Officials say the move will boost ease of business and enhance the employment of informal workers. However, the state’s trade union joint action committee says the amendment will erode workers’ rights and plans to challenge the amendment in court.
“As a result of the amendment, a large number of smalland medium-scale establishments will be out of the purview of the Act,” said Sanjay Wadhavkar from the Hind Mazdoor Sabha. “Larger establishments will also employ four to five sets of 40 contract workers to avoid coming under this law. ”
his means employersT will avoid providing statutory benefits, including provident fund, the minimum wage and leave to contract workers in smaller units, says Vishwas Utagi, convener of the state’s trade union joint action committee. “We hope to challenge the amendment Sanjay Wadhavkar soon in the Bombay high court,” he said.
The reform of labour laws has been high on the agenda of the Centre’s Make in India campaign, with states like BJP-ruled Rajasthan and Madhya Pradesh taking the lead. In 2015, Maharashtra amended the Factories Act 1948 to reduce the number of units coming under its purview. It also introduced self-certification for 16 labour laws, including the Maternity Benefits Act 1961 and Child Labour Act, 1986.
Source: The Times of India (Mumbai edition)
Some impact of demonetisation on industries was visible in December, and even a month after, showed two sets of government figures released on Friday. The Index of Industrial Production (IIP) fell 0.4 per cent in December, after a 5.6 per cent rise the previous month.
Corporation tax collection rose only 2.9 per cent in the April-January period (first 10 months) of the current financial year, although the growth was 4.4 per cent in April-December. Excise duty collections showed a similar impact — the growth was down to 26.3 per cent in January against 31.6 per cent in December. INDIVJAL DHASMANA writes
Some impact of currency demonetisation on industries was visible in December, and even a month after, showed two sets of government figures released on Friday.
The Index of Industrial Production (IIP) fell 0.4 per cent in December, after a 5.6 per cent rise the previous month. Corporation tax rose only 2.9 per cent in the AprilJanuary period (first 10 months) of the current financial year, although the growth was 4.4 per cent till AprilDecember.
Excise duty collections showed similar impact—the growth was down to 26.3 per cent in January against 31.6 per cent in December. However, these collections also showed the impact of some fading away of the base effect of oil duty increases. Service tax rose at a slower 9.4 per cent in January against 12.4 per cent in December, with the slowing of discretionary expenditure after the note ban.
Though the significant IIP rise in November seems surprising, as it was the first month of demonetisation, this was largely due to the higher number of working days, with many festivals in October this time, after having occurred in November during 2015. The actual test of the note-ban was December for IIP. Manufacturing, 75.5 per cent of the index, dragged down the industrial production. It fell two per cent in December.
However, it appears demonetisation did not affect industries that much, as IIP was down only 0.4 per cent and the pace of contraction was teeper in April (1.3 per cent), July (2.5 per cent), August (0.7 per cent) and October (0.8 per cent). In short, the fall in output in December was the slowest among the months when IIP contracted this financial year — and there was no demonetisation in the previous months.
However, the index represents mainly the organised sector. The note ban’s effect could have been much more dampening in the unorganised part of industry.
The other two segments of industry — electricity and mining - continue to show growth. While mining output grew 5.2 per cent in December against 3.7 per cent the previous month, electricity generation rose 6.3 per cent, against 8.9 per cent.
Only basic goods industries showed growth in December. The rest — capital goods, both kinds of consumer goods and intermediate goods — all showed a fall in output.
Even in January, companies were struggling to come out of the woods, shown by the tax figures. “The low growth of corporate income tax, net of refunds, remains a concern. There is growing likelihood of a shortfall relative to the revised estimate for FY17 for corporate income tax,” says ICRA principal economist Aditi Nayar.
Part of this could be due to refunds, of ~1.41 lakh crore during April-January, 41 per cent higher than in the corresponding period last year. The government has projected corporation tax to yield ~493,923 crore in the revised estimate for 2016-17.
