The Budget has allocated Rs 6,227 crore for the textile ministry for the next fiscal, representing a 36% hike from the budgetted level of Rs 4,595 crore a year earlier, as the government steps up focus on labour-intensive sectors to create more jobs The annual rise in budgetary allocation for the textile ministry has been marginal in recent years, and in 2013-14, it even witnessed a cut in outlay from a year before. The Budget has allocated Rs 6,227 crore for the textile ministry for the next fiscal, representing a 36% hike from the budgetted level of Rs 4,595 crore a year earlier, as the government steps up focus on labour-intensive sectors to create more jobs. However, the outlay for the next fiscal is a tad lower than the revised estimate of R6,286 crore for 2016-17, as allocation had to be raised substantially mid-way this fiscal under the Amended Technology Upgration Fund Scheme (ATUFS) to settle a major chunk of pending claims pertaining to earlier years and also to provide for a new duty drawback scheme that was announced as part of a special package for the garments industry in June last year (after the 2016-17 Budget was presented). These two major schemes — TUFS and the remission of state levies (RoSL) to the garments industry under the duty drawback scheme — have been allocated R2,013 crore and R1,555 crore, respectively, accounting for over a half of the total outlay for 2017-18. Analysts say although the budgetary allocation for 2017-18 is slightly lower than the revised estimate for the current fiscal, there is a chance that the ministry will get more funds under these schemes if required. FE had reported on January 30 that the ministry could be allocated R6,200-6,500 crore and the government could provide more than R2,000 crore for the ATUFS and over R1,500 crore for the duty drawback scheme in the Budget for 2017-18. While the allocation for the ATUFS was raised to R2,610 crore in the revised estimate for 2016-17 from the budgetted level of R1,480 crore, R400 crore was provided for the RoSL in the current fiscal. However, most of the other schemes barely saw any change in allocation for 2017-18 from the budgetted level last year. The annual rise in budgetary allocation for the ministry has been marginal in recent years, and in 2013-14, it even witnessed a cut in outlay from a year before. The ministry was even pulled up by a parliamentary standing committee in 2015 for slow spending in previous years. However, the panel observed that the ministry, of late, had improved its pace of expenditure. The textile and the garment sector assumes importance as it employs close to 32 million people, having become the largest employer after agriculture. Rahul Mehta, president of the Clothing Manufacturers’ Association of India, said though there are no new schemes or programmes specifically for the textiles or garment industry, the Budget has several provisions that will help the sector. For instance, the reduction of the corporate tax to 25% for small companies with turnover of up to R50 crore will cover a large number of garment units.
Source: The Financial Express
Finance minister Arun Jaitley in his budget has reiterated the government’s commitment to job creation and identified several sectors - textiles, leather, tourism, transportation and affordable housing - that he said will open up employment opportunity. In his speech on Wednesday, Jaitley described “energising youth through education, skills and jobs” as one of the government’s 10 important focus areas. The Centre, which has promised 100 million jobs by 2022, has decided to replicate the special scheme it had launched for the textile sector in the leather and footwear industries as well. “For transportation sector as a whole, including rail, roads, shipping, I have provided Rs 2,41,387 crore in 2017-18. This magnitude of investment will spur a huge amount of economic activity across the country and create more job opportunities,” the finance minister said on Wednesday. Tourism, said to be a big employment generator with a multiplier impact on the economy, is another sector which the Centre lays special emphasis for generating employment. Jaitley announced that five Special Tourism Zones, anchored on SPVs, will be set up in partnership with the states. Incredible India 2.0 campaign will also be launched across the world in order to encourage the sector. Experts said the decision to accord industry status to the affordable housing sector also seems to have aimed at providing mammoth job and entrepreneurship opportunities. With the mission of providing 20 million houses across India, the Centre has announced skilled development plans for youths for making them employable in this sector. “The budget lays special focus on the youth in the context of skill development, and it recognises the issue of job creation as well opportunities for boosting entrepreneurial skills. For example, the budget proposes training for masons for providing a workforce for housing sector with a major focus on the affordable housing,” CII director general Chandrajit Banerjee said. “This sector will also create micro-entrepreneurs. The industry, which has come out of the effects of demonetisation, is there to support the government in this sector,” he added. The private sector, too, is upbeat about the budgetary announcements. “The budget gives a great thrust to the Skill India Initiative. The government’s enhanced focus on youth learning and skill development (via schemes like Pradhan Mantri Kaushal Vikas Yojana), upliftment of women (through schemes like Mahila Shakti Kendra and Anganwadi initiatives) are notable moves,” Arjun Pratap, founder and CEO of EdGE Networks - an HR Tech startup - said. Pratap added that women empowerment has been given special attention in this budget which will resonate well for India’s economic growth. Jaitley said in his speech that the total funds allocated for the welfare of women and children across all the ministries will rise to Rs 1,846 billion from Rs 1,565 billion the previous year. “If executed well, these initiatives could bring in significant transformation across rural India. We hope that the investment in youth and education through the Skill India initiative will lead to a more employable population – and bridge the demand and supply gap,” he added. Employment generation has been the key electoral promise of the National Democratic Alliance government, which is midway through its five-year term. Tens of thousands of people, mostly in the informal sector, lost their jobs after the government’s demonetisation drive and affected the economy, which was already hurting from slowing demand and investments. Jaitley’s budget was being seen as an opportunity for the Modi government to ease the pain of people hit hard by the shock recall 500-and 1000-rupee banknotes in his fight against black money.
