Economic cooperation and improved connectivity with Bangladesh, Nepal and Bhutan, referred as the BBIN sub-group, is a pet agenda of the Modi government. Still, trade costs are abnormally high in this region, pulling down formal cross-border economic activities. The reasons for this are not difficult to understand. On a sub-regional scale, India is pursuing projects such as seamless road transport where gains are either limited or uncertain due to various physical, emotional and social issues on either side of the border. This is already evident in the case of Bhutan. In all fairness to the deal, India will probably see some restricted and low-scale roll-out, which will not impact overall trade costs. Bilaterally, India is pursuing many rail and inland water connectivity projects with its largest regional trade partner, Bangladesh. However, none of them promises to decongest the costly road traffic through Petrapole border in West Bengal. Petrapole is the largest trade route. It is, therefore, time the Government revisited the connectivity agenda with a policy focus on reducing trade costs in a time-bound manner. Removing key domestic logistical bottlenecks and integrating the same with foreign policy in the front-end is an immediate priority. Since regional trade is heavily tilted in India’s favour, any reduction in trade costs should primarily address the interests of the importing nations, helping to create a positive environment for further economic integration and seamless traffic. Rail and transshipment To start with, India should give a systemic push for conversion of non-containerised road cargo to containerised rail cargo for regional trade. (Obviously, bulk commodities would not feature here.) That landlocked Nepal and Bhutan have distinct interest in this is evident from the fast growth of rail cargo and containerisation ever since India connected the biggest Nepalese gate at Birgunj with a 6-km link from Raxaul in Bihar, in 2005. It is a pity that since then, India hasn’t extended the facility to other Nepalese gates — all located close to Indian railheads. There is no progress either on the proposed 30-km rail link to Bhutan, India’s most trusted partner in the region, despite repeated reminders from Thimphu. That’s not all. Nepal imports third-country products through the Kolkata port, which lies barely 700 km from Birgunj. And, the freight train takes a minimum of three days to cross this distance due to poor track capacity in North Bihar! The task at hand is to expand rail connectivity to border gates, invest in dry-port or transshipment facilities across the border, and decongest key rail corridors without worrying about financial returns in the near term. This should also help us reduce rent-seeking on the Indian side which makes road transport unduly costly. It is no coincidence that India has failed to build a rail over-bridge at the border town of Raxaul or that the 50-km stretch of the National Highway from Raxaul to Motihari is perennially potholed. Many allege that it is a design to keep trucks in waiting and extort money. The price is paid by customers in importing nations.
Focus Bangladesh
The design is most obvious in the over $6-billion India-Bangladesh formal trade. The majority of India’s $5.4 billion export cargo originates in the producing States of north and south India, and travels 1,500-2,000 km by road to Petrapole. Surprisingly, there is not much trace of containerisation in this trade. The journey is prolonged by more than 20 rounds of checks en route and the last 70-80 km from Kolkata to Petrapole takes up to three days (down from seven days a couple of years ago). This is partly due to a narrow road — which is difficult to widen (many bids failed in the past) for social and environmental reasons — and mostly due to rampant rent-seeking. This is a major source of political funding in the region. The Atal Bihari Vajpayee government connected the Petrapole border gates by rail in 2001. But rail cargo didn’t go up. The Railways refuses to carry break bulk, and Bangladeshi importers are not big enough to afford a whole rake. The rolling stock mismatch between the railways on either side added to the complexity. There is broad-gauge connectivity to Dhaka through Gede-Darshana but it is not suitable for freight movement due to load restrictions on Jamuna Bridge in Bangladesh. The Sheikh Hasina government is planning an infrastructure revamp in Bangladesh. But given the track record of the nation in project completion and rampant corruption, it will take years before the logistics gap is plugged. Till then, investing in transhipment facilities right across the border is the only option India has. Inviting private logistics companies to run the facility and make the market for containerised cargo are other logical steps to follow.
Private participation
Increased participation of reputed private logistics players in serving regional trade is another area India must focus on. Awarding contracts to state-owned companies may be the right option to ward off allegations of corruption. But it is not necessarily the most efficient one. For example, India recently granted Nepal access to Vizag seaport for third-country imports as an efficient alternative to Kolkata river port. Both are controlled by the Government. However, the trade is barely benefited as costlier rail freight erodes the advantage of efficient port handling at Vizag. Why can’t we allow an equally or more efficient privately-run Dhamra Port, located 900-km from Birgunj, to throw in its hat for the Nepalese cargo? If India wanted to please the Nepalese, who had all across been squeezed by the monopoly of Kolkata Port, Rail and CONCOR trio, why wouldn’t it offer access to lower cost alternatives? After all, the nation has a right to access private ports. Moreover, with so many deep-sea ports on the east coast, why can’t India explore the opportunity to extend third-country import services to Bangladesh? The only Bangladeshi port at Chittagong in the south-east suffers from low draft and congestion. The deep-sea port will take a long time to come. Also, there are road and rail logistics gaps to be mitigated. There is every possibility that ports such as Dhamra or Paradip can serve south-eastern Bangladesh better, provided India is quick to build the rail-connected transhipment facility.
