INTERNATIONAL
Textile Raw Material Price 2016-12-26
|
Item |
Price |
Unit |
Fluctuation |
Date |
|
PSF |
1212.69 |
USD/Ton |
-1% |
12/26/2016 |
|
VSF |
2346.22 |
USD/Ton |
1% |
12/26/2016 |
|
ASF |
1842.43 |
USD/Ton |
0% |
12/26/2016 |
|
Polyester POY |
1258.04 |
USD/Ton |
0% |
12/26/2016 |
|
Nylon FDY |
3137.89 |
USD/Ton |
0% |
12/26/2016 |
|
40D Spandex |
4361.38 |
USD/Ton |
0% |
12/26/2016 |
|
Polyester DTY |
2015.16 |
USD/Ton |
0% |
12/26/2016 |
|
Nylon POY |
1619.33 |
USD/Ton |
0% |
12/26/2016 |
|
Acrylic Top 3D |
3325.01 |
USD/Ton |
0% |
12/26/2016 |
|
Polyester FDY |
5459.64 |
USD/Ton |
0% |
12/26/2016 |
|
Nylon DTY |
1504.17 |
USD/Ton |
0% |
12/26/2016 |
|
Viscose Long Filament |
2950.77 |
USD/Ton |
0% |
12/26/2016 |
|
30S Spun Rayon Yarn |
2979.56 |
USD/Ton |
0% |
12/26/2016 |
|
32S Polyester Yarn |
1843.87 |
USD/Ton |
0% |
12/26/2016 |
|
45S T/C Yarn |
2648.50 |
USD/Ton |
1% |
12/26/2016 |
|
40S Rayon Yarn |
3123.50 |
USD/Ton |
1% |
12/26/2016 |
|
T/R Yarn 65/35 32S |
2267.06 |
USD/Ton |
0% |
12/26/2016 |
|
45S Polyester Yarn |
1971.98 |
USD/Ton |
0% |
12/26/2016 |
|
T/C Yarn 65/35 32S |
2216.68 |
USD/Ton |
0% |
12/26/2016 |
|
10S Denim Fabric |
1.32 |
USD/Meter |
0% |
12/26/2016 |
|
32S Twill Fabric |
0.81 |
USD/Meter |
0% |
12/26/2016 |
|
40S Combed Poplin |
1.15 |
USD/Meter |
0% |
12/26/2016 |
|
30S Rayon Fabric |
0.65 |
USD/Meter |
0% |
12/26/2016 |
|
45S T/C Fabric |
0.65 |
USD/Meter |
0% |
12/26/2016 |
Source: Global Textiles
Note: The above prices are Chinese Price (1 CNY = 0.14394 USD dtd. 26/12/2016)
The prices given above are as quoted from Global Textiles.com. SRTEPC is not responsible for the correctness of the same.
The Jawaharlal Nehru Port Trust (JNPT) has introduced a new system of Direct Port Delivery (DPD) of consignments under ease of doing business. Under the new scheme, imported consignments are not required to be transported to container freight station (CFS) for Customs clearance and could be di rectly picked up by importers.
Anil Diggikar, chairman, JNPT, said the move may help importers in a big way . “Under the earlier system, consignments used to go to CFS which would not just involve a delay of 5 to 7 days, but also result in the importer spending Rs 25,000 to Rs 40,000 on each consignment due to various formalities and charges at CFS. With DPD, we have eliminated the delays as well as the charges.“ He said now the containers would be directly delivered to the consignees within hours, thus reducing costs. He said the facility will be available to importers accredited with the Customs department. The JNPT chief said the port trust is targeting to bring 40% of import deliveries through DPD in the next few months, and it is organising a workshop for importers on Jan 3 to impart knowledge on DPD.
SOURCE: The Times of India
As exporters struggle in a stagnant world market, the Commerce Ministry is signalling help in the form of more incentives in the next fiscal year. Aimed especially at labour-intensive sectors such as engineering products, leather, textiles and chemicals, the sops will, however, depend on the Commerce Ministry’s request for more funds being accepted in Budget 2017-18. The Ministry has already petitioned the Finance Ministry, and its list of demand includes enhanced annual allocations that could be pumped into the merchandise export incentive scheme (MEIS). The MEIS, under which exports of specific products and to identified markets are eligible for direct sops in the form of duty-free scrips, started off in April 2015, with an annual budget of Rs. 18,000 crore. This was subsequently increased in tranches to Rs. 23,000 crore. The scheme’s coverage was also increased to 7,103 items from the initial 5,012. “We have asked for a substantial increase in allocation, but don’t know how much the Finance Ministry can spare. Once the allocation is made in the Budget, we can work on expanding the scheme,” a Commerce Ministry official told BusinessLine.
Demonetisation effect
“Despite the small increase in shipments in recent months, exporters are continuing to struggle. Demonetisation has led to instability in many sectors, especially the labour-intensive ones. There is definitely a need for more incentives, and this can be given through MEIS,” the official said. The duty-free scrips equivalent to 2 per cent, 3 per cent or 5 per cent of the value of exports can be used for duty-free import of inputs. The scrips can also be sold to other importers if the exporter earning them does not intend to import. With India’s exports having had a bad run all through 2015-16 and for moch the current fiscal year, exporters are looking for a booster shot in the Budget. In 2015-16, exports declined 15.85 per cent to $261 billion and stayed flat in the April-November 2016-17 period at $174.92 billion. World trade, which grew 1.7 per cent in 2016, will expand between 1.8 per cent and 3.1 per cent in 2017 as against earlier predictions of a 3.6 per cent growth, according to the latest WTO projections.
Apart from higher incentives, exporters also want the government to refrain from taxing the assistance provided under the schemes. The Engineering Exports Promotion Council, in its pre-Budget memorandum, said that since the incentives are taxed at the normal rate and exporters are getting benefits discounted at 67 per cent, the purpose of giving incentives is not being fully met.
LOOKING AHEAD
SOURCE: The Hindu Business Line
Kerala Industries minister A C Moideen at the joint meeting of the state textile sector trade union leaders and management representatives convened to evolve solutions to the problems faced by textile workers informed that officials has been directed to open all the defunct spinning mills in the state on an immediate basis. In the first phase revival plan, the minister ordered to release Rs 15 crore for procuring raw materials and repair works. As lack of working capital, raw material and unable to pay electricity charge dues and other statutory installments had affected the functioning of textile mills. However, lack of modernized tools, hike in prices of yarn in the domestic market and the demonetisation effect of the union government led to closure of the market resulting in the crisis for the textile sector. It was also decided at the meet to constitute an expert committee to study the problems confronting each of the textile mills and to offer appropriate solutions for its growth. The committee is expected to submit a report of the study within three months. The meet also decided to open the closed textile mills and to ensure electricity supply, to set up a centralized purchase system and to constitute review committee in a timely manner.
SOURCE: Yarns&Fibers
The India International Garment Fair (IIGF), the biggest international trade fair for fashion, will host buyers and buying agents from more than 70 countries. Manufacturers and exporters from across India will exhibit their products at the fair for Autumn/Winter 2017-18 season that is scheduled to take place from January 18-20 in Delhi. The fair for womenswear, menswear, childrenswear, scarves and stoles, bags and footwear, fashion accessory and jewellery has been organised by the Apparel Export Promotion Council (AEPC) under the guidance of the textiles ministry. It will occupy an area of over 16,540 square metres and is likely to be inaugurated by Union textiles minister Smriti Irani.
IIGF would be encouraging participants to display sustainable practices in design and production of garments. It will provide ample opportunities to showcase product range through fashion shows, which would be organised twice every day, on all three days of the fair. With strong support of the government through ‘Market Access Initiative’ grant and incentives offered to buyers under the ‘Reverse Buyer Seller Meet’ scheme, the fair has always attracted buyers from various countries. The network has been growing and flourishing from year to year and forms the basis for the sourcing plans of all major brands in the world of fashion and accessories, said the organiser of the fair. Various promotional activities have also been undertaken by the council to invite buyers and buying agents. Not only does this fair give a good opportunity to invite regular buyers, but a number of new buyers and buying agents are added every year by the organisers. This way this fair is a platform for interface with new buyers from new countries every season. In the last edition, that is, 57th IIGF held during July 2016, 408 participants and more than 1100 buyers and buying agents had visited the fair.
SOURCE: Fibre2fashion
Fresh inquiries from exporters and good demand from domestic mills pushed up cotton price further. Gujarat Sankar -6 cotton traded up by ₹100 to ₹39,000-39,300 per candy of 356 kg. About 32,000 bales arrived in Gujarat and 1.47 lakh bales arrived in India. Kapas gained by ₹10 to ₹1,000-1,050 per 20 kg and gin delivery kapasstood at ₹1,050-1,085 per 20 kg. Cotton seed traded up by ₹10 to ₹475-490 per 20 kg.
SOURCE: The Hindu Business Line
The sixth International Exhibition and Conference on Technical Textiles is being held in Mumbai from April 12, 2017. With the theme Advantage India: Emerging Global manufacturing hub for Technical Textiles, the main objective of the three day conference is to make India a manufacturing hub in technical Textiles under the Make in India initiative. The President of Textile Association, Arvind Sinha while talking to KNN claimed that the Expo will be helpful for the industries not only from the state but also from neighboring states. “It will be helpful for the MSMEs as you come across lot of buyers and sellers. The states like Gujarat who are nearby can also come easily,” said Sinha. He also said that the country is moving towards Digitization and so is the industry. “Though demonetization has created problems for the industrial sector, but it was a huge initiative PM Modi. As we can see that Mumbai is completely normalized now. That’s way I think we are heading towards a digital India,” added Sinha.
In Technical Expo, more than 200 exhibitors are expected to showcase the latest products, machinery, equipment and developments at Technotex-2017. The conference, to be organized by Ministry of Textiles and FICCI, will aim at technology adaptation and up gradation and also Joint Venture partnerships, project collaborations, transfer of technology, investments and R&D, said officials. On display among others will be medical textiles, industrial textiles, Eco textiles, Geotextiles, Home and Packaging textiles and Sports textiles.
