Post demonetisation and GST, about 30-35% workers have lost their jobs while the rest have seen erosion in their wages. Rajesh Agrawal, director of Geeta Polyfab, said, “Export orders are constantly declining due to refund issue and this has directly affected the Surat textile industry. Most of the units are working on single shift in current season time.” Glitches in implementation of the Goods and Services Tax (GST) have paralysed the once-booming Surat-based textile industry. The Federation of Surat Textile Traders Association (FOSTTA) claims that after the rollout of the new tax structure, over 4 lakh jobs have been lost with many of the textile units in the city running far below their installed capacity. FOSTTA claims that daily production has declined from 4 crore metres a day to 2.5 crore metres. Moreover, the past 18 months have seen sales slump by about 30-40 % and payments getting delayed. The city‘s textile industry provides employment to about 1.3 million workers. After demonetisation and GST, about 30-35% workers have lost their jobs while the rest have seen erosion of their wages. Two major changes demonetisation and GST have affected the textile trade in Surat and as a result production has fallen by nearly 40%,‖ said Champalal Bothra, secretary of FOSTTA. In view of the grim scenario, the association had recently written to Union textile minister Smriti Irani, apprising her about the crisis and urged government intervention and support. According to FOSTTA, textile and affiliated industries like power looms, embroidery and artisans have been losing jobs. FOSTTA president Manoj Agarwal said, Most of the textile and associated industrial units are small and unorganised. They are not able to understand and implement the complex structure of the new tax and this has led to many problems like fall in production and demand. Local artisans of embroidery have lost their jobs as they do not have enough work. Similarly, labourers in textile units are leaving to their home states for the same reasons. After GST, exports have decreased sharply from Surat. As the exporters have not received refund in time, several export orders have been canceled. Textile traders are also facing working capital shortage due to delay in payment from exporters and domestic buyers. FOSTTA estimates that exports have fallen by 60% post GST. Rajesh Agrawal, director of Geeta Polyfab, said, ―Export orders are constantly declining due to refund issue and this has directly affected the Surat textile industry. Most of the units are working on single shift in current season time. The crisis in Surat textile units will worsen if corrective actions are not taken by the government,‖ warns Agarwal.
Source: Financial Express
Recent economic news headlines signal a strong optimism relating to the Indian economy being on the upswing. GST collection for the month of April has topped Rs 1 lakh crore. The Goods and Services Tax (GST) revenue collection for the month of April has topped Rs 1 lakh crore, in a first since the implementation of the indirect tax in July last year. The higher GST collection in the month of April, on the back of year-end accruals and sales push, propelled the average monthly collection to a comfortable Rs 89,885 crore. “During the financial year 2017-18, total GST revenue collections between August 2017 and March 2018 has been Rs 7.19 lakh crore,” Finance Ministry said in a tweet. The SGST collection during the same period including the settlement of IGST has been Rs 2.91 lakh crore. “It appears that the GST revenues are now achieving the required buoyancy and the final figures may be even higher.The GST revenues appear to be on a good trajectory now and have the potential to increase further in the coming months based on the phased expansion of the e-way bill footprint,” MS Mani, Deloitte India said.