Source: The Hindustan times
Finance Minister Arun Jaitley and other government ministers and officials outside Parliament on Wednesday before the presentation of the Budget. The Budget sends out key messages on continuity in the policy of fiscal prudence Budget 2017 displays a steadfast resolve to stay on course despite turbulent external factors. The emerging trends of increased protectionism and tax competitiveness from developed economies, hardening crude prices and a dynamic global interest rate environment are just some of the external factors that the finance minister had to contend with, resisting any temptations to mend course. It is heartening that incremental steps in successive Budgets have followed a consistent theme as originally envisaged — widening the tax base, addressing the menace of the parallel economy, bringing transparency to political funding, boosting start-ups, enhancing ease of doing business, rationalising the tax administration, strengthening anti-abuse provisions, spending on the growth areas of infrastructure, creating jobs and achieving inclusive growth, all while staying within the broad parameters of fiscal prudence. It is noticeable that the Budget estimates on the tax revenue front project a very conservative scenario. After nearly 17 per cent growth in gross tax revenues over the last two years the FY18 Budget estimates it at only 12.2 per cent. This leaves room for improvement in the aftermath of demonetisation, which can yield dividends directly from the Reserve Bank of India’s (RBI) balance sheet readjustments and indirectly from bank deposits, with the potential of formalisation of a part of the parallel economy. Further, the overall 6.6 per cent increase in overall expenditure is being financed by a nominal growth of 11 per cent and tax buoyancy of 1.1 per cent compared to 1.9 per cent and 1.4 per cent in FY16 and FY17 respectively. The limited giveaway on the tax front, that is, marginal relief to the lowincome group between ~2.5 lakh and ~5 lakh and five per cent tax reduction to MSMEs is also well-targeted, reaching out to the segment that has been the most impacted due to demonetisation. The government has showcased disciplined execution of its expenditure plan in FY17 contributing considerably to gross domestic product (GDP) growth. It is expected that such discipline will continue. Despite the fact that total spending and revenue expenditure as percentages of GDP are estimated to be at a record low, the mix of revenue and capex has been tweaked as also aligned with the government’s resolve to check inflation. The RBI may then be encouraged to reduce rates — yielding cheaper credit access to the private sector, an imperative for sustainable growth. The Budget remains bold in reemphasising its resolve to address the menace of black money, with landmark proposals for transparency in electoral funding by restricting cash funding and institutionalising anonymous funding through the introduction of bonds. It is heartening that many proposals, which were part of the Justice Easwar Committee on Income Tax Simplification, have been addressed — reassuring taxpayers of a consultative approach that has become the hallmark of the tax legislative process recently. The anti-abuse proposal on the tax front remain bold and direct. The proposal to curb the long-term capital gains (LTCG) tax exemption post introduction of the securities transaction tax (STT) in 2004 only to cases where both the legs of acquisition and disposal have suffered such STT is well intentioned. Supplemental notification, exempting genuine transactions from the clutches of any unintended consequences of this proposal, that is, acquisition of shares through initial public offering, follow-on public offering, bonus or right issue, etc will be eagerly awaited to ensure it is broad-based enough to carve out transactions of succession, contributions to trusts and many more. Further, proposals such as the retrospective clarifications provided on applicability of the indirect transfer taxation provisions to foreign portfolio investors (FPI), further foreign direct investment (FDI) liberalisation and abolishing of the Foreign Investment Promotion Board are significant messages to attract foreign capital. Much-needed clarity on minimum alternate tax (MAT) applicability post Ind AS adoption has been provided, building largely on the recommendation of the committee constituted in this regard. The proposals are premised on the basis that existing adjustments provided in MAT computation shall be made to net profits before other comprehensive income. The resultant will be further adjusted as now proposed for items in other comprehensive income as also the transition adjustments. What may need some clarification is that with regard to fair-value adjustments that are mandated through the profit and loss account in Ind AS. Such adjustments, both losses and profits should be treated similarly if the same are considered eligible adjustments to distributable profits. This may have been an inadvertent miss considering the matter rests between the Central Board of Direct Taxes and the Ministry of Corporate Affairs. Continued commitment to spend on infrastructure development was evident in the Budget, with ~3.96 lakh crore spending in 2017-18. The thrust on affordable housing and stepped-up investments in road, highways and railway infrastructure are expected to spur economic activity and job creation. Further, measures providing income security to farmers, improving skill development and job creation at the rural level, in addition to affordable housing, are crucial for inclusive growth. Legislative reforms are also being contemplated for consolidation of labour laws to foster a conducive labour environment. The FM has performed commendably to table proposals, which address the needs of India’s economy in today’s global and domestic environment. The Budget sends out key messages on continuity in the policy of fiscal prudence and resisting counter-cyclical measures to artificially boost the economy, consistency of purpose, drawing unshakably from the economic agenda set out in the manifesto, boldness of reforms resisting socio-political hostility, pushing India towards a more digital and cashless economy and certainty in tax through a collaborative approach. The FM’s implicit message cannot be missed by any serious foreign investor seeking to place bets on the most promising of developing economies.
Source: Business Standard
The decision of the Union Government to set up 100 international skill centres, continue with the existing tax structure for textile units, and support cluster approach for contract farming are all expected to benefit the textile industry. According to Southern India Mills’ Association chairman M. Senthil Kumar, the main demand of the association to continue the existing tax structure till the GST is implemented has been considered. Additional allocation to the banks for NPA accounts, proposed labour reforms, and cluster approach for contract farming will benefit the cotton-based textile industry. The Cotton Textiles and Export Promotion Council has said in a press release that the five per cent reduction in Corporate Income Tax for medium and small enterprises with Rs. 50 crore turnover will benefit the textile sector. However, the Government has not addressed the needs of the export sector though the industry needs support to compete in the international market. It should also restore some of the incentives related to interest subvention for merchant exporters and cotton yarn. The Clothing Manufacturers’ Association of India said the garment industry will benefit from the international skill centres that will be set up. “Though there are no new schemes or programmes specifically for the textiles or garment industry, the budget has several provisions that will help the sector grow faster,” said Rahul Mehta, president of the association. M.B. Raghunath, president (sales and marketing) of Mafatlal Industries, has said that continuation of the current textile policy is good for the industry and the indirect taxes are expected to be addressed when the GST is implemented. The industry was hopeful of the Government bringing textiles under five per cent tax slab in GST as it is a mass consumption product. According to A. Sakthivel, president of Federation of Indian Export Organisations, the focus on Government investment on infrastructure is a move in the right direction. The introduction of trade infrastructure export scheme with a budgetary allocation of Rs. 3.96 lakh crore will benefit the exporters.
