year-end. The comments on rising crude prices come at a time when inflation in already showing up its head. The wholesale price index (WPI) returned to positive territory in April 2016 after being in deflation mode for 17 consecutive months. WPI inflation rose 0.3 per cent year-on-year in April, compared with -0.9 per cent year-on-year in March, way above consensus expectations of -0.23 per cent.
Sonal Varma, chief India economist at Nomura, says, the uptick in April was driven by three factors: Higher food prices, an uptick in global commodity prices and marginally better domestic demand in select segments. Varma says that any uptick in crude prices will have an impact on current account deficit and inflation though adding that she would not be too concerned till crude crosses $55-60 a barrel levels. The rising fuel prices can bring stability in global economy and hence, accrue positives too but Varma feels that rising commodity prices, fuel prices, etc can push up costs, while demand is still not too strong.
A rise in demand is what is crucial now. The last two years of bad monsoon and softer economic growth has been posing challenges on volume growth for consumer companies, automobile makers, etc. Amarjeet S Maurya at Angel Broking says while in the last few quarters the consumer companies may have seen soft three to four per cent revenue growth, the margin growth has been cushioned by softer input prices and hence bottom line growth has still remained in the range of 9-10 per cent. The rise in crude prices will push up costs of raw material as palm fatty acid distillates (PFAD) used in soaps and detergents, titanium oxide (TiO2) used for making paints to personal products to food colouring, which are all crude derivatives. Further, it can prop up packaging and transportation costs too. Thus, in an environment of soft demand, to what extent costs can be a passed through to customers, remains to be seen. For now, analysts are optimistic hoping that a good monsoon will push up rural demand and hence are not much concerned about possible rise in costs. Sujan Hazra, chief economist, Anand Rathi Financial Services, too, remains optimistic on the prospects of good monsoon taming food inflation and supporting demand and hence, says he is not overtly concerned on the medium-term prospects of the Indian economy. Baliga also believes that if monsoon as expected is good, the demand recovery will support the economic growth. Nevertheless, the gains from a good monsoon will only come with a lag. But, if oil prices surge, it will push costs of companies across industries shaving off the benefits seen in recent quarters in the form of high gross margins.
SOURCE: The Business Standard