Source: Financial Express
Successive governments have failed to make agriculture and manufacturing competitive. For much of the first week of May, countries engaged in the negotiations for formalizing the Regional Comprehensive Economic Partnership (RCEP) will meet in Singapore for their 22nd round of negotiations. The Singapore meeting is significant, for several participants in RCEP are keen to wrap up the negotiations quickly, especially since the negotiations have gone well beyond the original deadline of end-2015. In the recent weeks, Japan, Korea and China concluded their trilateral meeting on trade, with a message to recognize the importance of deepening regional economic cooperation and to realize the trade and investment liberalization and facilitation in East Asia through RCEP. China seems to be particularly intent in pushing RCEP towards its conclusion; perhaps President Trump‘s recent warming towards the Trans-Pacific Partnership (TPP) is acting as a trigger for China to make that extra effort in RCEP and to its imprint on the mega-regional alliance. India is the only major economy seemingly distant from this talk of getting RCEP over the line. A reluctant participant from the very beginning, India finds that its own interests are almost entirely at a variance with that of the principal proponents of RCEP. India drew its own divergent line in the tariff negotiations, when most countries spoke of undertaking trade liberalization in both agricultural and industrial products. India‘s major concern was the presence of China, and was therefore reluctant to offer lower tariffs on too many goods to its northern neighbour. The concern was not without basis: even without preferential tariffs, India‘s imports from China had increased nearly 11-fold (from $7.1 billion to $76.2 billion) between 2004-05 and 2017-18. During the same period, increase in India‘s exports to China was relatively modest, from $5.6 billion to $13.3 billion, resulting in steep increase in trade deficit vis-à-vis China, from $1.5 billion to $63 billion. Adding to this is India‘s none-too-happy experience implementing the three FTAs with Asean, Japan and Korea. India had agreed to eliminate tariffs on about 80% of its products in each of these agreements and the outcome was quite similar—consistently rising trade deficits. The implementation of these agreements shows that while India lowered its tariffs to allow easier market access to its partner countries, Indian entities were unable to secure enhanced market access using the lower tariffs offered by the FTA partners. An official endorsement of the lack of gains from the FTAs with Asean, Japan and Korea came from the former foreign secretary S. Jaishankar, who had submitted before the Department-Related Parliamentary Standing Committee on Commerce that ―a lot of our agreements have not served as well as they could have‖. Ambassador Jaishankar had sounded a note of caution ―about the manner in which such arrangements (FTAs) work out in respect of our imports as well as on our efforts to increase the share of manufacturing sector in our economy‖.This assessment was entirely correct as successive governments have failed to make agriculture and manufacturing competitive. Since mid-2000s, each government undertook for reviving the manufacturing sector, starting with the National Manufacturing Strategy (2006), National Manufacturing Policy (2011), Make in India (2014) and the proposed industrial policy, but India‘s manufacturing sector has, by and large, been unable to measure up to global competition. One way of looking at the state of the manufacturing sector is to analyse the trends in the manufacturing balance of trade. In 1991, there was a deficit of $3.4 billion, which remained below $10 billion until 2003. But once tariffs began to drop rapidly, the weaknesses of the individual sectors were crudely exposed. In 2016, the deficit had increased to nearly $80 billion. What is particularly disconcerting is that among the large manufacturing sectors, only four registered trade surpluses in 2016, namely, pharmaceuticals, textile and clothing, iron and steel products and automobiles. However, each of these industries has its own problems. Pharmaceutical industry depends on imported bulk drugs; textiles and clothing faces challenges in a subsidy-free environment as export subsidies have been challenged in the World Trade Organization (WTO); and iron and steel industry has been struggling of late. The automobile industry has been among the largest exporters, but it needs tariff protection to overcome its disadvantages, including several policy-induced ones, in order to be competitive. But RCEP negotiations, which are threatening to eliminate tariffs on 90-92% of the tariff lines, may pose existential challenges to sectors like the automobiles. In 1997, India joined the Information Technology agreement of the WTO and eliminated tariffs on electronic goods, dealing a fatal blow to the fledgling domestic industry. Two decades later, the government should desist from walking down the same path, allowing RCEP to hollow out the manufacturing sector. What it should do instead is to negotiate the policy space that is imperative for supporting the turnaround of domestic manufacturing. Biswajit Dhar is a professor of economics at Jawaharlal Nehru University, New Delhi.