Source: Business Line
The government of Haryana has prepared Textile Policy 2017, which providing incentives for setting up of new textile units. The policy proposes capital subsidy of 10 per cent for the eligible new projects of all textile enterprises across the state. Industrial plots would be made available by HSIIDC and panchayats on lease, under the policy. Further, textile companies would get financial assistance of up to 50 per cent of the cost for adopting technology from recognised national institutes. However, the upper limit for this assistance would be Rs 25 lakh. “Taking a holistic approach to the issue, the policy is packed with fiscal incentives and contains provisions for infrastructure augmentation, setting up of textile parks, and facilities for skill training. It aims at generating 50,000 new jobs by attracting investment in the textile sector to the tune of Rs 5,000 crore,” an official spokesperson said. The policy has been especially prepared to benefit the state’s cotton belt comprising Bhiwani, Sirsa, Fatehabad, Hisar and Jind districts. “This sector provides employment to about one million people and readymade garments worth $2 billion are exported from the state annually,” the spokesperson said. The policy aims at making Haryana a preferred destination for international textile majors, and increasing textile exports at 20 per cent CAGR during the policy period. In addition, a textile park would be set up at Hansi in Hisar district. The park would house weaving, sizing and garmenting enterprises. The existing quality marking centre for textile goods at old industrial area in Panipat would also be upgraded to global standards.
Source: Fibre2fashion
SURAT: The textile tempo goods transporters have unanimously decided not to enter textile markets located on Ring Road, and dump and accept the delivery of grey fabric outside the market starting from April 10. The association has given an ultimatum to the textile traders that the tempo drivers will load and unload the grey and finished fabric outside the textile market area. The traders will then be responsible to take their goods to their respective shops. The decision has been taken after the textile traders failed to provide parking space to tempo transporters at the markets and there was no reduction in hefty parking charges. Sources said that the tempo transporters association have started scouting for an open land outside the textile market area where all the grey fabric goods will be dumped for loading and unloading. Leader of the textile tempo goods association, Shravan Thakur said, "After April 10, the traders will have to deliver the grey fabrics on their own at the location outside the textile market area. Same will be the rule for the dyeing and printing mills supplying finished goods in the market. The tempo drivers will load the textile goods from outside the market and delivery to the textile mills." Thakur added, "The tempo drivers have been facing lot of difficulties due to non-availability of parking space in the market area. Even the parking charges have not been reduced." Stay updated on the go with Times of India News App. Click here to download it for your device.
Source: Times of India
The State Government of Maharashtra (India) is planning to shape up a scheme to develop solar projects to supply electricity to the textile sector. This was announced by Subhash Deshmukh, Minister of Textiles (Maharashtra), while attending a live broadcast programme of Centre’s Power Tex India Scheme launch. Union Minister of Textiles Smriti Irani had launched the Scheme at Bhiwandi in Mumbai and the programme was broadcast at 43 centres nationwide. The Minister also said that the State Government is considering reopening of closed textile units as well as those that are in bad shape because of market fluctuations. Also Read – Indian powerloom units to get subsidy for solar plants installation “New technology will be introduced in the sector so that the process of converting cotton to cloth will be accelerated. The power availability issue for the sector will be addressed by designing a scheme to use solar power for textile mills,” he said.
Source: Apparel Resource
NEW DELHI: India's shipments of goods and services are expected to reach $500 billion in 2017-18, apex exporters' body FIEO today said. "We expect the merchandise exports to be around $315 billion and services exports to about $185 billion in 2017-18," Federation of Indian Export Organisations (FIEO) said in a statement. The new FIEO President G K Gupta said that exporters should look at increasing shipments more aggressively. "A greater emphasis needs to be given to exports in the new GST regime with liquidity being the key challenge for exporters," he said. He also said that in the upcoming mid-term review of the Foreign Trade Policy, there is a need to relook at further diversifying the product basket and focus more on high-tech products where India's share in global trade is very low, to further compete in the international market. FIEO has nominated M Rafeeque Ahmed of Farida Group as its new Vice President.
Source: The Economic Times
Manufacturing sector activity rose to a five-month high in March with a sharp rise in production and new orders. The Nikkei India Manufacturing Purchasing Managers’ Index (PMI) rose to 52.5 in March, from 50.7 in February. A reading above 50 indicates expansion and below that denotes a contraction. “Incoming new orders expanded at a stronger pace, thereby leading to quicker increases in production and input purchasing. Moreover, firms hired additional employees to cope with greater workloads,” it said in a release on Monday. New orders rose at the fastest pace in five months and production expanded at the strongest rate since last October. Export orders also increased significantly. The survey said intermediate goods led the upturn. Although both input costs and output charges rose further, inflation rates softened from those seen in February, it further said. In fact, 96 per cent of manufacturers kept selling prices unchanged to try and stimulate demand. The data comes ahead of the Reserve Bank of India’s monetary policy review on April 6. The central bank in its last policy review had a maintained status quo on rates as it kept a watch on inflation. Business confidence among manufacturers also improved in March, with almost 20 per cent of them expecting output levels at their units to be higher in a year.
