INTERNATIONAL
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The review of Asean-India Trade in Goods Agreement (AITGA) will start with discussions on making the Rules of Origin (ROO) more comprehensive and detailed, as New Delhi is keen to remove the scope for exporters from third countries to exploit the preferential tariffs, a senior official said. The ROO revision would be in line with the provisions in the trade agreements that are currently being negotiated, where extent of value addition in a product originating from the exporting country is different for each chapter or product. Currently, the ROO is not a very detailed chapter in AITGA. This is seen to be still allowing businesses fro m third countries to utilise this FTA, for exports to India. “We need to look at ROO in a very different manner because different sectors behaves differently,” the official added. After years of negotiations AITGA was signed in 2009 and at that time the ROOs framed were very generic in nature. For non-manufactured products, agriculture products and marine items, grown or extracted or obtained from territorial waters of the counties participating in the pact, were eligible for concessional duties. In manufactured products, domestic value addition of 35% of FOB (the cost at the frontier of the exporting country) value was mandated. Another condition for availing concessional tariffs was that final processing is performed within the territory of the exporting country. “We want to make rules of origin in AITGA more granular and product specific,” the official said. In trade talks with Australia value addition norms for 6000 products are being negotiated individually. Even with the UK, product specific value addition norms are discussed and is one of the contentious issues in the talks. “In newer agreements under consideration the value addition requirements are different for each product. These values cannot be the same for agriculture and manufactured products,” the official. For the review the government has held stakeholder consultations with 7-8 industry groups. The AITGA entered into force on 1 January 2010 which created one of the world’s largest free trade areas. Since then The trade deficit with Asean widened from $4.98 billion in 2010-11, the first full year of operation of AITGA to $43.57 billion in 2022-23. The widening of the deficit by $17.51 billion in the last financial year is alarming as in 2021-22 the deficit was $ 25.76 billion. Within five years of the agreement on goods being activated India had started asking for a review of the pact as its imports from Asean zoomed but it could not derive the expected benefits. India maintains that its exports to Asean have been impeded by non-reciprocity in FTA concessions, non tariff barriers, import regulations and quotas. In August this year both sides laid down the framework and a deadline of 2025 to complete the review. Apart from rules of origin, other areas where talks will focus on are goods. Both rules of origin and goods trade will be negotiated by separate sub-committees. The in-person joint committee meeting on the review is expected in the third week of February. Before that one virtual meeting of the joint committee may be held, the official said.
Source: Financial Express
Commerce and industry minister Piyush Goyal on Wednesday said the proposed free trade agreements with the European Union and four-nation European Free Trade Association (EFTA) group are doable, but they should keep in mind India’s concerns as the level of economic development is different.“We are in active dialogue with the EU and EFTA for a free trade agreement... I do believe that both of these are eminently doable and will significantly help us expand our engagement not only in trade in goods services, but also in investments, technology, tourism, innovation, and clean energy,” Goyal said at the Confederation of Indian Industry’s (CII) India-Nordic Baltic Business Conclave. The Nordic Region nations include Denmark, Norway, Sweden, Finland, and Iceland, Faroe Islands, and Greenland, while Baltic states include Estonia, Latvia, and Lithuania.He said the EU and EFTA countries need to understand certain “very important and significant” differences between the two set of regions.EFTA includes Iceland, Liechtenstein, Norway, and Switzerland. India and EFTA are negotiating a Trade and Economic Partnership Agreement.Goyal said Nordic and Baltic nations can act as India’s ambassadors in the EU and the EFTA to help them understand certain very important and significant differences between the two set of regions engaging with each other. “Unless this is understood by the member countries of the EU and the EFTA, it will be very difficult to look at really concluding a high quality but fair, balanced, and equitable arrangement between them,” Goyal said.Citing the example of Norway, Goyal said Norway has about 6,000 fishermen as compared to about 4 million in India, who are small and marginalised. While Indian fishermen are engaged in basic fishing near the shores, as compared to developed nations where fishermen go deep into the sea for fishing, he said. The amount of investment in subsidising Norway's fishermen is multi-fold as compared to India.“It is not an equal competition,” he said, adding that free trade has to have enough opportunity to catch up “when you are staring from two different levels”. He said the Nordic-Baltic region has come close to India in recent years and Indian cuisine, Bollywood, yoga, ayurveda, and textiles are popular in that region, and that these nations have the best of innovation, green tech, AI, and blockchain-led transformation, supply chain logistics and fintech and these are the areas where there is a huge scope for collaboration with India.
