INTERNATIONAL
Textile Raw Material Price 2016-06-01
|
Item |
Price |
Unit |
Fluctuation |
Date |
|
PSF |
1001.02 |
USD/Ton |
-0.30% |
6/1/2016 |
|
VSF |
2050.65 |
USD/Ton |
0.15% |
6/1/2016 |
|
ASF |
1913.94 |
USD/Ton |
0% |
6/1/2016 |
|
Polyester POY |
964.57 |
USD/Ton |
0% |
6/1/2016 |
|
Nylon FDY |
2217.74 |
USD/Ton |
0% |
6/1/2016 |
|
40D Spandex |
4329.15 |
USD/Ton |
-0.35% |
6/1/2016 |
|
Nylon DTY |
2445.59 |
USD/Ton |
0% |
6/1/2016 |
|
Viscose Long Filament |
5664.35 |
USD/Ton |
0% |
6/1/2016 |
|
Polyester DTY |
1230.39 |
USD/Ton |
0% |
6/1/2016 |
|
Nylon POY |
2058.25 |
USD/Ton |
0% |
6/1/2016 |
|
Acrylic Top 3D |
2088.63 |
USD/Ton |
0% |
6/1/2016 |
|
Polyester FDY |
1093.68 |
USD/Ton |
0% |
6/1/2016 |
|
30S Spun Rayon Yarn |
2764.58 |
USD/Ton |
0% |
6/1/2016 |
|
32S Polyester Yarn |
1673.94 |
USD/Ton |
0% |
6/1/2016 |
|
45S T/C Yarn |
2430.40 |
USD/Ton |
0% |
6/1/2016 |
|
45S Polyester Yarn |
1807.61 |
USD/Ton |
0% |
6/1/2016 |
|
T/C Yarn 65/35 32S |
2126.60 |
USD/Ton |
0% |
6/1/2016 |
|
40S Rayon Yarn |
2916.48 |
USD/Ton |
0% |
6/1/2016 |
|
T/R Yarn 65/35 32S |
2217.74 |
USD/Ton |
0% |
6/1/2016 |
|
10S Denim Fabric |
1.35 |
USD/Meter |
0% |
6/1/2016 |
|
32S Twill Fabric |
0.81 |
USD/Meter |
0% |
6/1/2016 |
|
40S Combed Poplin |
1.16 |
USD/Meter |
0% |
6/1/2016 |
|
30S Rayon Fabric |
0.68 |
USD/Meter |
-0.22% |
6/1/2016 |
|
45S T/C Fabric |
0.67 |
USD/Meter |
0% |
6/1/2016 |
Source : Global Textiles
Note: The above prices are Chinese Price (1 CNY = 0.15190 USD dtd. 01/06/2016)
The prices given above are as quoted from Global Textiles.com. SRTEPC is not responsible for the correctness of the same.
Polyester producing companies have cut production by 40 per cent in last three months due to acute shortage of key raw material PTA (purified terephthalic acid) supplied by oil refining companies such as Reliance Industries and Indian Oil Corporation besides MCC PTA India which shut production in some of their units for various reasons. MS Bagheria, Chairman, Filatex India said Reliance Industries, the largest producer of PTA had cut production between March and May for two weeks each and it is allocating only 50 per cent of demand to all its customers since April. Similarly, he added, IOC supplied only 70 per cent of its customers demand since February before taking a complete shut down in April for 15 days while MCPI took month long shut down in February and supplied less than 50 per cent of the contracted volume to each customer.
Interestingly, the polyester manufacturers require 5.3 million tonnes of PTA per annum, while the country has production capacity of 6 million tonne with Reliance Industries itself commanding annual production capacity of 3.2 million tonne. Reliance is the largest producer of polyester fibre and yarn in the world, with a capacity of 2.5 million tonnes per annum. Reliance said it has suspended PTA production at its Dahej unit due to water shortage.
DOUBLE WHAMMY
The anti-dumping duty of 15 per cent levied in December has made import of PTA unviable for the polyester industry, said Bagheria. Unlike other PTA users, the polyester companies, which is among the largest employment generators, cannot afford imports after the anti-dumping duty as they are operating at wafer-thin EBITDA margin of 6-7 per cent, he added. RK Vij, General Secretary, PTA Users Association said with the domestic PTA in short supply and anti-dumping duty on imports, the polyester industry is struggling for survival with levy of $108 a tonne on PTA import price of $600 a tonne works out to about 18 per cent. “The industry is facing two-prong problems. On one hand, it is not getting enough domestic supply of raw material and on the other the Government has imposed anti-dumping duty on imports from Thailand, Korea, China, Iran, Indonesia, Malaysia and Taiwan,” he added. Bagheria said a steady supply of raw material is key for operating a polyester plant as it is a continuous process and cannot be shut and restarted at once will. “To shut and restart a polyester plant with daily capacity of 200-300 tonnes would cost about Rs. 1 crore. It is high time the Government removes the anti-dumping before things go out of hand,” he said.
Of the annual installed polyester production capacity of 8.4 million tonnes, companies have produced only 5.8 million tonnes due to raw material shortage. Currently, Vij said industry has idled about 1000-1500 tonnes of daily production capacity due to non-availability of PTA. Highlighting the undue protection to large PTA producers, Vij said while import of PTA attracts a duty of 15-20 per cent, the government allows duty free import of paraxyle, which is raw material for producing PTA. Due to the inverted duty structure, Indian polyester products have become costlier by 15-20 per cent making exports unviable. The current situation has led to import of fabrics and yarn are going up. Last fiscal cumulative imports of polyester fibre and yarn had gone up 13 per cent to 139,909 tonnes (123,993 tonnes).