Source: The Hindu
The Budget focuses on the hinterland more and is only “mildly” supportive of growth that may touch 7.4 per cent in 2017-18 says a Crisil analysis. “We expect a gradual pick up in GDP growth to 7.4 per cent from 7 per cent in 2017-18 as investment cycle is expected to remain weak and consumption demand will likely pick up only moderately despite reduction in tax rates and softer interest rates ” it said in a post-Budget note today. Noting that the Budget is only “mildly growth supportive” it said the key focus is to revive the rural sector by bolstering agriculture and infrastructure. Jaitley has performed a “balancing act” by refraining from stretching fiscal coffers to give a steroidal push to the economy it said commending the “prudence over populism” in restricting the fiscal gap to 3.2 per cent. It said the fiscal math is “broadly credible” even though the targets on divestment and GST implementation may “cause hiccups” and any shortfall in stake sales alone will pose a threat of 0.10 per cent slip-up in this. Commenting on the drawbacks it said the one big miss in the Budget is the lack of a roadmap to resolve banking sector ’s asset quality and recapitalisation woes. #
Source: Tecoya Trend
The Budget focuses on enabling a smarter way of solving each issue and raising productivity, versus throwing money at everything. There are so many examples – increasing crop insurance to 50%, expanding digital agri- markets (e-NAM), linking physical targets and using space tech (GIS) to MGNREGA spend, online courses for skill development, JVs with state governments for railway capex, Aadhaar-enabled cards for healthcare to senior citizens, and fine-tuning the bankruptcy code to make collections easier, etc. A push on permeating digitalisation into every sector of the economy is obvious, from the above, and in not allowing over Rs 3 lakhs in cash transactions. But the smartest move is, of course, moving the budget date earlier which gives more time for the funds to be immediately available by April 1. It has also taken care of the very near term, as without that the economic recovery would be delayed. It has thus provided the most succour to agri (increases in outlays and credit) and SMEs (tax incentives) who were most affected by demonetisation. Given the temporary economic hit by demonetisation, it has been conservative with revenue and expenditure projections (on divestment targets, atleast so far in this regime, both buyer and sellers of govt issuances have been happy). And given the opinion polls for state elections about demonetisation helping BJP, there’s no earth-shaking need to be populist just yet – conserving fire power for next (pre-election) year when the tax base is broader and the economy stronger, makes more political and economic sense. Not getting tempted into blowing out capital expenditure, which instead of spurring private capex in such an environment is more likely to increase interest rates, fiscal discipline is admirable. Instead, spurring affordable housing through various incentives, a little of “Robin hood” in income taxes, maybe mining the demonetisation-period data for better tax compliance, and letting the natural wave of economic recovery to take place in the light of falling borrowing costs, promises a more mature way of dealing with the economy. Capex increase was mentioned to be at a hefty 25%, but it’s spread out in so many sectors that only the Railways and Highways show an increase of ~10%. One disappointment has been in not providing enough for bank recapitalisation, although there is a promise that more can be provided. And now let’s wait for the Real Budget session for corporates, 18 February onwards, when the GST council meets to deliberate on the rate structure for goods and services.
Source: Financial Express
India is expected to clock a GDP growth of 7.1 per cent in 2017-18 as the country gets sufficiently remonetised and the schemes in the Budget play a supportive role, says an HSBC report. The uptick in the growth numbers would be largely driven by the remonetisation process which is expected by April end as this in turn would boost the consumption levels in the country. "We expect GDP to grow at 7.1 per cent year-on-year in 2017-18, up from 6.3 per cent in 2016-17, as the country gets sufficiently remonetised (by April-end), and consumption moves back to pre-demonetisation levels," HSBC India chief economist Pranjul Bhandari said. Growth numbers will be largely consumption driven as investment is expected to be a drag. "We believe that investment, which tends to be sensitive to policy uncertainty, will continue to remain weak, keeping growth at an arm's length from the cherished 7.5-8 per cent levels," Bhandari said. On the Reserve Bank's monetary policy stance, the report said the room for a rate cut is "dwindling". "With oil on the climb, pressure from higher government wages and Fed rates expected to rise, the space for rate cuts is quickly dwindling. We expect one final 25 bps rate cut in the cycle," Bhandari said. On December 7, the central bank kept interest rate unchanged despite calls for lowering it and also lowered the economic growth projection by half a percentage point to 7.1 per cent in the first policy review post demonetisation. It will hold its next monetary policy meet on February 8.
Source: Business Standard
Manufacturing sector activity rebounded in January and registered positive growth after contracting in December due to demonetisation, according to a private monthly survey.The Nikkei India Manufacturing Purchasing Managers’ Index (PMI) rose to 50.4 in January from 49.6 in December. “The main factors contributing to the above-50 PMI reading were growth of both new orders and output,” said Nikkei , adding that the rates of expansion were only slight, but reversed the contractions noted in December.
Source: Business Line
Union Minister Smriti Irani thanked for the Rs 6,226.50 crore provision in the Budget for textiles. She further added that the Rs 1,555-crore outlay in the Budget for remission of state levies will “greatly benefit" exports in the garments and made-ups segment of textiles. Irani said that for the first time, the Budget has provided Rs 200 crore under PM Paridhan Rojgar Yojna to boost employment in the garment segment. The decrease of 2.5 percent in Customs duty on nylon mono filament yarn will have a positive impact on the fishing net export market. Besides, the reduction in corporate tax for MSME units with turnover of up to Rs 50 crore will benefit large number of textiles units. It will also provide a major boost to exports and employment, especially for women.