Source: Business-Standard
Union Finance Minister Nirmala Sitharaman on Friday (October 13) said a unified approach to regulating cryptocurrencies has been adopted by the G20 nations, signaling a coordinated global effort to address the challenges and opportunities posed by crypto assets.Addressing the media following the 4th G20 FMCBG Meeting under India's G20 Presidency held on October 12-13, 2023 in Marrakech, Morocco, Sitharaman said the G20 nations are aligning their regulatory efforts and are in her words, "on the same page" concerning the regulation of crypto assets. "Given the understanding that globally now all of us are on the same page about the way in which regulations can happen, country and their specific legislative arrangements will also have to be worked out.
Source: The Cnbctv18.com
India's stock market will hit new highs in the next six months and rise over 10% from here by end-2024, driven by a sustained expansion in the fastest-growing major economy, according to a Reuters poll of equity strategists. Those same strategists also said in response to an extra question value stocks, which have trailed overall equity performance in recent years as investors chased technology and other shares, will outperform growth stocks. Click here to follow our WhatsApp channel The benchmark BSE Sensex index touched an all-time high of 67,927.23 in September, recording the longest streak of gains in 16 years. The index has since dropped around 3% but was still up almost 8% for the year. The benchmark BSE Sensex index touched an all-time high of 67,927.23 in September, recording the longest streak of gains in 16 years. The index has since dropped around 3% but was still up almost 8% for the year. While that run puts India as one of the best performing markets - the BSE index has risen in nine of the past 10 years - it also makes it expensive compared to regional peers and other major indices. The BSE's current price-to-earnings ratio of 21.45 was only second to the U.S. S&P 50 ratio of 23.11 according to LSEG data. But still nearly 90% of analysts, 22 of 25, who answered an additional question in the Nov. 10-22 poll said Indian stocks would hit record highs in the coming six months. The Sensex was expected to gain over 6% from Monday's close of 65,655.15 to a lifetime high of 70,000 by mid-2024, an upgrade from 68,578 in an August poll.It was then forecast to add another 3.6% to reach 72,500 by end-2024, according to the median forecast of 29 analysts. India's economy is the fastest growing among major economies and is expected to grow over 6% in the next couple of years. That is likely to push domestic equities higher. "This was a good year for growth in Indian markets and next year we should see some moderation in growth. But having said that, I think India remains one of the well-favoured markets," said Rajat Agarwal, Asia equity strategist at Societe Generale. "Growth is resilient and the macro momentum has been strong and that should continue to be the case in 2024 as well."The strong run-up in domestic equity prices may be due to the rise in young Indian investors fuelling the boom at a time when the country has overtaken China as the most populous in the world. "A combination of better financial literacy and increased access to financial services has led to a surge in mutual fund accounts (typically used by retail investors), from under 60 million in 2016 to over 150 million now," noted Shilan Shah, deputy chief EM economist at Capital Economics. Asked about expectations for corporate earnings over the coming six months all 27 respondents said they would increase."Earnings actually extended by more than 20% this year. So we already have a high base. I think earnings should increase, but we might not really have the kind of growth we saw in the last year," added Agarwal. Two-thirds of analysts, 16 of 24, said value stocks would perform better over growth stocks in the coming six months. "In an environment where interest rates are high, or are expected to be high if not go up further, value typically does better," said Nishit Master, portfolio manager at Axis Securities. "We are not going back to the 0% interest rates or 1% or 2% global interest rates any time soon. And if that is the case, value will keep on doing well."The Nifty 50 index was forecast to gain 5.6% from Monday's close of 19,694 to 20,800 by mid-2024 and reach 21,840 by end-2024.