Source: Live Mint
India is ready and willing to assist in development in southern African countries, Commerce and Industry Minister Suresh Prabhu said at the India-South Africa Business Summit 2018, noting that the region holds huge potential for trade. Prabhu was leading a high level business delegation to Johannesburg to participate in the two-day summit from April 29-30. “We feel that there is a huge potential that exists between these two regions,” Prabhu said as he shared the platform with his counterparts form Botswana, Swaziland, Lesotho and Mozambique at the summit. Prabhu said there had been a meeting in New Delhi just a month earlier to explore what could be done in each of these countries. “It was quite an eye-opener for us, because we realised that some of these countries have so much capability which we were not aware of, so we can actually use that and bring it into India as well. The minister said “we are preparing for each and every country what it is that we can do together.” “We don’t want to offer one single solution to all the countries, but something befitting each of the countries in the southern African region,” Prabhu said. He said India’s commitment to trade relations with Africa is “very strong” and efforts are on to find out how the credit extended for project financing in some of these countries can be further improved. Prabhu said the steps would further benefit the countries where these projects are going to be implemented. Despite the optimism about the pledge of support from India, Prabhu cautioned that these projects “should not be overambitious”. “Often the ideas don’t work because of the very high ambitions that we start with, feeling that everything should be done immediately. That is not possible, even for India, which is a country much larger (than its African partners).” Prabhu proposed that a Joint Study Group be set up to explore these ideas further. “The relationship at political level is very high and very good, but we need to transcend that relationship into the economic sphere as well to benefit both the populations from that interaction,” he said. Botswana’s Minister of Investment, Trade and Industry, Bogolo Kenewendo, supported Prabhu’s view about people in her country benefiting from any partnership with India. “Development should not be just about GDP figures – the development we are looking for is now mainly focused on what is being translated to the livelihoods of our people,” Kenewendo said. “The world is looking to Africa for the next growth opportunities, and it would be wise to partner with a country that knows the struggle of Africa during the colonial times,” said Swaziland’s Minister of Economic Planning and Development, Prince Hlangusemphi. “I consider this a win-win situation based on mutual interest, which is why we encourage India to partner with our local businesses in various sectors of our economy,” he added.
Source: Financial Express
I take the Delhi Metro to work every morning. The subway system allocates one out of six or eight carriages exclusively for the use of women, in the interest of safety. The remaining carriages are mostly occupied by men - I would venture to say anywhere between 80% and 90%, based on rudimentary calculations. This is usually the case all the time. It’s a stark and daily reminder of just how far India has to go in terms of solving its gender inequality problem. A recent report on gender equality by the Mckinsey Global Institute (MGI), the consultancy‘s research division, shows that India is one of the lowest-ranked countries in the Asia-Pacific in terms of labour force participation by females and the contribution of women to GDP, based on figures from 2016. Around 18% of India‘s GDP is accounted for by women, while the share of females in the country‘s labour force is 25%. Only Pakistan ranks lower than India on both counts- with women contributing a mere 11% to GDP and comprising 22% of its labour force. It has a lot to gain by unleashing the productive potential of its women- who have, up until this point, been a underused resource. MGI estimates that India‘s GDP, if everything were to carry on as usual, could increase by $770 billion, or 18%, by 2025 by giving women access to equal work opportunities as men. Around $550bn, or 70% of this increase, would come by just increasing the share of females in the workforce by 10%.The remaining portion of the increase in GDP would be achieved by improving the quality of work given to women and the hours worked. Too often, the report notes, women are engaged in unpaid care work or low-quality, low-paying work like cleaning. A staggering 97% of all female workers are engaged in informal sector work that isn‘t regulated and doesn‘t offer adequate remuneration based on hours put in. Additionally, the amount of time spent doing unpaid, household chores is lengthened by a lack of easy access to amenities such as cooking fuel and clean water. A lot of women find themselves unable to enter the formal sector due to a low level of education. A report last year in the Wire showed that despite achieving strong enrolment rates for females in primary schools, as a result of the Right to Education Act, the government was not able to translate this into improved rates for secondary and tertiary enrolment. A girl‘s higher education is looked at as an opportunity cost. Why send her to school when she can start helping her mother take care of the house or drawing an income from manual work?
