INTERNATIONAL
NATIONAL
Revenue of the Indian viscose staple yarn (VSY) industry is set to grow 10-12% on-year to an all-time high of over $2.5 billion this fiscal on continued strong demand — similar pace to last fiscal, said CRISIL Ratings on Tuesday. Even as yarn prices decline, though at a lower rate than raw material prices, overall profitability is likely to improve 200-300 basis points (bps). Strong balance sheets and improved cash flows will support the credit risk profiles of manufacturers, despite substantial debt-funded capital expenditure (capex). A CRISIL Ratings analysis of VSY companies, accounting for over a fourth of the industry by revenue, indicates as much. VSY is an attractive alternative to cotton yarn because of its lower prices and comparable features. It logged a compound annual growth rate of 13% over the last three fiscals, higher than 5% for cotton yarn. During this period, VSY prices were relatively stable, ranging between Rs 200 and Rs 250 per kg. In contrast, cotton yarn prices ranged between Rs 200 and Rs 380 per kg. The removal of anti-dumping duty on imports of viscose staple fibre (VSF) in fiscal 2022 also helped steady VSY prices. Subsequently, VSY’s share of the spinning industry volume increased to over 10% last fiscal from under 7% in fiscal 2020 Says Himank Sharma, Director, CRISIL Ratings Ltd, “Viscose spinners’ volume is expected to grow 15% on year this fiscal, supported by sustained domestic demand and a revival in export demand during the second half. Overall, segmental growth will be in low double digits.” With VSY makers’ revenue improving and spreads between VSY and VSF expanding to Rs 55-58 per kg, the operating margin is likely to improve to 11-12%. Higher viscose yarn imports from China and weaker global demand impacted spreads last fiscal, causing the margin to shrink 800-900 bps. Margin is projected to recover this fiscal as prices of major raw materials (wood pulp and chemicals) moderate, nearing steady-state levels of 12- 13%. VSY makers have increased capacity by 50% in the past three fiscals. They are expected to add another ~15% capacity this fiscal with an outlay of ~Rs 600 crore, likely to be funded by a 1:1 debt-to-equity ratio. Says Jayashree Nandakumar, Director, CRISIL Ratings Ltd, “The capitalintensive nature of the VSY segment has resulted in players regularly contracting debt for capacity expansion. However, strong balance sheets have ensured credit risk profiles of players remain comfortable despite continuous capex.” Gearing is expected to improve to 0.85 times as on March 31, 2024, from 1.0 times as on March 31, 2023, while the interest coverage ratio is likely to improve to 6 times this fiscal, from 4.5 times last fiscal, on the back of higher profitability. Any adverse impact of the levy of anti-dumping duty on VSF, leading to higher input costs for viscose spinners or lower domestic demand, along with a further slowdown in global demand, will bear watching.
Source: The retail.economictimes.indiatimes.com
India should take measures such as increasing awareness among exporters and proper implementation of track and trace systems to deal with compliance requirements of the European Union's Deforestation Regulation (EUDR) as it would hit agri exports, a report said on Tuesday. This regulation will hit India's agricultural exports worth USD 1.3 billion to the EU starting December 2024, think tank Global Trade Research Initiative (GTRI) said. "Indian exports may take a bigger hit than exports from other competing countries to the EU because of India's higher deforestation rate," the report said, adding India's exports will also be affected by the complex compliance requirements of the EUDR and the EU's Foreign Subsidies Regulation (FSR). Even if the exporter is certain that a product is not grown on the deforested land, he/she still has to follow all elaborate compliance requirements, GTRI Co-founder Ajay Srivastava said. He said this is so different from quality standards where quality of the final product alone matters. "The EU just wants to raise the cost of imports to help local producers through a complex compliance mechanism," he added. The key products which would be affected due to this regulation include coffee, leather hides, skin, preparations, oil cake, paper, paperboard, and wood furniture. The European Union Deforestation-Free Products Regulation, also known as EU Deforestation Regulation (EUDR) was adopted by the European Union Council, on May 16, 2023. The regulation requires firms to ensure that the product exported to the EU has been grown on land which has not been deforested after December 31, 2020. "The regulation is not WTO (World Trade Organization) compatible and a nontariff barrier," the report said. The new rules will apply to large firms with effect from December 2024 and small firms from June 2025. the EU, confiscation of product, confiscation of revenues gained from a transaction. Citing a March 2023 report by 'Utility Bidder', GTRI said that India lost a significant amount of forest between 1990 and 2020, making it the secondworst country after Brazil in terms of forest loss during 2015-2020. "India lost 384,000 ha of forests