Synopsis The government plans to address the inverted duty structure in the upcoming Budget to bolster local manufacturing. This structure, where input taxes exceed those on finished goods, creates cost discrepancies. The Commerce Ministry shared a list of 13-14 affected products with the Finance Ministry, emphasizing the need for reform. This issue burdens manufacturers with higher input costs, hindering competitiveness. Finance Minister Nirmala Sitharaman is set to unveil the Union Budget on February 1, 2024. The government is likely to address the issue of inverted duty structure for certain products in the forthcoming Budget to boost domestic manufacturing, an official said. Inverted duty structure refers to taxation of inputs at higher rates than finished products that result in the build-up of credits and cascading costs. The official said that the Commerce and Industry Ministry has shared a list of 13-14 products with the finance ministry to look at the inverted duty structure issues. "The ministry always shares such list of goods, where customs duties on components are higher than the finished products, We have given our inputs to the finance ministry to look at that. Inverted duty structure is not economically efficient," the official said. Inverted duty structure impacts the domestic industry as manufacturers have to pay a higher price for raw materials in terms of duty, while the finished products land at lower duty and cost.
Source: Economic Time
The Commerce & Industry Ministry has asked the Finance Ministry to address the inverted duty structure, where import duties on inputs are more than duties on finished products, for over a dozen items, in the forthcoming Union Budget for 2024-25, an official said. Despite steps taken in past Budgets to address the problem, the sectors which still get affected due to presence of the inverted duty structure, include textiles, engineering goods and leather. “The Commerce & Industry ministry always shares such list of goods, where customs duties on components are higher than the finished products. We have given our inputs to the Finance Ministry on the inverted structures. It is a list of about 13-14 products. They will look at it in the context of Budget discussions,” the official said. As inverted duty structures are not economically efficient, the Ministry is hopeful that the Budget would address it, the official added. Inverted duty structure goes against the government’s emphasis on ‘Make in India’ as it encourages the import of finished products rather than raw materials by imposing a higher import duty on the latter. The Union Budget for 2024-25 is likely to be presented on February 1, 2024. Inverted duty structure has also been created due to Free Trade Agreement pacts signed by India with its partner countries. The industry, in the past, has complained about the FTA with the ASEAN in particular resulting in a situation where the finished product is imported duty free, because of duty elimination under the pact, while import taxes on intermediates continue.
Source: Business Line
Shillong: The state tourism department organized an Investor Summit-cum-Roundtable Conference on ‘Investment Opportunities in Meghalaya’ on Thursday. The event brought together key stakeholders, industry experts and potential investors to explore and discuss the vast potential that Meghalaya holds for strategic investments. “Meghalaya is rapidly developing as a promising investment destination. The summit shed light on the untapped economic prospects across various sectors and aimed at fostering dialogue and collaboration among participants.”, a statement said. Govt aims to develop Idukkis tourism potential, says CMCM aims to develop tourism potential of Idukki through ecologically balanced development models; government focuses on finding solutions for development activities affecting ecology in Munnar; formation of Munnar Hill Area Authority is a decisive step; objective is collective planning for long-term development of Munnar and neighboring areas; joint planning committee created for master plan; government addresses land issues through amendment of Kerala Government Land Assignment Act; plantation directorate established under industrial department; comprehensive study of plantation sector conducted by IIM-Kozhikode; cabinet meeting to be held at Thekkadi Rajasthan garment units propose to invest in stateMPIDC receives investment proposals for textile and garment industries in Neemuch, with over 20% from Rajasthan. The response prompts the expansion of industrial belts near border areas. MPIDC plans to expand industrial areas in Mandsaur, Neemuch, Burhanpur, and Agar-Malwa, and develop new areas in Ratlam and Jetapur. The department is also building land banks. In the past 4 years, Madhya Pradesh has seen investment in various sectors, including chemical, mining, energy, textile, iron & steel, pharma, food processing, plastic, paper & packaging, and engineering industries.PM Modi inaugurates Global Investors Summit in DehradunPrime Minister Narendra Modi inaugurated the Uttarakhand Global Investors Summit 2023 at the Forest Research Institute. The summit aims to promote the hill state as a major investment destination. He also launched the House of Himalayas brand to promote local products and increase the income of self-help groups. The summit has already exceeded its target of signing MoUs worth Rs 2.5 lakh crore, reaching around Rs 3 lakh crore. It is being attended by investors and delegates from across the country and abroad.