Source: Yarns and fibres
Union Textile Minister Smriti Irani last week announced infusion of Rs 820 crore in sericulture in the North East region to boost employment opportunities to nearly four lakh families of which 70 per cent are women. “The Government of India is in a position to support sericulture in the region by infusion of Rs 820 crore ” Irani said at the inauguration of first Investors Summit exclusively for North Eastern Region (NER) here. “Our estimate is that close to 3 95 000 families of which 70 per cent are women will benefit from the opportunities ” she said. She said that her Ministry has sanctioned Rs 1 040 crore for the region for promotion schemes for handloom handicrafts sericulture apparel and garmenting. Irani also announced the employment opportunities for handicrafts as master craftsperson in NIFTs. “Within next academic session I will ensure that the master craftsperson’s of the NE region in handloom sector help us teach the children studying at NIFTs across the country and will be paying them respects that they truly deserves ” the minister said. She complimented Chief Minister Mukul Sangma who had earlier said that these craftsmen are highly skilled people. Urging investors to seriously consider investing in the region in handloom handicrafts and sericulture Irani said the Centre has invested in infrastructural projects worth Rs 52 000 crore to help investment opportunities as part of the Act East policy. Highlighting the government’s effort to help the industry and those who are dependent of it she said a mobile app and a helpline number were launched recently. “The mobile app was launched in December ensuring that weavers can see the quota and understand their rights and track movement of yarns allotted ” she said. The helpline number launched on January 4 works from 10 am 6 pm to help handloom weavers for services and queries. She said over 2 500 queries made by weavers across the country were solved till date. Later about 10 MoUs were signed between different central and state agencies with the investors and promoters and an equal number is on the pipeline. (PTI)
Source: Tecoya Trend
The rupee’s good run continued into the 8th straight session on Friday as it firmed up by another 4 paise in early trade to 67.33 against the dollar after the U.S. currency saw higher selling by exporters and banks amid foreign fund inflows. Forex dealers said the weakness in the greenback against other currencies overseas and a higher opening in the domestic equity market also supported the rupee. Yesterday, the rupee had surged by 10 paise to close at a nearly two-month high of 67.37 on sustained dollar unwinding from exporters and banks amid weak overseas trend.
Source: The Hindu
Engagement of Designer in Handloom clusters takes Hand-woven fabrics to new heights As a result of an initiative launched by the Ministry of Textiles on the second National Handloom Day (7th August 2016), the traditional hand-woven products of West Bengal Handloom clusters have been transformed into high-profile fashionable fabrics. Due to the involvement of a reputed fashion designer (identified by MoU partner IMG Reliance) in training and product development, Beyond Boundaries", a garment range produced from the handloom products of West Bengal Handloom Clusters in Coochbehar and Udaynarayanpur, is being showcased in the Lakme Fashion Week, being held in Mumbai from February 1-5, 2017. The engagement of the fashion designer was done under a pioneering initiative taken by the Ministry of Textiles, to engage reputed designers in handloom clusters for product development/diversification, improved marketability and better returns. MoUs were signed with IMG Reliance and other similar organizations on the 2nd National Handloom Day i.e. 7th August 2016, in Varanasi. Ministry of Textiles Bengal is known for its Jamdanis and Balucharis but a larger number of weavers presently produce in plain weaves and basic Tangail" or plain weave sarees with has sanctioned a large number of projects for comprehensive development of handloom-concentrated blocks across the country. 273 such projects have been sanctioned with 2,30,133 weavers as beneficiaries. These include Coochbehar and Udaynarayanpur Handloom Clusters in West Bengal, which respectively cover 505 and 640 handloom weavers. Financial assistance has been provided for various interventions, including design development. In order to develop new designs/products in the clusters, an MoU was signed with a group of designers in partnership with IMG Reliance. Among them, Shri Sayantan Sarkar, Fashion Designer has come out with a range of garments, which is being showcased in the Lakme Fashion Week. It is expected that the products developed will go a long way in supporting handlooms, with the weavers getting higher wages. Mr. Sayantan Sarkar worked in association with Weavers Service Centre, Kolkata in Coochbehar Handloom Cluster in Coochbehar district and in Udaynarayanpur Handloom Cluster in Howrah district. jacquard borders or even the local towels gamchas" and the Lungis" which constitute a large segment in Bengal. This initiative has introduced Linen yarn to weave the gamchas", colour palette was changed to pastels instead of the stark contrasting combinations and the check formation was changed to an uneven gradation according to the forecast which all of a sudden made the same weave look like an upmarket fabric with extreme drapability and also difficult to replicate in powerlooms.
Source: Business Standard
Commerce minister of Bangladesh Tofail Ahmed has urged India to adopt measures to remove trade barriers in order to increase export-import between the two countries. He also stressed on the need for lifting anti-dumping duty on jute products as the imposition of the duty could have adverse effects on the import and export of these items. Trade barriers affect exports from Bangladesh to India, said Ahmed during a meeting with Nirmala Sitaraman, Indian trade and industries minister, in Andhra Pradesh after the inaugural function of a two-day partnership summit organised by ministry for trade and industries and the Indian Chamber of Commerce. The minister from Bangladesh suggested that official talks should be held between both countries to remove trade barriers, according to Bangladeshi media reports. Bangladesh’s GDP growth is 7.11 per cent and the country is progressing socially as well as economically, said Ahmed. It is the second largest exporter in the region after India, with total exports amounting $34 billion, he added.