SOURCE: The Hindu Business Line
The PTA Users Association has called the Commerce Ministry to roll back with immediate effect the provisional anti-dumping duty imposed on imports of PTA originating in or exported from China PR, Iran, Indonesia, Malaysia and Taiwan. The PTA Users association while urging for immediate termination of the duty stressed the entire polyester industry in the country should not be allowed to suffer only to benefit one or two large domestic PTA producers. The domestic PTA producers, the association said, have increased PTA prices after imposition of provisional antidumping duty on PTA in July 2014 in the first case by Rs. 1500 per tonne and now after imposition of provisional ADD in second case the prices have been increased effectively by Rs. 3000 per tonne from 1st April 2016. The domestic PTA producers simply want to create a monopoly market in India so that the users’ industry has no choice but to buy from the them at an exorbitant price as all possible import sources have been blocked with the imposition of anti-dumping duties. The anti-dumping duty amount was fixed in absolute numbers as US $ / MT and not as percentage of import price. Thus, with the fall in oil and petrochemical prices, ADD in percentage terms in now very high upto 17%, the PTA Users Association pointed out.
The domestic PTA producers are getting protection from the Indian Government. PTA is produced from Paraxylene (Px). The customs duty on Px is zero percent whereas the customs duty on PTA, the basic feedstock for the downstream man-made fibre (MMF) industry is 5%. The PTA producers have got anti-dumping imposed on PTA averaging 10%. Thereby, the domestic PTA producers are getting 15% protection. But the downstream MMF industry is getting only 5% protection resulting in effective inverted duty structure, the PTA Users Association pointed out.
SOURCE: The Tecoya Trend
The national policy for the micro, small and medium enterprises (MSMEs), which seeks to boost the overall growth of the sector, is expected to be released by the end of this year. MSME Minister Kalraj Mishra said a committee headed by former Cabinet Secretary Prabhat Kumar is drafting the policy and “we are expecting the report by October 31 and it would be released after that”. He said the committee would meet some more stakeholders for the proposed policy and they are also looking at policies of other countries. “We want a detailed policy for MSMEs,” he said while briefing media about the achievements of his ministry during the two years of the NDA government. A committee will be set up by the end of this month to look after the revival and rehabilitation of sick MSME units, he added. Presently, there is no integrated approach for the development of MSMEs despite the fact that the sector accounts for 45 per cent of India’s manufacturing and 40 per cent of exports. The Reserve Bank had revised the rules pertaining to revival of advances to small businesses and asked lenders to form district-level committees to resolve stressed loans to MSMEs.
Talking about the increase in sales of khadi and village industries product, Mishra said it has increased to Rs 37,935 crore in 2015-16 from Rs 33,136 crore in 2014-15. “Prime Minister Narendra Modi’s suggestion to consume khadi products has definitely helped in increasing the sales volumes. We have also improved the quality and introduced new products,” he said adding youth is showing keen interest in such products. The ministry is in discussion with public sector units to enhance procurement from MSME units as it has the potential to produce good quality products on time. “We are talking with PSUs in groups. They have some issues like why they are not able to procure from these units. But we are doing our best to address their problems,” he said adding the railways and defence ministers have assured that their departments would procure goods from MSMEs. When asked about the issue of bank loans to these units, he said MSMEs do complain about their problems in getting bank credits but “we are discussing with them to resolve the issues”. “We are getting good number of complaints about banks but we are monitoring the situation and we are also trying to fix the issues,” he said. The minister said exports from MSMEs have not come down. The sector accounts for 40 per cent of the country’s total exports. Declining for 17th straight month in April, exports dipped by 6.74 per cent to USD 20.5 billion.
SOURCE: The Tecoya Trend
Harihar and Kharach units of Grasim that produce viscose staple fibre (VSF) have bagged Frost & Sullivan's Sustainability 4.0 awards at the 2016 edition of 'India Sustainability Summit' held in Mumbai recently. Grasim's unit at Harihar in Karnataka, which houses a facility for the manufacture of both VSF and rayon grade pulp, the basic raw material for VSF, was awarded the 'Frost & Sullivan's Sustainability 4.0 Award in Challengers Category – Large Business'. The VSF plant at Kharach in Gujarat, which employs the most modern technology giving it a competitive edge in the export market, received 'Certificate of Merit - Challengers Category – Large' this year. The awards were given away after the summit held with a mission to assist the adoption of sustainable practices across Indian companies. At the event eminent persons from various businesses spoke about the different initiatives taken by their companies with respect to sustainability.
On behalf of Grasim's units, the awards were received by Rajeev Gopal, global chief marketing officer of Grasim's Pulp & Fibre business, and Ajay Sardana, vice president & head – sustainability of Grasim's Pulp & Fibre business. “Sustainability is critical to business success and continuity in today's world and organisations that will be at the forefront of sustainable business practices will be the ones that will have a competitive edge,” said Gopal. As a keynote speaker from Grasim, Sardana gave presentation on 'Product Life Cycle Management' ad spoke about Birla Cellulose's initiatives regarding its commitment towards a sustainable company. He explained the efforts at Birla Cellulose right from seeding to pulping, to processing and manufacturing. He also spoke about the responsible wood sourcing policy and explained how Birla Cellulose strictly adheres to all environment laws and regulations applied by respective countries for wood sources. “Our key raw material—wood pulp—is sourced through a responsible wood sourcing policy which takes care of high conservation forest, bio-diversity and more is planted than cut” he explained. He highlighted “Studies on LCA of viscose from cradle to factory gate” conducted by the company through international agencies, across its various products and plants. The findings show viscose in a better light compared to most other fibres in sustainability credentials. The fibre being eco-friendly and bio-degradable has the highly acclaimed Oeko-Tex 100 Certificate which states it as being safe on a baby skin.