Source: Times of India
Kurnool: Finance minister Buggana Rajendranath on Thursday said state government is establishing a 36-acre textile park at Jagadurthi in Dhone, incurring an investment of Rs 8.58 crore. He was speaking after inspecting the construction of a TTD Kalyana Mandapam, which is being built in Dhone town at a cost of Rs 3.50 crore. The finance minister underlined that Andhra Pradesh Industrial Infrastructure Corporation (APIIC) will supervise development of infrastructure at the textile park, including plots, roads, drainage systems, and provision of electricity and water. He said tenders have already been finalised for taking up these works. AP Meat Corporation chairman Sriramulu, Dhone MPP R. Rajasekhar Reddy and MRO Vidyasagar were among those present. Rajendranath later visited the site, where members of Andhra Pradesh Anganwadi Workers and Helpers Union are protesting. He inquired from Anganwadi workers about the problems that they are facing.
Source: Deccan Chronicle
Synopsis US Fed officials expect to lower rates by 75 basis points next year, a sharper pace of cuts than indicated in September’s projections. The Fed cutting rates draws positive reaction from India due to an overall positive impact. The rate actions of the US federal Reserve impact the Indian economy in several ways due to linkages of currency, investment and trade. A swing in either way can translate to many kinds of effects in India's economy. Indian benchmark equity indices extended the bull run to fresh all-time highs today after the Federal Reserve yesterday held interest rates steady for a third meeting and, more importantly, gave its clearest signal yet that its aggressive hiking campaign is finished by forecasting a series of cuts next year. Fed officials expect to lower rates by 75 basis points next year, a sharper pace of cuts than indicated in September’s projections. The US Fed cutting rates draws positive reaction from India due to an overall positive impact. Impact on markets Cuts by the US Fed bring down interest rates in the US which can lead to higher foreign investment in Indian markets as foreign investors find India more profitable than the US because the difference between the interest rates of India and the US widens. The influx of foreign money will boost Indian markets further. The foreign institutional investors, which had pulled out of Indian markets as the US Fed started hiking rates, are likely to return.The clear dovish message from the Fed yesterday has set the stage for a smart Santa Claus rally in the coming days, and this can even trigger a pre-election rally that can take the markets to a series of new highs, V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, has told ET. "The takeaway from the Fed message yesterday is that the tightening cycle is over and three rate cuts are possible in 2024. The market expects four. The record-breaking rally in the Dow will send many indices to new records," Vijayakumar said. Impact on India's economy Since lower interest rates in the US will lead to higher availability of dollars, the biggest impact for India can be softening of the dollar and strengthening of the rupee which would mean lower import bill for India. India imports more than 80% of the oil it consumes which constitutes the biggest chunk of its total imports. A strong dollar bloats its import bill and worsens the current account deficit which in turn increases fiscal deficit, the gap between how much the government earns and how much it spends. A strong rupee will also make it less expensive for India to service its foreign debt. Lower imported fuel costs are generally good for keeping inflation in check since higher transportation costs, besides higher cost of other imported goods and services, contribute to the growth in inflation. The US Fed signalling rate cuts next year is likely to cap the global cycle of monetary tightening. The Reserve Bank of India (RBI) too is likely to follow the US Fed and cut rates. The RBI has been on a rate pause as inflation remains sensitive. If inflation moves closer to the 4% target which is expected by the middle of next year, the RBI too can begin a rate-cutting cycle because the US Fed rate action will be positive for the global economic scenario and contribute to growth in demand. Impact on business Lower rates in the US mean more availability of dollars which leads to more investment in Indian markets. More foreign capital flows into India mean Indian companies getting more money and investing more which boosts overall business activity. A pivot to lowering rates by the US Fed might bode well for Indian startups too which saw investment drying up further when the US Fed started raising rates. Most of the investors in Indian startups are Americans and monetary tightening in the US had dashed hopes of revival of India's startup sector which has been struggling with low funding for quite some time. The US rate cuts might herald the end of a funding winter for them. If the rupee gets stronger due to a softened dollar, Indian exporters will see a drop in income. However, imports will be cheaper which would be good for companies whose business is based on imports such as imported raw materials or subsidiary goods. Foreign travel as well as foreign education loans will also get cheaper.