SOURCE: The KNN India
Technotex-2017, the sixth International Exhibition and Conference on Technical Textiles to take place at Mumbai in April coming new year 2017 with the theme 'Advantage India: Emerging Global manufacturing hub for Technical Textiles'. The main objectives of the three day conference is to make India a manufacturing hub in technical Textiles under the 'Make in India' initiative and project latest developments in the sector, industry sources said. More than 200 exhibitors are expected to showcase the latest products, machinery, equipment and developments at the upcoming Technotex 2017. On display among others will be medical textiles, industrial textiles, Eco textiles, Geotextiles, Home and Packaging textiles and Sports textiles. The conference, organized by Ministry of Textiles and FICCI, will aim at technology adaptation and upgradation and also Joint Venture partnerships, project collaborations, transfer of technology, investments and R and D.
SOURCE: Yarns&Fibers
Shipping, road transport and highways minister Nitin Gadkari on Monday exuded confidence that the Sagarmala project — aimed at promoting port-led development — will fetch nearly R12-15-lakh crore capital investments, generate direct and indirect employment for around two crore people and provide a huge fillip to the country’s economic growth. Talking to reporters after inaugurating Sagarmala Development Company, a unit under his ministry that will act as the nodal agency for the project, Gadkari said R8-lakh crore investment is expected as industrial investment while an additional R4 lakh crore might go into port-led connectivity. Further investment is likely in other related areas. The minister said projects worth R1 lakh crore under the Sagarmala programme are already under various stages of implementation and by the completion of the present dispensation’s current tenure in 2019, projects worth R5 lakh crore are expected to commence. Gadkari further said a national perspective plan under the Sagarmala project has been prepared and projects worth R8 lakh crore have been identified. “This project will be a game changer. It will be the biggest project in the history of the country,” Gadkari said.
Incorporated under the Companies Act, 2013, SDC has R1,000-crore initial authorised capital. The ministry has already started the process to appoint a full-time managing director for the company. Apart from port modernisation and new port development, the Sagarmala project also aims at port-led industrialisation, promoting cruise tourism, port connectivity enhancement, setting up multi-modal logistics parks, coastal community development and development of the fisheries sector among others. Asked about funding, Gadkari said, “I don’t have any problem with financial resources. We have already appointed an agency to help us raise funds.” India has around 7,500-km long coastline, but the country transports only 6% of its cargo through the waterways compared with around 55% on roadways and 35% by the railways. As a result, India’s logistics costs as percentage of its GDP is as high as 19% compared with 12.5% in China. Gadkari said India’s exports would go up by one and a half times if the country was able to reduce its logistics costs to 12%. India’s cargo traffic growth is expected to increase to 2,500 MT in 2024-25 from 1,072 MT in 2015-16. In India, share of coastal and inland water transport is 2-3% compared to China’s 25%.
SOURCE: The Financial Express
TeraSpin, a business unit of ATE, showcased its range of precision spinning components at the recently concluded textile machinery fair India ITME 2016 in Mumbai. TeraSpin closed the show on a high note with more orders and a good number of enquiries for its established product range like PK 2025, PK 1500, spindles with HF1, HF21 and HF100 inserts. TeraSpin, whose drafting components are already a preferred choice amongst OEMs across the world, displayed ring frame drafting system for cotton, synthetic fibres, and blends up to 45 mm length with smart cradle at the six-day exhibition. The company also showed ring frame drafting system for synthetic fibres from 40 to 60 mm length, roving frame drafting system for roving frames, and spindles in different configurations suitable for tape drive or tangential belt drive, suitable for hand doffing or auto-doffing ring frames.
Components like cradles and top rollers for a range of machines/drafting systems and latest innovations in the area of drafting and spindles for ring spinning machines were also among the products displayed by the company. The TeraSpin stall was brimming with curious visitors all through the exhibition. Many spinners met TeraSpin technology experts to discuss their requirements of customised solutions on their existing machines. Machine makers from India and abroad also visited the booth to discuss opportunities for further cooperation. “It was good to meet both existing and new customers at our stand in India ITME and heart-warming to note their interest and confidence in TeraSpin products. Some OEMs showed keen interest in our new product offerings and discussed minute details thereof,” said TeraSpin director KP Singh.
At this event, TeraSpin felicitated Banswara Syntex Limited (BSL), a well-known, vertically integrated textile mill in India, for its continued support and patronage ever since the inception of TeraSpin in 2012. A small event to felicitate BSL was held at the TeraSpin stall in which RL Toshniwal, chairman of BSL, was presented with a memento by the ATE management team.
SOURCE: Fibre2fashion
We sell newspaper subscriptions in India for our clients abroad. Our clients pay us commission in foreign currency. Please let me know if we are liable for service tax. This year we have already recorded revenues of around Rs 7 lakh until now. Will we have to pay service tax after we cross revenues of Rs 10 lakh, or is there no such requirement?
The service you provide is that of an intermediary. Rule 2(f) of Place of Provision of Services Rules, 2012 defines “intermediary” as a broker, an agent or any other person, by whatever name called, who arranges or facilitates a provision of a service (hereinafter called the “main” service) or a supply of goods, between two or more persons, but does not include a person who provides the main service or supplies the goods on his account. As per Rule 9(c) of the same Rules, the place of provision of intermediary services shall be the location of the service provider. Since you are located in India, your services are provided in the taxable territory and the services you render are not in the negative list nor exempted, you have to discharge the tax liability. You have to start paying tax after you cross the threshold limit of Rs 10 lakh.
As per FTP 2015-20, para 3.06 (vi), SEZ / EOU / EHTP / BPT / FTWZ products exported through DTA units are not eligible for MEIS benefits. My query is, can SEZ/EOU be a merchant exporter and if so, will such merchant exporter SEZ/EOU be eligible for MEIS benefits?
Trading units are not allowed under the EOU scheme, as mentioned in Para 6.00 (a) of the FTP. MEIS is not available for exports made by units in FTWZ as mentioned in Para 3.06 (xix) of FTP. There is no bar on other trading units in SEZ claiming MEIS, but supplies made from DTA units to SEZ units are not eligible for MEIS, as mentioned in Para 3.06 (ii) of FTP.
We would like to make payment in foreign exchange as a percentage of the business brought in by our agent who markets our services in Europe. What is the liability of service tax or withholding tax on this payment?
The service provided by your marketing agent is that of an intermediary and, as explained above, the place of provision of intermediary services shall be the location of the service provider. Since your agent is located outside India, his services are provided in non-taxable territory and hence not chargeable to service tax. Income accruing for services provided outside India by a non-resident is not taxable in India and so there is no question of TDS.
SOURCE: The Business Standard
Crop losses, mounting debts and a spate of pest attacks apart, the cotton farmers of Telangana and Andhra Pradesh now have to deal with the demon of demonetisation as well. "The note ban has been a worse epidemic than the white fly or pink bollworm for cotton farmers," says Konda Surekha, a former minister from Warangal, one of the most prominent cotton-growing areas in Telangana. These farmers are sour that Prime Minister Narendra Modi had picked a wrong time for banning big currency notes — the harvest period of the Kharif season for cash crops like tobacco, tomato, groundnut, sugarcane and cotton. Now prices have fallen by 20 to 30 percent and they are unable to clear loans due to the ushering-in of the cashless regime in agricultural markets. "My cotton stock withered at the market yard as traders said they had no cash to pay and offered cheques," said Jagarlamudi Anil Babu, a cotton farmer of Prakasam district. Farmers say that banks would rather adjust cheques towards loans and interest than disburse cash.
A variety of issues abound for the cotton and textile industry like the non-implementation of the promised loan waiver, the delay in institutional credit and fall in global demand. Cotton farmers in five districts of Telangana and six districts of AP are wringing hands in distress as cotton prices crashed to Rs 4,100 per quintal from Rs 5,600 per quintal in the pre-demonetisation period. “Adding to our woes, the traders are asking us to accept payments in cheques or scrapped notes of Rs 500 and Rs 1,000,” says a cotton grower from Inkollur in coastal Andhra who deferred cotton-plucking for a week due to demonetisation.
The RBI decision to allow scrapped notes circulation among farmers in marketing their produce and also purchase of seeds and fertilisers has given them temporary relief, but Telangana’s farmers say that Modi should have chosen mid-January to February for demonetisation. A cascading impact is evident from the distress on cotton farmers — weddings, house warming functions and thread ceremonies are either low-key affairs or deferred. Besides cotton, the tobacco industry is dominated by 70 percent cash transactions in the vicious circle of growers, lenders, commission agents and exporters.
Andhra Pradesh and Telangana contribute to one-third of the country’s cotton trade. Chirala in Guntur and Siricilla in Karimangar are popular for their handloom and lungi markets and concentration of looms – they are considered the biggest in Asia for exports to Sri Lanka and Bangladesh. According to the US-based International Cotton Advisory Committee (ICAC) the currency crunch in India has created shortages in domestic textile market and also hit exports to global markets. Cotton exports from Australia, Mali, Burkina Faso and the US could fill up the gap caused by Indian cotton in 2016-17. The ICAC report also blamed the note ban as an ‘untimely move’ detrimental to the Indian cotton market, which could have a domino effect for the next two years. Officially 21 cotton farmers had committed suicide in 2016 from June to December. Unofficially though, 61 farmers have committed suicide since June and 12 more in the months of November and December.
Since its birth as a new state in June 2014, Telangana has recorded 1,269 suicides. The Hyderabad-based Centre for Sustainable Agriculture (CSA), estimates farmer suicides in Andhra Pradesh in the past 20 years (1995-2014) at 38,000. Lack of access to institutional credit and low crop insurance add to farmers' woes. “Besides, in anticipation of loan waivers, a large number of farmers did not repay loans last year, and banks have refused loans this year,” points out GV Ramanjeyulu, executive director of CSA. “They take up crops in Kharif with high interest loans and high expectations to wipe off old dues but often end up adding to their debts and consequent suicides,” says K Changal Reddy, a farmers’ representative.