Source: Business Line
NEW DELHI: India is likely to become significantly more influential in Asia-Pacific in next five years and the number of cross-border transactions involving Indian companies is also set to increase, says a report. According to a new report by global law firm Baker McKenzie and Merger market, 90 per cent of 150 Asia Pacific based business leaders expect the number of cross-border M&A transactions involving Indian companies to rise. "Amidst global uncertainty, Asia-Pacific will play an increasingly significant role to fuel both international trade and investments. This, combined with the Government of India's progressive outlook, is accelerating India's favourable position to do business in and with, as well as strengthening the country's influence in the region," Ashok Lalwani, Global Head of India Practice, Baker McKenzie said. Around 95 per cent of respondents said Indian economic influence in the region would grow in the coming five years, compared to 77 per cent who saw China's influence as continuing to expand. Besides strong growth rate, India's influence will also stem from its attractiveness as an investment destination and a jurisdiction where domestic businesses can grow and expand beyond their borders. "The steps taken by Prime Minister Narendra Modi's pro-business government, among many other factors, have contributed to respondent sentiment that the Indian government is the most active in the region in terms of improving the ease of doing business in the country," the report said. The report, Asia Pacific Business Complexities Survey 2017, further noted that technology, through either disruption or the need for innovation, is the leading complexity with companies across the region, followed by cost pressures/ shrinking margins and technological disruption from competitors.
Source: The Economic Times
MUMBAI: Exchange offers may pinch the pockets of an individual buyer, going by the draft rules for valuation of supply under GST. This tax is triggered on supply of goods or services. Supply is a comprehensive term that includes not just sale, but also exchange and barter. The draft valuation rules, released on April 1, explicitly provide that in cases where the supply of goods is 'not wholly in money', the value of the supply will be its open market value. The draft rules provide an illustration: A new phone is supplied for Rs 20,000 in case it's exchanged with an old phone. Without the exchange, the price of the new phone is Rs 24,000. In this case, the open market value of the supply will be Rs 24,000. GST will be computed on this amount, rather than on Rs 20,000. Exchange offers are quite popular in the white goods segment — old mobile phones, refrigerators, television sets, cars, it al — can be exchanged under various schemes extended by both brick-and-mortar and online stores. "Currently, in most states (Gujarat being a notable exception), VAT is payable on the money consideration paid by a customer. Under the proposed draft rules, the supply value will be the market value of the goods itself," explains Badri Narayanan, partner at law firm Lakshmikumaran & Sridharan. "The differential levy, which arises owing to non-adjustment of the value of the old product, will pinch the pocket of an individual customer (say a salaried employee) who cannot claim any input tax credit for the GST borne by him." The draft valuation rules state that where goods or services are supplied and where the consideration is not wholly in monetary terms, the valuation for GST levy will be determined in the following order — open market value (according to the earlier illustration); value of goods and services of like kind and quality; 110% of the cost and, lastly, any other reasonable means. "There will be added complexity in cases involving exchange of old goods. As there is a supply of an old phone by the customer (who is not registered under GST), the mobile phone dealer will have to bear GST on this old phone under a reverse charge mechanism," adds Bipin Sapra, indirect tax partner at EY - India. The valuation draft rules also provide that the value of supply of services by an agent for booking of air travel tickets shall be 5% of the basic fare in case of domestic and 10% in case of international travel. This remains the same as current rates, even as the industry had recommended that a lower rate be introduced under GST. "However, if the GST on air travel is higher than the current rate of 15%, say 18%, it would also have a cascading impact on booking costs. In such an eventuality, the customer would pay more for air travel," points out Narayanan. For supply of services relating to life insurance, the current practice of reducing the investment-related component to arrive at the taxable value of the service continues. "GST is a consumption tax and investment is not a consumption," explains Narayanan. Thus, the gross premium charged from a policy holder will be reduced by the amount allocated for investment. After such adjustment, the value of the supply on which GST is to be levied shall be 10% of the premium charged in case of single-premium annuity policies. In all other cases, it will be 25% of the premium charged in the first year and 12.5% of the premium in the subsequent years. After obtaining stakeholder comments, the set of eight draft rules — covering issues ranging from registration to valuation — will be further discussed at the GST Council meeting to be held in mid May.
Source: The Economic Times
MUMBAI: For the first time since the opening up of the economy in 1991, India’s current account deficit - the excess of imports over exports - is being funded by foreign direct investment (FDI), a sign of rising confidence among long-term investors in Prime Minister Narendra Modi’s ability to strengthen the country’s economic foundation for sustained growth. The deficit funding, which had historically been done through borrowings by companies in the overseas markets or remittances by non-resident Indians and portfolio inflows, is undergoing a shift. FDI, where the investment is typically towards establishing operations or acquiring business assets, is more stable: it stays in a country for years unlike the often-fickle portfolio inflows into the securities market.
In fact, the record surge in FDI inflows is being used by companies and the central bank to redeem past borrowings. Data from the RBI show that these categories witnessed net outflows in the April-January period. These include a near $26 billion outflow due to redemption of special dollar deposits India raised from NRIs in 2013 to prop up a free-falling rupee at the time. Gross FDI from April 2016 to January 2017, the first 10 months of the fiscal year that just ended, had totalled $53.3 billion, compared with $47.2 billion in the same period a year earlier and $55.6 billion in the entire fiscal 2016. “In times of volatile global market conditions, such durable flows preserve the resilience of external sector account,” said Shubhada Rao, the chief economist at Yes Bank. “An outcome of liberal policy framework as well as an endorsement for India’s rapidly improving business environment, FDI inflows in recent times have outpaced portfolio flows. FDI, in addition to being durable, also facilitates transfer of superior technology that brings efficiency gains.” India is becoming an economy that offers stable growth in an environment where emerging markets like South Korea and Indonesia have been struggling with political and economic problems. India’s ranking in global ease of doing business has risen to 130 in 2017 from 142 in 2015. The government has been aggressive in pushing legislation such as on Goods and Services Tax, which is all set to become a reality more than a decade after the most important tax reform to create a single market was first thought about.
