Amid rising Houthi attacks on merchant vessels in the Red Sea and Somali piracy in the Arabian Sea, the Ministry of Ports, Shipping and Waterways expressed concerns about the possibility of the Western Indian Ocean being re-established as a “high-risk area”, Business Standard has learnt. A high-risk area is determined by the global shipping industry through its associations and declared for information for all maritime stakeholders in the global supply chain so that adequate security protocols can be put in place on those trade routes.
Source: Business Standard
The budgetary allocation for the popular export benefit scheme, Remission of Duty and Taxes on Exported Products (RoDTEP), is likely to get a 10 per cent increase in 2024-25, over the ₹15,070 crore allocated last fiscal, which may allow the Commerce Department to extend the scheme for the iron & steel, pharmaceuticals and chemicals sectors for the entire financial year, sources said. Unlike most other sectors that get covered under RoDTEP on a permanent basis, the scheme incorporates iron & steel items, pharmaceuticals and chemicals, on a piecemeal basis depending on the availability of funds. “The Commerce Department is expecting a 10 per cent increase in allocation for the RoDTEP scheme in 2024-25. As exports are not likely to increase steeply because of the strained geopolitical conditions, it can be anticipated that the RoDTEP amount will be enough to meet the demand of the additional three sectors as well. So, one could hope that the scheme will be extended for iron & steel, pharma and chemicals for the entire fiscal year,” a person tracking the matter told businessline. At present, benefits under the scheme are available till June 30, 2024 for the three identified sectors. It will lapse after that if not further extended. he RoDTEP scheme, announced in January 2021 as a replacement for the WTO-incompatible MEIS scheme, remits embedded duties/taxes on inputs to exporters. These include VAT on fuel used in transportation, mandi tax and duty on electricity used during manufacturing, and other input taxes that are not rebated under other schemes.
Outlay constraints
During its inception, the scheme covered 8,731 items from most export sectors with the exception of organic and inorganic chemicals, pharmaceuticals and iron & steel. “The only reason these sectors were excluded was outlay constraints as these sectors qualify for substantial benefits due to relatively high exports,” the source said.
The Commerce Department later extended the scheme to the remaining three sectors as well, but for a limited period, retaining the flexibility to take an appropriate decision on further extension later. “It was not the Department of Expenditure which directed that the scheme should be extended for the three identified sectors for a certain time. The Commerce Department itself did so to ensure that budget imposed restrictions were not breached,” the source pointed out. Allocation for the RoDTEP scheme in FY 2023 was increased by 10 per cent to ₹15,069 crore, from ₹13,699 crore in 2022-23. India’s exports in the April-December 2023 period shrunk 5.7 per cent to $317.12 billion compared to the same period last year due to adverse geopolitical conditions, including the Red Sea crisis that has disrupted India’s exports to the EU, US east coast and parts of West Asia and Africa.