Local common sense
In many parts of Telangana and Andhra the crisis has been tackled with local common sense. “Farmers are deferring payments to daily wagers but pay partly in the form of rice and also stood guarantee to small loans taken by them in the local grocery shops,” says Palaparthi Srinivasa Rao, a cotton farmer of Srikakulam. Traders linked payments to fertilisers and seed suppliers for the benefit of farmers. “We also tied up with lorry operators and hotels to pay their dues from the amounts due to them,” says Gopalakrishnaiah, a cotton exporter in Guntur market.
Kuvulu Rythu Sangam (Andhra Pradesh Tenant Farmers’ Association) state secretary N Ranga Rao says that for the Kharif crop season, farmers needed Rs 3,200 crores to take up harvesting in about 40 lakh acres. Another Rs 2,400 crores is needed for the Rabi season. “Since private money lenders also do not have valid currencies now, we depend on government to release crop loans early,” he said.
The monthly report of the Cotton Corporation of India (CCI) said the cotton market in Andhra Pradesh, one of the major producers in the country, has plunged into a deep crisis in the aftermath of demonetisation, as trade and export transactions have almost come to a halt and cotton prices have slumped by Rs 1,000 per quintal from Rs 5,000 to Rs 4,100 in just 40 days. Though the CCI has opened over 40 purchasing centres and offered cash payments in Rs 2,000 notes, the farmers are unwilling to sell and choose to suffer rather than sell at the current prices.
Arrears in loan waiver payments
Although both Andhra and Telangana government announced farm loans waiver as a poll promise, they have been paying dues to banks in installments. Telangana government had pegged arrears at around Rs 18,000 crores and Andhra had reduced the burden to Rs 36,000 crores. Banks were advised to issue new crop loans with the promise that loans as of June 2013 would be borne by the government. However, the RBI had opposed the bulk farm loan waiver initiative of both the states and advised banks to release only crop loans in a guarded manner and ensure that until clearance of arrears, farmers’ slates would not be cleaned.
As a result, banks refuse to give fresh loans until old loans are either paid by the farmer or by the state government. As a result, farmers had to take up farming with savings and loans from private money lenders. “My money lender wants cash and not cheque,” says Bharatakka, a cotton farmer of Ibrahimpatnam in Nalgonda district.
Cotton crop grown in Andhra is sent to the ginning mills of Guntur district which supply cotton to textile mills in Maharashtra, Tamil Nadu, Gujarat and Karnataka. According to market sources, almost 70-80 percent of transactions have come to a halt and the market has been hit hard. This has meant the denial of wages to over two lakh people engaged in cotton trading, spinning, ginning and harvesting activities in the state.
In Telangana too, the situation is similar. Traders are offering farmers sops now to get them to sell their cotton and accept cheques — trips to Mumbai, Shirdi and Tirupati are being offered. “If we deposit the cheques in the banks, the bankers will adjust it against loans and interest and the government will not reimburse it,” said Muthyala Reddy of Warangal.
“Cotton trade is always cash and carry activity and bank operations are hardly 10-15 percent. If we offer to pay online or through cards, our suppliers of seeds and fertilises will just reject,” says a cotton farmer, K Samaiah at Enumamula market yard in Warangal. “The ceiling on withdrawals had also made us delay payments. The government cap on withdrawal at Rs 24,000 per week has sandwiched the farmers,” says Phani Raj, a cotton trader at Chilakaluripeta.
Continuing trouble for cotton
The cotton crisis since 2014 in Telangana and Andhra Pradesh had led farmers to shift to other crops due to delay in institutional credit and an unending wait for farm loan waivers. The total area under cotton declined by 12 percent to 10.5 million hectares this year against 11.88 million hectares in 2015-16.
In 2015 and in early 2016 the crop was hit by the white fly and pink bollworm leading to 30 percent drop in yields. “We are asking the farmers not to use non-Bt cotton seed as refuge crop and reduce area under cotton,” says K Dhananjaya Reddy, commissioner for agriculture (Andhra Pradesh).
SOURCE: The First Post
Even as cotton trades firm on lower arrivals due to the impact of the currency crunch, the Cotton Corporation of India (CCI) has begun purchasing the fibre at market rates from various parts of the country to ensure supplies for its customers in the textiles industry. “We have made a small beginning and have purchased about 1,000 bales (of 170 kg each) so far, at commercial rates, from various centres. We expect to purchase up to 15 lakh bales in the current season,” said MM Chockalingam, CCI’s Chairman and Managing Director (in-charge).
After a gap of almost four years, the state-run CCI, which comes under the Ministry of Textiles, has resorted to commercial purchase of cotton from markets such as Ahmedabad and Nandurbar. CCI has been purchasing kapas or raw cotton from markets wherever the prices are lower, Chockalingam said, adding that the commercial purchase of up to 15 lakh bales would be mainly from the West, Central and Southern parts of the country as prices in the Northern markets are ruling much higher. Kapas prices are ruling between ₹4,900 and ₹5,300 a quintal in various markets.
Prices firm up
“We expect the prices to soften a bit from next month,” Chockalingam said, while ruling out a drastic fall. Further, he sees a very slim possibility of the CCI taking up procurement operations at the MSP this year as prices were unlikely to drop below the support price levels on account of the tight demand-supply scenario. The Centre had announced an MSP of ₹4,150 per quintal for the current season for the long staple fibre and ₹3,860 for the medium staple length.
Besides protecting cotton growers’ interests, CCI also caters to the needs of its customers, such as the National Textiles Corporation and several co-operative mills. It also meets the demand of private sector mills, mainly during the lean season, by releasing the fibre from its stocks. Over the last three-four years, CCI has stepped into the markets to protect farmers when prices fell below the minimum support price (MSP) levels. But this year, cotton prices have been firm at the start of the season on account of lower arrivals. In fact, in the immediate aftermath of demonetisation, cotton prices spiked, even surpassing the global prices, as farmers temporarily held back their produce.
Output projections
Though the Indian cotton acreage had dropped by close to a tenth this year to around 11 million hectares, higher yields — on account of widespread rains in key producing States — are expected to help maintain output. The Cotton Advisory Board has pegged the output at 351 lakh bales for the 2016-17 season starting October. Similarly, the International Cotton Advisory Committee expects the cotton output in India this year to remain unchanged from 2015-16, at 5.8 million tonnes. The Cotton Association of India, the apex cotton trade body, expects the output to be around 336 lakh bales, marginally lower than last year’s 337.75 lakh bales.
SOURCE: The Hindu Business Line
The outgoing year has been a momentous one for the Indian economy—landmark reforms and economic strategies were rolled out even as the global economic environment turned increasingly complex. In terms of economic growth, the prospects remained buoyant as the rural economy benefited from normal rainfall after two back-to-back drought years. GDP growth picked up in the second quarter to 7.3%, compared with 7.1% in the first quarter. However, this was lower than the previous year. The gross value added in agriculture was robust at 3.3% with 5.2% in industry and 8.9% in services. Most macroeconomic indicators such as fiscal deficit, inflation, and current account deficit performed positively over the year. Industry was particularly encouraged by the cut in interest rates.
The slide in exports came to a halt during the year although the April-October data remains negative. The index of industrial production in the first half of the year was also in negative territory at -0.1%. The global economy remains uncertain and fragile, and developments such as Brexit, a new regime in the US, and slowdown in China as also pick-up in commodity prices add to its complexities.
The year commenced with a reformist and progressive Budget that targeted rural development, infrastructure, and skill development through a range of measures and higher allocations. Innovative initiatives were announced, such as providing gas cylinders to poor rural households, a health insurance scheme and setting up of multi-skill centres in districts. Over the year, government spending on infrastructure helped boost the economy.
The GST is widely acknowledged as a transformational indirect tax reform, and will unite the country as a single market with a common tax structure under the rubric of ‘one country, one tax’. It promises to deliver significant impact on bringing more small traders and manufacturers into the tax system. Preparations are underway to roll it out in 2017 while the last few issues are sorted out by the Council. CII suggests a transparent procedure for working out the new tax rates for different sectors with most rates in the 18% band, and others in line with current rates.
Demonetisation and withdrawal of high-denomination notes from the system pushes more of the cash-based economy into the formal financial channels. This infuses transparency and clarity, and can be expected to have significant benefits over the medium to long term. After the transition process, the gains in terms of wider tax net, more predictable business environment, and better calculation of national income would be significant. The government would need to compensate for the temporary fall in the demand by strategising for higher investments, particularly in infrastructure, education and healthcare.
On the ‘ease of doing business’ front, the movement of more administrative clearances and procedures towards online platforms and single-window systems has been notable. While India’s ranking on the World Bank Doing Business indicators covering Delhi and Mumbai did not show much improvement, the monitoring process conducted by department of industrial policy and promotion with the participation of the Bank showed remarkable changes at the state level. Ten states achieved over 90% in the 340 reform areas identified by DIPP, compared with the highest at 71% last year.
Under Make-in-India, a substantial shift is visible in the electronics sector as more than 50 new handset-makers are now present in India. A new national policy for textiles, garments and made-ups has revitalised the sector. For the automotive sector, the Automobile Mission Plan 2016-2026 sets the target of becoming the third-largest global sector with $300 billion turnover by 2026. Steps have also been taken for food processing, leather, and other sectors identified under the campaign, while states too are coming out with innovative policies to attract investments and create jobs.
The foundation for a strong innovation culture was another highlight of the year. The national intellectual property rights policy aims to strengthen administration for the sector and boost industry linkages. An action plan was launched under Start-up India in January this year, including incubation facilities, a fund of R10,000 crore, and tax incentives. FDI inflows reinforced the positives of the economy with over 20% increase during the calendar year to September.