between 1990 and 2000, and 668,400 ha between 2015 and 2020. However, the India State of Forest Report 2021, released in January claimed a small increase in forest cover. But the positive picture is because the government doesn't distinguish between natural forests and plantations when assessing forest cover. India is losing its natural forests and replacing them with plantations," it said. Due to this situation, Indian exporters will face challenges as they must prove that their export products come from land that has not been deforested after December 31, 2020, it said adding the EUDR will consider plantation land as deforested land, which would add to the difficulties for Indian exporters. "The EUDR makes exports expensive due to the high compliance cost. Even exporters of high-quality products must invest in expensive due diligence. They need to prove the integrity of their supply chain through a detailed trace and track system from Indian farms to EU markets. This involves sharing farm and farmer data with the EU," it said. The compliance procedure includes collecting various information such as commodity details, quantity, farmer/supplier names, country of production, and addresses of the land plots where the commodities were produced. It said that the Indian government should acknowledge that the EUDR is a reality and it should not expect any exemptions from the EU. The government should "join hands with other affected countries to raise the issue at the World Trade Organization (WTO). Raise awareness among exporters about the compliance requirements; and utilize the existing blockchain-enabled trace and track system implemented by APEDA for grape exports to the EU and extend its adoption to cover all relevant products," the report suggested. Agricultural & Processed Food Products Export Development Authority (APEDA) is an arm of the commerce ministry which deals with agri exports.
Source: Economic Times
The four recent climate change and trade-related regulations of the European Union are expected to be a major point of friction at the next ministerial conference of the World Trade Organisation (WTO). Developing countries are expected to mount a major challenge to the move and seek concessions to help them deal with global trade shake-up that will follow the move, a senior official said. The Ministerial Conference is the topmost decision making body of the WTO and its 13th meeting will be held by February-end in Abu Dhabi.India has already submitted a paper against the Carbon Border Adjustment Mechanism, also known as carbon tax, at the WTO. After India’s move other countries like China and members of the Africa Group have also filed their objection at the global trade-regulating body.The tax will be imposed on iron and steel, cement, aluminium, fertilizers from January 2026 to start with. From India’s standpoint, the most impacted sectors would be aluminium and steel. In 2022, around 27% of India’s exports or steel and aluminium worth $8.5 billion went to the EU.“This (EU regulations) will become a major issue in the conference. So many countries have already submitted papers against this in the WTO. It looks like discussions will happen on this and a general view will also emerge,” a senior official said. “We will also have to discuss and engage with the EU at the conference (on the new regulations) to help exporting countries navigate the new regulatory environment,” he said. The official admitted that countries have limited options to counter the new regulations as they will apply equally to EU’s domestic manufacturers. “In the WTO, the dispute system is defunct. If we will not engage with them and not do business with them it will hurt us only.” To meet the commitments that the new regulations require, the EU is bringing in the latest technologies and getting into new kinds of manufacturing. “The EU can be asked for some aid for trade and sharing new technologies,” the official said. The WTO has the provision of ‘Aid for Trade’ that helps least developed countries build capacity for exports.Apart from carbon tax, the EU has come out with three other regulations. Deforestation Regulation stipulates that companies ensure that farm products they export to the EU have not been grown or raised on land deforested after December 2020. EU Foreign Subsidies Regulation gives the 27-nation authority to block imports of products if they were produced using subsidies and are distorting markets. It also proposes to start charging CBAM like tax on shipping from January 2027. Germany has come out with its Supply Chain Due Diligence Act that seeks to impose labour standards on imports. “Once the regulations are implemented in full, these will help the EU raise $500 billion to $800 billion annually through the sale of emission allowances, collection of fines and other related fees,” founder of Global Trade Research Initiative Ajay Srivastava said. The global trade is in for more shocks as other developed countries like the UK, US, Canada and Japan are also examining replicating carbon tax, which will be imposed on emissions beyond a threshold at the production stage of a product, to meet their net zero emission targets.