Inequality in formal sector
The lack of female representation in the formal sector also has a lot to do with how upper classes in Indian society function. The MGI report explained that women‘s workforce participation follows a ―U-shaped curve‖. While women from low-income families are forced to work out of necessity, the level of female employment gets progressively lower the wealthier a family gets, owing to the fact that there is a lower need for a woman to work for pay. MGI says that this effect can be reversed if companies step up their hiring of women and give women more leadership opportunities. In most cases, the hiring practices of Indian companies reinforce the labour participation gap. According to a working paper by the World Bank, an analysis of over 800,000 Indian job postings showed that there was an explicit bias towards men, especially in blue-collar sectors. Further still, professions that have greater representation by women - such as teaching, health and business process outsourcing - actually paid men significantly more. A lack of legal protection and political representation India does not have any laws in place to ensure equal pay for men and women. While the government passed a law mandating 26 months paid maternity leave in April last year, it made no provision for financial support to small-and-medium sized businesses. At the time, experts felt that the law would only serve to exacerbate discriminatory hiring practices against women. The government also excluded the unorganised sector from the purview of the law, thereby offering no protection to women in temporary, self-employed or contractual roles. Worse still, the law did not make any mention of paternity leave, deciding once and for all that child-rearing was the sole responsibility of the mother. The percentage of women in India‘s lower house of Parliament is tragically low, at 11%. The Women‘s Reservation Bill, which reserves 33% of the seats in both houses of Parliament and state legislatures for women, has been languishing for 22 years, despite being passed in the upper house in 2010. No surprise there. Why would the leaders of a male-dominated legislature be okay with ceding their seat to a woman?
The Northern states fare a lot worse
There seems to be a regional aspect to India‘s gender equality problem. While states in the northeast and south of India, like Andhra Pradesh, Kerala and Sikkim, report strong female workforce participation rates, Northern states like Bihar, Uttar Pradesh and Jammu & Kashmir, fall significantly behind. Unsurprisingly, the level of female workforce participation was lowest in states with lower levels of adult literacy. This highlights the problem as primarily one of access to good education. In mapping out a strategy to improve gender equality in India, the government would do well to focus on states in the North first.
Some progress has been made, however
This is not to say that India hasn‘t made any progress in curbing gender inequality. Over the past decade, it has reduced maternal mortality rates from 280 for every 100,000 births to 174. The female-to-male adult literacy ratio has also increased by 0.10 points to 0.87 while the prevalence of child marriage has declined.
Financial inclusion is also being achieved, gradually, through the Jan Dhan Yojana Scheme, which has given around 300 million women access to bank accounts and savings schemes, and the Mudra Yojana microcredit programme, under which more than 6 million female entrepreneurs have received loans.
But a lot more needs to be done
So what does that India needs to do to unlock the potential of its women and achieve the aforementioned increase in GDP? Firstly, according to the MGI, the government needs to leverage the digital inclusion and internet penetration wave. Greater access to computer skilling and by extension, to the internet means greater access to information - educational courses, learning resources, job postings and networking opportunities. It also means access to online banking, which in turn, means access to credit and savings instruments. Secondly, there need to be skilling and vocational training programmes tailored to industries where women have the highest potential for greater participation- healthcare, hospitality, textiles and electronics assembly. Thirdly, the government needs to encourage gender diversity-focused hiring policies in the companies. Fourth, given that women do ten times more unpaid work than men, the government can help reduce the time spent on unpaid work by providing households in rural area with electricity, closer access to clean water and subsidised childcare services. Fifth, increasing the level of women in legislative bodies in India will set a good example for other industries and could kickstart a shift in societal norms. Women are an increasingly influential electoral group and deserve adequate representation. Last, but most important, it needs to stimulate private investment and create enough jobs in the economy to accommodate the increase in female workers - an issue that merits its own feature story. The increase in the female labour participation rate is not low-hanging fruit that the government can pluck and qualify as a win. It transcends election cycles and requires long-term, structural reform and a broad shift in societal attitudes. It‘s a massive undertaking, but with a worthy payoff. Wouldn’t it be great if there were two compartments for women in the Delhi subway? Or better yet, each compartment was equally comprised of men and women?