In 2017, industry expects a visionary Budget, now merged with the rail budget and brought forward to early February. We would like to see a cut in corporate and personal income tax rates accompanied by higher public investments for which the space will be available through various means such as disinvestment and asset monetisation. Challenges such as high bank non-performing assets, ease of doing business, and slack domestic and global demand would need to be addressed, but there is much for the industry to look forward to in the coming year.
SOURCE: The Financial Express
With consumption spends in rural and urban India stifled by the acute scarcity of cash, the economy is set to clock sharply lower levels of growth in the current and coming quarters. While the initial days of demonetisation saw economists merely pruning their growth estimates, the cuts could get bigger. Nomura, for instance, believes there is a downside risk to its Q1 GDP growth projection of 6.9% y-o-y. “Near-term growth may fall much more than expected,” economists at the brokerage wrote. They alluded to proprietary indicators which had slumped to their lowest level since the series started in 1996 and were consistent with a below 6% GDP growth. While sales have decelerated across markets, given the larger volume of cash transactions, the hinterland has been hurt far more than urban areas.
Economists at Bank of America Merrill Lynch (BofAML) estimate every month of disruption due to demonetisation costs between 0.3- 0.5% of GDP. Consequently, they are now looking at a FY17 GDP growth target of just 6.9% rather than the 7.7%. At a time when consumption was driving the economy in the absence of investments, the hit to sales of big-ticket items—property, jewellery, cars and other durables—will deal a blow to the economy.
Credit Suisse has reworked its forecast for GDP growth in FY17 to 6.9% from a more robust 7.8% since it feels consumption will grow at a much slower 6.5%, way below the 8.2% anticipated before demonetisation. “Businesses, especially small- and medium-sized enterprises, and sectors like automobiles and non-bank finance companies will probably see temporary disruptions as well,” the brokerage wrote. High frequency indicators show the economy has been sluggish (see charts) — the contraction in railway freight together with slowing sales of commercial vehicles is a sign of weak demand. While consumer goods sales had started picking up after the raises for government employees, demonetisation will put the brakes on consumption for the next few months. In the meanwhile, investment continues to be anaemic; gross fixed capital formation (GFCF) contracted for the third straight quarter in Q2FY17 after increasing by sub-1% in Q3FY16.
Consequently, corporate earnings could continue to disappoint; Bofa ML estimates a downside risk of anywhere between 1-6% to its FY17 earnings estimates. To be sure, the recovery reflected in the Q2FY17 results may seem impressive, analysts point out these came off a low base. More pertinently, underlying trends — volumes for instance — have been subdued. BofA points out that Q2FY17 aggregate numbers are somewhat misleading because of the 70 sub-sectors that it tracks, the fewest number at 61% have delivered a growth in earnings before interest and tax (ebit).
“Demonetisation plus GST mean earnings will be volatile for the next 3-4 quarters,” the brokerage wrote recently, adding further downgrades were possible. “Demonetisation measures will not help,” Kotak Institutional Equities (KIE) wrote in a recent report. The brokerage, nevertheless, expects earnings to grow 13% and 20% in FY17 and FY18, respectively. That’s on the back of profits in sectors such as PSU banks, metals & mining and pharmaceuticals getting normalised. The brokerage cautions that there are potential risks to earnings in sectors such as cement, consumer discretionary and industrials on the back of weaker-than-expected demand and profitability. “Weakness in demand will also hurt profitability disproportionately,” KIE noted.
SOURCE: The Financial Express
Prime Minister Narendra Modi and finance minister Arun Jaitley will get views on the Budget for 2017-18, job creation through skill development and other issues at a meeting with experts on Tuesday. There will be 13 people —from the NITI Aayog, economists and others with expertise — who will make presentations. The Aayog wanted to hold a pre-Budget meeting with the PM but the latter’s office suggested the agenda be broadened to the overall economy, sources said. The meeting is to cover job creation and skill development, agriculture and issues for the Budget, though participants would raise others, too. The theme is ‘Economic policy reform, Road ahead’. Those invited include Pulak Ghosh of the Indian Institute of Management-Bangalore; Neelkanth Mishra of Credit Suisse; Vivek Dehejia, professor with Carleton University in Canada, and economist Surjit Bhalla. Aayog vice-chairman Arvind Panagariya, chief executive Amitabh Kant, its members, all five secretaries at the finance ministry, and industrial policy secretary Ramesh Abhishek would be there.
After a discussion, those present would be split into three groups. Then, the issues discussed will be presented before the PM in the evening. The Reserve Bank of India has reduced its forecast for economic growth this year to 7.1 per cent, from the 7.6 per cent it had earlier estimated. And, the Asian Development Bank has cut its estimate to seven per cent, from 7.4 per cent earlier, due to the impact of demonetisation on economic activity. The economy expanded by 7.1 per cent and 7.3 per cent in the first and second quarters of 2016-17. Various economists think demonetisation could pull down the growth rate for the year by up to two percentage points. An official said the PM would also take stock of Aayog initiatives to promote the digital payments, such as the Lucky Grahak Yojana and Digi Dhan Vyapaar Yojana. Estimated expenditure on the first phase of the schemes (up to mid-April 2017) is likely to be Rs 340 crore.
SOURCE: The Business Standard
The Goods and Services Tax (GST) is not something that consumers could care to wait for as tax practitioners foresee a higher tax burden initially. “Tax rates may come down later. But in the initial two years, it would put additional burden on consumers,” MVK Murthy, National President of All-India Federation of Tax Practitioners (AIFTP), said. The federation felt that implementation of GST from April 1, 2017, was not possible. “It might happen in September,” he said.
Stating that there won’t be much difference between the Value-Added Tax (VAT) that was in vogue and GST, he said both systems had multiple tax rates on goods. “Multiple tax rates could lead to disputes on classification of these goods. Also, they have left liquor, tobacco and petroleum, which attract higher tax rates, out of the purview of the GST,” he said. The services component of GST could end up with higher tax rates for consumers as the initial rate proposed was higher than that charged now. “The GST is being rolled out in 140 countries but only two countries have dual (Central and State level) GST. India is going to be the third country after Australia and Canada to have such a dual GST system,” he said. Murthy was in the city in connection with the South Zone conference of the federation. The federation has over 7,000 members from different parts of the country. There are over 3.50 lakh tax practitioners in the country. “A Bill was introduced last year to regulate the tax practitioners,” he said. He said the process of registration by dealers, traders and tax practitioners was on under the GST regime. The federation has been conducting awareness programmes for traders, dealers and tax practitioners to throw light on the new tax regime. “As far as trade is concerned, there’s no change in VAT and GST regimes. States are going to lose the power to (levy) tax in the post-GST regime. States will have to depend on the GST Council’s nod on issues related to tax rates,” he said.
SOURCE: The Hindu Business Line
Industry captains in Gujarat have put out a ‘white paper’ on the scale of investments that materialised under the Vibrant Gujarat Global Summits, the biennial business congregation of global leaders, started by Prime Minister Narendra Modi as Chief Minister of the State back in 2003. During the seven summits since then, 51,738 memorandums of understanding (MoUs) were signed, out of which 30,065 MoUs or 58 per cent were commissioned and about 4,014 MoUs are under implementation.
Optimism
Listing out the status of MoUs signed in the past two summits – 2013 and 2015 – top business houses from the state, Raliance Industries, Essar Group, Adani, Torrent, Welspun and Zydus Cadila Group highlighted the optimism attached to the summits and their importance to the businesses. As per the data shared by the industry leaders, total 17,719 MoUs were signed in 2013 Summit, out of which 10,770 were commissioned and close to 1400 were at various stages of implementation. About 5,600 MoUs were dropped.
In 2015, out of the 21,304 MoUs signed, 12,670 were commissioned and 2,731 were under implementation. “These summits are an opportunity for every businessman to think ahead on future plans. It creates a very healthy and positive environment. In that environment, progress and growth can happen and that is the advantage of the Vibrant Gujarat summits,” said Pankaj Patel, chairman and managing director, Zydus Cadila, addressing media here.
Priority treatment
“The Vibrant MoUs are given priority treatment at government level. However, some MoUs drop, mainly because they are either non-viable or ill-conceived,” he added. Parimal Nathwani, Group President (Corporate Affairs), Reliance Industries highlighted the investments the group committed and commissioned in the past two years. Reliance has been the largest investor at the Vibrant Summits.
"In the last two Summits, Reliance Industries had signed MoUs worth Rs. 1 lakh crore, out of which Rs. 90,000 crore was already invested and the remaining is under progress,” he said, adding that the group has also invested at other places in the state, including Dahej ( Rs. 12,000 crore), Hazira ( Rs. 3,232 crore), Reliance Jio ( Rs. 9,000 crore) over the past two years, providing permanent employment to over 52,000 and temporary employment to close to over 1.40 lakh. Since 2003, the summits were being marketed on the investment intentions or MoUs signed. However, the past two summits were showcased with intellectual deliberations and brain-storming as the central theme, leaving the investment agenda on the backburner.
SOURCE: The Hindu Business Line
Investments in startups declined significantly in volume (28 per cent) and value (44 per cent) in calender 2016. The deal sizes got smaller as angel and early-stage funding dominated and late stage funding took a backseat, said VCCEdge in its year-end analysis. In 2016, startups witnessed a 44.3 per cent decline in investments at $1.452 billion from 928 deals compared with $2.606 billion from 1,026 deals in 2015, the analysis said. Investors continued to back startups till Q12016. However, the value of investment has dropped significantly across all quarters this year compared with 2015. Investors seem to be sitting on the sidelines, being selective in making investments and focusing more on realising investments.
Given the fact that both the volume and value of deals continue to slip across the early-stage spectrum, the trend clearly suggests that investors have started writing smaller cheques. Hence, clearly raising capital was not at all easy this year. The number of investments in startups fell to 181 deals in the last quarter of 2016 from 346 a year earlier. Likewise, the total amount of funds deployed slid to $411 million in Q4 this year as against $648 million in the stipulated period of 2015. In Q12016, it was $400 million from 303 deals and in Q2 it was $332 million from 232 deals. Q3 of this year saw a deal size of $309 million from 212 deals, the analysis said.