Source: The Economic Times
The international crude oil price of Indian Basket as computed/published today by Petroleum Planning and Analysis Cell (PPAC) under the Ministry of Petroleum and Natural Gas was US$ 51.28 per barrel (bbl) on 31.03.2017. This was lower than the price of US$ 51.36 per bbl on previous publishing day of 30.03.2017. In rupee terms, the price of Indian Basket decreased to Rs. 3325.11 per bbl on 31.03.2017 as compared to Rs. 3334.79 per bbl on 30.03.2017. Rupee closed stronger at Rs. 64.84 per US$ on 31.03.2017 as compared to Rs. 64.93 per US$ on 30.03.2017. The table below gives details in this regard:
|
Particulars |
Unit |
Price on March 31, 2017 (Previous trading day i.e. 30.03.2017) |
Pricing Fortnight for 01.04.2017 (March 13, 2017 to March 29, 2017) |
|
Crude Oil (Indian Basket) |
($/bbl) |
51.28 (51.36) |
50.06 |
|
(Rs/bbl |
3325.11 (3334.79) |
3275.43 |
|
|
Exchange Rate |
(Rs/$) |
64.84 ( 64.93) |
65.43 |
Source: PIB
Pirates have hijacked an Indian commercial vessel off the coast of Somalia, the second attack in weeks after years without such seizures, industry and security sources said on Monday. United Kingdom Maritime Trade Operations (UKMTO), which coordinates the management of merchant ships and yachts in the Gulf of Aden area, said it had received information that a dhow en route to Bosasso from Dubai had been hijacked “in the vicinity of Socotra (Island)”. A spokesman said UKMTO could not confirm the location of the vessel, which he identified as Al Kausar, or what exactly had taken place. Investigations were continuing. “We understand Somali pirates hijacked a commercial Indian ship (and it is heading) toward Somalia shores,” Abdirizak Mohamed Dirir, a former director of the anti-piracy agency in Somalia’s semi-autonomous Puntland region, told Reuters. Graeme Gibbon-Brooks of UK-based Dryad Maritime Security said industry sources had told him the Indian vessel had been en route to Bosasso from Dubai when it was hijacked on Saturday. The pirates on board were taking the ship and its 11 crew members to Eyl in Puntland, he said. Muse Osman Yusuf, Eyl’s district commissioner, said authorities were ready to confront the pirates. “We shall not allow it. Puntland maritime police forces have a base here and we shall fight the pirates in case they come,” he told Reuters. An Indian government official said the 11 crew were all Indian and that officials were in touch with the Somali government. “This confirms that the pirates still have the ability to go to sea and take vessels, and the international shipping industry needs to take additional precautions,” John Steed of the aid group Oceans Beyond Piracy told Reuters. Somali pirates hijacked an oil tanker last month, the first such seizure of a vessel since 2012, but released it after a clash with the Puntland marine force.
SOURCE: Africa News
The rupee strengthened further against the dollar breaking above 65 as expected. The currency made a high of 64.78 on Friday. But it lost some ground on Monday and reversed lower giving back some of the gains made in the past week. It finally closed at 65.03 on Monday. Although the dollar index recovered in the past week, strong inflows from Foreign Portfolio Investors (FPIs) overshadowed the greenback’s strength and lent support to the rupee on the upper hand. The dollar index recovered sharply from its low of 98.86 to break above the psychological 100 mark in the past. The index is currently at 100.50. This bounce-back in the dollar failed to have any negative impact on the rupee and the FPIs continued to pour money into the Indian market. The Indian debt segment witnessed an inflow of $1.41 billion, while the equity segment attracted $1.84 billion in the past week.
The best quarter
The first quarter (January-March) of 2017 that went by has been one of the best for the Indian markets in many ways. First, the 4.74 per cent rise in rupee against the dollar this quarter has been its best since September 2012. Second, after selling Indian debt aggressively between October 2016 and January 2017, FPIs had turned net buyers since February. An inflow of $4.47 billion into Indian debt in the first quarter is the best in the last two years since March 2015. Also, the $6-billion inflow into equity this quarter is the highest since June 2014. Will this momentum continue for the rest of the year? We will have to wait and see.
Events to watch
Two major events are key to the rupee’s journey this week. First is the Reserve Bank of India’s monetary policy meeting on Thursday (April 6). The RBI is expected to leave policy rates unchanged this week. Any surprise from the RBI may cause high volatility in the markets. The second event is the US non-farm payroll and the unemployment data on Friday. A strong jobs number might give a boost to the dollar, which in turn may restrict the strength in the rupee.