Source: Business Line
The government is working to liberalise export norms for certain products which have dual-use like chemicals for companies that have proven track record, a senior official said on Tuesday. Director General of Foreign Trade (DGFT) Santosh Kumar Sarangi said that dual-use goods and technologies are sensitive and if it goes in the wrong hands of non-state actors, it can cause serious disruptions globally. Click here to follow our WhatsApp channel A small group of rebels in Yemen have disrupted the global trade as they are attacking foreign commercial ships with drones and missiles. "We are working with the industry, with the ministry of external affairs, and with the customs to ensure that a whole lot of sectors are liberalised for those companies which have proven track record of responsible use and responsible exports," Sranagi said here at the 'National Conference on Strategic Trade Controls'. It was organised by the DGFT and the external affairs ministry here. Dual use implies the usage of these goods and technologies in military applications or its use in nuclear, chemical or biological weapons of mass destruction (WMD), along with their civilian or industrial applications. These goods are categorised under the SCOMET list. Special Chemicals, Organisms, Materials, Equipment and Technologies (SCOMET) items require licensing for trade as they are under the strategic trade control regime of the world. The day-long conference focussed on issues like showcasing India's export control system; preventing the proliferation of WMD and their delivery systems by strengthening the export control system; and facilitating dialogue between the government authorities and industry stakeholders. Sarangi also said that there is a need to develop an internal system which makes responsible use of high-end technologies or correct usage of SCOMET items by complying with the guidelines. He added that the industry has helped the government in getting the processes streamlined and simplified for trade of these goods. Over the years, India has liberalised general authorisations for drones, repeat order for stock and sale policy, global authorisations for intra-company transfer and general authorisation for export of chemicals. Speaking at the event, Commerce Secretary Sunil Barthwal said that trade and commerce have been disrupted due to various issues which have cropped up along the Suez Canal route due to misuse of high-end goods and technologies
Source: Business Standard
J.P. Morgan on Tuesday said that the growing conflict in the Middle East remains a growing risk for energy markets. Recent attacks on vessels in the Red Sea by Iranian-backed Houthi militants in Yemen have disrupted international commerce on the shortest shipping route between Europe and Asia. The attacks have pushed several shipping companies to reroute their vessels. Click here to follow our WhatsApp channel Meanwhile, drone attacks will likely lead to a reduction in Russia refining and export capacity and add uncertainty to the global oil market, mostly impacting oil product markets rather than crude, the bank said in a note. The oil refinery in the Russian city of Yaroslavl is operating normally after an attempted drone attack on Monday, regional governor Mikhail Yevrayev said. "At $82, we estimate Brent is trading today only about $4 above its fair-value, with $2 added to account for increased freight costs," J.P. Morgan added. April Brent crude futures was up 0.3% at $82.10 and U.S. West Texas Intermediate crude gained 0.7% to $77.35 by 1449 GMT.
Source: Business Standard
India has sought investment commitments from Switzerland under the proposed free trade agreement with the four-nation EFTA bloc, a top government official said on Tuesday. The European Free Trade Association (EFTA) members are Iceland, Liechtenstein, Norway, and Switzerland. The official also said negotiations for the pact are at an advanced stage and both sides are trying to conclude it fast. The investment commitment would help India balance Switzerland's decision to remove customs duties on most of its goods. When asked if this move would have an implication on the agreement, the official said that it can be bargained against many other things. "We have told them that we will be requiring commitments on investments so that this zero duty on goods can balance more investments and more manufacturing in the country," the official told PTI. The Indian negotiators are also trying to see how the Swiss companies can come and manufacture in India so that it gives a boost to Make in India programme and also helps in raising the domestic manufacturing power. When asked about the demand for duty cut in gold by some EFTA members, the official said "that is part of it, but our major focus is on non-gold issues". Switzerland is the largest source of gold imports, with about 41 per cent share during April-October this fiscal, followed by the UAE (about 13 per cent) and South Africa (about 10 per cent). The precious metal accounts for over 5 per cent of the country's total imports. Switzerland has large historical accumulations of gold and it primarily refines imported gold. In 2022-23, India's imports from Switzerland stood at USD 15.79 billion, in stark contrast to its exports of USD 1.34 billion, leading to a substantial trade deficit of USD 14.45 billion. India received about USD 10 billion foreign direct investments from Switzerland during April 2000 and September 2023.
Source : Business Standard
The Union Minister for Textiles, Commerce and Industry and Consumer Affairs, Food and Public Distribution, Shri Piyush Goyal, while chairing the 8th Meeting of the Mission Steering Group (MSG) of National Technical Textiles Mission (NTTM), emphasized on the need for enhancement of collaborative efforts among the Government and industry to enhance indigenous development of technical textiles products.The Ministry of Textiles approved 11 project proposals, including 9 R&D projects, 1 project on machine development and 1 project on equipment development, worth approx. INR 103 crores. One of the projects focused on development of high-strength carbon fibre for strategic applications to make India self-reliant in the field of Technical Textiles. The projects cover different application areas of technical textiles including 2 projects of Protech, 2 Meditech, 2 Mobiltech, 1 Buildtech, 2 Smart Textiles and 1 project of Sustainable Textiles. Amongst the approved projects, research projects were led by institutes and research bodies including CSIR-NAL, ATIRA, NITRA, IIT Delhi, ICT-Mumbai, NIT-Jalandhar, Colorjet India Ltd., among others. The Union Minister reviewed the progress of different components of National Technical Textiles Mission including review of sanctioned R&D products, status of applications under General Guidelines for Enabling of Academic Institutes in Technical Textiles Education in India (Round-II), implementation of Quality Control Orders issued by Ministry of Textiles, patents guidelines of R&D, Outreach activities and events under NTTM, amongst others.