That is only ~1 crore less than the budgeted estimate.
On excise duty, Nayar said February would give the real picture on collections, as the impact of hike in duty will not be there.
Service tax collection growth also came down to single digit in January, against double digits the previous months. “This might reflect a curtailing of discretionary spending,” Nayar said. Customs duty collections showed a zigzag pattern (see chart).
In direct tax collection, the kitty continued to see robust growth from personal income tax. However, the growth in the financial year fell to 23.1 per cent till January, although it was 24.6 per cent till December.
Source: Business Standard
Industries continued to shy away from investments in 201415, showed comprehensive data released by the Central Statistics Office on Friday.
Gross capital formation (GCF), which connotes investment in the economy, contracted for the second straight year in 2014-15, with the pace of fall accelerating, showed the Annual Survey of Industries (ASI).
GCF decreased 18.3 per cent in 2014-15, after declining 5.6 per cent in the previous year, ASI data revealed. The data is in nominal terms, which means it has not been adjusted for inflation.
Investments by industries have been on a downturn due to overleveraged balance sheets of companies. Gross value added (GVA) by industry grew 9.3 per cent in 2014-15 (in nominal terms), from 5.7 per cent in 2013-14, the data showed.
The ASI dataset is a more comprehensive measure of industrial growth than the Index of Industrial Production (IIP) as it covers registered small and medium industries — all units employing at least 10 workers and using power, or units employing 20 workers and not using power are covered. But as it does not capture unregistered entities, there are some differences in the numbers between the gross domestic product (GDP) data and the ASI numbers. This dataset, along with the MCA21 database, is used by the CSO to arrive at estimates of gross value added (GVA).
GVA by industry, according to GDP data, grew 8.4 per cent in FY15, down from 9.1 per cent in FY14.
The ASI data, which comes with a lag of two years, show the number of factories rose 2.6 per cent in 2014-15, from 224,576 in 2013-14 to 230,435 in 2014-15.
The number of workers employed rose three per cent in 2014-15 and the wages paid to workers grew 11.1 per cent.
In 2013-14, wages had grown at 14.1 per cent. Profits grew at 4.6 per cent in 2014-15, after contracting by 1.1 per cent the year before.
Source: Business Standard
Back to top
Industrial production contracted in December due to a sharp decline in production of consumer goods, confirming a demonetisation-led contraction in demand.
According to the data released on Friday, the Index of Industrial Production (IIP) was 0.4% lower in December from a year ago, well below 5.7% growth in November and consensus expectation of around 1% in December.
The cumulative IIP growth for April-December is 0.3% against 3.2% for the same period last year.
“The steep and broad-based dip in the performance of the IIP in December 2016 on a sequential basis is largely along expected lines, with inventories being adjusted to the temporary demand compression after the note ban, and the boost from a favourable base effect fading away,“ said Aditi Nayar, principal economist, ICRA.
The Purchasing Managers' Index (PMI) had suggested subdued manufacturing sentiment both in December and January.
The decline is largely due to consumer goods-driven 2% contraction in manufacturing, the largest component of the index. Electricity generation was up by 6.3%, while mining output rose 5.2%.
Lack of cash seems to have dented demand for consumer goods, which spilled over to 6.8% decline in production. Within consumer goods, production of durable goods fell 10.3% from a year ago in December, while that of non-durables or the FMCG goods was down 5%.
“The sectors where the impact of demonetisation was expected to be more pronounced were consumer durables and non-durables,“ Sunil Sinha, principal economist, India Ratings & Research, said, adding that the numbers deflate the government's claim that “demonetisation has not been as disruptive as it has been made out to be.“
Capital goods were lower by 3% in December, confirming subdued investment sentiment.
As many as 17 out of 22 manufacturing sub-sectors re ported contraction in the month of December with office, accounting and computing machinery leading with a 23.9% contraction.