Investors are writing smaller cheques and conservation is expected to continue as a theme for the next couple of years, showing a clear trend of “cautious money” available in the market, the VCCEdge analysis said further. FinTech leads in terms of the number of deals with a total of 67 investments worth $183 million as compared with $122 million from 65 deals in 2015. HealthTech startups attracted about $69 million across 60 deals in 2016 as against $99 million from 54 deals in 2015. EduTech stood at third position with $21 million through 41 deals in 2016 as compared to $40 million from 47 deals in 2015, said VCCEdge. “We are already a service economy. Be it EdTech or HealthTech or FinTech, with 70 per cent to 80 per cent of the capital going into consumer tech. These startups are improving either the front-end or the back-end services of a business. They are getting ready for a bigger game,” said Nita Kapoor, chief executive of News Corp-owned The VCCircle Network. Among the top cities, metros lead as funding destinations. The National Capital Region (NCR) topped the list, recording 268 deals.
SOURCE: The Indian Express
With industrial activity slowing and an acute cash crunch in the aftermath of demonetisation, power demand is set to come down drastically. According to experts tracking the sector, peak power demand is down six per cent between September and November 2016. On a year-on-year basis, though, demand grew 11 per cent in September 2016, according to the latest data of Central Electricity Authority.
With demonetisation kicking in from November 8, 2016, from medium, micro and small enterprises (MSMEs) have reduced their power demand owing to slow activity. Peak power demand deficit — the gap in power supply and demand – has also reduced owing to decline in power demand during the past month. The peak demand deficit in November was 0.6 per cent, down from one per cent in October and 1.6 per cent in September 2016. “Small enterprises are facing the brunt of cash crunch and labour shortage,” said a power sector expert, who did not wish to be identified.
Agricultural power demand is also likely to go down as the current sowing season has been hit by cash crunch. The country received good monsoon this year, which was expected to boost rural demand, say experts. Several power-guzzling sectors such as automobiles, hotels and textiles have been hit by the cash crunch. While weavers and textile traders have stalled production, the auto sector is looking at one of the worst sale periods, which could affect production in the coming quarters. Commercial vehicles, and two- and three-wheelers posted a decline. This was the steepest in the past 44 months. The sector declined 7.75 per cent in March 2013. The last time the sector posted a decline was in December 2015, when volumes fell by 0.17 per cent.
Exporters expect demonetisation to lead to a fall in outbound trade this month, and a greater decline in the coming months. Exporters have warned that the government’s ban on old Rs 500 and Rs 1,000 notes would lead to a production decline in the short term. Stagnant power demand forced 30 power-generating companies to reduce their coal offtake, even below their lowest permissible threshold under the respective fuel-supply agreements with Coal India.
SOURCE: The Business Standard
The rupee opened nearly 10 paise down at 67.84 against the dollar on Tuesday amid selling of the US dollar by banks and exporters amid weakness in the greenback. The domestic equity market opened on a flat note on Tuesday following mixed global cues. The BSE Sensex opened 8.33 points higher at 25,815, while NSE’s Nifty50 opened 6.80 points up at 7,915. The local currency was trading 11 paise down at 67.85 against the dollar at around 9.30 am (IST). The rupee rallied nearly 8 paise on Monday as most global markets remained were closed on account of Christmas holidays. However, gains remained capped amid huge outflow and rising US yield. Nirmal Bang Commodities in a research note said, “The rupee should trade in the 67.74 – 67.96 range against the dollar on Tuesday.”
Angel Broking expects the rupee to depreciate in Tuesday’s session as recent weakness in the Dollar index is likely to prompt traders to place fresh bets, which will in turn hamper the rupee trend. Moreover, a fall in domestic equities due to heavy foreign capital outflows will keep the domestic currency under pressure. Foreign institutional investors stood net sellers in the domestic equity market on December 26 as they sold shares worth Rs 1,460.65 crore with gross purchases and gross sales at Rs 2,089.30 crore and Rs 3,549.95 crore, respectively, data available with depository NSDL showed. In the currency futures market, the most traded dollar-rupee December contract ended at 67.71 on NSE on Monday. The open interest of the December contract fell by 2.55 per cent from the previous day.
SOURCE: The Economic Times
US oil prices extended gains on Tuesday in post-Christmas trading, as Opec and non-Opec members are set to start curbing output in less than a week to support oil prices. NYMEX crude for February delivery was up 16 cents at $53.18 a barrel by 0002 GMT, after closing up 7 cents at a 17-month high on Friday. London Brent crude for February delivery was yet to trade after settling up 11 cents at $55.16 a barrel on Friday. Oil markets were closed on Monday after Christmas holiday. Oil has been supported in the past several weeks as the Organization of Petroleum Exporting Countries and non-Opec members have agreed to lower output by almost 1.8 million barrels per day (bpd) from Jan. 1.
Libya's oil production rose slightly to 622,000 barrels a day (bpd) on Monday, as an armed faction agreed to lift a two-year blockade on major western pipelines, the National Oil Corporation said. It said it could add 270,000 bpd within three months. The US Department of Energy expects to begin sales of roughly 8 million barrels of sweet crude from the country's emergency oil reserve in early to mid-January, according to a notice sent to potential bidders and seen by Reuters on Friday.
Russia's oil exports would rise by almost 5 percent this year to 253.5 million tonnes and a "slight" increase was expected next year, Deputy Energy Minister Kirill Molodtsov said on Monday. China's end-November crude oil stocks fell 1.55 percent from the previous month to 29.89 million tonnes as domestic output shrank and winter demand grew, data from the official Xinhua news agency showed. Diesel inventories slid to a record low. Algeria's Sonatrach will drill 290 wells in 2017 in comparison with 265 in 2016, the head of the oil and gas giant's drilling division told Reuters late on Friday. Hedge funds boosted bullish bets on US crude oil for a third week in a row to a near 2-1/2 year high, data showed on Friday, on signs that Opec and other producers will stick to a deal to cut output.
SOURCE: The Economic Times
With Donald Trump set to take charge as the next US President, Indo American Chamber of Commerce today suggested that India and the US should exchange wish lists to fast track resolution of bilateral issues which are impeding accelerated investment flow. Broad contours of the wish lists should include amicable settlement of IPR issues leading to earliest conclusion of a bilateral investment treaty (BIT), totalisation agreement, a sound legal framework to expeditiously settle disputes, settlement of issues emanating from non-tariff measures and importantly, a fast solution to nagging visa problems. Billionaire businessman Trump is set to take over as the next President of the United States in January.
Indo American Chamber of Commerce (IACC) National President N V Srinivasan said there is a growing realisation among the US corporations that India, lying mid-way between West and the East, has the potential to emerge as a gateway for serving both markets. "Many corporations are seriously discussing these ideas in their boardroom meetings, while others are taking concrete steps towards investing in India with a renewed interest. We have to capitalise on the situation by removing impediments to the flow of investments and take concrete steps towards ease of doing business in India to leverage our position as an attractive investment destination," Srinivasan said.
US President-elect Trump has made it clear that he is averse to regional trade agreements like NAFTA, emerging Trans Pacific Partnership (TPP) etc which, according to him, have been militated against the US interests, IACC noted. "He (Trump) is in the process of recalibrating the policies to deal pragmatically with each country by their level of importance and economic engagement. "Against this backdrop, India's recent policy initiatives like Make in India, Digital India, Smart Cities project, high budget investments in infrastructure etc where critical technical and financial investments are needed, would stand to benefit," Srinivasan said.
Flagging contentious issues that are coming up in the bilateral economic negotiations, such as retrospective tax regime in India, tardy intellectual property rights (IPR) protection and their enforcement, insistence on deciding economic disputes under Indian laws etc, the IACC President said these issues can be settled in a spirit of 'give and take'. "We are happy and privileged to have two administrations in the US and India, which are pro-business and believe in creating an environment for seamless business activities. "Donald Trump's significant business interests in India in various sectors and his statement of intent to forge a strong business relationship are pointers to an exciting bilateral business relationship," Srinivasan said.
Another area that needs immediate attention is the earliest conclusion of the double taxation avoidance treaty on social security taxes, often referred to as Totalisation Agreement, to avoid double taxation of social security both in the home country and the country where an employee works. Currently, temporary migrant Indian workers in the US have to make dual payment of social security contributions, both at home and in the US. India has around 3 lakh workers in the US at any given point of time, contributing over $2 billion every year towards social security taxes without getting any benefits. To avail social security benefits in the US, one has to stay there for over 10 years, but work visas in that country are generally provided for a maximum of 6 years. Over the years, nearly $25 billion have been lost by India, IACC said.
Referring to the difficulties faced by Indians in getting US visas, the IACC chief said that one has to take a long term and philosophical stand on these issues and not one driven by short term gains. "There has been a proliferation of Indian companies and start-ups in the US, mostly in the ICT sector. These are set up mostly by people who migrated to the US at various stages, particularly during the dotcom days. Their business enterprises are providing gainful employment to many US citizens," Srinivasan said. "Most of the IT and technology platforms in India, such as mobile telephony, credit/ debit card networks, climate tracking equipment, heavy duty computers, drones, sensors etc are working on equipment mostly imported from the US," he added.
SOURCE: The Economic Times
The home ministry's New Year gift to its foreign tourists from 161 countries will be a pre-loaded sim card at 12 major airports of the country after home minister Rajnath Singh formally launches the scheme this weekend. The ready-to-call sim cards will be available to foreign tourists arriving at airports in Panjim, Ahmedabad, Amritsar, Jaipur, Bengaluru, Chennai, Mumbai, Lucknow, Delhi and Varanasi to start with. The move is aimed at projecting India as a global tourist destination among foreign travellers as well as addressing the security concerns by equipping the tourists with mobile phones to make calls in case of any distress, an official at the home ministry said.