SOURCE: Fibre2fashion
With India’s economy achieving the projected growth rate of 7.6% in FY16, economic affairs secretary Shaktikanta Das on Wednesday said the growth could accelerate further to 8% in the current fiscal year on policy measures and likely good monsoon. He credited the government’s “very effective and prudent” fiscal management for achieving the fiscal deficit target of 3.9% as well as 2.5% revenue deficit target for FY16 without cutting Plan spending for the first time in five years. Nearly Rs 39,000 crore increase in government capital expenditure, which stood at Rs 2.35 lakh crore, played a crucial role in reviving economic activity in the absence of a pick-up in private investment in FY16. “With good monsoon and better performance of agriculture and rural sectors due to various measures, the growth rate of 8% can be achieved (in FY17),” Das said. Private sector investment is likely to increase due to increased private consumption and rural demand during 2016-17, he added.
SOURCE: The Financial Express
With India retaining the fastest growing large economy tag post latest GDP numbers, Finance Minister Arun Jaitley on Wednesday said the country is on an "upward curve" and a good monsoon, GST passage and increased infra and rural spending will further accelerate the growth. With pro-growth policies helping gross domestic product grow a faster-than-expected 7.9% in January-March quarter and 7.6% in the entire 2015-16 financial year, he asserted that these are not "stray figures" and an analysis of the pattern shows inherent strength in the economy. Also aiding was the growth in output of eight core sectors growing 8.5% in April on the back of pick up in output of refinery products, fertilisers, steel, cement and electricity. "Last two years, a number of factors were loaded against us - there was a global slowdown and we had two consecutive below normal monsoon rainfalls," he said, adding that people are surprised how India has managed to grow at the fastest pace in the world.
Going forward, "reform process is going to continue. Hopefully, Goods and Services Tax (GST) bill is passed (in ensuing monsoon session of Parliament), which has the potential to add to GDP growth. Also, our infrastructure and rural spending will add to that," he said commenting on the latest GDP numbers. On the forecast of a good monsoon this year, Jaitley said it "would mean an increase in agriculture production, more purchasing power and rural demand." On the growth clocked in 2015-16, Jaitley – who is on a six-day investor wooing tour of Japan – said, there was improvement in the agriculture as well as the services sector. "More importantly, there is a consumer demand and there is increased consumer spending," he added. The GDP expansion in January-March period bettered 7.2% of December quarter and helped extend the lead over China, which grew 6.7% in the March quarter - the slowest in the world's second largest economy in seven years.
Earlier speaking at a meeting organised by Japan-India Business Cooperation Committee, he said investors looking for higher returns should park funds in India's infrastructure and manufacturing sectors. "As growth would return to the world, consumer spending would pick up, hopefully the monsoons would be better, this trend which has been set in India itself could be improved upon. That we are on an upward curve seems evident," he said. Jaitley said the Indian economy clocked 7% growth rate in every quarter last financial year despite an unsupportive global economy and two consecutive years of weak monsoon. This has been possible because of increased public spending, the performance of India's private sector and the confidence which foreign investors reposed in India by investing the highest ever even in the slowdown years, he added. "I'm sure Japanese investors and funds and other agencies who are looking forward for gainfully employing their resources would certainly look at the India story which offers attractive destination for investment," the finance minister added. He said that besides infrastructure, the manufacturing sector is the top most priority and provides very large opportunity to international investors to participate in India growth story. India offers flexibility to investors, Jaitley said adding that impetus on 'Make in India', increased infrastructure and rural spending would help push growth. "The returns that India offer are extremely attractive compared to other destinations, the magnitude and volume of investment required is much larger and it's for a reasonable period of time that this investment is going to continue because infrastructure deficit has to be met," Jaitley added. The finance minister said the Indian government is now continuing on the reform trajectory which was left undone in 1991 and people have become aspirational and are supporting reforms. "India today is passing through a very critical phase in its history. In 1991 we had a very important reform programme which was initiated, it proved to be very successful. We continued on that roadmap and I think what was left out is now being implemented. There is never a last day in the calendar of reforms, situations are dynamic, they keep changing, they keep progressing. Newer challenges come up and we expect newer responses from the government," he said. He said Japanese companies have become household names in India starting from automobiles to household appliances to also the Delhi Metro. "Our industrial corridors are being built with Japanese assistance and I am sure the ambitious bullet train project between Mumbai and Ahmedabad once implemented will be absolutely a showpiece in India's economic development," he said, adding currently there are over 50 projects of different magnitudes being implemented in India today. "I don't see a period which is very far off where almost every major city in India which aspires to have a local transport system based on Delhi Metro to become reality," Jaitley added.
SOURCE: The Business Standard
Nomura, the Japanese financial company, on Wednesday marked down India’s gross domestic product (GDP) growth forecast marginally to 7.7 per cent for the current financial year, from 7.8 per cent earlier, saying there is still no sign of an export or private capex turnaround. The economy grew 7.9 per cent in the fourth quarter of 2015-16 taking overall GDP growth for FY16 to a five-year high of 7.6 per cent. Nomura said the headline GDP data suggests that the underlying recovery continues at a gradual pace but it is narrowly based, driven primarily by private consumption. Going forward, there are three positive impulses to growth - the seventh pay commission hikes, a normal monsoon and ongoing public capex, Nomura said, adding that "at the same time, our leading indicators suggest that there is still no sign of an export or private capex turnaround". "As a result, while we expect GDP growth to still improve in FY17, we have marginally marked down our forecasts. We expect GDP growth to rise to 7.7 per cent y-o-y in 2016-17 (earlier: 7.8 per cent) from 7.6 per cent in 2015-16," it added.