Source: Financial express
The Government’s roadmap for making India a $5 trillion economy comprises focussing on growth at the macro level and complementing it with all-inclusive welfare at the micro level, promoting digital economy and fintech, technology-enabled development, energy transition and climate action and relying on a virtuous cycle of investment and growth. The Government’s Road Map was put into effect in 2014. This was stated by Union Minister of State for Finance Shri Pankaj Chaudhary in written reply to a question in Rajya Sabha today. The Minister stated that major reforms including Goods and Services Tax (GST), Insolvency and Bankruptcy Code (IBC), a significant reduction in the corporate tax rate, the Make in India and Start-up India strategies, and Production Linked Incentive Schemes, among others, have been implemented. Giving out more information, the Minister stated that the Government has also focused on a capex-led growth strategy to support economic growth and attract investment from the private sector, increasing its capital investment outlay substantially during the last three years. Central Government’s capital expenditure has increased from 2.15 per cent of GDP in 2020-21 to 2.7 per cent of GDP in 2022-23. The Minister further stated that the Union Budget 2023-24 has taken further steps to sustain the high growth of India's economy. These include a substantial increase in capital investment outlay for the third year in a row by 33 per cent to ₹10 lakh crore (3.3 per cent of GDP). Direct capital investment by the Centre is also complemented by Grants-in-Aid to States for the creation of capital assets. The ‘Effective Capital Expenditure’ of the Centre was accordingly budgeted at 13.7 lakh crore (4.5 per cent of GDP) for 2023-24. This strong push given by the government is also expected to crowd in private investment and propel economic growth, the Minister stated.
Source: PIB
Indian manufacturing continued to maintain strong growth momentum at the start of the third quarter amid ongoing buoyant demand, even as the Purchasing Managers' Index (PMI) for the sector fell slightly to a three-month low of 57.7 in July from 57.8 in June, said a private survey on Tuesday. The July figure marked 25 months of the index remaining above the 50-mark, separating expansion from contraction. A survey print above 50 indicates manufacturing expansion and below marks contraction.“Reports of demand improvements were widespread across the latest survey, and resulted in another marked expansion of new orders in the sector. The rapid increase was broadly in line with that seen in the previous survey period,” said the survey by the global credit rating agency. The survey said that the rate of expansion in output and new orders was only marginally softer than in June, as firms expanded their employment and purchasing activity accordingly with cost inflationary pressures remaining relatively muted.“The Indian manufacturing sector showed little sign of losing growth momentum in July as production lines continued to motor on the back of strong new order growth,” said Andrew Harker, economics director, S&P Global Market Intelligence. The survey said the growth in new export business picked up to the fastest since November, as respondents noted increases in new orders from customers in the United States, Bangladesh and Nepal.“With new orders up sharply again, manufacturers expanded production accordingly. Output has increased continuously on a monthly basis since July 2021. The latest rise was substantial, albeit the softest in three months,” said the survey. Besides, to manage greater workload, firms responded by taking on extra staff as the pace of job creation was broadly in line with those seen in May and June. However, this expansion in capacity was not sufficient to prevent a further build-up in backlogs of work, as outstanding business increased for the nineteenth successive month, albeit only slightly.Stocks of purchases also rose rapidly as companies expressed a desire to build inventories given the buoyant demand environment. The rate of input cost inflation accelerated to a nine-month high in July, but remained softer than the series average. Where input prices increased, panellists reported higher costs for raw materials, in particular cotton. These higher prices for raw materials, plus rising labour costs, led firms to increase their selling prices. “Pressure continued to come on capacity, prompting firms to expand employment solidly again, a trend that is likely to continue in the months ahead should demand remain strong. All in all, the Indian manufacturing sector has maintained its position as one of the star performers globally, bucking the trend of demand weakness seen in other parts of the world,” said Harker.