Source: Fibre2Fashion
Tata International, the global trading arm of the Tata group and India’s leading exporter of leather products, showcased the 2017 leather garments collection featuring ‘Candy Crush’ and ‘Indo-western Fusion’ themed leather outfits. The new collection was showcased at the Leather Fashion Show 2017 that was recently held in Chennai, India. The ‘Candy Crush’ collection used vivid colours and unusual forms to captivate the audience and transport them into a tour to the fantasy candy world. The ‘Indo-western Fusion’ collection added an Indian touch to western silhouettes, portraying bold Indian women to showcase the modern rebranding of feminism. “We are very pleased to showcase the 2017 leather garments and footwear collection by Tata International at the 32nd India International Leather Fair Fashion Show. Combining our signature techniques with quality materials, good value and a diverse product range, as always, each of our collections is a reflection of our core value,” said N Mohan, global head, footwear business and leather products, Tata International Limited. Footwear collections from Aerosoles and Bachi Shoes were also displayed at the show. Young kids showcased the Bachi Shoes Spring Summer 2017 collection of sandals made of fine and soft leather with breathable lining and footbed designed for more comfort to the feet. The fashion show also saw a line-up of the latest footwear from Aerosoles’ Spring Summer 2017 collection, including a variety of new designs in ballerinas, casual shoes, boots, sandals and pumps.
Source: Fibre2fashion
Finance Minister Arun Jaitley will meet captains of industry on Friday as part of the customary post-Budget meeting. The meeting will see Jaitley and senior Finance Ministry officials interacting with representatives of Confederation of Indian Industry, Federation of Indian Chambers of Commerce & Industry and Assocham, official sources said. The meeting comes two days after Jaitley presented his fourth Budget. Although the Budget pushed the right reform buttons, it is being seen as restrained both in tone and substance, especially given the imperative to deal with the effects of demonetisation. For industry, especially small and medium-sized businesses, there was some tax relief. The corporate tax rate for companies with annual turnover of less than Rs.50 crore was lowered to 25 per cent.
Source: Business Line
During the RECP talks, India would press for greater market access in the services sector, particularly easy movement of professionals. RCEP is a mega trade deal that aims to cover goods, services, investments, economic and technical co-operation, competition and intellectual property rights. Photo: Bloomberg RCEP is a mega trade deal that aims to cover goods, services, investments, economic and technical co-operation, competition and intellectual property rights. Single-tier duty structure and roadmap to liberalize services sector will be the key areas over which the Regional Comprehensive Economic Partnership (RCEP) members would deliberate during the negotiations beginning 27 February in Japan. Under the single-tier system, the RCEP member countries will discuss finalising the maximum number of goods on which duties will either be eliminated or reduced drastically. This will be the 17th round of negotiations in Kobe, Japan where chief negotiators will meet and discuss the progress of the mega trade agreement, an official said. RCEP is a mega trade deal that aims to cover goods, services, investments, economic and technical co-operation, competition and intellectual property rights. As the domestic industry has apprehensions over a deluge in imports from countries such as China after the duty cut under the agreement, India wants certain deviations for such countries. Under deviations, India may propose a longer duration for either reduction or elimination of import duties for such countries. During the meetings, India would press for greater market access in the services sector, particularly easy movement of professionals, the official added. The talks for the pact started in Phnom Penh in November 2012. The 16 countries account for over a quarter of the world’s economy, estimated to be more than $75 trillion. The 16-member bloc RCEP comprises 10 Asean members (Brunei, Cambodia, Indonesia, Malaysia, Myanmar, Singapore, Thailand, the Philippines, Laos and Vietnam) and their six free-trade agreement (FTA) partners—India, China, Japan, South Korea, Australia and New Zealand. India already has implemented a free trade agreement with Asean, Japan and South Korea. On the other hand, the country is negotiating similar pacts with Australia and New Zealand.
Source: Business Line
The international crude oil price of Indian Basket as computed/published today by Petroleum Planning and Analysis Cell (PPAC) under the Ministry of Petroleum and Natural Gas was US$ 55.49 per barrel (bbl) on 02.02.2017. This was higher than the price of US$ 54.26 per bbl on previous publishing day of 01.02.2017. In rupee terms, the price of Indian Basket increased to Rs. 3742.44 per bbl on 02.02.2017 as compared to Rs. 3670.13 per bbl on 01.02.2017. Rupee closed stronger at Rs. 67.45 per US$ on 02.02.2017 as compared to Rs. 67.65 per US$ on 01.02.2017. The table below gives details in this regard:
|
Particulars |
Unit |
Price on February 02, 2017 (Previous trading day i.e. 01.02.2017) |
Pricing Fortnight for 01.02.2017 (Jan 12, 2017 to Jan 27, 2017) |
|
Crude Oil (Indian Basket) |
($/bbl) |
55.49 (54.26) |
54.03 |
|
(Rs/bbl |
3742.44 (3670.13) |
3680.52 |
|
|
Exchange Rate |
(Rs/$) |
67.45 (67.65) |
68.12 |
Source: PIB
It is 10 years since China committed itself to an early and decisive shift from an investment-, exportand manufacturing-led growth strategy to one driven by consumption and services. But this rebalancing has proven to be elusive. A high rate of gross domestic product (GDP) growth based on investment continues to be pursued, financed by ever larger injections of credit. The target for annual GDP growth set by the Chinese leadership for the current Five-Year Plan is within the range of 6.5-7 per cent, which can only be achieved through even greater credit expansion. Currently, the debt-toGDP ratio is estimated at 280 per cent. The debt-servicing burden, which is rising at double the rate of repayments, can only worsen. Rebalancing the economy can only take place through reducing the massive debt overhang and lowering the GDP growth rate. This is irrespective of economic reforms directed at improving productivity and promoting innovation, which would show results incrementally only over the longer term. Chinese policymakers have been reluctant to acknowledge the need for urgent and painful adjustments, such as reining in credit expansion, allowing inefficient firms to go bankrupt and compelling banks to acknowledge bad debts both on and off their balance sheets and, above all, accept significantly slower GDP growth, probably in the range of 3-4 per cent. Instead, attention has been deflected towards an animated debate taking place between “growth economists” and “supply-side