Source : Economic Times
MSC Terminal Investment Ltd, the container terminal operating and investing arm of the Switzerland-based major Mediterranean Shipping Company (MSC), has taken 49 per cent stake in Adani Ennore Container Terminal (AECTPL) for an equity consideration of ₹247 crore. MSC is the world’s largest shipping company. After the completion of the transaction, APSEZ would hold a 51 per cent stake in AECTPL. The deal takes the total enterprise value of AECTPL to ₹1,211 crore. APSEZ, which is India’s largest private port operator, in a statement said it has expanded partnership with MSC. AECPL is the second joint venture built on the success of the 2013 joint venture with TiL for Adani International Container Terminal Pvt Ltd (AICTPL), which operates CT3 Container Terminal at Mundra Port, the largest private commercial port in India located in Gujarat. AECTPL has a current annual capacity of 0.8 million twenty-foot equivalent units (TEUs), which can be expanded to 1.4 million TEUs annually, and has a concession ending in 2044. “We aim to replicate the AICTPL terminal’s success at the Ennore Container Terminal and service the trade needs of the South Indian market,” said Karan Adani, CEO and Whole Time Director of APSEZ. “This strengthening of our association with the world’s largest shipping company reflects APSEZ’s robust vision of accelerating sectoral growth through a transparent business approach.” “We are highly pleased to strengthen our partnership with APSEZ, India’s largest private sector port operator,” said Ammar Kanaan, CEO of Terminal Investment Ltd. “This association will enable us to further improve TiL’s presence in one of the world’s fastest-growing economies and strengthen our offering to customers in the Indian subcontinent.” Located on India’s east coast, AECTPL has a quay length of 400 m and an annual handling capacity of 0.8 million TEUs. The terminal handled 0.55 million TEUs in FY23 and 0.45 million TEUs in the initial eight months of the current fiscal year. APSEZ also operates the Katupalli Container terminal located adjacent to the Ennore terminal.At the time of filing this report, the share price of Adani Ports on the NSE was trading at ₹1,068.75, down by 0.55 per cent.
Source: Business Line
Developing economies in the Asia and Pacific region are projected to grow by 4.9 per cent in the current year, a slight increase from the previously forecasted 4.7 per cent in September, according to the Asian Development Outlook (ADO) December 2023 report by Asian Development Bank (ADB). This revision is primarily due to stronger-than-anticipated domestic demand in China and India. The growth forecast for the upcoming year remains steady at 4.8 per cent. In China, the economy is projected to expand by 5.2 per cent this year, an upward adjustment from the initial estimate of 4.9 per cent. This increase is attributed to heightened household consumption and public investment, particularly noted in the third quarter. Meanwhile, India's growth outlook has been revised to 6.7 per cent from 6.3 per cent, following a faster-than-expected expansion in the July-September period, driven by a significant increase in industrial output, as per the report.These positive adjustments for China and India have more than compensated for the reduced growth forecast in Southeast Asia. The lowered projection for this region, now at 4.3 per cent compared to the previous 4.6 per cent, is due to a downturn in manufacturing export demand. Regarding inflation, the region's outlook for the current year has been slightly reduced to 3.5 per cent, down from an earlier projection of 3.6 per cent. However, for the next year, inflation is anticipated to marginally increase to 3.6 per cent, compared to the previously forecasted 3.5 per cent. In terms of regional subgroups, the outlook for economies in the Caucasus and Central Asia has been raised marginally. In contrast, projections for the Pacific economies remain unchanged.The ADB's report also highlights potential risks to this economic outlook. These include the possibility of persistent high-interest rates in the US and other advanced economies, potentially leading to financial instability in more vulnerable economies in the region, especially those with high debt levels. Additionally, potential supply disruptions due to factors like the El Nino weather pattern or the ongoing conflict in Ukraine could trigger a resurgence in inflation, especially in the food and energy sectors.