Regarding the Reserve Bank of India's monetary policy stance, the report said the central bank is expected to be on hold this year. "With inflation remaining sticky at slightly above 5 per cent and growth fairly steady (although uneven), we expect policy rates to stay on hold until end-2016 (including at the upcoming policy meeting on June 7) with the focus shifting to liquidity provision," said the report by the Japanese financial service major. In April, RBI cut policy rate by 0.25 per cent to 6.5 per cent. While this was the first rate cut after a gap of six months, RBI has lowered its rate by 1.5 per cent cumulatively since January 2015. However, the industry still wants further rate cuts from the apex bank to boost investment.
SOURCE: The Business Standard
Manufacturing activity in May remained dull even as their growth inched up, compared to April, showed the widely-tracked Nikkei Purchasing Managers’ Index (PMI). The PMI for manufacturing rose to 50.7 points, from the 50.50 in April. The index had shown an eight-month high of 52.4 in March. The seasonally adjusted index is a composite single figure indicator of manufacturing performance. A reading above 50 represents expansion, while one below this level means contraction. However, April still represented a fourth consecutive month of output growth mainly due to improvements in new export business remaining sustained, although growth was at a six-month low. Manufacturing had last contracted in December at 49.1. "Signs of challenging economic conditions in the Indian manufacturing sector were evident in May, with output losing further growth momentum. The headline PMI remained in expansion territory, but recorded one of its lowest readings since the end of 2013, suggesting that the sector is barely improving," Pollyanna De Lima, Economist at Markit and author of the report, said.
PMI shows manufacturing still subdued While new orders expanded in May at a "slight pace" and was mostly driven by the domestic market, new business from abroad fell for first time since September 2013. Similarly, goods producers continued to raised their output volumes but to the least extent. Whereas higher production was associated with an increase in order books, there were mentions that growth was hampered by the assembly elections in certain regions, the report said. PMI data indicated that Indian manufacturers had sufficient resources to work on existing projects, as outstanding business declined in May. Contributing to the overall decline in backlogs was an expansion in workforce sizes. The rate of job creation was, however, only marginal yet again, a trend that has been evident for almost two years. On the price front, input cost inflation accelerated to a 14 month high, its fastest since March 2015. Last month panel members had blamed high costs of a range of raw materials such as metals, chemicals, plastics, paper and food as the cause. Interestingly, in spite of the high cost burden, manufacturers increased selling prices at the slowest rate in the last 3 months, the report noted, suggesting a strongly competitive environment. The report showed that intermediate goods producers fared better than their counterparts producing consumer, intermediate and investment goods. The last category saw a further decline in both output and new orders. Earlier in April, the RBI cut its policy rate by 0.25% to 6.5%. While this was the first rate cut after a gap of six months, the RBI has lowered its rate by 1.5% cumulatively since January 2015. "So far, there is little evidence that the latest cut in the benchmark rate acted to significantly improve business conditions for manufacturers. Therefore, further stimulus may be necessary to shift the economy into a higher gear," Lima said.
Domestic industry has also demanded further rate cuts from the apex bank to boost investment. Meanwhile, the Indian economy grew at 7.9% in the fourth quarter of 2015-16 taking the overall GDP growth to a five-year high of 7.6% in the fiscal year. The PMI figures for China, which were released earlier in the day, showed that growth in manufacturing activity in the country stayed same as April, at 50.1. This has raised more doubts about the recent recovery in the world's second-largest economy grappling with a slowdown. While analysts suggested the sector was stabilizing on the back of higher commodity prices, a better housing market and plenty of government spending questions remain as to whether the slow upturn will last.
SOURCE: The Business Standard
A day after official data showed the economy grew 7.9 per cent in the January-March quarter and that the fiscal deficit target for 2015-16 had been met, economic affairs secretary Shaktikanta Das said we could touch eight per cent Gross Domestic Product (GDP) growth in the current financial year with a good monsoon, despite global headwinds. At a media briefing on Wednesday, after a Cabinet meeting, he said: “With all the reform measures, policy initiatives, the direction the Budget has given this year for growth, especially for agriculture and the rural sector -- we are beginning to see the results. This is reflected in the overall GDP and in the fiscal numbers.” GDP grew 7.6 per cent in FY16, up from 7.2 per cent a year before. Full-year growth was fuelled by close to an eight per cent rise in the fourth quarter of 2015-16, fastest in the world and also since the new domestic GDP series was launched in 2011-12. As a percentage of GDP at current prices, the fiscal deficit for 2015-16 was 3.9 per cent, as Finance Minister Arun Jaitley had said it would be in February. Das noted the revenue deficit had significantly improved, from 3.2 per cent of GDP in 2013-14, to 2.9 per cent in 2014-15 and 2.5 per cent in 2015-16. The secretary said Plan expenditure at Rs 4.71 lakh crore in 2015-16 was higher than the Budget estimate of Rs 4.65 lakh crore. Capital expenditure had exceeded budget estimates for the first time in five years, he added.