Source: Business-Standard.
The 50 meeting of the Executive Committee of the National Mission for Clean Ganga (NMCG) was held under the chairmanship of DG, NMCG, Shri G. Asok Kumar where Seven projects worth around Rs. 692 crore were approved. Out of the seven projects, four pertain to sewage management in Uttar Pradesh and Bihar. NMCG has so far sanctioned a total of 452 projects worth around Rs. 38,126 crore out of which 254 have been completed. For sewage management in Uttar Pradesh, 3 projects worth Rs. 661.74 crore were approved in the meeting. These include creation of a 100 Million Litres per Day (MLD) STP in Lucknow along with Interception and Diversion (I&D) works under Hybrid Annuity Mode (HAM). Another project for I&D of balance discharge of Dariyabad Pipalghat and Dariyabad Kakahraghat drains and construction of a 50 MLD STP in Prayagraj was approved. This project costing around Rs. 186.47 crore will augment the existing treatment capacity of Naini STP in sewerage district-A in Prayagraj to 80 MLD. In a smaller project, a 6 MLD STP, I&D and other works in Hapur was also approved to stop the flow of Hapur city drain into River Kali, which is a tributary of River Ganga. Two STPs (5 and 7 MLDs) at an estimated cost of Rs. 74.64 crore for tapping of Pipra ghat drain and Chhatiya ghat drain respectively along with I&D works was also approved in the 50 EC meeting for Raxaul town in Bihar. This project will abate pollution in Sirsiya River that originates in Nepal and enters Bihar at Raxaul in East Champaran district. In an important step for effective management of water in urban areas, a project envisaging preparation of 60-70 Urban River Management Plans (URMPs) in two phases has also been approved costing around Rs 20 crore. During the first year, 25 URMPs shall be prepared and 35 URMPs shall be prepared during the second year. The first phase would cover 25 cities from 5 main stem Ganga basin states: Dehradun, Haridwar, Rishikesh, Haldwani & Nainital in Uttarakhand; Lucknow, Varanasi, Agra, Saharanpur & Gorakhpur in Uttar Pradesh; Patna, Darbhanga, Gaya, Purnea and Katihar in Bihar; Ranchi, Adityapur, Medininagar, Giridih and Dhanbad in Jharkhand and Asansol, Durgapur, Siliguri, Nabadwip and Howrah in West Bengal. This project is part of the River-Cities Alliance (RCA) under Namami Gange, which provides cities opportunities to cooperate, work together, learn from each other’s best practices, share knowledge, thus paving the way for Gyan Bhagidari, which will lead to transformational solutions. This project will be World Bank funded. RCA which started from 30 members in 2021 now has more than 140 members, including international cities. In a first-of-its-kind project, one project was approved for initiation of M.Sc. Course in Freshwater Ecology and Conservation at Ganga Aqualife Conservation Monitoring Centre, Wildlife Institute of India, Dehradun at an estimated cost of Rs. 6.86 crore for 10 years. The proposal aims to develop a cadre of ecologists and field biologists, with expertise in freshwater ecology for effectively managing the freshwater resources and its biodiversity in India. The project addresses the need for scientific knowledge and skilled professionals in the field of freshwater ecology and conservation. It aims to train a new generation of field researchers and ecologists to effectively manage and conserve freshwater ecosystems in India. The project will offer a two-year M.Sc. Course in Freshwater Ecology and Conservation spanning four semesters. The curriculum will cover various aspects of freshwater ecosystems, their biodiversity, and the impact of drivers on these ecosystems. One project for the construction of an electric crematorium at Barkola, Kharagpur in West Bengal was also approved in the 50 EC. Shri S.P. Vashishtha, Executive Director (Admin.), NMCG, Shri Bhaskar Dasgupta, Executive Director (Finance), NMCG, Shri D.P. Mathuria, Executive Director (Technical), NMCG, Ms. Richa Misra, Joint Secretary and Financial Advisor, Department of Water Resources, River Development and Ganga Rejuvenation, Ministry of Jal Shakti, senior officials from the states concerned also attended the meeting.