Source: Business-Standard
Closer ties between India and Australia have revamped the global trade landscape with the trade between the two countries recording a significant growth to $27.8 billion from $15.6 million a decade ago, according to a study by India Exim Bank, released on Tuesday.The significant growth in trade is the outcome of India’s trade relations with Australia that have transformed considerably over ten years. Trade volume between both the nations was just $15.6 million in 2012. India and Australia entered into an Economic Cooperation and Trade Agreement (ECTA) last year in April and after ratification and exchange of written instruments, the agreement came into force on 29 December 2022. About 96% of India’s imports from Australia are primarily raw materials and intermediate goods such as coal. India imports about 74% of coking coal from Australia. India’s exports to Australia are dominated by finished products, particularly consumer goods. The India Exim Bank’s study noted that transforming the ECTA into a Comprehensive Economic Cooperation Agreement (CECA) would make ECTA capitalise on the potential for closer economic ties between the two nations. The study mentioned that the potential areas for India-Australia cooperation under the CECA could include support to small and medium enterprises, promotion of digital trade, trading in geographical indication certified goods, settlement of trade payments in local currencies, strategic alliance for sourcing critical minerals, government procurement, agri-technology partnership and partnership in renewable energy, etc. The study was released by India Exim Bank managing director Harsha Bangari and Export Finance Australia (EFA) CEO John Hopkins during the sidelines of the Asian Exim Bank Forum (AEBF) annual meeting held at Sydney.The AEBF was formed by Export-Import Bank of India for Asian Export Credit Agencies (ECAs) to exchange information for fostering trade ties.
Source: Live mint
The government is going slow in giving quality certification to factories in China for products coming under quality control orders (QCOs), increasing pressure on companies to curb imports from China and opt for domestic production. Companies including Nike, Mitsubishi and Carrier are facing issues in getting Bureau of Indian Standards (BIS) certification for their vendor factories in China, people aware of the development told ET.These firms have now written to the government to seek certification for manufacturing units in other Asian nations, a senior government official said. But the government is reluctant to certify factories located even in some Asean countries with which it has a free-trade pact.
Govt fears 'backdoor entry'
These include countries like Thailand and Vietnam, as the government fears companies may import Chinese products from these locations as a "backdoor entry" without much value-addition there, four industry and government sources said.As per the QCO rules, products notified under such orders and their components need to be manufactured in BIS-certified factories whether located in India and abroad. Each factory needs to be individually certified even if they are owned by the same manufacturer.Currently, over 500 products including footwear, toys and air conditioners are under QCO cover, up from just 106 products prior to 2014. A Carrier Midea India spokesperson said the company's finished products including window ACs, split ACs and ducted ACs along with individual components such as compressors and heat exchangers are in compliance with BIS norms and meet the specified standards."However, in the case of VRF products, BIS is necessarily required for hermetic compressors," the person said, adding that such compressors are not made in India at present. "So far, the VRF product segment contribution is quite low in the overall category, resulting in low volumes," the person said. "Therefore, the manufacturing facilities for this type of compressors are currently not available in India, which is an industry wide concern." Emails to Nike and Mitsubishi remained unanswered till press time Wednesday. Nike has requested the government to certify the factories of its suppliers in Indonesia and Vietnam so that it can continue to import from there, as per a letter written on November 20. Nike has asked for "timely certification of overseas factories in Vietnam and Indonesia (26 suppliers to Nike and Converse have submitted their applications since May 2023)". ET has seen a copy of the letter. A senior executive with a leading global AC manufacturer said the BIS team is not very forthcoming to go to China to certify factories there. Earlier, BIS used to complete the certification process through videoconferencing, but now they are not doing it for Chinese vendors, he said on the condition of anonymity. "Even factories in some Asean nations such as Thailand and Vietnam are not getting easily certified," he said. "The government wants to shift all production to India, which takes time. For instance, domestic capacity for AC compressors as of now is around 3.5-4 million units whereas the market size for ACs is 11-12 million units." China is the largest supplier for AC compressors apart from other components like copper tubes. India's imports in the first half of the current fiscal (April-September 2023) dropped marginally to $50.5 billion from $52.4 billion in the corresponding period last year.