SOURCE: The Business Standard
India has received a lot of backlash in the last few RCEP (Regional Comprehensive Economic Partnership agreement) negotiation rounds. According to reports, India got an ultimatum from the RCEP countries to either cut tariffs or leave the bloc. They were irked by its protectionist attitude towards domestic industry, and this further delayed negotiations. The commerce ministry later refuted the allegations and clarified that India very much remains a part of the trade pact. The pact has already missed its 2015 deadline and members expect to seal the deal by the end of this year. In the next round, in Auckland, between June 12-18, India may face enormous pressure to reduce tariff rates beyond the initial offer it made in Busan last year. RCEP is a proposed free trade agreement (FTA) between 10 ASEAN countries and their six FTA partners, namely Australia, China, India, Japan, Korea and New Zealand. It accounts for 25% of global GDP, 30% of global trade, 26% of FDI flows and 45% of the total population. After submitting the initial offer on goods trade, India is now reluctant to further dismantle tariff rates unless some of its demands are met. The reason for India’s aggressive stance is largely due to its past experiences with other trade agreements, where it did not gain much.
What are India’s pain points? Based on its learnings from previous FTAs, it wants to strike a fair deal for its domestic industry. It has raised concerns related to quantum of tariff elimination, threat of cheap Chinese imports, market access for services, rules of origin requirement and a stricter IPR regime. First, opening its domestic industry for Chinese imports is the biggest concern. India’s trade deficit with China has risen thirteen-fold in the past decade. In fact, China now accounts for over 40% of India’s trade deficit, as imports have grown at an annual rate of 30% while exports have risen only by 14%. India Inc. claims that cheap Chinese imports have hurt domestic players. This is evident from the fact that India has registered the maximum number of anti-dumping cases against China (134/545 cases). Under RCEP, India has negotiated a different tariff liberalisation schedule with China, giving concessions only on 42.5% of the tariff lines. It is not comfortable reducing tariffs, especially on textiles, metals, etc. China, of course, is not very happy.
Second, in the case of quantum of tariff elimination, India is reluctant to be aggressive. Historically, India’s trade balance with FTA partner countries has deteriorated post FTAs. For instance, trade deficit with ASEAN and Korea has almost doubled since 2010. With Japan, too, trade deficit has increased from $3.1 billion to $5.1 billion during the same period. Also, exports to RTA and non-RTA partner countries have grown at similar pace over the past decade (13% y-o-y).This points to the fact that India has not gained much in terms of exports as a result of FTAs. Due to its higher tariff regime, India has to reduce tariffs much more than other RCEP countries. Sharp reduction in tariff will mean huge revenue loss for India. The commerce ministry estimates that RCEP will lead to a revenue loss of 1.6% of GDP. The average MFN applied tariff rate for India is the highest amongst the RCEP countries (13.5%) followed by South Korea, Thailand and Cambodia. Agriculture is also highly protected with average MFN applied rate at 33.4%, next only to South Korea. While Singapore, Australia, Brunei & New Zealand are few countries that have low import duties.
Third, as India’s strength lies in services trade, negotiation on this is critical. India has been pushing for greater market access in services which has irked ASEAN members. India did not get a fair deal under the AIFTA services pact, after the goods agreement was signed. It expects greater liberalisation in Mode 4 services that facilitate movement of professionals from one country to the other. This could be critical for India’s IT sector. Apart from pushing for liberal visa regimes, India has backed greater liberalisation in Mode 3 (commercial presence) and Mode 2 (consumption abroad) services. However, member countries want tariff liberalisation for goods to precede services negotiations.
On the issue of rules of origin, India has suggested a change in HS code classification plus a 40% value addition as a criteria for “origin” in a particular country, as it is worried about surge in imports from China. However, member countries feel it to be stringent criteria which may not do justice to the regional value chain. Lastly, the IPR regime demanded by members like Japan and Korea are stricter than the level of protection India provides under TRIPS (Trade Related Aspects of Intellectual Property Rights) agreement of the WTO. It has opposed some proposals initiated by members involving patent extensions, restrictive rules on copyright exceptions and other anti-consumer measures. This may limit access to affordable drugs and have serious implications for domestic pharma. Initial offers for tariff reduction have been made under RCEP. India has followed a three-tiered approach to reduce tariffs from base rates. Base rates are basic customs duty as of January 1, 2014. For each tier, ‘thresholds’ are decided, based on the quantum of tariff lines and RCEP import value, on which customs duties will be eliminated. For the 1st tier, with ASEAN countries, India’s threshold for tariff elimination is 80% which includes 65% at entry into force (EIF) and 15% over a decade. For the 2nd tier, with Japan and Korea, India has offered 65% tariff elimination threshold while the two countries have reciprocated with 80% threshold over a decade. For the 3rd tier, with Australia, China and New Zealand, India’s offer of 42.5% threshold has been reciprocated with a 42.5% threshold from China, 62.5% from New Zealand and 80% from Australia over a decade. However members, feel India should be more ambitious for their tariff liberalisation schedule.
India is negotiating an FTA with Australia. RCEP countries already constitute 27% of India’s total trade, 16% of its exports and 35% of its total imports. The trade deficit with RCEP has risen ten-fold, from $9 billion in FY05 to $93 billion in FY16, of which China accounts for 56% of the trade deficit ($53 billion). India’s trade deficit can be attributed to two reasons. First, exports are more sensitive to income changes than price. This is because the composition of export basket has moved away from traditional exports of textiles, leather and agri products to the export of engineering goods, pharma and petro products. The latter are much more sensitive to global demand than traditional exports. Secondly, in the case of multiple RTAs available for exporting to a particular country, exporters prefer the route where compliance is less cumbersome, even if the duty benefits are fewer. If the cost of obtaining benefits (applying for certificates of origin, waiting time and other administration cost) are higher than the benefit itself ( Margin of preference =MFN duty- preferential duty) exporter will use the MFN route instead of the preferential route. According to the Asian Development Bank, the utilisation rate of India’s FTAs varies between 5% and 25% (one of the lowest in Asia). This reflects India’s prevailing complex compliance and administration process. In such a situation, Indian exporters may not benefit much from tariff cuts/liberalisation under an FTA. This is evident from India’s worsening trade deficit with most of its FTA partners. However, with upcoming mega trade pacts like TPP and TTIP expected to change the global trade landscape, India would not want to opt out of RCEP at this stage. Thus, India’s best bet would be to offset its loss on account of goods trade by greater benefits from market access in services and investment.