Source: Business Insider
The garment division of Sivaraj Spinning Mills, an integrated textile company based out of Coimbatore, is eyeing an Rs. 100-crore turnover from its domestic retail business by 2020, a top official said. The company announced an expansion plan for its retail business under the Chennis brand. Subrata Pal, chief executive officer, Chennis, told The Hindu that the 10-year-old brand currently has menswear, womenswear and children‘s wear. However, the company would largely focus on menswear for now bringing out a range of outerwear, inner wear, ethnic wear and a bit of sports wear. The plan is to increase the number of company-owned outlets to 30 by the end of the current financial year. More stores would be opened in Chenani, Bengaluru and Hyderabad expanding to Ahmedabad, Pune, and Mumbai later this year. We are present mainly in Tamil Nadu, Andhra Pradesh, and Karnataka and in tier-two cities, said Mr. Pal. Integrating technology. We will expand to the metros and move to the western States this year. We are also changing the look and experience at the stores by integrating technology,‖ he said. Chennis is sold in 800 multi-brand outlets and this would increase to 3,500 by the end of this year. With the large format stores, the company is looking at selling its own brand of products and co-branding. ―We are working with three to four retailers and will increase to 15 retailers, which will give us presence in 700 stores,‖ he added. The company will be selling through five major e-commerce portals within a month. At present, 10% of the group‘s turnover comes from retail business. The company‘s plan is to take this to 32% by 2020 and have a pan-India presence, Mr. Pal added.
Source: The Hindu
Trade bodies and businesspersons demanded warehouses at the Benapole Land Port by private investors for adequate storage of imported and export goods. Businesses recommended that the Bangladesh government should facilitate setting up private sector warehouses at Benapole Land Port, at the fringe of Bangladesh-India international border to increase storage capacity at the port for boosting trade with India. Shipping Minister Shajahan Khan was the chief guest at a seminar on 'Addressing Land Port Issues for Better Indo-Bangla Trade' jointly organised by India Bangladesh Chamber of Commerce and Industry (IBCCI) and the High Commission of India in Bangladesh at Pan Pacific Sonargaon Hotel in on April 29. IBCCI president Abdul Matlub Ahmad, IBCCI export-import sub-committee chairman Motiar Rahman, former Bangladesh High Commissioner to India Tariq Karim, Deputy High Commissioner of India to Bangladesh Adarsh Swaika and India-based CUTS International executive director Bipul Chatterjee spoke at the inaugural ceremony. Bangladesh Land Port Authority chairman Tapan Kumar Chakravorty, IBCCI vice-president Shoeb Chowdhury, Institute for Policy Advocacy and Governance senior research associate Avia Nahreen, also spoke at the seminar. IBCCI president said that the warehouse capacity of Benapole was as low as 40,000 tonnes against the requirement of at least one lakh tonnes. Ahmad, who is also the immediate past president of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI), recommended making all 22 land ports along the India-Bangladesh border fully operational to augment bilateral trade. 'Unless we have enough warehouses, we cannot do business. The private sector is ready to help to build the warehouses at the port and we are ready to help the government,' he remarked. Last fiscal year, goods worth $650 million were shipped to India, 90 per cent of which were brought in through the land ports, according to data from the Export Promotion Bureau. If better land port facilities can be created, Bangladesh can easily grab a good portion of the $30 billion Indian apparel market, Ahmad said. IBCCI export-import sub-committee chairman, also Benapole based clearing and forwarding agent, Motiar Rahman said that it was absolute necessity to introduce private warehouse system at Benapole port, which cannot accommodate huge volume of imports from India. The existing 60,000 square feet government-owned warehouse is not adequate for the expanded trading relationship between the two neighbouring countries, businesses said at a seminar styled 'addressing land port issues for better Indo-Bangla trade'. Due to congestion on either side of the border, importers and exporters have to wait for as many as 25 days and in that time goods deteriorate in quality or go missing in the absence of adequate storage facilities. For instance, in the past 15 days, more than 4,000 trucks have been unable to enter Bangladesh from Indian Bangaon-Chakdaha side due to lack of space in Benapole, said Rahman, who is also the chairman of the import-export sub-committee of the IBCCI. In 2016-17, a total of 155.19 lakh tonnes of goods were imported and exported through the land ports, according to Shipping Minister Shajahan Khan. Bangladesh earned Taka 111.47 crore from the land port last fiscal year in contrast to Taka 26.74 crore in 2008-09. Shipping Minister said that the government took a coordinated approach to develop the country's all major land ports, riverine ports and sea ports. In 2016-17, the Petrapole-Benapole land port alone accounted for 37 per cent of the total trade between the two friendly neighbours, said Adarsh Swaika, deputy high commissioner of India in Bangladesh. 