The data provide evidence of a softer second half following demonetisation. The Economic Survey expects FY17 growth to be in the range of 6.5% to 6.75% compared with 7.9% in FY16.
The RBI expects GVA growth in the current fiscal at 6.9% compared with 7% estimated by the Central Statistics Office without factoring in the impact of demonetisation. The central bank has said demonetisation will have a `transient' impact on the economy.
The RBI on Wednesday decided not to cut rates citing upside risk to inflation, disappointing markets that had penciled in a 0.25 percentage points cut.
Banks have lowered interest rates, thanks to the surge in low-cost funds due to demonetisation, and the impact of lower lending rates could be seen on demand within a few months though January is likely to be lackluster.
Source: Times of INDIA
Back to top
In the Budget 2014-15, the Government announced setting up of Trade Facilitation Centre and Crafts Museum (TFC&CM) at Varanasi to develop and promote handloom products and carry forward the rich tradition of handlooms of Varanasi. The estimated cost of project is Rs.300 crores. The first phase of the Project consisting of Crafts Museum, Entrance Plaza and Shopping arcade has been inaugurated on 22nd December, 2016.
The above information was given by the Union Textiles Minister, Mrs. Smriti Zubin Irani, in a written reply to a Rajya Sabha question.
Ten block level clusters have been sanctioned in different blocks/urban areas of Varanasi at a total project cost of Rs.7.89 crore with Central share of Rs.7.70 crore and first instalment of Rs.5.12 crore released, covering 4129 weavers. Nine Common Facility Centres (CFCs) alongwith Common Service Centres (CSCs) have been set up in different blocks/urban areas to provide facilities like training, yarn, dyeing, warping, ITenabled
services etc. CSC provides services like banking, Aadhaar Card, e-commerce, e-ticketing, Mobile charging etc. So far, more than 21000 persons have benefitted. The Government has taken several steps to help weavers in
opening bank accounts and taking benefits of digital payment modes. The Common Facility Centres have taken banking services to the door step of handloom weavers. Several camps have been held in Varanasi to train the handloom weavers in accessing digital payment modes. 307 such camps were organised in Varanasi in which 12,502 persons participated. Micro-ATM/Banking Correspondent(BC) facility was extended in association with various Banks for easy withdrawal of money.
National Handloom Development Corporation has also implemented e-Dhaga Mobile App which has facility
of making online payment for purchase of yarn. E-commerce players have been facilitated to work with handloom weavers of Varanasi with the arrangements that the sale proceeds are transferred into their bank accounts.
SOURCE: TECOYA TREND
E-commerce players in India have urged the government to re-evaluate the clause of “Tax Collection at Source” (Section – 56) proposed under the Model Goods and Services Tax (GST) Law. TCS Section – 56 clause under the GST draft model law, mandates e-commerce marketplaces, to deduct 2 per cent of the transaction value and submit it to the government.
As an estimate, this clause would lead to locking up about Rs 400 crore of capital per annum for the e-commerce sector. In addition, it would result in a loss of an estimated 1.8 lakh jobs, putting a halt to the growth and investments in the sector, e-commerce sector stakeholders said at a press meet organised by the Federation of Indian Chambers of Commerce and Industry (FICCI). The e-commerce marketplace model facilitates sellers (whose turnover is generally in the range of Rs 50 lakh to Rs 10 crore per annum) in maximising their capital efficiency by rotating it frequently, which helps to provide the volumes required to generate profit for them. However, blocking capital would disrupt the cash flow, thus making it difficult for them to generate profits. Additionally, TCS is bound to increase the working capital requirements for these sellers, who might resort to increasing margins or internalising the costs, to cover the additional burden. Hence, there is a need to find out alternatives which could be employed to ensure that regular information on tax is made available to the government, without jeopardising the business model and future growth prospects of the nascent e-commerce sector.