economists.” The “growth economists” contend that Chinese debt, though large and expanding, should not be a constraint on greater investment since a growing economy will be better placed to service the debt. They claim that there is still enough headroom for growth, particularly in China’s vast western regions. The ambitious One Belt One Road (OBOR) initiative, through which China intends to invest massively in infrastructure development across Asia, Africa and Europe, would also take care of spare manufacturing capacity. These growth advocates also support market-based allocation of resources, reduced role of state-owned enterprises (SOEs) and minimal government intervention in investment decisions. The supply siders criticise debt-fuelled growth. A senior advisor to President Xi Jinping, in an article in the People’s Daily of May 16, said, “It is unrealistic and unnecessary to add leverage to pump up the economy.” It was at the Economic Work Conference in December 2015 that supply-side reforms were introduced as a new strategy to achieve the rebalance of the economy. In spelling out what these reforms entailed, the official Xinhua News Agency explained: “The Chinese economy is no longer galloping ahead on the back of investment, exports and consumption. Adjusting banking regulations and interest rates have not been very successful in boosting investment or consumption. With growth falling below seven per cent China’s economy is in dire need of a makeover. Instead of working on the demandside attention has turned to stimulating business through tax cuts, entrepreneurship and innovation while phasing out excess capacity resulting from previous stimulus. Such measures are intended to increase the supply of goods and services, consequently lowering prices and boosting consumption.” A pivotal role is assigned to SOEs “as the core force of national economic development.” Alongside, we see the assertion of party authority over corporate governance, a reversal of the trend towards relatively autonomous and professional management of SOEs with state ownership of assets being separated from management. The Chinese version of supply-side reforms is very different from the set of policies, under the same label, pursued by US President Ronald Reagan in the early 1980s. It assigns a central role to the state and SOEs, rather than the retreat of the state and pervasive elevation of the market principle advocated by the American supply side theorists. Surprisingly, some questions are being raised on Mr Xi’s flagship OBOR initiative. An editorial in the Chinese Caixin news agency stated, “Since officials have recently placed their hopes of avoiding painful reforms on the ‘belt and road’ initiatives, arguing that they will export their way out of excess. But new markets opened by these programmes will not be big enough to absorb all of China’s excess capacity. We have already witnessed backlashes in some developing countries against China’s steel exports. Such resistance will become stronger.” The debate provides insights into the likely political and economic trends in the world’s second largest economy even though the contrasting approaches leave the challenge of rising economic imbalances unaddressed. What do these trends imply? One, while it is acknowledged that debt fuelled expansion cannot continue, the leadership remains committed to an unsustainable 6.5-7 per cent rate of GDP growth., which contradicts the intent to retire debt. The risk of a financial crisis not only remains but continues to intensify. Two, there will be more state intervention in the economy and the role of SOEs will likely expand as prime movers of economic change and innovation. We have already witnessed a return to active state management of the currency exchange rate and reimposition of controls on capital movements. The internationalisation of the yuan may remain stalled in the foreseable future. Three, with the new Donald Trump administration in Washington threatening protectionist measures on Chinese exports and the likelihood of Chinese retaliation, even greater state intervention may be deployed to deal with the negative consequences of an incipient trade war between the two largest trade partners in the world; and, Four, there could well be a rethink on the OBOR initiative whose scale may be downsized. These likely developments provide India with both political and economic opportunities to raise its own relative profile in the region and globally despite the uncertainties spawned by the Trump administration.
Source: Business Standard
The textile industry is the second largest employer in developing countries, but most artisans are trapped in domestic markets with no links to international trade Catherine Makie, 27, sews bow ties for European and US markets in Nairobi’s Kibera slum. Photograph: Anna Dubuis At a tailors’ workshop in Kibera, Nairobi’s sprawling slum, business has gone global for a group of women. After years spent sewing clothes for the local market, the 10 tailors have started on international orders for bow ties. Their client is Wakuu, a two-year-old business employing Nairobi artisans to create suits and other garments using local fabric, kitenge, which they then sell in Europe and the US. The women have been hired to create accessories and Wakuu says it will reinvest a portion of its profits into further training, as well as providing support to their families, for instance through improved childcare facilities. “Fashion can be a major growth driver for African nations,” says Daan Vreeburg, co-founder of Wakuu. “I saw we could build a business and employ people, give them a fair wage and break the poverty chain.” The Kenyan garments sector remains relatively small, with just 40,000 workers according to a report (pdf) commissioned by development organisation Hivos. But if the African Development Bank gets its way, this is set to change. In 2015 it launched the Fashionomics. For these jobs to be sustainable, the region will need to break away from the model the fashion industry has pursued elsewhere in the world and which has already done damage ininitiative, an online business platform designed to boost small businesses in the fashion and textile industry. The bank believes the sector could generate 400,000 jobs in sub-Saharan Africa by 2025. Kenya, according to Nicola Round, campaigns manager at UK-based Labour Behind the Label. “In Kenya, like many other African countries, the domestic textile industry has suffered because of the ‘race to the bottom’ by global brands seeking out low-cost labour,” says Round. Reaching global markets at all is also a challenge. The textile industry is the second largest employer in developing countries, after agriculture, but the majority of artisans are trapped in domestic markets without links to international trade. Wakuu is part of the steady flow of socially conscious fashion brands trying to challenge this norm by sourcing artisans from marginalised communities to produce their fashion lines. Others include Artisan.Fashion, which connects Kenyan artisans to luxury brands such as Vivienne Westwood