SOURCE: The Financial Express
The reversal in the rupee from the May 24 low of 67.76 was short-lived as it failed to strengthen beyond 67.The currency touched a high of 66.95 on Friday and reversed lower again. Even strong GDP numbers failed to boost the sentiment. A Bengali newspaper reporting that the RBI Governor wants to go back to the US and may not want to extend his tenure has added fuel to the down-move. This news weakened the rupee from 67.10 to 67.44 on Wednesday. The rupee recorded a low of 67.46 before closing at 67.45 on Wednesday.
An eventful week
Volatility is on the cards as the week is packed with key events that can impact the rupee movement. It begins with the European Central Bank and Organisation of Petroleum Exporting Countries (OPEC) meetings on Thursday. These will be followed by the US non-farm payroll numbers on Friday. A strong surge in the payroll numbers accompanied by a rise in employee wages will boost the dollar. It will further increase the possibility of a rate hike in the US in June or July. In such a scenario, the rupee can fall further, to 68 or lower levels. On the domestic front, the RBI’s monetary policy meeting is scheduled on Tuesday. There are widespread expectations of a rate cut this month. If the RBI disappoints, then it can trigger a sell-off in the equity market and pile pressure on the rupee.
Dollar outlook
The dollar index (95.55) is facing resistance near 96 and has come off slightly. While below 96, a fall to test 95, an important support, is possible. A breakout on either side of 95 or 96 will decide the next leg of move for the index. The US jobs numbers due on Friday might be a possible trigger for this breakout. A strong break above 96 can take the dollar index higher to 96.6. Further break above 96.6 can increase the possibility of the rally extending to 98 thereafter. On the other hand, if the index declines below 95, it can fall to 94 in which case the rupee can recover slightly.
Rupee outlook
As expected, the psychological level of 67 has capped the upside in the rupee over the past week. The subsequent reversal from the high of 66.95 keeps the bearish outlook intact. Immediate support is at 67.5, a break below which can drag the rupee to 67.85 in the near term. A strong fall below 67.85 can take the currency further lower to 68.25 in the short term. Such a fall will keep the medium-term bearish outlook also intact for a revisit of the previous lows of 68.85 recorded in August 2013. The downside pressure on the rupee will ease only if it decisively breaks above 67. The next target will be 66.8. If the currency manages to surpass the hurdle at 66.8, it can strengthen further to 66.5. The 66.5 level is an important short-term resistance, which is likely to limit the upside in the rupee.
SOURCE: The Hindu Business Line
India and Morocco today launched the India-Morocco Chamber of Commerce and Industry (IMCCI) here to accelerate the pace of economic development between the two countries. The chamber was jointly launched by visiting Vice President Hamid Ansari and Moroccan Prime Minister Abdelilah Benkirane at a function here. Speaking on the occasion, Ansari said that a Chamber of Commerce and Industry did not exist because “we took things for granted”. He said that the world is changing and it has become a globalised world. “We do need bodies like the IMCCI,” he added. Ansari said, “It is a testament to the growing importance of commercial engagement between our two countries”. He said that the IMCCI should focus on the requirements of both sides. An official spokesman said that bilateral trade between the two countries stood at $1.26 billion in 2015 with Indian exports forming roughly 25 per cent of the trade volume. He said that Morocco has emerged as a favoured destination for investments by Indian firms adding that Indian companies have cumulatively invested more that $320 million in Morocco, including in the flagship project, the Indo-Maroc Phosphore SA joint venture. The last two decades of economic growth have also strengthened India’s private sector and it is keen to expand its global operations, the spokesman said. Earlier in the evening, Ansari visited the Mohammed VI Imam Training Centre which promotes the values of moderate Islam and is actively working on ideologies and beliefs. The Centre trains a large number of preachers from the Arab world besides Africa, including women.
SOURCE: The Financial Express
The India-Australia free trade agreement will take longer to materialize as negotiations will resume after Australia completes its national elections in June, Australian envoy Harinder Sidhu said on Wednesday. Speaking at discussion session on trade liberalization, the newly appointed high commissioner said Australia was keen to conclude the agreement but refused to give a deadline for its completion. Pointing out that fruitful talks can only be held after a new national government takes charge in Canberra in early June, Sidhu added that the complicated nature of the talks demanded more time. "Australia would rather have a good outcome which takes time than one which doesn't satisfy aspirations on both sides", she said. The talks for a comprehensive economic cooperation agreement (CECA) were started in 2011 to boost both trade and investments between the two countries but progress has been slow due to disagreements over lowering tariff duties and access to services sector. The countries had missed the last deadline - January, 2016 set by Prime Minister Narendra Modi and Australia's then-Prime Minister Tony Abbott in September, 2014.