Source : Indian Textile Magazine
Gujarat’s textile industry has recently seen better orders as a result of cotton prices declining from their peak. On the other hand, orders from earlier, when cotton prices were comparatively higher, are having delivery issues. Some 350 containers of various textile products, such as denim and spinning waste, are reportedly stalled in various nations because purchasers are looking for deals as cotton prices have decreased, say sources. Buyer payment difficulties are another factor contributing to the stalled shipments. When India’s new cotton season began in October, cotton prices were about Rs 60,000 per candy (356 kg), but they have since stabilised at about Rs 55,000 per candy. Since December, price stability has increased orders both from the domestic and foreign markets, increasing the Gujarat’s spinning mill capacity to almost 80%. An office-bearer of the Spinners’ Association Gujarat (SAG) said, “Different kinds of spinning wastes are used in some countries for denim, carpet and terry towels. Around 250 containers of such waste from India including around 100-150 from Gujarat, have reached different countries but buyers are not taking delivery due to various reasons. Containers going to Vietnam have been facing major issues in the last few months.”
Source : Apparel Resource
New Delhi: India and ASEAN member countries are set to revisit their free trade agreement (FTA). A delegation from Southeast Asia, comprising about 50 members, including high-ranking officials, will arrive in New Delhi for a three-day discussion starting 17 February, according to two people aware of the matter. - The review will focus on the ASEAN Trade in Goods Agreement (ATIGA), which has been in place for over a decade, and will likely include more goods and services under non-tariff barriers, said one of the persons cited above. "There is also a need to modernise the ATIGA, which has been signed over a decade ago," the person said, requesting anonymity. Officials from India and ASEAN have established a quarterly negotiation schedule, aiming to conclude the review by 2025. A key aspect of this review will be updating the Rules of Origin (ROO), to enhance the efficiency of the agreement, the person added. The Rules of Origin are crucial in international trade, as they determine the national origin of products for government and international trade treaty purposes. India's commerce ministry and ASEAN secretariat had not responded to emailed queries sent on 25 January. Signed in 2009, the AITIGA came into effect in 2010. The decision to review it came at the 16th ASEAN-India Economic Ministers Meeting in September 2019, following multiple requests from member nations. The scope of the review was finalized in September 2022, with the first meetings scheduled for February 2024. India's trade deficit with ASEAN has grown significantly, from $7.5 billion annually when the agreement came into effect to approximately $44 billion in FY23. This fiscal year so far, India has exported goods worth $44 billion to the region, while imports stood at $87.57 billion. The ASEAN comprises of Brunei Darussalam, Burma, Cambodia, Indonesia, Laos, Malaysia, Philippines, Singapore, Thailand, and Vietnam. These countries represented about 11% of India's global trade in FY23. India's trade with ASEAN has evolved from agricultural raw materials and food to manufactured goods. India imports items like palm oil, coal, and minerals from ASEAN countries, while exporting transport equipment, chemicals, textiles, and other manufactured and agricultural products. The FTA review aligns with the Indian government's Look East policy. Experts suggest that restructuring trade and investment relations with ASEAN is crucial, as these economies are poised to significantly influence global trade flows. Dattesh Parulekar, assistant professor of International Relations at Goa University, highlights the importance of equitably addressing market access issues in goods and services trade. “India and ASEAN need to address each other's concerns towards building a common supply chain product lines resilient framework, even whilst addressing concerns that RCEP (Regional Comprehensive Economic Partnership) provisions will override mutual trade accords."