and Stella McCartney in a bid to pull high fashion houses away from mass production factories. The company involves 22 community groups, recruited from existing networks like self-help and women’s groups, and is able to produce 100,000 units a year, mostly bags and accessories. Not all such enterprises succeed in scaling up and having a lasting impact, however. New York brand SUNO, worn by the likes of Michelle Obama and Beyoncé, trained Kenyan tailors as part of efforts to build a sustainable fashion business. But last year it announced it would close after failing to attract sufficient investment to take it to the next stage. Clare Lissaman, an ethical fashion consultant and co-founder of menswear brand Arthur & Henry, warns that good intentions do not always translate into sustainable businesses, and a robust business model is essential. Being able to demonstrate the product’s worth is vital, she adds: “Just because it is made in the slums does not mean it is automatically good. You need to show you are doing what you say you are doing.” The search for profits Vreeburg, who also works for the Netherlands-African Business Council, and his business partner Nick Searra, are conscious of the potential pitfalls as they attempt to scale up Wakuu. Although the suits and bow ties have been a hit, Vreeburg says the business could not survive solely on the handmade products created by their small-scale artisans. Shunning the cheap option of outsourcing production to Asia, however, they have launched a T-shirt line made in a local Kenyan factory to boost profits and in turn support the artisans. Their website will detail where each product was made and by whom, and they are formalising a partnership with the Kibera workshop to ensure the women have a guaranteed income. Jewellery brand The Good is Good is planning to take a slightly different tack, enlisting established western designers with an existing client base to come up with designs for traditional artisans in Kenya to produce. The hope is this will ensure a sustainable market. “We are changing traditional designs a little bit but if we are to create opportunities in the western market it is important to create a product that we can sell,” says Jeff Parry, who is launching the brand this year with wife Anna. From their home in Sweden it is difficult to monitor working conditions so they have partnered with an existing Fairtrade-certified project employing women in the Maasai Mara. “For us it is obvious that they should be made fairly and ethically,” says Parry. “It’s really good for us to know the processes are right and that they get paid properly.”
Source: The Guardian
Tekstil Trans Ltd has opened a new textile factory on February 1 in Kyrgyzstan’s northern Chui province. Kyrgyzstan’s Prime Minister Sooronbai Jeenbekov at the opening ceremony, said that opening of this enterprise will help reduce Kyrgyzstan’s dependence on the import of textile products, namely fabrics, which will allow lowering the production cost of domestic sewing industry. The total cost of the new textile factory project is $9.5 million, including $7.5 million provided by the Russian-Kyrgyz Development Fund. Jeenbekov emphasized that the light industry is among priority sectors of Kyrgyzstan’s economy. Domestic textile products are in high demand in foreign markets. With the country’s accession of the Eurasian Economic Union, Kyrgyz entrepreneurs, including textile producers, have a good opportunity of entering a larger market. Tekstil Trans General Director Almazbek Abdrayev showed the prime minister the factory, which had worked in a pilot mode since last November. At the initial stage, the factory will produce 9-10 tons of ready products per day or 225 tons per month, with further increasing the production capacity up to 30 tons per day. The new factory will also create 150 jobs. The factory is using the latest technological equipment and high-quality raw materials from Uzbekistan, Tajikistan, and China. Tekstil Trans Ltd took the decision to build this fabrics-producing factory taking into account the increasing growth of the Kyrgyz sewing industry and its big potential.
Source: Yarns and fibres
Once the garment sector safety initiatives initiated by two buyer groups, the Accord and the Alliance expires in July 2018, they are likely to be replaced by a new programme named 'Version 2.0'. The new programme comprising the government, BGMEA, ILO, trade unions and global brands, is expected to also include sustainable development goals in the agenda. However, when Version 2.0 comes into effect, BGMEA has proposed deletion of the 'legally binding' terminology, which is present in the articles of the Accord and the Alliance. In October 2015, BGMEA had set up a taskforce to develop a strategy that can be implemented once the term of the Accord and the Alliance ends. The taskforce has recommended that a steering committee of Version 2.0 should be constituted with representations from BGMEA, ILO, Department of Inspection For Factories and Establishments, trade unions and brands. The BGMEA draft proposal has suggested that for the initial period between June 2018 and June 2020, signatory buyers will continue their contributions, but will be reduced by 50 per cent of the yearly amount, that these buyers have been paying to the Accord and the Alliance since 2013. According to BGMEA, they have suggested the reduction, as a vast majority of remediation would have been completed, while only some follow up would be needed in 2018.
Source: Fibre2fashion
Chinese companies are in talks to snap up more businesses and land in Pakistan after sealing two major deals in recent months, a sign of deepening ties after Beijing vowed to plough $57 billion into a new trade route across the South Asian nation. A dozen executives from some of Pakistan’s biggest firms told Reuters that Chinese companies were looking mainly at the cement, steel, energy and textile sectors, the backbone of Pakistan’s $270 billion economy.
Think tank explains why India loathes CPEC
Analysts say the interest shows Chinese firms are using Beijing’s “One Belt, One Road” project – a global trade network of which Pakistan is a key part – to help expand abroad at a time when growth has slowed at home. A Chinese-led consortium recently took a strategic stake in the Pakistan Stock Exchange, and Shanghai Electric Power acquired one of Pakistan’s biggest energy producers, K-Electric, for $1.8 billion. “The Chinese have got deep pockets and they are looking for major investment in Pakistan,” said Muhammad Ali Tabba, chief executive of two companies in the Yunus Brothers Group cement-to-chemicals conglomerate. Tabba said Yunus Brothers, partnering with a Chinese company, lost out in the battle for K-Electric, but the group is eyeing up other joint ventures as part of a $2 billion expansion plan over the coming years. Mohammad Zubair, Pakistan’s privatisation minister until a few days ago, told Reuters China’s steel giant Baosteel Group is in talks over a 30-year lease for state-run Pakistan Steel Mills. Baosteel did not respond to a request for comment.