PLI benefits
The government is much more liberal in issuing BIS certificates to AC brands that have committed to set up plants for local production of compressors under the production-linked incentive (PLI) scheme, another industry executive said. Such brands have received the BIS approval for their vendors, including those located in China, he said. "The government wants a clear commitment on domestic capacity building before certifying the overseas vendors," he said. A senior government official said there are plans to expand the mandatory quality standard certification to include 1,500-2,000 products, ranging from toys to electronic items, in the next 2-3 years. The government recently notified 217 products that will come under QCO over the next couple of years. They include sanitary diapers, bed sheets, flasks, door handles, bottled water dispensers, containers for food storage, cotton bales, refrigerators and automotive wheel rims besides industrial products like aluminium ingots billets and wire bars, power converters for use in photovoltaic power systems and poly vinyl chloride geomembranes. Stressing the government's intent to strengthen quality standards in the country, union minister Piyush Goyal had earlier said, "India needs to become a quality-conscious nation and adopt quality as an integral part of the process in preparing the foundation of becoming a developed nation by 2047. Until India becomes a leader in quality, it will not be able to become a developed economy."
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INTERNATIONAL
While loading and unloading activities at the Chittagong port remain quite normal, the delivery of goods to and from the port has been obstructed due to hartals and blockade programmes imposed by opposition parties. Trucks are unable to operate on the streets, causing hindrance to the transportation of essential items. Businessmen, exporters, and importers have voiced their concerns regarding the political unrest and the parties' blockade programs. According to Chittagong Port Authority (CPA) sources, loading and unloading operations continued during the hartals and blockades, but deliveries were almost suspended. Omar Faruk, Secretary of CPA, highlighted that while cargo and container handling remained normal, delivery services were disrupted by the hartals and blockades. Mahafujul Haque Shah, Director of Chittagong Chamber of Commerce and Industry (CCCI), noted that while the transportation of import goods from Chittagong port's jetty to the ICD in Chattogram proceeded smoothly, the transportation of export and import goods and containers to and from Chattogram to other districts was hindered by the blockades and hartals. Alamgir Parvej, an importer and Director of CCCI, acknowledged the disruption in the supply chain of essentials due to these programmes. He highlighted the difficulty in transporting imported goods from Chittagong port to other districts at present. Mohammed Sekandar, another importer, expressed how trade and business are suffering due to the ongoing political unrest. He emphasized that the transportation hindrances caused by hartals and blockades are leading to price hikes in retail markets across the country. Waker Uddin, a businessman, lamented the disruption in the supply chain caused by these programmes, echoing the sentiment that hartals and blockades are affecting trade. The silent rise in the prices of essentials due to political unrest is causing significant hardship for people, leading to a crisis in transportation and increased costs.
Source: The Financial Express
Trade bodies have urged the National Board of Revenue (NBR) to extend the deadline for submission of income-tax returns by individual assesses to allow them to adapt to the changes that came with a new law. The Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) requested it to be extended by one month until December 31, 2023 while the Chittagong Chamber of Commerce and Industry (CCCI) requested extending it by two months until January 31, 2024. FBCCI President Md Mahbubul Alam in a recent letter to NBR Chairman Abu Hena Md Rahmatul Muneem pointed out that taxpayers may not be able to meet the existing deadline of November 30, 2023 due to the ongoing political unrest. The taxpayers have not had sufficient time to prepare for the return submission due to delays in publishing the Income Tax Poripatra (a guideline with details of tax measures), he added. Sources at the NBR said that an extension of the deadline is under active consideration of the NBR amid difficulties being faced by both taxmen and taxpayers to cope with the new changes in income tax law. They said the NBR cannot take this decision right now as its chairman is now on an overseas tour. The official sources said that though the new law has no such scope to extend the deadline, yet the NBR can manage it under different arrangements, for this year only, by issuing an order. The new Income Tax Law-2023, came into effect from June 23, 2023, has replaced the previous ordinance, framed in 1984, with a number of new provisions. However, the taxmen were unwilling to concede that the 'Poripatra' can be cited as a reason for extending the deadline as the guideline for filling up the returns was issued in September last. Visiting some field-level tax offices, this correspondent found poor presence of taxpayers in the Income Tax Booths as many are yet to complete their preparations. The FBCCI president said the stakeholders and associations of the country's apex trade body have sought an extension by two months. However, the FBCCI requested for a month following businesses woes due to the dollar crisis and volatile money market, he added, requesting the NBR to focus on tax net expansion rather than putting pressure on existing taxpayers as he pointed out the higher tax-base in India and Pakistan than Bangladesh. The NBR is yet to compile the status of tax return submission until Wednesday. Our Chattogram correspondent adds: In a letter to the NBR chairman on Wednesday, CCCI President Omar Hazzaz said a large number of taxpayers would not be able to submit their returns within the existing deadline due to an adverse environment like delayed issuance of return filing guideline and lack of understanding of the new law. It is almost impossible for the taxpayers to file returns by the existing deadline, he said, demanding the extension of the return filing schedule.