Australia is pushing for tariff reduction in dairy, fresh fruit, pharmaceuticals, meat and wines. On the other hand, India wants zero duty on auto parts, textiles, and fresh fruit, including mangoes and greater access in the services sector. Several rounds of negotiations have been completed for liberalizing trade and services regime besides removing non-tariff barriers and encouraging investments. The latest ninth round of negotiations took place in New Delhi on 21-23 September last year. After visiting India for the sixth time in April earlier this year, Australia's special trade envoy Andrew Robb said the deal may be completed in less than two months. It had been reported earlier that India wanted to defer the talks keeping an eye on negotiations regarding the Regional Comprehensive Economic Partnership (RCEP), which are also ongoing. The RCEP agreement involves the ten countries of the ASEAN grouping and six of its free trade partners - China, India, Japan, New Zealand, South Korea and Australia. Under the RCEP, India has offered tariff elimination of 42.5 per cent of all traded goods to Australia, while that country has offered zero tariff on 80 per cent of such goods. India feels it may lose its leveraging power by finalizing a trade deal with Australia ahead of the RCEP deal, which is also languishing after other members complained India wasn't lowering tariffs enough.
Uranium supply from Australia
The high Commissioner also said that supply of Uranium will start from the country soon although ironing out contract issues will take some time. The Australia-India nuclear cooperation agreement permits Australian companies to commence commercial uranium exports to India.
SOURCE: The Business Standard
China’s youth will now have access to safer apparel. The Standardization Administration of the People’s Republic of China (SAC) issued the country’s first mandatory national textile standards for children’s clothing, in honor of International Children’s Day on Wednesday, China Daily reported. “The standards are expected to guide manufacturers to improve the safety and quality of children’s clothing to ensure infants’ and children’s health and safety,” SAC spokeswoman Li Jing said. The quality supervision administration created the new standards after nationwide textile product inspections last year revealed that more than 10 percent of products designed for children, including apparel, failed its safety regulations. Textiles are divided into two types under the new standards: materials for infants 36 months or younger; and children from the ages of 3 to 14.
According to China’s Chemical Inspection and Regulation Service (CIRS), the National Standard GB 31701-2015 Safety Technical Code for Infants and Children Textile Products updated requirements for chemical safety and mechanical safety. Six plasticizers and two heavy metals (cadmium and lead) were limited from children’s apparel. Cords, stipulations and combustibility were also altered under the standard’s requirements for mechanical safety. Cords were banned from the neck area of clothing for kids under 7 and sharp stipulations were also eliminated from all children’s apparel. The new standard also breaks children’s apparel into three safety regulation groups: Category A includes all infant textile products and is very rigid in terms of appropriate materials; Category B involves any products created for direct skin contact and they must meet or go above the standard’s guidelines at this level; and Category C is the least rigid and involves children’s clothing not designed for direct skin contact. There will be a two-year transition period for full compliance across China. From June 1 to May 30, 2018, manufacturers will be allowed to sell any products that passed the original textile product standards. After this time period, any future products must comply with the updated standards.
SOURCE: The Sourcing Journal
For so long, the textile, apparel and footwear industry played a dominant role in the manufacturing sector of the Nigerian economy. With a record high of over 140 companies, Nigeria witnessed a boom in the textile manufacturing industries in the 1960s to 1970s with companies such as Kaduna Textiles, Kano Textiles, United Nigeria Textiles, Aba Textiles, Texlon Nigeria Limited, First Spinners Limited, amongst others, employing about a million people, contributing about 15 per cent of the manufacturing sector earnings to the GDP of the Nigerian economy and accounted for over 60 per cent of the textile industry capacity in West Africa. The story however changed for the industry in the 1980s. Following the discovery of oil and the subsequent oil boom, the government became reliant on oil and abandoned agriculture. The neglect of the agricultural sector had an adverse effect on the textile industry. The production of cotton, the basic raw material used for the manufacture of clothes regressed rapidly as its production capacity declined by 50 per cent. In addition, the economic regression meant that manufacturers could not afford to import sophisticated modern equipment which could have facilitated the production process. Similarly, textile manufacturers and fabric designers who could afford to import raw materials procured the materials at an astronomical cost which had an effect on their business. This meant the textile industry had insufficient and at times, no raw materials to work with.
Also, the trade liberalisation polices adopted in 1986 following the implementation of the Structural Adjustment Programme (SAP), saw the flooding of imported fabrics and finished goods, thereby degenerating the manufacturing capacity of the industry. By the 1990s, the degradation of infrastructure especially the lack of stable electricity supply affected textile manufacturers as they could not keep up with the strains of production and this led to the closure of a number of textile companies with hundreds of workers rendered helpless. By 1998, the industry was operating at a capacity of just 28 per cent. The abysmal performance of the textile industry and indeed, the entire manufacturing sector is indeed a sad tale. The sector which played a major role in boosting of nation’s economy and development is suddenly a shadow of itself as the country’s manufacturing capacity especially the textile industry is at an all-time low and its poor performance is having a bearing on the Nigerian economy. Despite the fact that oil, Nigeria’s major source of income is in a declining state and its overall contribution to the economy has reduced drastically, the manufacturing sector unfortunately lacks the capacity to provide relief to Nigeria’s ailing economy as it only contributes a paltry seven per cent to the Gross Domestic Product (GDP) of the economy with the textile, apparel and footwear industry contributing about N1.8 billion of that in 2015, according to the National Bureau of Statistics (NBS) report. However, it has however been proven that the textile industry is indeed a driver of growth and employment globally. For example, the exports of the textile industry in Hungary edged up to 3.2 per cent in 2014 to $1.62 billion from $1.57 billion in 2013. With a strong labour population of over 43, 000 in the textile industry, the involvement of medium-size enterprises in the industry and a robust export of textile products to countries such as Germany, Italy, Austria, France and Romania, a tremendous improvement has been forecasted for Hungary’s economy in 2016. The influence of the textile industry is bigger in China with more than 100,000 manufacturers employing over 10 million people. The industry is estimated to contribute about 47 percent to the country’s GDP with its value of garment export believed to be around $153.219 billion as at 2013. With its percentage of the global garment market at 38 per cent, China is the world’s largest manufacturer, exporter and consumer of garments. The Chinese textile industry remains competitive due to the continued investment in the domestic industry.