Source: Fibre2fashin
ISLAMABAD: The textile industry on Thursday has warned that it will lose its biggest markets in the United States and Europe if the government imposes high wheeling charges for electricity under a new market system. Wheeling charges, also known as use of system charges, are fees paid by power producers or consumers to use the transmission and distribution network of the national grid. The government is planning to introduce a competitive trading bilateral contract market (CTBCM) system, which will allow power producers and consumers to enter into direct contracts and bypass the state-owned central power purchase agency (CPPA). The CPPA and the power distribution companies (DISCOs) have petitioned the National Electric Power Regulatory Authority (NEPRA) to set the wheeling charges at Rs27 rupee per unit, which the textile industry says will make the CTBCM system unviable. In a letter to the caretaker Finance Minister Dr Shamshad Akhtar, who heads a special panel to deliberate the issue of wheeling charges, the All Pakistan Textile Mills Association (APTMA) said that the proposed charges were unrealistic and absurd. The APTMA argued that BtB electric power contracts at wheeling charges of 1-1.5 cents per unit excluding cross-subsidies and stranded costs are imperative to continue exports to the USA and EU countries, and if the wheeling charges are set more than that, then exports of the country to the said established market will not be able to be continued as the input cost would further surge making the country's products in the international market uncompetitive. "The unrealistic and absurd wheeling charges of around 9.6 cents per unit sought by CPPA and Discos will serve nothing but will defeat the purpose of market liberalization and it also underscores the intention of the power division bureaucracy in stalling any meaningful reforms," the latter said. "The absurdity of the proposed wheeling charges is further emphasized by the fact that it is significantly higher than the full tariff for export-oriented consumers in regional economies like Bangladesh (8.6 cents per unit) India (8 cents per unit) and Vietnam (7.2 cents per unit)." APTMA also mentioned that when the export sector was provided regionally competitive energy tariff of 9 cents per unit during 2020-22, Pakistan’s textile and apparel exports increased by 54 percent in only two years. However, following the withdrawal of RECT amid a larger macroeconomic crisis and power tariff rebasing earlier this year, power tariffs for the export sector increased from 9 cents per unit to 14 cents per unit including economic inefficiencies like stranded cost and cross-subsidies to the non-productive sectors of the economy. "The current B3 and B4 industrial tariff of approximately 14 cents per unit is almost twice the average faced by competing firms in the regional economies and renders the textile and apparel sector’s exports uncompetitive in global markets. At 9 cents per unit, energy costs account for 12-18 percent of total input costs across the textile and apparel value chain." Finance Minister has also been sensitized through the letter that because of 14 cents tariff for the export industry, the power consumption of textile and apparel firms had declined by 49 percent on the Lahore Electric Supply Company (LESCO) network and 36 percent on the Multan Electric Power Company (MEPCO) network in October 2023, compared to the same month last year. The power sector revenue from these industrial units was over Rs1.1 billion less on the LESCO network alone in October 2023, the letter said, adding that the actual losses were likely to be much higher. This has nullified the argument that any substantial increase in power tariffs will increase the power sector’s revenue collection and reduce capacity payments for all consumers. If the status quo is maintained, industrial production and electricity consumption will continue to decrease, which will further worsen the economic situation.High tariffs have caused export firms to be priced out of international markets and lose export orders to competitors with significantly lower power tariffs in regional economies. APTMA’s analysis suggests that above a threshold of 12.5 cents per unit, export-oriented firms are increasingly forced towards closure and the export sector is crowded out in due course."At the same time, domestic industries also face weak demand as rampant inflation has eroded consumers’ purchasing power and this has in turn lowered manufacturing activities and therefore industrial power consumption across the board."