According to MHA officials, Home Minister Rajnath Singh will launch the initiative planned in association with BSNL this weekend by distributing free pre-loaded Sim cards to tourists arriving in India on e-Visa. “The sim cards will be given to the tourists at the immigration itself. We are starting this in a phased manner. It will pilot in Delhi and a few select cities next week,” said an official said. The proposal for this move was initiated by the Ministry of Tourism earlier this year. Sources at MHA said it was only after a detailed interministerial committee comprising officials from Tourism, Home, Telecom and Finance Ministries, the idea was given go-ahead. “There were some security concerns but after consultations we have taken the required the steps and decided to implement the programme. Mandatory checks have already been done with the documentation required for e-visas,” an MHA official said. “Foreign tourists face problems while procuring a Sim card, making them dependent on telephone booths. The cards can be recharged as and when required and will be functional from the moment they step out of the airport,” the official added. The Sim card will come with a ‘welcome kit’ which would also consist of maps, tourism booklets with information about emergency numbers.
SOURCE: The Economic Times
The international crude oil price of Indian Basket as computed/published today by Petroleum Planning and Analysis Cell (PPAC) under the Ministry of Petroleum and Natural Gas was US$ 52.83 per barrel (bbl) on 26.12.2016.
In rupee terms, the price of Indian Basket decreased to Rs. 3583.64 per bbl on 26.12.2016 as compared to Rs. 3587.79 per bbl on 23.12.2016. Rupee closed stronger at Rs 67.83 per US$ on 26.12.2016 as against Rs 67.91 per US$ on 23.12.2016. The table below gives details in this regard:
|
Particulars |
Unit |
Price on December 26, 2016 (Previous trading day i.e. 23.12.2016) |
Pricing Fortnight for 16.12.2016 (Nov 29, 2016 to Dec 13, 2016) |
|
Crude Oil (Indian Basket) |
($/bbl) |
52.83* |
50.85 |
|
(Rs/bbl |
3583.64 (3587.79) |
3460.34 |
|
|
Exchange Rate |
(Rs/$) |
67.83 (67.91) |
68.05 |
* Since Brent, Oman & Dubai prices are not available due to holiday on 26.12.2016, the price of Indian Basket Crude oil cannot be derived. Therefore, price of Indian basket as of 23.12.2016 has been considered.
SOURCE: PIB
Sri Lanka should seriously consider negotiating trade agreement with the EU, as the GSP plus can be enjoyed for a maximum of 4-5 years at most. The restoration of trade agreements will give some room to breathe and consolidate the industry. It can be used to accomplish many other medium and long term goals, which will not only be beneficial to the apparel industry, but boost all the exports from Sri Lanka, said the new Chairman of the Sri Lanka Apparel Exporters Association (SLAEA), Felix A. Fernando. Also the government should explore the possibility of signing trade agreements with countries such as Japan, Russia, Korea, Brazil and South Africa.
The apparel industry has made a commitment to the Government to increase exports to the EU by US$ 500 million annually after GSP+ is restored. Trade agreements will help the apparel industry to broaden its export base and bring in valuable foreign exchange. Although it was disheartening to digest the current economic realities and the state of the world economy and their own economy, they value the current government’s desire to achieve sustainable development through export-led growth with globally connected value chains.
Prime Minister Ranil Wickremesinghe hopes for the revival of the industry with the restoration of GSP plus. If the proposed FTA with China can be successfully concluded, they will have a great opportunity to expand their market in China. The same cannot be said, however, about the proposed FTA with India. It is necessary to remove the quota in its totality in respect of the apparel sector if their industry is to see a significant benefit from the proposed ETCA, Fernando said.
The chairman speaking at the Annual General Meeting of the Association said that they all need to find and diversify into new markets for exports. Considering the reputation Sri Lanka has for its quality, and their inability to compete on the low-end value products which are made in neighbouring South Asian countries, they must increase the production of higher value-added products, such as formal wear and high-end outerwear. Moreover Sri Lankan industry largely lacks automation, there are only a few major players investing in automation. When considering shortage of labour in the country it could become a critical factor in time to come.
SOURCE: Yarns&Fibers
The government has maintained the customs duty on cotton yarn at the lowest level of 5 percent in order to support the textile industry. Sources said that this was informed to the Senate Standing Committee on Finance in writing by Federal Board of Revenue (FBR) while briefing on the implementation of the committee's recommendations to the Finance Bill 2016.
Responding to the queries of the Senate Standing Committee on Finance, the FBR informed that specific recommendations pertaining to the customs duty had been implemented in the last budget, for example reactivation of the Alternate Dispute Resolution Committee (ADRC) to resolve customs related disputes between taxpayers and tax collectors. In budget 2016-17, the Senate recommended to the National Assembly that the duty on cotton yarn should be kept at minimum slab rate of 5 per cent. The FBR responded that the recommendation has been implemented through amendment in Finance Bill 2016, by amending the Fifth Schedule to the Customs Act 1969.
The Senate recommended to the National Assembly to rationalise the import process and simplify the structure of import duties for equipment used to produce solar energy. The Senate had recommended to the National Assembly that Customs House should be established for gateway at Tehsil Qamardin Karez, Balochistan. Qamardin Karez is already a notified customs station; however, it is not operational due to the law and order situation and lack of infrastructure like roads, electricity and banking facilities, the FBR added. The Senate recommended to the National Assembly that all the legal issues with Alternate Dispute Resolution Committee (ADRC) should be resolved to make it functional. The FBR responded that the recommendation has been implemented through amendment in Section 195C of the Customs Act, 1969.
SOURCE: The Business Recorder
The textile exporters have decided to take final step against the government failure in resolving issue of Sales Tax charges on certain goods/services under provincial laws and FBR Sales Tax laws, it is learnt. Textile exports sector sources told Pakistan Today that the issue of conflict of federation and provinces on Sales Tax was discussed during several rounds between Pakistan Textile Exporters Association (PTEA) and FBR officials and Special Assistant to the Prime Minister on Revenue Haroon Akhtar Khan. They said that controversy was yet to be resolved between federation and the provinces and the exporters had been upset as notices of the provincial revenue authorities for registration under the respective Sales Tax on services and provincial Sales Tax on services (withholding) rules are being received. They said that the industry had submitted that the issue of applicability of Sales Tax charges on certain goods/services has cropped up since promulgation of Provincial Services Acts 2011, 2012, 2014 and 2015. They pointed out that was decided during previous meetings to constitute tax reforms committees both at central and regional levels comprise of officer of inland revenue and representative of exporters/business associations to look in to the matters irritating exporters and business community. But no committee has yet been constituted till date, association said.
FBR officials on the other hand, informed that on this specific issue, dialogues with provincial government were under way and the matter would be resolved later. FBR officials agreed to immediately constitute a central tax reforms committee comprising of three members from the association and one member from FBR not less than the rank of Member of FBR/Board. However, tax reforms committees at regional level will be constituted after the visit of Member IR (Operations) to PTEA later. It was pointed out by the association that cheques for disbursement of amount of refunds sanctioned through Expeditious Refund System (ERS) are invariable issued after a period of six months from the date of issuance of refund payment order (RPO). It was time and again requested that there is no justification for such delay. The cheques have been issued in respect of RPOs issued till 31.05.2015. All RPOs issued after 31.05.2015, till to date are pending for issuance of cheques. PTEA’’s tax consultant pointed out that all data has been submitted with returns but still for refund it is to be submitted separately which serves no purpose. FBR officials explained that in view of severe financial position, government is considering to give status of negotiable financial instrument to the RPOs. Furthermore, efforts for speedy processing of refunds will be initiated.
Exporters pointed out that in ERS, a capping of upper limit has been applied in the system and any refund exceeding the prescribed limit is automatically disqualified for electronic processing and is deferred and sent to concerned RTO/LTU. This upper limit has been determined keeping in view the rate of sales tax paid by exporters. An upper limit of 3.5pc was assigned to the system prior to Finance Act, 2015. During the previous meetings, it was decided that the same will be enhanced to 4.5pc due to rise in the sales tax rate from 2 pc to 3 pc for textile sector. However, the same has not been increased as yet and refund claims of the exporters are still being rejected due to capping and exporters are not filing their refund claims for the period July-2015 onwards due to fear of rejection by ERS. It was further pointed out that in addition to all 1 pc additional customs duty has been imposed on all imports which will further add certain amount under the head of ”Sales Tax”. FBR officials informed that FBR has decided to increase the capping of upper limit from 3.5 pc to 4 pc. The PETA chairman explained that any limit less than 4.5pc was not feasible for value added textile sector. They requested to review the issue and increase the upper limit as 4.5 per cent.
SOURCE: The Pakistan Today
Soaring wages at home are prompting Chinese apparel makers to shift production to neighboring Vietnam, where labor costs are nearly 60% lower. Though such moves involve a certain amount of risk due to the nations' territorial dispute in the South China Sea, among other factors, observers do not see the trend ending anytime soon. Nameson Holdings, which makes sweaters and other knitwear to order, plans to increase production in Vietnam. Based in Huizhou, Guangdong Province, the company began turning out products in the Southeast Asian country in 2015 at a factory in the suburbs of Ho Chi Minh City. It expects to complete the second phase of construction at the plant in April next year.
Nameson mainly supplies garments to Japan's Fast Retailing, operator of the Uniqlo chain of casual clothing stores. Over half of the Chinese company's revenue comes from sales to the Japanese retailer. Nameson's production shift is partly due to a 2009 economic partnership deal that has in principle eliminated tariffs on Vietnamese textile exports to Japan. Nameson is trying to expand its customer base in Japan.
China's Bosideng International Holdings, a major manufacturer and retailer of down jackets, is also boosting output in Vietnam. It currently produces garments on a trial basis at a Vietnamese textile factory affiliated with Japanese trading company Itochu, with which it has a capital partnership. Bosideng will closely monitor the situation at its Vietnam plant and base its expansion moves on developments there. "Our clients are increasingly looking for a cross-border supply network, and that's partly why [Bosideng] is missing out on potential orders in original equipment manufacturing(OEM)," said Bosideng Chief Financial Officer Mak Yun Kuen. The shift to Vietnam is intended to cut production costs, he said.