Source: Live Mint
Indian businesses in the textile and chemicals sectors may not be immediately affected due to the ongoing crisis around the Red Sea because of either better ability to pass on higher costs or a weaker trade cycle, according to Indian rating agency CRISIL Ratings. As for home textiles (three-fourths of the production in India is exported, primarily to these regions), their mid-teen margins can absorb higher freight rates for some time, CRISIL observed in a credit alert. Similarly, in chemicals (25-30 per cent of the revenue of agrochemicals and specialty chemicals makers comes from these regions), exports may be less affected given sufficient channel inventories and subdued near-term demand scenario. But a sustained disruption of trade channels could dent operating profits and crank up working capital needs in this sector, it noted. Crude oil may also be less hit as only 10 per cent of the global oil trade is through the Red Sea route and the current disruptions have had a limited impact on prices. Also, India sources a major part of its requirement from the Middle East and Russia, largely shipped via the Persian Gulf. A few sectors like shipping and freight forwarders could benefit from rising freight rates. While the immediate impact of the crisis would be low for most of India Inc, a prolonged strife can affect the profitability and working capital cycle of export-oriented industries. Supply chain issues could also intensify, curbing trade volume and renewing inflationary pressures, it added.
Source : Fibre2fashion
Synopsis Exporters want the FM to resolve issues around inverted duty structure in sectors like textiles, engineering and leather. FIEO suggests extending the 15% corporate tax facility for three years and the development of an Indian shipping line of global repute to save on freight remittances. The exporting community wants the government to change the Integrated Goods and Services Tax (IGST) regime, in the interim budget. Exporters also want customs duty rates on certain sectors such as textile, engineering and leather to correct inverted duty structure. An inverted duty structure refers to a higher tax rate on raw materials than the rate applicable on finished goods. It makes it difficult for industry to claim full input tax credit, blocking their working capital. Exporters also want customs duty rates on certain sectors such as textile, engineering and leather to correct inverted duty structure. Exporters are claiming that such measures are more important today given that they are facing several problems: a slowdown in demand in developing markets, a steep rise in freight costs due to conflicts, uncertainty in business and difficulty in getting raw materials. The exporting sector needs some revival, says Federation of Indian Export Organisations (FIEO)’s Director General Ajay Sahai. Urging the government to consider extending the 15% corporate tax facility for the next three years, he says this will ensure that a lot of investments stuck in the pipeline flows in.
Source: India Times
New Delhi: The textile ministry is expected to get a marginal budget increase of 2.5% for the fiscal year 2025, taking its allocation to ₹4,500 crore, two persons aware of the matter said. The proposed budget for the upcoming fiscal year shows an increase of ₹110 crore compared with the current fiscal year’s allocation of ₹4,389 crore. While the government aims to position India as a global player in textiles, the marginal uptick in allocation may pose a challenge to the ministry in utilizing its budget effectively. However, the continued budget boost, even though marginal, shows the government’s commitment towards developing and promoting the textile sector to enhance India’s global standing in this industry. Queries sent to the ministries of finance and textiles remained unanswered till press time. In fiscal year 2021-22, the ministry received a budgetary allocation of ₹11,059.81 crore, which was further increased by over 10% to ₹12,382 crore in 2022-23. However, the ministry faced a massive 71% cut in its revised budget estimate, plunging the outlay to ₹3,579 crore in 2022-23. The marginal rise in the budgetary allocation will not impact the progress of the Pradhan Mantri Mega Integrated Textile Region and Apparel (PM MITRA) scheme as its outlay of ₹4,445 crore is sanctioned for five years till 2027, one of the persons cited above said. The government is aiming to position itself as a textile sourcing and investment destination through seven PM MITRA parts and plans to seek an investment of ₹70,000 crore in the next five years, this person said. The government is also looking to attract foreign direct investment (FDI) through the PM MITRA and several other schemes. The domestic apparel and textile industry contributes approximately 2.3% to India’s gross domestic product, constitutes 13% of its industrial production and plays a pivotal role by contributing 12% to the country’s export revenue. India commands a 4% share in the international trade of textiles and apparel. To foster private equity investments and boost employment opportunities, the government has strategically introduced several initiatives, including the Scheme for Integrated Textile Parks and the Technology Upgradation Fund Scheme. The government is doing several other things as well to help the textile sector. The ministry has added 43 new partners under the Samarth scheme for capacity building in the textile sector, the second official said, adding that it has approved projects for research and development and is spending $7.4 million on it. Some of the major schemes implemented by the textiles ministry are the national handloom development programme, the mill gate price scheme/yarn supply scheme and the handloom weavers’ comprehensive welfare scheme, among others.