Source: PK News
In December 2023, the ZEW Indicator of Economic Sentiment for Germany reported a modest increase, signalling a cautious optimism among financial market experts. The indicator, which reflects the experts' expectations for the German economy over the next six months, rose by 3 points from the previous month, reaching 12.8 points. This uptick in sentiment is accompanied by a slightly improved perception of the current economic situation in Germany. The indicator for the assessment of the present economic condition increased by 2.7 points, now standing at minus 77.1 points. In the eurozone, the economic sentiment witnessed a more substantial boost. The indicator for the region's economic development jumped by 9.2 points compared to November, landing at 23.0 points, as per ZEW.
Source: Fibre2fshion
Global trade is projected to end the year 5 per cent down compared to last year’s record level, shrinking by about $1.5 trillion to below $31 trillion, the United Nations Conference on Trade and Development (UNCTAD) recently said in its Global Trade Update. Due to factors like geopolitical tensions, escalating debt and widespread economic fragility, its outlook for next year remains ‘highly uncertain and generally pessimistic’. However, the report notes a few positive trends this year. These include a slight increase in trade volumes, suggesting resilient global demand for imports. Also, some developing economies, particularly Mexico and East Asian countries, have had opportunities to better integrate the supply chains affected by geopolitical concerns. The report noted declines of 13 per cent in the textile industry and 11 per cent in the apparel industry in 2023.Global trade patterns are increasingly being influenced by geopolitics, with countries showing preferences for politically-aligned trade partners, a trend termed ‘friend-shoring’. The trend has become more pronounced since late 2022, the report noted. The report also highlighted a marked increase in trade concentration. “There has been an overall decrease in the diversification of trade partners, indicating a concentration of global trade within major trade relationships,” it noted. It noted a significant uptick this year in trade-restrictive measures, especially non-tariff measures, driven by a resurgence of industrial policies and the pressing need for countries to fulfill climate commitments. These factors have prompted countries to favour policies that support domestic industries and reduce reliance on foreign supply chains. “These inward-looking policies are anticipated to impede the growth of international trade,” the report added.
Source: Fibre2fshion
The global textile industry is now witnessing a transformative shift, with a growing focus on sustainability goals and commercial aspects like greater speed, more reliable quality and data-led pricing, according to a new report released by Portugal-based Smartex, which uses artificial intelligence to empower textile factories. The unregulated era of low-cost dominance is evolving, and the key to this transformation lies in the emergence of the modern textile factory, the report, titled ‘The Modern Textile Factory: Charting the Impact of a Shifting Textile Supply Chain Landscape’, notes. As the supply chain makes up four-fifths of the industry’s environmental impact, to prepare it for a change in primary data reporting and investment in more sustainable technology, the modern textile factory (MTF) has to emerge, the report, prepared by Smartex’s first focus group dedicated to the modern textile factory, says. The urgency for the supply chain to adapt to new reporting standards and invest in sustainable technology is evident, the report observes. At the same time, commercial advantages are emerging for factories that embrace modernisation, including the greater speed to market that aid brand revenue and dead stocks, improved quality control for greater factory control of their profits, and the ability to compete globally with data-led pricing strategies. The realisation by suppliers that better quality control means higher profits and more reliable speed. The market is demanding competitive prices, increased speed, better quality, and rock-solid compliance at the same time, necessitating factories to accelerate their modernisation efforts. While challenges such as financing, macro trends susceptibility, and traditional mindsets exist, overcoming them is possible with collective support, the report hopes.
Source: Fibre2fashion