Rupee outlook
The sharp downward reversal on Monday is significant as it has happened from a key trend-line resistance around 64.70. The rupee should breach this hurdle at 64.70 to strengthen further against the dollar. If the rupee remains below 64.70, a fall to 65.20 is likely in the near term. Further break below 65.20 may drag the rupee to 65.50. Inability to break above 65.50 may keep the rupee range-bound between 64.70 and 65.50 in the short term. On the other hand, if Monday’s weakness in the rupee remains short-lived and it manages to break above 64.7, it can regain its momentum. In such a scenario, the rupee can strengthen towards 64. But the strength in the rupee is expected to be restricted to 64 as this level is a key medium-term resistance. There is lesser possibility of the rupee strengthening beyond 64 for now.
Source: Business Line
Some organised transporters say they have not yet seen much impact of the truckers strike apart in Southern India. And the situation is far from good as the talks between the insurance regulator and transporters unions failed on Monday. Several players, including TCIEXPRESS, Apollo Logistics and Truckola, say they have not yet seen any significant impact of the ongoing strike. Trucks of TCIEXPRESS have started operating at night to negate the impact of the strike. “TCIEXPRESS operates across India and it has not been impacted by the strike, particularly in the North, West and East parts of India,” according to Chander Agarwal, Managing Director, TCIEXPRESS. However, in the South, there has been a a bit of impact as truck drivers associations have been protesting during day time. The transportation is managed over night so that delivery services are not impacted. “We have not seen any real impact on our business,” stated Raghav Himatsingka, founder, Truckola, an aggregator. Apollo Logistics, another player, maintained its operations have not been not impacted, declining to share the reasons. Meanwhile, commercial vehicles unions had a meeting with the Insurance Regulatory and Development Authority (IRDA) seeking a drop in third-party insurance fee or de-regulating the third-party insurance space. They have decided to continue the strike, with IRDA declining to lower the third-party premium, stated the Indian Foundation of Transport Research and Training, a body which tracks the transport sector. The Cabinet-approved Motor Vehicles Amendment Bill proposes that in case of injury or death caused due to accidents, the victims or the deceased’s family have the option of accepting a compensation of ₹ 2.5 lakh and ₹5 lakh, respectively, provided they do not approach the Motor Accident Claims Tribunal. The amount has to be paid by the insurers within one month, according to the proposal.
Source: Business Line
Major Indian and Malaysian companies in the oil and gas, infrastructure and engineering sectors on Monday signed investment proposals worth $36 billion. Companies such as Adani Ports, Andhra Pradesh Gas Distribution Corporation and Natco Pharma signed 31 memoranda of understanding (MoUs) with Malaysian companies and industry bodies to facilitate investments in both countries. The developments were part of the visit by Malaysian Prime Minister Najib Razak to India. As of December 2016, Malaysia was the 25th largest source of investment into the country, with $829 million worth of foreign direct investment (FDI). India is the ninth largest investor in Malaysia, as of 2016, with nearly $300 million worth of investments across eight manufacturing projects, Razak said at a business forum. The prime minister also called for a speedy conclusion to the negotiations on the Regional Comprehensive Economic Partnership (RCEP) agreement, which both nations are a part of. “It is more relevant than ever before that we conclude RCEP, now that Trans-Pacific Partnership is buried.” The RCEP is a proposed free-trade agreement (FTA) between the 10 countries of the Association of Southeast Asian Nations (Asean) and the six with which this bloc has FTAs — Australia, China, India, Japan, South Korea, and New Zealand. Negotiations, which began in 2012, was to have concluded in 2015. While negotiations on RCEP recently broke a deadlock, India is now under pressure to update its offers on tariff reduction on goods and services trade before the next meet. At a ministerial meet held in Laos in August last year, India had made its boldest move so far by shifting its long-held stance of a three-tiered, differential levels of tariff reduction to a single one applicable to all RCEP members, subject to the provision of minimum deviations for various nations. Also, the Trans-Pacific Partnership factor continues to impact RCEP talks. With the Trump administration in the Us pulling the plug on TPP, experts had predicted that India would be able to push talks faster with nations like Japan, Australia, New Zealand, which were part of the TPP. However, officials in the know said these nations have taken a more aggressive stance. Bilateral trade between India and Malasia slumped nearly 25 per cent to $12.79 billion in the last financial year against $16.93 billion in 2014-15. The trade balance is in favour of Malaysia. Imports from Malaysia, mostly in the form of palm oil and crude oil, dominate trade with more than $9 billion worth of incoming goods.
Source: Business Standard
Mathew Cyriac, the former co-head of Blackstone’s private equity (PE) business in India, has bought a 39.96 per cent stake in Gokaldas Exports from Blackstone for ~58.61 crore. The PE firm has taken a 79 per cent haircut to exit its decade-long investment. In 2007, Blackstone had picked up a 70 per cent stake in Gokaldas for ~676 crore, paying ~275 a share. Cyriac, with three others acting in concert, has launched an open offer to acquire another 26 per cent stake in Gokaldas Exports for ~63.25 a share, the firm informed shareholders on Saturday. The open offer will cost ~58.06 crore. Blackstone has been trying to sell Gokaldas without much luck and had made partial exits in the past few years. The hit Blackstone has taken on this deal could be lower, as it had made partial exits by selling a 30 per cent stake over the years. The Gokaldas stock closed at ~80 on Monday, up 14 per cent, even as trading volumes doubled since the afternoon. The remaining 60 per cent stake in the company is held publicly, largely by individuals.