Source: Live Mint
Ahead of the Interim Budget, a Finance Ministry report on Monday placed FY25 GDP growth close to 7 per cent despite new geopolitical risks such as the Red Sea crisis that could impact global inflation and economic output. The report said India can aspire to become a $7-trillion economy by 2030. In a normal year, the annual Economic Survey is presented a day before the Union Budget and gives real growth rate for the coming fiscal. This being an election year, the annual Survey will be tabled in July, but the interim report ‘Indian Economy- A Review’ prepared by the Economic Affairs Department of the Finance Ministry underlined that India’s growth will outpace the global economy in the next fiscal year.
Source: Business Line
China's manufacturing activity contracted for the fourth straight month in January, an official factory survey showed on Wednesday, suggesting the sprawling sector was struggling to regain momentum at the start of 2024. The official purchasing managers' index (PMI) rose to 49.2 in January from 49.0 in December, below the 50- mark separating growth from contraction and was in line with a median forecast of 49.2 in a Reuters poll. Click here to follow our WhatsApp channel The data provides the first official snapshot of how the world's No.2 economy has started off the new year after a shakier-than-expected post-COVID recovery. The latest figure is also affected by the Lunar New Year which will fall on Feb. 10 this year, as factories may shut earlier and send workers back home ahead of the holiday. January's new orders sub-index was at 49.0, contracting for the fourth month, according to the NBS survey. Weak external demand also dragged on manufacturing activity, with the new export orders index registering at 47.2, contracting for the 10th straight month. To spur growth, China's central bank governor Pan Gongsheng unexpectedly announced a cut to banks' reserve requirement ratio at a press conference last week. Authorities face a daunting task as they try to revitalise the economy in the face of a property downturn, local government debt risks, deflationary pressures and weak global demand The official non-manufacturing purchasing managers' index (PMI), which includes services and construction, rose to 50.7 from 50.4 in December, the highest since September last year, according to NBS. The composite PMI, which includes manufacturing and services, was at a four-month high of 50.9 in January compared with 50.3 the previous month. The International Monetary Fund on Tuesday lifted China's growth forecast this year to 4.6 per cent from 4.2 per cent in October, thanks to the significant fiscal support from the authorities and a less-severe-than-expected slowdown in the property sector. China won't release its 2024 growth target till March, but policy insiders expect Beijing to maintain a similar growth target to last year of around 5 per cent.