“At the moment, the e-commerce sector in India is at less than 2 per cent of the entire retail segment and moreover, at a very nascent stage, with a promise of high growth in the future. Subjecting the sector to a major compliance at such an early stage will not only result in slowing it down but also deter the benefits that e-commerce fosters in terms of employment creation and giving a boost to both the manufacturing and services space by providing an apt platform. Moreover, this clause is discriminatory towards online sellers as it does not exist in the offline retail segment,” said Dr Didar Singh, secretary general, FICCI. Singh said that the government should find out alternative ways to replace the clause, may be the information related to the sellers declared to the government would be the best feasible option available. He also stressed that the sector is one of the core pillars of the government’s Digital India campaign and is needed to be nurtured with right set of policy frameworks and guidelines.
“The proposal (TCS Section – 56), while adding needless complexity for the sellers, provides no benefit to the tax authorities and will lead to duplication of information followed by the need for its reconciliation. It is a measure, which goes against the spirit of making India digital and improving the ease of doing business in the country. We are positive that the government will address this crucial concern,” Kunal Bahl, co-founder and CEO of Snapdeal, said at the press meet. Echoing Bahl, Amazon India country head Amit Agarwal said, “We remain concerned about the TCS provision which we believe will negatively impact the growth of marketplaces at a stage when the industry is still in its infancy. There is an urgent need to re-evaluate such requirement. We are working with the government on this and hope for a favourable resolution.”
“The TCS clause would lead to blockage of approximately Rs 400 crore of working capital into the system, and will discourage sellers to come online. Also, the government needs to set a level playing field as the clause is not pertinent to the off-line retail segment. Central and the state governments need to find out alternative ways to address the situation and the e-commerce platforms may give a self-declaration about the taxes being reimbursed by the sellers. Some of the states namely Kerala, Rajasthan and Delhi are already doing the same. I’m sure that the clause would be removed in the greater benefit of the Indian digital space as a whole,” said Sachin Bansal, co-founder & executive chairman, Flipkart. (RKS)
(Source: Fibre2Fashion, February 10, 2017)
Back to top
New Delhi: Khadi India has threatened to sue Fabindia, a chain of ethnic wear retail outlets, for allegedly indulging in "unfair trade practice" by using and selling its cotton products unauthorisedly under its registered brand name "Khadi". Khadi & Village Industries Commission (KVIC) has sent a legal notice to Fabindia Overseas Pvt Ltd asking it to immediately stop using Khadi word from all its cotton products and remove display banners from its showrooms immediately alleging that Khadi India's brand name was unlawfully used to mislead and confuse the consumers. "You are called upon to explain your position in the above matter within 15 days from the date of receipt of this notice, failing which the KVIC will be constrained to proceed against your company as per law for the violation of Khadi Mark Regulation and payment or incidental damages for the losses caused to KVIC by Fabindia," the February 8 legal notice addressed to Fabindia's New Delhi-based CEO said. KVIC, which is an autonomous body under the Ministry of Micro, Small & Medium Enterprises, said that despite warning and assurances given earlier, continuation of selling garments in the name and style of 'Khadi' was an illegal act and amounted to "indulging in unfair trade pracice by selling normal cotton fabric as Khadi."
Justifying the legal notice, KVIC Chairman V K Saxena said, "the KVIC was very keen to protect its reputation and would take stringent measures against those who violated rules and regulations that have been framed for the benefit of rural artisans attached to it."
Fabindia (Source: PTI, Pune Mirror, February 12, 2017)
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$ 54.66 per barrel (bbl) on 10.02.2017. This was higher than the price of US$ 54.23 per bbl on previous publishing day of 09.02.2017.