Source: Business Standard
The textile sector in Zimbabwe exported goods worth over R2 billion to South Africa since 2009, but none of these goods were made available to local clothing manufacturers, an official has said. Zimbabwe Clothing Manufacturers’ Association chairperson, Jeremy Youmans, told NewsDay that even though the textile sector exported R2 billion worth of goods to South Africa since 2009, the clothing sector did not benefit. “Since 2009, there has been over R2 billion worth of textiles exported to South Africa from Zimbabwe,” he said. “Obviously none of these textile goods were made available to local clothing manufacturers, so while it earned the country external funds, some of these were needed to fund imports of fabric, which was not available locally due to it having been exported.” Youmans said the sector was importing poly-cotton fabrics, as these were not produced locally. As a result, the country is losing millions of dollars through imports. “Because the textile sector chooses not to make poly-cotton fabrics, they have to be imported. While the polyester fibres would always have to be imported, this means the clothing manufacturer, who imports the poly-cotton fabric, their customer has demanded, also is effectively importing the cotton, which was used to produce the fabric as well,” he said. “So, not only do we pay scarce external funds on cotton, which could be sourced here, the benefit of the value addition in the cotton to clothing chain in Zimbabwe is also lost.” To value add cotton, Youmans said it does not have to be used only in 100% cotton fabrics. “When it is blended into poly-cotton fabrics, it is utilised and the value addition realised as well. So it is a real issue that the textile sector chooses not to make these fabrics and we have to import them.” Youmans said the industry was still suffocating from cheap imports despite government having introduced a number of measures to tame the tide.
Source: Newsday
Over 3,000 staff of closed textile companies in Kaduna have died while waiting for the payment of their entitlements, with many others plagued by various health challenges, a group of former textile workers has said. The President of the Coalition of Closed Textile Workers Association of Nigeria (CCUTWAK), Comrade Wordam Simdik, said while speaking at a special programme held in conjunction with wives of their late members at the Kaduna Textile Limited (KTL) premises yesterday that the closure of the textiles several years ago had led to broken marriages and disengagement from social life by their members. In a communiqué issued, the coalition appreciated the efforts of the 19 northern states for paying off N400 million KTL debts owned to First Bank, while also appreciating the efforts of the Group Managing Director of the NNDC for supporting the Managing Director of the company to get investors for the reopening of the company. On Arewa Textiles PLC, the coalition appealed to stakeholders to assist in resolving the dispute between the company’s management and that of Union Bank. “We workers appeal to Union Bank to release all necessary documents to the Arewa Textiles management to enable them get an investor. We believe the bank will be more committed to doing business with the company if it reopens,” it appealed. The communiqué said the workers wanted the Chairman of Nortex and Finetex, Alhaji Aminu Dantata to compute their terminal benefits and gratuity and seek ways to settle them.
Source: Daily Trust
As the world’s second largest garment exporter, Bangladesh is expected to export over $50 billion worth of garment by 2021. One of the major factors that drives Bangladesh’s booming textile and garment industry over the recent years is the growing foreign direct investment in the industry. The country’s cheap textile labour, preferential location in the heart of Asia-Pacific region and government supports are some of the reasons increasing amount of investment have been made in Bangladesh’s textile and garment industry. According the statistics from Bangladesh Bank, Bangladesh’s textile and garment industry experienced a surge in Foreign Direct Investment (FDI) in the last fiscal year of 2016, with total FDI totalling over $396 million, representing a 11% increase from previous year’s $351.6 million. This surge marks a successful rebound of FDI from the economic slump in the country’s textile and garment industry after achieving a record high of FDI of $445.8 million in fiscal year of 2014. Among all the foreign investment on Bangladesh’s textile and garment industry in the last fiscal year, some $222.86 million was invested as reinvested earnings of the current companies that are already operating in the country. South Korea was the largest investor for Bangladesh’s textile and garment industry in fiscal year of 2016 – several South Korean apparel companies invested over $111.6 million, representing over 32% of the total FDI in the sector, followed by Hong Kong’s $89.07 million. FDI from the United States stood at a modest $33.02 million. Currently, Bangladesh is the world’s second largest garment exporter in the world after China, the South Asian country also enjoys tariff-free market access in EU, Canada, Australia and some other major textile and garments markets in the world. An increasing number of international investors and famous fashion brands, such as Zara, H&M, Gap and Levi’s, are already manufacturing and importing clothes from Bangladesh. In order to further increase the FDI in the sector, the Government of Bangladesh is promoting investment opportunities not only in textile sector but also in the allied energy and infrastructure sectors that will help boost volumes in textile trade. Meanwhile, industrial associations are also improving healthier business environment, training more skilled workers, improving social compliance status, and improving coordination among the manufacturers, exporters and importers.