Given the importance of high productivity of the textile industry in boosting economic growth and the standard of living of the people as evident by the examples stated above, and with the glowing success of the country’s fashion designers today as seen in both local and international fashion shows, it is apparent that Nigeria must give priority to the textile industry and indeed, the entire spectrum of the manufacturing industry to improve the fortunes of the Nigerian people and their economy. The government must provide the enabling environment for the textile manufacturers and fashion designers to thrive. Provision of critical infrastructure such as electricity and good transport system needed by the manufacturers and designers should be made available to help them become truly productive. Also, the recently formulated policy road map for the creation of fashion clusters, the Integrated Textiles and Garment Parks (ITGPS), should be formally adopted by the present government and ensures it implements the policy provisions to the letter.
Government should also provide funding and financial incentives for members of the textile industry as it is done in other countries. Financial institutions of government such as the Bank of Industry, theand Nigeria Export-Import Bank should endeavour to provide funds to both manufacturers and designers as this would help in the long-term to grow the economy. Finally, there is a need for sustained dialogue by all stakeholders in the country to ensure that they undertake a comprehensive study and solutions on how to modernize, strengthen and get the industry to perform competitively locally and ultimately globally. Only by enacting all these would the Nigerian people and economy truly benefiting from a thriving textile, apparel and footwear sub-sectors of the manufacturing industry.
SOURCE: The Cable
DBL Group, a ready-made garment and textile giant of Bangladesh, is stepping up on plans to establish a factory in Ethiopia that will provide around 4,000 jobs and be supported by long-time customer Hennes & Mauritz (H&M). Fast fashion retailer H&M has committed to becoming a long-time buyer and supporting the factory with expert knowledge in sustainable textile production. The Mekele-based integrated knitting, dyeing and garment facility will be solely owned by DBL Group, with Swedish state-owned investment firm Swedfund investing US$15m through a loan for the facility. According to local reports, the total investment will be in the region of $100m, with the Ethiopian Development Bank has extending an additional $55m loan to the Bangladesh company. Anna Ryott, managing director at Swedfund, said that the factory will be a long-term sustainable industrial plant in every aspect and will be an important step for developing the textile industry in Ethiopia. MA Rahim, vice president of DBL Group, says it is a "milestone for us to build an integrated textile factory entirely focused on export.” The agreement was signed at the Swedish Embassy in Addis Ababa last week. Decent working conditions, job creation for women, and environmental considerations are some of the key goals for the project aimed at pushing one of Ethiopia's prioritised industry sectors forward. The collaboration also involves local and international partners to enhance the know-how around sustainable production of ready-made garments in Ethiopia.
SOURCE: The Global Textiles.
Finance Minister Ishaq Dar has told that special packages will be given in five different sectors of exports to promote them in upcoming budget, as they would try to overcome losses in trade, Dunya News reported on Wednesday. Dar also said that Pakistan army is indulged in Operation Zarb-e-Azb and consensus would not be possible without army’s support. He added that Prime Minister (PM) Nawaz Sharif was recovering speedily and that doctors were satisfied with the recovery. Finance Minister also added that increment in salaries of government employees would be done on suggestion of committee. Budget would be presented on June 3 and there was no need of a separate notification of budget meeting, he said.
SOURCE: The Dunya News
Manufacturing unexpectedly expanded at a faster pace in May, helped by an increase in orders that signals U.S. factories are rebounding from an early-2016 slump. The Institute for Supply Management’s index climbed to 51.3 from 50.8 in April, figures from the Tempe, Arizona-based group showed Wednesday. The median forecast in a Bloomberg survey of 81 economists called for 50.3. Readings greater than 50 indicate growth. Factories are using a pickup in bookings from the U.S. and abroad to help trim stockpiles, laying the ground for bigger gains in production later in the year. The recent pickup in oil prices also will probably help stem the slump among energy producers that has contributed to weak business investment. “Manufacturing will be on a slow, gradual path of improvement,” Sam Bullard, a senior economist at Wells Fargo Securities LLC in Charlotte, North Carolina, said before the report. “Hopefully, we’re in a stabilization process in energy and mining.” Estimates for the manufacturing index in the Bloomberg survey ranged from 49 to 52, according to the Bloomberg survey of 80 economists. The new orders gauge was little changed at 55.7 compared with 55.8 in April. A measure of production cooled to 52.6 from 54.2.
Employment Lags
One weak spot was the factory employment measure, which held at 49.2, indicating manufacturers trimmed payrolls last month. In other signs that the industry is turning around, the index of supplier deliveries jumped to 54.1, the highest level since December 2014, from 49.1. A reading greater than 50 means shipments slowed, which often happens when suppliers have trouble keeping up with demand. The ISM’s gauge of factory inventories fell to 45 from 45.5. The index has been lower than 50 for almost a year as producers trim the amount of goods on hand. “Things, for me, are pointing in the right direction,” Bradley Holcomb, chairman of the ISM factory survey, said on a conference call with reporters. With businesses having pared stockpiles and orders picking up, “there’s a bit of an inventory shortage” and “suppliers are now having a harder time catching up so they’re slower.” The report also showed the headwind from sluggish overseas markets may be dissipating. The index of export orders held at 52.5 in May, marking the third straight month demand from abroad has grown. Manufacturers also are seeing a pickup in price pressures. The index of prices paid jumped to 63.5, the highest level since June 2011, from the previous month’s 59.
SOURCE: The Bloomberg