In rupee terms, the price of Indian Basket increased to Rs. 3658.93 per bbl on 10.02.2017 as compared to Rs. 3634.31 per bbl on 09.02.2017. Rupee closed stronger at Rs. 66.94 per US$ on 10.02.2017 as compared to Rs. 67.01 per US$ on 09.02.2017. The table below gives details in this regard:
|
Particulars |
Unit |
Price on February 10, 2017 (Previous trading day i.e. 09.02.2017) |
Pricing Fortnight for 01.02.2017 (Jan 12, 2017 to Jan 27, 2017) |
|
Crude Oil (Indian Basket) |
($/bbl) |
54.66 (54.23) |
54.03 |
|
(Rs/bbl |
3658.93 (3634.31) |
3680.52 |
|
|
Exchange Rate |
(Rs/$) |
66.94 (67.01) |
68.12 |
SOURCE: PIB
Back to top
The global menswear market has been experiencing fast growth that has outpaced the womenswear market in recent years. Contemporary society has witnessed the development of fashion culture shifting from historically womenswear domination to menswear. Increasing fashion concerns among men has driven international fashion brands to expand their menswear offerings, while the rise of e-commerce has made shopping easier for men in a big way. The rapid economic and purchase power growth of emerging markets like China and Japan have also boosted the global menswear market. According to the report from Technavio, the total value of the global menswear market was $418.9 billion in 2015, and is expected to reach $522.3 billion by 2020, recording a CAGR of about 4.8% from 2016 to 2020. Sales in the menswear apparel market are expected to reach $480 billion by 2019. Online sales in the menswear category have had significant growth. IbisWorld reported that the menswear category increased 17.4% in online sales between 2010 and 2015, outpacing all other segments in the global fashion and apparel market. It is also predicted that online menswear sales will grow further, with an annual average of 14.2% between 2015 and 2020. Social media has played a pivotal role in increasing product awareness and promoting sales. The luxury menswear category is another segment that will see significant growth over the next few years. The global market for men’s designer apparel is projected to reach nearly $33 billion in 2020, up 14 percent from $29 billion in 2015, according to Euromonitor International. To meet the increasing demand of the global menswear market, luxury fashion brands such as Hermès, Lanvin, Gucci, Ralph Lauren, Dolce & Gabbana and Prada have launched their men’s-only flagships. Increasing demand for activewear for use as gym wear and casual wear has also had a considerable impact on the global menswear market growth. Activewear is comfortable and versatile, as well as stylish. Nike’s sales in North America increased by 14% during 2014-2015, a large portion of this coming from the apparel segment. Under Armour’s sales in the region increased by 29% in 2014. Lululemon also entered the menswear segment, gaining 10% increase in sales, and Adidas’ global revenue grew 9% in the same year. Apart from the traditional major markets for menswear, including the US, Germany, Italy and the UK, Asia Pacific is likely to grow at a more significant rate in the coming years, thanks to its growing middle-class and upper middle-class populations. The rise in disposable personal incomes in countries like China, Japan and India is also one of the key drivers of the market. Currently, China and Japan control two-thirds of the menswear market in Asia Pacific. Globally, China was the largest market for menswear, with a share of 19.19% in 2015. Japan was the third-largest market with a 6.66% share.