SOURCE: The Daily Star
Along with its growing exports of garment products, Vietnam has also seen a soaring Foreign Direct Investment (FDI) in its booming textile and apparel industry over the recent years, make the country one of the most popular destinations in Asia for textile investment. Singapore, China, the US, Japan and South Korea are currently some of the largest textile investment sources for Vietnam’s textile and apparel industry. According to the data from Vietnam’s Foreign Investment Agency (FIA), FDI investments in Vietnam were up 152.78% year-on-year in the first two month of 2017, and investment in Vietnam’s textile and apparel industry now accounts for 21% of the country’s total FDI. FIA also reports that Chinese investors have registered 123 investment projects in Vietnam between January and February of 2017. One of the largest among these Chinese investments is the $220 million in Billion Vietnam polyester synthetic fibre plant in central Tay Ninh province. Over the recent years, Chinese investors have been pouring increasing amount of money into Vietnam and China is now the second largest FDI contributor to Vietnam, after Singapore. In the January-February period a total of $721.7 million came to Vietnam from Chinese FDI, representing total 30% of total FDI registered in Vietnam. Chinese investment in Vietnam’s textile plants will enable Vietnam to have more advanced technology and increased capacity in its textile and apparel productions. Meanwhile, textile investment from South Korean in Vietnam is also increasing. By the early 2017, South Korea’s Sea-A Group has committed total $2 billion capital in Vietnam’s textile and garment industry. The Sea-A group has been operating in Vietnam for over six years and has a garment plant that turns out seven million products a year and has a workforce of 3,000. The growing foreign direct investment in Vietnam’s textile and apparel industry is believed to be brought as one of the major side-beneficiaries after Vietnam joined the Trans-Pacific Partnership (TPP). When joining the TPP, textile tax rate reduces to 0% which also indicates a bigger growth and more profit for Vietnam’s textile and apparel exports. Vietnam’s Ministry of Trade and Industry suggests the increasing FDI is also attributed to the fact that Vietnam will implement all commitments under the ASEAN Free Trade Agreement with China and with other major ASEAN markets, the ASEAN Economic Community (AEC), World Trade Organisation (WTO), and new generation free trade agreements. All these implementations and agreements are expected to create highly favourable conditions for the country’s economic development.
SOURCE: Vietnam’s Foreign Investment Agency (FIA)
In Turkey's mainly Kurdish southeast, deeply scarred by conflict between state forces and militants, a textile firm that supplies companies across Europe plans three new factories — a rare bet the government can deliver on a vow to regenerate the region. The government announced a $2.8 billion investment scheme for the area in September, hoping to win over the population with the prospect of economic revival before a referendum later this month on expanding President Tayyip Erdogan's powers. The Iskur group, a supplier to fashion brands including Zara, Adidas and Nike, sees its $100 million investment as showing the way for other companies from western Turkey to take advantage of government incentives and lower wages in the east. Undaunted by the militant Kurdistan Workers Party's (PKK) decades-old insurgency, it has been operating a $30 million cotton thread plant outside the region's biggest city Diyarbakir since 2014 but few others have followed its lead. "We have opened a door in Diyarbakir, creating an example for other investors in the west," plant manager Ekrem Kul told Reuters as workers tended to rows of machines spinning thread. Iskur halted expansion plans in 2015 with the outbreak of some of the worst fighting since the PKK took up arms in 1984, but Kul said it revived them after the government initiative. It aims to employ more than 2,000 people in the new Diyarbakir plants, up from just 330 now. Its optimism is rare in a region where, according to the United Nations, the upsurge in violence between July 2015 and December 2016 killed around 2,000 people, devastated whole neighborhoods and drove half a million people from their homes. The ruling AK Party, founded by Erdogan, owed much of its early success to its stewardship of the economy after coming to power in 2002, improving roads, building bridges and hospitals. The pro-Kurdish HDP says the government has, however, failed to solve the problems of the southeast, where more than 40,000 people have been killed in three decades of conflict. The government counters it has boosted per capita income in the area to $5,000 from $800 with extensive state investment. Prime Minister Binali Yildirim promised new factories, housing, hospitals and sports stadiums under the investment plan. Urbanisation Minister Mehmet Ozhaseki told reporters on Saturday state investments have so far focused on reconstruction of buildings damaged in the conflict. Alican Ebedinoglu, president of one Diyarbakir trade association, is skeptical private investment will follow. "Every new government has made fresh legislation to provide incentives for investment in the region. But without peace and calm, these incentive packages don't mean much. If there is peace, the region hardly needs any incentives," Ebedinoglu said.