Source: The Financial Express
Recently, the collaboration report between Bain & Company, a top management consulting firm and Altagamma, the Italian luxury brand predicts that the global luxury market is set to achieve a milestone of €1.5 trillion in 2023. Despite challenging macroeconomic conditions, the market registered robust growth of 11-13%, at constant exchange rates. This is consistent with last year's growth rate and translates to a ~€160 billion increment in spending across luxury categories. A significant contributing factor to this growth has been increased spending on experiences, notably in travel and social interactions, which have rebounded to historical highs. A key segment, personal luxury goods, is anticipated to grow by 4 percent to reach €362 billion by the year's end. However, as per the report, potential challenges in the fourth quarter, including fragile consumer confidence and macroeconomic tensions, particularly in China and the US. As a result, a more subdued performance is expected in 2024, with projected growth in the low-to-mid single digits. The luxury market's resilience is underscored by the near recovery of global luxury tourist purchases to pre-pandemic levels. Europe has witnessed a surge in tourism, contributing to growth in both long-haul resort locations and key luxury cities. Despite macroeconomic instability for local aspirational customers, stable topcustomer pools have sustained market growth. In contrast, the Americas have seen an 8 percent decline from 2022, with ongoing uncertainty impacting spending. However, top customers remain confident, often choosing to spend abroad due to favorable currency exchange rates. Claudia D'Arpizio, a Bain & Company partner and leader of Bain's global Luxury Goods and Fashion practice, the lead author of the study said, "This is a defining moment for brands, and the winners will separate themselves through resilience, relevance, and renewal—the basics of the new value-centered luxury equation." The luxury market is generating positive growth for 65-70% of brands in 2023, compared to 95% in 2022. To stay in the game, it will be crucial for brands to take bold decisions on behalf of their customers, she added. Notably, Saudi Arabia and Australia have emerged as burgeoning luxury markets, attracting significant brand investments. Mainland China initially demonstrated strong post-reopening performance but encountered a slowdown due to new macroeconomic challenges. Hainan, however, is positioned to become a major luxury hub by 2025. Japan is thriving, propelled by robust local consumption and a weak Yen attracting tourists. Conversely, South Korea faces challenges due to macroeconomic factors and a strong currency. The report highlights growth across all luxury categories, driven by continuous price increases. Ready-to-wear, particularly in the ultra-high segment, exhibit positive growth owing to increased demand for excellence and durability. In distribution, mono-brand channels lead the way, supported by consumers' preference for physical experiences and effective clienteling. However, multi-brand environments, including department and specialty stores, are experiencing a slowdown. The report underscores the escalating complexity of multi-generational consumer needs. Generation X and Y, in their peak income years, dominate luxury purchases, while Generation Z, at the forefront of social change, wields increasing influence. By 2030, it is anticipated that Generation Z will account for 25-30 percent of luxury market purchases, with millennials representing 50-55 percent. Looking ahead to 2030, the luxury market's growth appears poised to continue, with Chinese customers projected to represent 35-40 percent of the personal luxury goods market. Europeans and Americans combined are expected to contribute 40 percent. Online and monobrand channels are predicted to dominate two-thirds of the market.
Source: Textile Today