SOURCE: Technavio
The global women’s apparel market has had steady growth associated with growing consumer spending power over the last few years. In 2015, the value of the global women’s apparel market reached US$505 billion, and is expected to grow at a CAGR of around 3% during the next 5 years, according to the report from Technavio. One of the fastest growing segments is luxury clothing, which is expected to grow at a higher year-over-year rate in terms of sales compared to the mass market. Luxury apparel brands such as Louis Vuitton from LVMH, Gucci from Kering, and Hermès have expanded significantly across the globe during the last five years. With an increasing number of consumers focusing on physical fitness, the active lifestyle clothing segment will likely have greater demand over the coming years. From 2010-2015, women’s activewear and sportswear sales increased by an average growth rate of more than 8%. Brands are continually rolling out new lines of athleisure clothing such as Adidas’ Stellasport and Gap’s women’s athletic wear outlet Athleta. In addition, a growing trend of expressing individuality and creativity will support the growth of the designer clothing segment. The tops segment accounted for the largest share of the market in 2015. Tops and bottom wear are the two biggest segments, and together make up more than three-fifths of the global women’s apparel market. Both segments are expected to have continual growth and retain their positions in the market over the forecast period. In Europe, sales in the women’s apparel market has mainly been driven by the growing number of fashion-conscious consumers. The major markets for women’s apparel are the UK, Germany, France, Spain, Russia, and Italy. Specialty store retailers represent the largest share of sales in the European women’s apparel market in 2015, where value sales through this channel generated $126.3 billion, representing 74.63% of the market’s overall value. Also, value sales through department stores generated a revenue of $27.26 billion in 2015, accounting for 16.11% of the market’s total revenue. The women’s apparel market in Europe is expected to grow at a CAGR of 2.9% over the forecast period. In North America, the primary markets include the US, Mexico, and Canada, and the US is the largest country for women’s apparel products in the world. Its contribution to the global market was 29.15% in 2015, and its share in North American market was 92.22% in the same year. In the next five years, the women’s apparel market in North America is expected to grow at a CAGR of 3.01%. The women’s apparel market in APAC is expected to have the highest CAGR in the world of around 4% over the next 5 years. China and Japan control two-thirds of the women’s apparel market in APAC. Globally, China was the second-largest market with a share of 9.98% in 2015, and Japan was the third-largest market with a share of close to 9%. India is the fifth-largest country in APAC after China, Japan, South Korea, and Australia.
As for the rest of the world, Brazil is in the lead, with the UAE, Saudi Arabia, and South Africa as the other key markets. The contribution of Brazil in the Rest of the World market was approximately 46% in 2015, while South Africa contributed close to 12% of the market revenue. Specialty store retailers accounted for the largest portion of sales at 70% of the overall market.
SOURCE: Tecoya Trend
Back to top
The technical textile and industrial nonwovens industry in Russia is currently witnessing steady growth, thanks to the ongoing recovery from the recent economic crisis. With the increasing number of the investment projects announced for Russia’s technical textile industry, the Russian government has set ambitious plans to further boost the country’s technical textile sector in the near future. According to Russian government statistics, their technical textile market was estimated at around $40 million in 2016. Domestic production volume of technical textiles in Russia is expected to grow over 7% year on year through 2017. Moving forward, the Russian government hopes to increase its domestic production of technical textiles up to an 80% market share of the national market by 2020. Apart from strong government support, the significantly increasing amount of investments flourishing to Russia’s technical textile industry is another major reason to boost the sector. Production of technical textiles in Russia is closely based on the country’s economic benefits, and in particular lower costs, compared to China and other technical textile emerging markets, thanks to Russia’s cheaper energy resources and relatively low wages in the industry. All these advantages can attract investors from both domestic and international markets. For instance, the Balashov textile mill (Baltex), one of Russia’s leading producers in technical textiles and nonwovens sector, recently invested $200 million for future expansion of production of polyamide fibres and fabrics. Currently only 30% of its production in the newly-built factory is fully utilized, meaning that the production is expected to significantly grow in the coming years. Other leading technical textile producers in Russia, such as Kuibyshevazot, Kurskhimvolokno and BTK Group, have also announced their expansion plans in the near future. Moscow is set to become one of the largest producing hubs of the Russian technical textiles and nonwovens industry due to improving investment climate and increased in-state support. In 2016, over 30 local technical textiles and nonwovens producers received support from the Moscow city government and another 28 companies, specializing in the technical textiles and nonwovens production, will receive support from local governments this year. According to the Moscow Department of Economic Policy and Development, the consumption of technical textiles in Russia will be continue to grow in 2017, mainly driven by the ongoing recovery of the Russian economy from previous financial crisis’ and the demand for technical textiles from the major consuming industries, in particular, defense, which is one of the larges technical textile consuming sectors in Russia, consuming up to 60% of domestic technical textiles production.