China exports about $169 billion worth of clothing annually. It used to be the unrivaled textile king of Asia. But with wages in China having doubled in the last five years and apparel makers there under heavy pressure from clients to cut costs, companies are increasingly moving production of low value-added goods out of the country. Setting up operations on foreign shores carries risks, however. In the spring of 2014, Vietnamese protesters gathered for a huge demonstration against China's oil exploration in the South China Sea. Chinese and Taiwanese companies were targeted by violent protesters, leading to supply chain disruptions.
Meanwhile, U.S. President-elect Donald Trump has announced his intention to pull the U.S. out of the Trans-Pacific Partnership, a free trade accord encompassing 12 countries, including Vietnam and Japan. With the future of the agreement looking increasingly murky, the shift of textile production to Vietnam by Chinese businesses wanting to take advantage of lower tariffs may slow.
SOURCE: The CCF Group
Cotton mills in two Chinese provinces have suspended output as part of measures to curb smog that has blanketed the north of the country in the past few days, triggering official pollution alerts, according to an industry website. Mills have stopped buying raw cotton and closed in Hebei province and parts of Shandong, both major growing regions for the fibre, according to a report by Cncotton.com, a government-backed trade website. The report did not say how many mills were affected, nor give details on the amount of production involved. China is the world's top textile exporter. The report said cotton processing in parts of Hebei, one of the nation's most polluted provinces, may be affected until the end of December.
The shutdowns come as more than more than 40 cities in China's northeast have issued pollution warnings in the past 48 hours. For many cities, that means shutting factories, closing schools, recommending residents stay indoors and curbing traffic and construction work. Pollution alerts have become increasingly common in China's northern industrial heartland, especially during winter when energy demand - much of it met by coal - skyrockets.
Prolonged closures at cotton mills would likely hurt demand for the natural fibre amid concerns about global oversupply. China's most-active cotton futures on the Zhengzhou Commodity Exchange settled down 0.60 percent on Monday at 15,715 yuan ($2,263.27) per tonne, after earlier hitting their lowest in a month at 15,465 yuan.
SOURCE: The Global Textiles
Garment factories in Ashulia have reopened today after several days of staying closed in face of agitation over pay hike. All 59 factories, which were shut down following the labour unrest reopened today with small attendance of workers. The garment workers have been agitating demanding a raise in minimum wage to Tk 15,000 for over a week that compelled the factories to close operation indefinitely. Meanwhile, 541 workers have lost their jobs over the unrest.
Sharmin Group terminated 143 workers today for their alleged involvement in labour unrest. The management of Sharmin Group also filed two cases against 200-250 unnamed workers over the unrest with Ashulia Police Station. Another factory of Setara Group terminated 30 workers on charges of "creating chaos," said Mofazzal Haque, security in-charge of the factory. Officer-in-charge of Ashulia Poilce Station said that a total of 10 cases were filed since the unrest.
The garment owners said losses incurred were Tk 100 crore each day. Dhaka superintendent of police Shah Mizan Shafiur Rahaman said, "The workers have been requested to work peacefully in their respective factories. The situation is very good now with no report of any chaos in the area." The SP said that additional members of law enforcers including Rapid Action Battalion (RAB) and Border Guard Bangladesh (BGB) have been deployed in the area to avert any untoward incident. On the other hand, superintendent of Industrial Police-1 Mustafizur Rahman said, "Police do not have the accurate number of the sacked workers yet but we will get the total number of sacked workers very soon."
Earlier, Bangladesh Garment Manufacturers and Exporters Association (BGMEA) declared closure of the factories on December 20. Meanwhile, BGMEA President Siddiqur Rahman announced the decision of reopening the factories at a press briefing at BGMEA Building on Sunday. He said, "As per directions and assurance of security and safety from Prime Minister Sheikh Hasina and urge from the workers, we have decided to reopen the closed factories in Ashulia from Monday."
He said, the factories will be reopened as per Section 13/1 of the Labour Act that empowers the owners to close down factories amid workers' unrest without providing them any benefit. The BGMEA chief also said, "The factory closure was hurting the workers and owners as well as the country's economy and as the Prime Minister ordered us to reopen the factories, we have decided to reopen the factories."
SOURCE: The India Today
At a recent conference held to review Vinatex’s business results in 2016, Hung said the group should promote research and development activities and apply technology in garment production to offer value-added products, at the same time ensuring that there are no negative effects on the environment. Tran Quang Nghi, chairman of Vinatex, said the group would focus on expanding its market base next year and would keep a close watch on the global raw materials market in order to take advantage of the free trade agreements. In 2017, Vinatex expects a rise of 12 per cent in export revenue, 15 per cent in industrial production and 6 per cent in profits.
The group made pre-tax profit of VND1.43 trillion (US$63.8 million) in 2016, a rise of 9 per cent over the previous year. Its industrial production value totalled VND37.7 trillion, which is 103 per cent over 2015, and its export value touched VND2.477 trillion, a 4 per cent rise. The incomes of Vinatex’s employees averaged VND6.7 million per month, up by 8 per cent. This year, the group also invested in 41 projects, worth a total of VND5.5 trillion.
On December 23, the Ha Noi Stock Exchange approved Vinatex trading on the Unlisted Public Company Market (UPCoM) under the code VGT, making it the first state-owned group to be traded on UPCoM. Vinatex has a charter capital of VND5 trillion, with the state holding 53.49 per cent stake.
SOURCE: The Vietnam Investment Review
A fabric material which does not allow the liquid to penetrate into the interior part and works as a shield to resist the harsh climatic conditions such as rain, UV radiation, and to retain the body temperature can be termed as the waterproof textile. The fabric is ventilated with the help of infinite pores. Waterproof textiles are basically coated synthetic or natural fabrics with rubber, silicone, elastomer, fluoropolymers, and wax. Based on recent development, polyethylene terephthalate (PET) is the material used for making bottles and utilized for producing waterproof textiles.
Waterproof textiles are widely segmented based on raw materials through which they are processed as polyurethane, polymer, and synthetic microfilament. Based on the type of textile used in the manufacturing of the end product, the global market is further segmented as densely woven, membrane, and laminated. The membrane type is highly demanded in the market. Waterproof textiles are divided into various segments such as tents, sportswear, outdoor equipment, and industrial safety wears.
Owing to rising consumer preference towards health and fitness, growing disposable income, adoption of various sports such as snow sports, water sports, and mountaineering are augmenting the demand for sportswear resistive to water. The introduction of latest developments in terms of smart breathable fabrics with water proof fabric is also a development factor augmenting the growth of the market. High demand of water proof textile by defense sector in terms of jackets, vests, and other clothes to ensure the protection of soldiers from the harsh climatic conditions in the battle field is a vital factor responsible for rising the demand of waterproof textiles. However, varying consumer choices related to fashion and trends may hinder the growth of the water proof textiles market.
Geographically, North America is holding its influence over the market due to the huge demand of sports clothing and apparels in its regional territory such as the US, Canada, and others. Further, Europe is expected to grow rapidly. Asia Pacific is also anticipated to grow at a steady pace owing to rising demand for water proof textiles and rapid industrialization.
Key players operating in the global waterproof textiles market include Heartland Textiles Co. Ltd., Columbia Sportswear, Dow Corning, Clariant, General Electric, Huntsman Textiles Co. Ltd., APT Fabrics, Archroma, Lowe Alpine, and WL Gore & Associates, Inc. These players are focusing on developing innovative water proof fabrics to increase their influence over the market.
SOURCE: The QWTJ Live
J. Crew Group Inc. is heading into 2017 on a mission that gets more critical with each passing day: turn around a two-year sales slump or slam head-on into a wall of debt. Some of the company’s $2 billion (Dh7.3 billion) in debt becomes current in 2018, and J. Crew needs to revive its flagging business to stave off rising odds of default. To do that, the retailer is focusing on its preppy heritage, expanding its discount business and fuelling the growth of its small but successful Madewell brand geared toward millennials. For some analysts, it may already be too late. “I don’t think they know how to fix J. Crew,” said Carla Casella, an analyst at JPMorgan Chase & Co. “They were just living on the past strength of their brand.” J. Crew has fallen sharply out of favour since first lady Michelle Obama and her daughters wore the brand at the 2013 inauguration, casting a halo over the company with a wave of publicity that money couldn’t buy. That glow lasted into early 2014, when the retailer was interviewing banks as it considered an initial public offering.
An IPO would have enabled CEO Mickey Drexler and private equity backers TPG Capital and Leonard Green & Partners LP to exit their 2011 leveraged buyout. Over the past two years, the retailer has lost customers who complained of high prices on low-quality and ill-fitting clothes, and its same-store sales have fallen in 10 of the past 11 quarters. To move goods, the retailer has offered deep discounts and expanded its off-price factory and Mercantile chains.
Drexler, the former Gap Inc. CEO, is working with creditors to restructure the company’s debt. One of his proposals, a plan to shift the J. Crew brand name to an entity in the Cayman Islands, has riled lenders. They say the change could prevent them from demanding the intellectual property as collateral or lower the value of their holdings in any restructuring.
J. Crew, which began as a popular catalogue company and expanded into brick-and-mortar stores in the 1990s, has fallen a long way from its peak. The company cultivated its image of an aspirational lifestyle brand by opening a two-level wedding salon on New York’s Madison Avenue in 2010, and almost doubled its store base from 2009 to 2016. Now, much of that image is unravelling. The company said this year it will shutter its 12-year-old bridal business, and it’s entered into an agreement to wholesale the iconic J. Crew brand through Nordstrom — the first time the company’s signature apparel will be sold outside its carefully curated stores.