Daewoo to become Pakistan’s first bus service listing on stock exchange
The negotiations come as Pakistani business sentiment turns, with companies betting that Beijing’s splurge on road, rail and energy infrastructure under the China-Pakistan Economic Corridor (CPEC) will boost the economy. The Chinese charge is in contrast to Western investors, who have largely avoided Pakistan in recent years despite fewer militant attacks and economic growth near 5 percent. It is welcomed by many in Pakistan: foreign direct investment was $1.9 billion in 2015/2016, far below the 2007/2008 peak of $5.4 billion. At the stock exchange signing ceremony, Sun Weidong, China’s ambassador to Pakistan, said the deal “embodies the ongoing financial integration” between Chinese and Pakistani markets. “This will facilitate more financial support for our enterprises,” Sun said.
Reservations
CPEC will connect China’s Western region with Pakistan’s Arabian Sea port of Gwadar through a network of rail, road and pipeline projects. That will be funded by loans from China, and much of the business will go to Chinese enterprises.
Six concerns PML-N government must address about CPEC
The scale of Chinese corporate interest beyond that is difficult to gauge, but in Karachi, Pakistan’s financial centre, sharply-dressed Chinese appear to outnumber Westerners in hotels, restaurants and the city’s airport. Rising skyscrapers testify to a construction boom in the city, businesses are printing Chinese-language brochures and salaries demanded by Pakistanis who speak Chinese have shot up. Miftah Ismail, chairman of Pakistan’s Board of Investment, said Chinese companies were interested in investing in the telecoms and auto sectors, with FAW Group and Foton Motor Group planning to enter Pakistan. FAW said the Pakistan “project is going through internal approvals”, but did not offer more details. Foton declined to comment. But not everyone is excited by China’s growing role in the Pakistan economy, including trade unions, who said Chinese companies’ alleged mistreatment of local workers in Africa in the past had alarmed them. “We have concern and reservations that the Chinese might use the same methods in Pakistan,” said Nasir Mansoor, deputy general secretary of National Trade Union Federation, Pakistan, the national trade union body.
CPEC: another Marshall Plan?
The Chinese government and Chinese companies have dismissed such accusations in the past. And doing business may not be easy for newcomers. Security remains a concern despite a drop in Islamist militant violence, and in the World Bank’s ease of doing business index, Pakistan ranks 144 out of 190 countries.
Next phase
The Chinese interest comes as Islamabad and Beijing discuss the next phase of CPEC: how to build Pakistan’s industry with the help of Chinese state-owned industrial giants. Pakistani officials are drafting plans for special economic zones which would offer tax breaks and other benefits to Chinese businesses. But even before zones are established, Chinese investors are scoping out land deals. “A lot of companies … don’t care about CPEC. They just want 500 acres of land to set up shop,” said Naheed Memon, head of the Sindh province’s Board of Investment.
Special security force for CPEC notified: report
Faisal Aftab, manager of private investment firm Oxon Partners, said Oxon was in talks with two state-run Chinese companies and a wealthy Chinese businessman to purchase and develop land for high-end residential and commercial properties. “They are seeking land in prime markets such as Lahore, Karachi, and Islamabad,” Aftab said. Yunus Brothers’ Tabba urged Western investors to overcome their “phobia” of Pakistan. “If they came here, they would see the momentum, the buzz of growth.”
Source: The Express Tribune
The department of trade and industry (DTI) in Bukidnon, Philippines has joined the technology mission organised by Northern Mindanao Technical Working Group (TWG), in an attempt to revitalise the Mindanao silk industry. The activity aims to learn more about the potentials of the industry and study the technologies needed to improve productivity. The partnership will also explore the possibility of forging a partnership between different agencies in Northern Mindanao, and leading silk manufacturers in the country. the TWG team visited the sericulture project of the Organisation for Industrial, Spiritual and Cultural Advancement (OISCA) Bago Training Centre, which within its 26-hectare farmland produces 1.5 tons of silk yarn annually, accounting for 90 per cent of the country’s total production. Around 80 per cent of its silk products are sold to weavers in Aklan, and the remaining 20 percent to Manila based traders. Philippine fashion designer Melody Parrel-Pimentel, along with other key government agencies too are pushing for the revival of Mindanao silk.
Source: Fibre2fashion
Uzbek cotton exports will fall to record lows, thanks to lower plantings and rising domestic usage, US officials said. The US Department of Agriculture's bureau in Tashkent saw Uzbekistani cotton exports in 2016-17 at 2.39m 480-pound bales. This is above the USDA's official forecast for Uzbek exports, but some 360,000 bales behind the Tashkent bureau's earlier estimates, and the lowest level on records going back to 1960. Falling production The bureau saw 2016-17 cotton production at 4.08m bales, about 200,000 bales below its earlier estimates. "A warmer than usual winter, lack of water, pest problems and replanting all caused a lower than expected crop," the bureau said. Planted area was reduced by 30,500 hectares, to 1.26m hectares, due to a shift in government policy. "In 2016-17, the government of Uzbekistan lowered cotton planting area to open up fields for vegetable and fruit production, especially in areas where water is scare and cotton yields are low," the bureau said. The government intends to reduce cotton planted area by a total of 170,500 hectares over the next five years, although the bureau expects production to be resilient thanks to improving agronomy. Rising consumption Higher cotton consumption was also seen reducing exports. The bureau saw Uzbek cotton consumption at 1.84m bales, some 200,000 bales above earlier estimates. "Domestic cotton consumption is increasing year-by-year with new textile investments," the bureau said. "The Uzbek government is encouraging new partnerships to increase the domestic use of cotton." "Many new textile investments have been approved which will increase domestic consumption gradually in the coming years."
Source: Agrimoney.com