Source: PIB
The Union Minister for New & Renewable Energy and Power has informed that during the G20 Energy Transitions Ministers Meeting held on 22 July, 2023 under India’s G20 Presidency, members discussed the importance of building a sustainable and equitable global hydrogen ecosystem that benefits all nations, and affirmed High level Voluntary Principles on Hydrogen, which inter-alia includes promotion of free and fair trade of hydrogen produced from zero and low emission technologies and its derivatives. The Government is also cooperating with several countries bilaterally on development of green hydrogen sector. The Union Minister informed that on 4th January 2023, the Union Cabinet approved the National Green Hydrogen Mission with an outlay of Rs. 19,744 crores. Various financial and non-financial measures have been announced under the Mission, including inter-alia, the following: i. Facilitating demand creation through exports and domestic utilization; ii. Strategic Interventions for Green Hydrogen Transition (SIGHT) programme, which includes incentives for manufacturing of electrolysers and production of green hydrogen; iii. Pilot Projects for steel, mobility, shipping, etc.; iv. Development of Green Hydrogen Hubs; v. Support for infrastructure development; vi. Establishing a robust framework of regulations and standards; vii. Research & Development programme; viii. Skill development programme; and ix. Public awareness and outreach programme. The Strategic Interventions for Green Hydrogen Transition (SIGHT) Programme, is a major financial measure with an outlay of ₹ 17,490 crore. The programme consists of two distinct financial incentive mechanisms to support domestic manufacturing of electrolysers and production of Green Hydrogen. The Government has issued the Guidelines for incentive schemes for electrolyser manufacturing & for production of Green Hydrogen. The Minister informed that the Mission is expected to lead to development of 5 MMT Green Hydrogen production capacity per annum by 2030. He said that it is estimated that nearly 50 MMT per annum of CO2 emissions can be averted through production and use of the targeted quantum of Green Hydrogen. This information has been given by the Union Minister for New & Renewable Energy and Power Shri R. K. Singh, in a written reply to a question, in Rajya Sabha today, August 1, 2023.
Source: PIB
The Union Minister for New & Renewable Energy and Power has informed that the installed renewable energy capacity in India has increased from 115.94 GW in March 2018 to 172.00 GW in March 2023, i.e., an increase of around 1.48 times. Further, as per information provided by the Central Electricity Authority (CEA), 365.60 Billion Units (BU) of electricity have been generated during the year 2022-23, from renewable energy sources across the country. Globally, India has the fourth largest Installed Capacity of renewable energy as per Renewable Energy Statistics 2023 released by the International Renewable Energy Agency (IRENA). The Minister stated that on October 9, 2022, the Prime Minister Shri Narendra Modi, dedicated to the nation India's first Battery Storage and Solar Power based 'Suryagram' - "Modhera" in Gujarat, with round-theclock Renewable Power Supply. The Minister has also informed that a 6 MW ground-mounted solar power plant with 15 MWh Battery Energy Storage System and Rooftop Solar systems on all feasible household and Government buildings are providing solar power to the entire Modhera village, which has a population of around 6,500 people. This information has been given by the Union Minister for New & Renewable Energy and Power Shri R. K. Singh, in a written reply to a question, in Rajya Sabha today, August 1, 2023
Source: PIB
INTERNATIONAL
In pursuit of its goal of achieving a circular economy strategy, the UK Government has announced new initiatives to promote and boost fashion and textile repair, reuse, and recycling operations. The Government claims that its Waste Prevention Programme for England, dubbed ‘Maximising Resources, Minimising Waste,’ aims to support its waste reduction targets and net zero pledge. The UK Government adds that it intends to focus on seven important sectors, including textiles. The Waste Prevention Programme aims to reduce fashion and textile waste, boost product utilisation, and foster a lucrative textile recycling business, all while encouraging a circular economy. Recognising the importance of collaboration, the Government has collaborated with the fashion sector to push voluntary action through initiatives such as Textiles 2030, the UK Sustainable Textile Action Plan. The plan’s signatories commit to aggressive 2030 targets, including a 50% reduction in new product carbon footprint and a 30% decrease in water footprint. Circular business models and closing the material loop are two crucial areas for achieving these goals. Additionally, the Government will provide £ 15 million through the UK Research and Innovation’s Circular Fashion Programme to overcome obstacles to the adoption of circular business models. Included in this are £ 4 million for a sorting and recycling demonstration unit, £ 6 million for research, £ 2 million for an industry-led innovation network, and £ 3 million for initiatives that link UK fashion companies with academic institutions.