"BUSINESS EVAPORATED"
Erdogan won support among Kurds for spearheading a peace process in 2013, the first time Kurdish political demands had been addressed, and for easing some restrictions on them. But after a ceasefire with the militants collapsed in July 2015 he has ruled out a return to negotiations, saying security forces will "annihilate" the PKK, which is considered a terrorist organisation by Turkey, the United States and Europe. In events echoed in other towns in the southeast, armed youths dug trenches and laid explosives in Diyarbakir's ancient Sur district that is encircled by towering, Roman-era walls. Security forces fought back with tanks. Security operations ended in Sur a year ago, but there are checkpoints all across the city and concrete blocks placed in front of buildings deemed vulnerable to the sporadic bombing attacks on security forces that have taken place since. Ebedinoglu said the fighting caused 500 businesses to shut down completely, while shopkeepers were forced to close their stores for weeks or months at a time when the violence surged, meaning they fell behind on rent and debt payments. "The government has said it will provide interest-free loans but that's a myth. You wouldn't be able to find 100 people around here that the banks would lend to unless their credit background is entirely erased." Mustafa Avcilar, owner of a cafe in a 16th century courtyard once popular with tourists, closed it for months as clashes raged nearby. "Once the fighting began, business evaporated in the blink of an eye. A wave of tension swept over the city," said the 52-year-old, speaking as trade was picking up in the Sur district. The industrial zone where the Iskur thread factory is based is 20 km (12 miles) north of the city, far from the focus of the fighting, but it was not immune. "It affected our workers' ability to come to work easily - their psychological states, their productivity. We experienced difficult days," Kul said. Household disposable incomes are around half the national average of $4,500 in the southeast and official unemployment in some provinces is 28 percent, more than twice the national average, a figure some local business say is an underestimate. In the four provinces, including Diyarbakir, most affected by the recent conflict, the pro-Kurdish HDP won around three quarters of the vote at the last parliamentary elections in November 2015. However, the AK Party attracts greater support in less troubled provinces of the southeast. Diyarbakir, a city of more than 1.5 million, is better off than rural areas. Apartment blocks have mushroomed and modern shopping malls add to the appearance of growing prosperity, but Ahmet Sayar, head of the Diyarbakir Chamber of Commerce said there e is a long way to go. "For there to be a leap forward in achieving the economic potential as a region there needs to be an environment of predictability, stability, peace and confidence." he said. For workers too, a return of the ceasefire is vital. "We did not have these troubles during the peace process, we could come to work easily," said Ramazan Yildiz, an employee at the Iskur plant. "We go home in fear in the evenings, we come to work in fear, thinking, 'Will there be any problem or clashes on the road?'."
SOURCE: Fast Fashion
With consumers demanding high performance clothing, Intertek Hong Kong has opened its High-Performance Textile Testing Center at its Garment Centre premises. The facility is one of the best-equipped testing centres in the region to provide a comprehensive range of advanced technology performance testing for global brands, retailers and manufacturers. Intertek is a leading total quality assurance provider to industries worldwide. It has a network of over 1,000 laboratories in more than 100 countries. With a focus on delivering innovation and superior customer service, the Intertek Hong Kong test centre offers over 200 high-performance tests and unique testing technology including compression-sock testing and non-destructive down-fibre penetration resistance testing accredited by the Hong Kong Laboratory Accreditation Scheme, the company says. Christina Law, chief executive, North East Asia, Intertek, said, "Today, our customers are keen on integrating high-performance features into their products, but are often faced with many challenges, including sourcing, and technical and compliance issues. Intertek Hong Kong has always been a pioneer in innovation and in launching this new state-of-the-art facility, it reinforces our leading position to provide total peace of mind to our customers through our total quality assurance solutions, and signifies a new chapter in our accomplishments." Intertek founded the first commercial textile testing laboratory in Hong Kong in 1973. Over the years, it has developed a comprehensive range of testing methods for high performance textile testing, including for comfort (breathability, cooling), protection (thermal resistance, UV protection, water resistance) and easy care (oil release and water repellency). The exciting industry growth being forecast in the global sportswear retail market, expected to reach $185 billion by 2020, combined with the increased trend for athleisure, has led to the need for leading brands and manufacturers to deliver high performance functionality and increased performance testing to meet global standards.
Source: Fibre2fashion
LAHORE: The Prime Minister’s Export Enhancement Initiative will prove ineffective in boosting textile exports if the government does not pay back the industry tax and other refund claims amounting to billions of rupees to end cash crunch facing the exporters. In a statement on Monday, Pakistan Textile Exporters Association (PTEA) chairman Ajmal Farooq said that textile exporters were deprived of liquidity as a major portion of their working capital had been blocked in refund regime. “Under such extreme financial stress, achieving the target to increase the country’s export by $2 to $3 billion by June 2018 appears to be impossible.” He termed the PM’s initiative a right move but apprehended that inadequate funding would result in failure of getting the desired results. Giving example, he said that due to short releases of funds, half of the incentives of the Textile Policy (2009-14) are still yet to be disbursed. Moreover, a huge amount of claims of incentive schemes under the existing textile policy (2014-19) also remain unpaid. Terming fund blockage as the major cause of continuous drop in exports, he said the textile industry was unable to tap its potential in accordance with capacity. PTEA Group Leader Ahmad Kamal was of the view that export industry is the lifeline of the economy and continuous drop in exports would spell trouble for it, especially considering that the trade deficit is continuing to widen. Expressing concern over disparity with Punjab industries in gas prices, he said that gas rates are almost 100 per cent higher than those paid by industries in other provinces. Pressing for uniform prices across the country, he said that industries in Punjab are bearing additional burden of Rs100 billion annually on account of gas price differential as compared to the industries in other provinces. Meanwhile, All Pakistan Textile Mills Association (APTMA-Punjab) chairman Syed Ali Ahsan has urged the government to take the burden of Rs3.63 electricity surcharge to save the Punjab-based textile industry from total collapse. He said already 30 per cent of the production capacity has been closed down besides 30pc decline in exports in terms of quantity all across the value chain. Furthermore, he said, 30 per cent decline in cotton production during the last two crop seasons has added to the miseries of the textile industry.
Source: Dawn