SOURCE: Global Textiles
Back to top
Announces Final Program: Nonwoven, Personal Care 7 Medical Industry Expert Speakers Convene in Brazil The two global nonwoven trade associations, EDANA and INDA, announce the joint posting of the final OUTLOOK Plus Latin America 2017 program to their respective websites.
The second edition of a unique three-day networking conference and exhibition will examine the latest Latin American developments in the nonwoven personal care, absorbent hygiene, and nonwoven medical products industry. The first two days of the conference and table top display exhibition, March 7-8, offer an economic overview of the Latin American nonwoven markets, the absorbent hygiene markets and technologies, and disposable hygiene markets. The third day, March 9, caps the event with a focus on the growing Latin American wipes market, nonwovens in healthcare and infection prevention, and perspectives in converting technologies.
Keynote presenter, Welber Barral, Ph.D., Chairman of the Brazil Industries Coalition and former Brazilian Secretary of Foreign Trade, leads the conference with a presentation on the advantages and barriers to conducting business in Brazil and shares his incisive view on Brazil’s changing political environment and
its impact on growth and investment attractiveness. The program includes presentations from the following global and regional leaders:
Next Generation of Adult Incontinence Consumer Needs & Solutions “This second edition of the OUTLOOK Plus Latin America conference highlights the opportunities and potential for growth across the Latin American nonwovens industry, particularly for the personal care, hygiene and medical products industries. In organising this conference, we are keen to highlight not just the potential but also the resilience of the Latin American nonwovens markets, which highlight the opportunities beyond Brazil, the traditional market regional leader, and into the broader nonwovens supply chain,” said Pierre Wiertz, General Manager of EDANA.
“This is a must-attend event for anyone involved in the growing market for hygiene and personal care products in Latin America,” said Dave Rousse, INDA President. “Building on our successful 2015 event, this gathering of industry professionals will discuss key elements for success in these markets.”
SOURCE: TECOYA TREND
In arecent video interview with Mauldin Economics, Jared Dillian notes that Trump’s new “America First” trade policy is anti-free trade. Plus, given the Republican Party has been the champion of free trade for decades, Trump’s new trade policy does not sit well with many in the party. Dillian also says that Trump’s trade policies “will benefit certain people at the expense of other people; [it] will benefit workers and producers at the expense of consumers.” As an example, Dillian notes that US auto makers are now making “uneconomic decisions to benefit American workers” (moving auto plants back to US) because of pressure from Trump. Making cars in the US is more expensive than making cars in Mexico. Therefore, making cars in the US means Americans will have to pay higher prices for cars. Getting a grip on Trump’s border adjustment tax As Dillian points out, the main reason a “border adjustment tax” (BAT) is so popular among politicians is that it is not a tariff. A BAT taxes the full value of a product made by a US firm abroad, thus encouraging producers to make products in the US. With BAT, companies that make products in the US and sell them abroad (exports) may deduct the cost of making the product and only pay tax on the net profits. The key thing to keep in mind is that a border adjustment tax will lead to higher costs for many consumer items. The overall impact of a BAT is twofold: imports cost more (higher prices) and exports cost less (more sales for US exporters).
There is virtually no garment industry left in the US, so moving manufacturing back to the high-cost US from low-cost Thailand and China will lead to higher prices for apparel. Higher prices mean fewer sales for apparel firms and retailers. This would be a major blow to both of these struggling sectors. Dillian also notes that getting a BAT passed by Congress is not a “slam dunk.” Given that the retail and apparel industries would be the hardest hit, you can be sure they will fight tooth and nail against it. Major US exporters, however, are licking their chops at the thought of a BAT regime. This is because their overall tax burden would drop. Finally, Dillian warns that if Trump can’t get Congress to pass his BAT proposal, it is very likely he will resort to tariffs by decree. While the president has the power to levy tariffs, Dillian argues this kind of protectionism is close to a worst-case scenario, pointing out that tariffs always lead to less trade, not more.