Source: Apparel Resources
Two new reports from the United Nations Climate Change’s Fashion Industry Charter for Climate Action aim to help the fashion industry better understand how to reduce greenhouse gas emissions from raw material extraction, production, and processing, which is the most carbon-intensive part of the fashion value chain for some companies. “These reports are a key resource for any company or organization wanting to understand and improve upon the current state of play of impact data in the fashion and apparel industry,” said Lindita Xhaferi-Salihu, Sector Engagement Lead with UN Climate Change. The new papers add to the Charter’s 2021 report Identifying Low Carbon Sources of Cotton and Polyester by covering two additional raw material categories crucial to the global fashion and textile industry: animal fibres and man-made cellulosics. The papers give a thorough assessment of the data gaps and difficulties and serve as neutral, centralised sources of information on the greenhouse gas impact data that are currently available globally for each category of raw materials. The findings will assist the Fashion Charter signatories in finding strategies to lessen their greenhouse gas emissions and get closer to their goal of achieving net-zero emissions by 2050. Lenzing, Canopy, VF Coproration, Reformation, Primark, Schneider Group, Fabrikology, New Enzymes, Sateri, and other Charter signatories contributed significantly to the development of these gap analysis reports, which were led by Textile Exchange as the Raw Material Working Group’s leaders.
Source: Apparel Resources
For decades, China set a shining example of how to capitalise on globalisation to accelerate domestic economic growth and development. These days, however, the country risks becoming a cautionary tale about mishandling globalisation’s shift from a beneficial tailwind to a disruptive headwind. Although the Chinese economy’s recent travails have some unique characteristics, they illustrate the growth challenges facing many developed and developing countries. They also show that while economic growth is not everything, you cannot solve much of anything without it.This year was supposed to mark a robust economic recovery for China. Instead, many analysts have been forced in recent days to again revise down their projections for Chinese growth, and more are likely to follow suit. This increasingly pessimistic outlook can be attributed to three main factors.First, as the most recent trade data show, the global economy no longer supports China’s domestic growth dynamics. In June, Chinese exports fell by 12.4% (in dollar terms), and imports declined by 6.8%, far worse than the consensus forecast of a 10% decline in exports and a 4.1% decrease in imports. These disappointing figures are the result of sluggish demand growth in Europe and elsewhere, and enhanced restrictions against China, particularly those imposed by the United States, which created a self-reinforcing cycle that further dampened the country’s growth prospects. Second, the Chinese authorities appear to be torn between two distinct approaches to stimulating the economy, resulting in a rather indecisive policy response. While the government seems inclined to revert to the top-down stimulus measures it employed in the past, actual implementation has been limited, owing to concerns about exacerbating inefficiencies and impeding the ongoing and generally orderly deflation of debt bubbles in certain sectors. Conversely, the much-needed alternative of unleashing bottom-up economic dynamism is constrained by domestic political considerations, leaving China stuck in the muddled middle. Meanwhile, domestic policy challenges are compounded by structural factors, including the aging population, high youth unemployment, and remaining pockets of excessive leverage.
Source: Financial express