One bright spot is the 110-store Madewell chain, J. Crew’s modern twist on basics. Drexler bought the Madewell name in 2003 for $125,000, and it was absorbed by J. Crew in 2005. The bet may be paying off. Madewell’s same-store sales — a closely watched measure — rose 4.1 per cent in the third quarter from a year earlier. Sales by that measure fell 9.2 per cent at the J. Crew brand. Still, Madewell, which opened its first store in 2006, represents only about 12 per cent of J. Crew’s annual revenue. It generated $88 million in sales last quarter, compared with $488 million brought in by the flagship brand. “It’s the crown jewel,” said Casella at JPMorgan. “It’s small, so it still has a lot of growth from that perspective. Not everyone knows it, but it’s more trend-right and price-right.”
The partnership with Nordstrom, meanwhile, could let the company close some costly J. Crew locations or convert them into the brand’s growing value-focused chains, said Noel Hebert, a Bloomberg Intelligence analyst. At its main brand, the company is returning to its roots. Last year, Drexler said J. Crew would focus on its classic, basic styles and produce less of the flashy, high-style items it had recently introduced. “They’re trying to return to the core of what the business is,” Hebert said. “The question that I can’t answer — and I don’t know if anyone can — is what’s the appeal of that core J. Crew business, and how big does that get to be?”
SOURCE: The Gulf News
South Korean specialty fibre producer Hyosung has expanded its reach into the functional textile markets through a partnership with Black Yak, which develops products for the outdoor market. Under the terms of the partnership, both the companies will jointly undertake development of new products as well as joint marketing. Hyosung products for functional textiles include Freshgear and Aerowarm both of which are polyester and Creora Fresh which is spandex. According to the fibre manufacturer, Freshgear and Creora Fresh remove effectively the reasons causing smell of sweat, and give comfortable sense of wearing. While, Aerowarm improves warmth retaining, but is also light as it can contain air, and is suitable for outdoor activities in winter as it absorbs sweat and dries quickly. “Through this partnership, we will further widen further our ground as a premium textile maker through strengthening partnership with client companies and endless development of technologies,” Hyosung's head of textile Cho Hyun-joon said.
SOURCE: Fibre2fashion
The Screen Print East Africa 2017, an dedicated exhibition to broaden business horizons giving visitors a rare opportunity to know how the printing industry from across the globe congregates at East Africa, will be held from June 21 to 23, 2017 at Visa Oshwal centre, Nairobi, Kenya, with co-located events Sublimating Ideas expo, Sign expo, and Label show. Devang N Sheth, managing director, Aditya Expositions said, “Screen Print India has always been among the world’s leading and Asia’s finest exhibitions with a sustained track record since 1994. This East Africa foray has been envisaged after considerable research regarding the economic development and business potential in the region. It will be a win-win situation for all those who are part of these four printing industry segments. Continuing the fine traditions of the parent brand, the debut edition Screen Print East Africa 2017 is expected to attract exhibitors and visitors from across the globe. There are going to be focused interactions by people who are genuinely interested in exploring business opportunities and new technologies.”
SOURCE: Fibre2fashion
ISPO Munich 2017, the leading exhibition for the sports industry, will launch a newly designed trend forum along with the new edition of ISPO Textrends, the best platform for performance textiles and an effective link between manufacturers, designers and product managers. Touching the fabrics to get a feel for them will be a key part of ISPO Textrends. In ten categories, a total of 462 new products will be showcased. With an increase of almost 40 per cent compared to last year, 86 companies from all over the world sent their products for evaluation by the independent jury of experts. Based on the idea of “Never stop improving”, the newly designed forum is an essential visit from brand developers and designers to see the latest textile developments in Hall C3. The new trend forum will consist of tables in natural materials which make the touch and feel experience even easier. Stylish decoration elements will underline the trends in performance textiles and colours. Starting with the jury meeting at the end of November 2016, a total of 536 products were judged, a new all-time high in applications. Overall, the jury noted the increased creativity that was featured.
SOURCE: Fibre2fashion
Donald Trump got within striking distance of the White House — or, more precisely, Comey-and-Putin range — thanks to overwhelming support from white working-class voters. These voters trusted his promise to bring back good manufacturing jobs while disbelieving his much more credible promise to take away their healthcare. They have a rude shock coming. But white workers are not alone in their gullibility: Corporate America is still in denial about the prospects for a global trade war, even though protectionism was a central theme of the Trump campaign. In fact, the only two causes about which Trump seems truly passionate are supposedly unfair trade deals and admiration for authoritarian regimes. It’s naive to assume that he will let his signature policy issue slide.
Let’s talk means, motive and consequences.
Major leeway
You might imagine that a drastic change in US trade policy would require congressional approval, and that Republicans — who claim to believe in free markets — would put on the brakes. But given GOP spinelessness, that is unlikely. In any case, the relevant legislation gives the occupant of the White House remarkable leeway should he choose to go protectionist. He can restrict imports if such imports “threaten to impair the national security”; he can impose tariffs “to deal with large and serious United States balance-of-payments deficits”; he can modify tariff rates when foreign governments engage in “unjustifiable” policies. Who determines whether such conditions apply? The executive himself.
Now, these provisions were not intended to empower a president to reverse decades of US trade policy, or engage in personal vendettas. You can guess, however, how much such niceties are likely to bother the incoming administration, which is already talking about using its powers. Which brings us to the question of motive. Why would a Trump administration impose restrictions on imports? One answer is those working-class voters, whose supposed champion is set to pursue a radically anti-worker domestic agenda. There is an obvious incentive for Trump to make a big show of doing something to fulfil campaign promises. And if this creates international conflict, that is actually a plus when it comes to diverting attention from collapsing healthcare and so on. Beyond this, it is clear that the incoming commander-in-chief really believes that international trade is a game in which nice guys finish last, and that America has been taken advantage of. Furthermore, he is picking advisers who will confirm him in these beliefs.
When the tariffs come
Oh, and do not expect attempts by experts to point out the holes in this view — to point out, in particular, that the image of a predatory China, running huge surpluses by keeping its currency undervalued, is years out of date — to make any impression. Members of the Trump team believe that all criticism of their economic ideas reflects a conspiracy among think tanks that are out to undermine them. Because of course they do.
So what will happen when the Trump tariffs come? There will be retaliation, big time. When it comes to trade, America is not that much of a superpower — China is also a huge player, and the European Union is bigger still. They will respond in kind, targeting vulnerable US sectors like aircraft and agriculture. And retaliation is not the whole story; there is also emulation. Once America decides that the rules do not apply, world trade will become a free-for-all.
Will this cause a global recession? Probably not. No, protectionism didn’t cause the Great Depression. What the coming trade war will do, however, is cause a lot of disruption. Today’s world economy is built around “value chains” that spread across borders: your car or your smartphone contain components manufactured in many countries, then assembled or modified in many more. A trade war would force a drastic shortening of those chains, and quite a few US manufacturing operations would end up being big losers, just as happened when global trade surged in the past.
An old joke tells of a motorist who runs over a pedestrian, then tries to fix the damage by backing up — and runs over the victim a second time. Well, the effects of the Trumpist trade war on US workers will be a lot like that.
Given these prospects, you might think that someone will persuade the incoming administration to rethink its commercial belligerence. That is, you might think that if you have paid no attention to the record and character of the protectionist in chief. Someone who will not take briefings on national security because he is “like, a smart person” and does not need them is not likely to sit still for lessons on international economics.
No, the best bet is that the trade war is coming. Buckle your seat belts.NYT
SOURCE: The Hindu Business Line
China's yuan was flat against the dollar on Monday in thin trading, as many investors have wound down for year-end holidays. The People's Bank of China set the midpoint rate at 6.9459 per dollar prior to the market opening, firmer than the previous fix of 6.9463. The spot market opened at 6.9486 per dollar and was changing hands at 6.9488 at midday, unchanged from the previous late session close and 0.04 per cent softer than the midpoint. "Trading was light, and market sentiment was weak as many traders are on holiday for the year-end, so the spot yuan swung within a very narrow range," said a dealer at a foreign bank in Shanghai. He said he expects the spot rate to hover just below 6.95 per dollar level until year-end.
Traders noted they had not seen any dollar liquidity offered by state-owned banks on Monday morning. State-owned banks have regularly sold dollars over the past two months in what traders believe is part of efforts to prevent the yuan from falling too rapidly after the currency tumbled to 8-1/2-year lows last month. However, market watchers expect the yuan to face renewed depreciation pressure when 2017 begins, as individuals will get a fresh $50,000 foreign-exchange conversion quota for the new year. Some traders said dollar purchases by households at the start of 2017 will "inevitably" put pressure on the Chinese currency. The Thomson Reuters/HKEX Global CNH index, which tracks the offshore yuan against a basket of currencies on a daily basis, stood at 95.98, weaker than the previous day's 96.1. The global dollar index fell to 102.9 from the previous close of 103.01. The offshore yuan was trading 0.03 per cent weaker than the onshore spot at 6.951 per dollar. Offshore one-year non-deliverable forwards contracts (NDFs), considered the best available proxy for forward-looking market expectations of the yuan's value, traded at 7.255, or 4.26 per cent weaker than the midpoint. One-year NDFs are settled against the midpoint, not the spot rate.
SOURCE: The Economic Times
The Brazilian government has invited an academic to join the finance ministry and lead a microeconomic reform agenda that aims to bolster the country's productivity, two government officials said on Monday. Finance Minister Henrique Meirelles has asked Joao Manoel Pinho de Mello, a professor with Sao Paulo-based business school Insper, to be part of his team, said the officials who asked for anonymity because the information has been made public yet. The finance ministry press office and de Mello did not respond to requests seeking comments.
At the request of President Michel Temer, Meirelles has launched a series of microeconomic measures to help reduce Brazilian's debt burden and ease financial costs to aid an economy entering its third year of recession. Some of the measures include allowing workers to make early withdrawals from their severance funds and writing off some tax debts owed by corporations. De Mello is currently a visiting scholar at Harvard University and is expected to take position upon his return to Brazil in February, the officials said.
SOURCE: The Reuters