(Source: Jared Dillian, Mauldin Economics, Business Insider, February 12, 2017)
Several major textile manufacturers are to make products in the US, echoing US President Donald Trump’s pledge to push for goods labeled “Made in the USA.” Everest Textile Co (宏遠興業), a subsidiary of the Far Eastern Group (遠東集團), is one of the Taiwanese firms responding to Trump’s advocacy. The company, which has bought a plant in North Carolina and repurposed the production lines, is scheduled to start production by the middle of next month. Everest, which specializes in functional fabric production, said that the North Carolina plant would mainly manufacture fabrics, although some of the production lines would produce ready-to-wear garments. The company said the repurposing of the US plant has proceeded smoothly, with production set to begin one month ahead of schedule. Apparel maker Makalot Industrial Co (聚陽實業) said that it is studying the feasibility of setting up a plant in the US as part of its plans to expand overseas. Makalot is also considering investing in Haiti and the Dominican Republic. Li Peng Enterprise Co Ltd (力鵬), the largest nylon chip and yarn producer in Taiwan, said that it is planning to open warehouse facilities in the US in the second half of this year to store the nylon chips it produces in Taiwan and Southeast Asia to meet demand in the US market. Li Peng said that the US warehouses would be large enough to store about 2,000 tonnes, but they would not store nylon chips from China there, as they have been slapped with anti-dumping tariffs by the US government. The warehouse business aims to better serve US customers by taking advantage of proximity to the market, the firm said. This latest approach by textile makers represents a major shift in the sector’s production focus, as goods have largely been made in China and Southeast Asian countries in recent years. The Ministry of Economic Affairs has warned that Trump’s protectionism could affect Taiwan’s exports, while economists have urged the government and local exporters to come up with measures to counter the possible impact of Trump’s policies, as the US is one of the largest buyers of Taiwanese textiles.
(Source: Taipei Times, February 12, 2017)
Back to top
Pakistan Yarn Merchant Association member says US subsidies on cotton and yarn are negatively impacting developing countries lint producers
KARACHI: As the United States (US) has allocated more than $600 billion for subsidies on agriculture commodities - mostly for cotton growers - lint producers in developing countries are finding it difficult to capitalize on cost and international price competition. Ghulam Rabbani, a senior member the Pakistan Yarn Merchant Association, said that this was an unfair international trade practice and major cotton producers in the developing countries, especially in Pakistan, were facing hardships due to high input cost and higher bank rates. "Instead the US is demanding other countries to end subsidies on agriculture." He stated that the domestic textile and spinning sector had to import around 3 million bales in 2016-17 to meet the shortfall and keep the wheel of the industry moving. The shortfall was mainly related to higher production costs and an uncertain economic environment.
Rana Abdul Sattar, a ginner and former Sindh Assembly member said, "Input cost, uncertified supply of cottonseed and long-awaited demand for futures trading at Karachi Cotton Association are added bottlenecks to growers for acquiring better yield." There are not any major increases in acreage, but extreme weather conditions and pest attacks negatively impacted crop yields in 2016-17, Sattar added. Pakistan is the fourth largest producer of lint in the world (behind China, India and the US) and has the 3rd largest spinning capacity in Asia after China and India. In 2016-17, the USDA expected US cotton production at 14.9 million bales, India at 28 million bales and Pakistan at 10-plus million bales. Internationally, cotton is being traded at $76-$78 cents per pound and domestically, lint prices remained firm during 2016-17; cotton was traded at Rs 6,000 per maund to Rs 6,550 per maund depending on quality and trash level. Rabbani said that the World Trade Organisation had once agreed that export subsidies for agriculture would be abolished. "Developed country members should eliminate their scheduled export subsidy entitlements from the date of adoption of this decision and developing country members should eliminate their export subsidy entitlements by the end of 2018". However, silver fibre-related people have questioned whether the decision has been implemented in a full and fair manner or whether the political economy of others is standing in the way of fair play.
(Source: Razi Syed, Daily Times, February 13, 2017)