Source: Economic Times
The "threat" posed by China offers an opportunity for the US and India to make strong agreements, including a genuine Free Trade Agreement (FTA) to ensure that the two countries will look at each other as first partners, according to Darrell Issa, an influential American lawmaker. Issa, a Republican Congressman from California, said this during a conversation with Aparna Pande, Research Fellow, India, and South Asia with the think tank Hudson Institute here on Monday. Click here to follow our WhatsApp channel Agreeing that the India-US relationship today does seem to be based in no small part on the China threat, he said, Having said that, I view this China threat as an opportunity to do with that we did not do. The items produced in China could be produced in India, at substantially similar costs (and) would more than allow for India to substantially replace its dirty fuel with clean fuel, Issa said. But that requires that the two countries really make strong agreements, including a genuine Free Trade Agreement (FTA), one that ensures that the two will look at each other as first partners. I think we're a long way down the road toward doing it, he said at the event, A Conversation with Rep. Darrell Issa on US South Asia Relations.' Who are the people running some of our largest and most successful companies in the United States? Who are the innovators in the United States? Who dominates our universities? Answers quite frankly -- Indian exchange students, who want to remain here and Chinese students, who China wants to take back to China! We can harness those together. We already have, he said. Pointing out that he is someone who's been working on immigration reform for 20 years and has seen that the number one challenge for Indian H-1B and other temporary visa programmes (for people) who want to become permanent residents and citizens, the Congressman acknowledged that the backlog is huge. The fact is that the amount of Indian investors who would like to expand their L visas like to bring greater amounts over is massive. These are people who, yes, they want to have a nexus to the country of India. But they also want to have a real foothold in the United States, he said. Advocating the FTA, Issa said, India and the US cannot be partners only against something and expect it to last. Britain, Australia, New Zealand, Canada, and for that matter, the NATO alliance ... all have common sides. But they also have ever-growing free trade agreements, ever-growing mutual agreements to share technology. They also have companies which are headquartered in one and substantially doing business in the other. The same has to be done for India. Are we equal partners? No, we're not. We have more money. You have more people. We have more people who want to be lawyers. You have more people who want to be engineers, he said. The Congressman observed how the Indian and the US societies share many of the same values but approach the work ethic and the education ethic in a substantially different way in which the shortages in the US are disproportionately able to be filled in partnership with India. I don't believe in one world. I believe that the world is made up of partnerships. And a partner of one to another is bilateral. But when a partner of one has five other partners and invites them into that relationship, then you build a multilateral relationship, he said. Responding to a question on the upcoming elections in Pakistan, Issa said the country does not have a free and fair election. Pakistan does not have free and fair elections. Pakistan, at best, has elections in which somebody can win in spite of the incumbent system pushing against them. But that means the only time there's a change in power in Pakistan is when it gets really bad when the people are so adamantly opposed, that in spite of all that, there is a change. "When there is it usually doesn't end up being because you still have the corruption that is endemic in there the absence of rule of law and foremost, you have the military, and no government can long remain independent when at the end of the day, your ability to be independent is kept in the hands of the military, he said. If you displease them, one way or the other, you'll be gone," he said, adding that he continues to believe that there are small differences. In democracies, local elections sometimes can give you honesty and improvement, national elections are usually the last ones to give you that. The same is true in India, he said.
Source: Business Standard
Ambassador of Denmark to Bangladesh Christian Brix Moller paid a courtesy call on BGMEA president Faruque Hasan at BGMEA Complex on January 28. During the meeting, they mainly discussed important issues related to the current status of Bangladesh's ready-made garment industry, global market dynamics, challenges and priorities for sustainable development. The meeting also discussed the possibility of increased cooperation between Denmark and Bangladesh, especially in the areas of sustainability, circularity and integration of energy efficient technologies in the apparel industry. The meeting also discussed the preparation of Bangladeshi garment and textile companies for the upcoming EU due diligence. Faruque Hassan briefed Ambassador Christian Brix Moller on BGMEA's strategic vision. He said, the core of this vision is to further enhance the position of the apparel industry in the global market through product and market diversification with emphasis on sustainability, innovation, filling skill gaps and skill development. He sought the cooperation of the Ambassador of Denmark in enhancing the knowledge and skills of the students of BGMEA University of Fashion and Technology (BUFT) in important areas like product and design development through leading Danish fashion institutes. The meeting was also attended by Shams Mahmood, Chairman of BGMEA Standing Committee on Foreign Mission Cell; Mohammad Kamal, Chairman of BGMEA Standing Committee on Trade Fair and Sanjay Kumar Naha, Director of Rose Intimates Limited. From the Embassy of Denmark in Dhaka, Saadia Taufiq Sadi, Senior Trade Adviser and Ali Asraf Khan, Supply Chain Expert attended the meeting.
Source : Textile Today