'Twelve more land ports are on way now,' said Tapan Kumar Chakravorty, chairman of the Bangladesh Land Port Authority, which manages six of the land ports. Currently, Bangladesh has 23 land ports, 22 of which are located along the Indian border, except for Teknaf land port with Myanmar. Non-tariff, procedural and regulatory barriers are standing in the way of higher bilateral trade between the two countries, said Bipul Chatterjee, executive director of CUTS International, an Indian research body. 'We need to focus on border areas. Border infrastructure is very important for land ports, and so multimodal connectivity has to be increased. In that case, active participation of foreign agencies and coordinating agencies is very essential,' the expert said.
Source: Bangladesh Monitor
Trade expansion, india, south africa, india south africa flight, business summit Delegates and industry leaders from India and South Africa have discussed ways to expand the trade relationship between the two countries and mooted the reintroduction of direct flights between Johannesburg and Mumbai. Delegates and industry leaders from India and South Africa have discussed ways to expand the trade relationship between the two countries and mooted the reintroduction of direct flights between Johannesburg and Mumbai. The two-day India-South Africa Business Summit 2018 (ISABS 2018) saw scores of noted speakers and distinguished experts and diplomats from the two countries participating in parallel discussions on startups, automobile industry, healthcare and pharma, mining, agro-processing, women entrepreneurs in business and the fourth industrial revolution. Suresh Prabhu, Minister of Commerce, Industry and Civil Aviation, lauded the efforts of the High Commission of India and various South African government departments including the Department of Trade and Industry in organising the summit in the run-up to the BRICS Summit in July 2018. “South Africa has a strategic relationship with India. Our bilateral trade is growing and has increased from R68 million in 2012 to R107 million in 2018. Investments has also grown seeing 130 Indian firms investing in South Africa and 29 South African FDIs in India for R10 billion,” said South African Minister of Trade and Industry Rob Davies. In her remarks, High Commissioner Ruchira Kamboj said the India-South Africa partnership goes beyond the “undeniably unbreakable ties of solidarity” that have linked the people and the liberation movements of the two countries. “This partnership was also about a shared future through synergies, shared strengths and membership in multilateral settings where the two countries seek constantly to engage, deliberate and collaborate,” Kamboj said. Cautioning against the summit becoming just another ‘talkshop’, Prabhu has tasked a team led by the India-South Africa CEOs Forum to present an action plan to implement all the suggestions at the summit by the time he comes back for the BRICS summit in July. The summit also witnessed the signing of an MOU between Invest SA and Invest India, strengthening a rapidly growing economic and trade partnership between the two strategic partner countries. A CII sponsored white paper was also released, showing the good work being done by Indian businesses in South Africa, with a strong focus on localisation to skill South Africans in a collaborative spirit for mutually beneficial growth and progress. One of the biggest concerns expressed by delegates from both countries was about the lack of a direct flight between Johannesburg and Mumbai, resulting in long delays. Prabhu emphasised that most airlines in India had been privatised but promised to look into the matter, as did South African Minister of Public Enterprises Pravin Gordhan, under whose jurisdiction the state-owned enterprise South African Airways (SAA) falls. Air India, SAA and Jet Airways all stopped direct flights between the two commercial hubs at various stages in the past decade, citing they were commercially unviable.
Source: Financial Express
Barely a year ago, US President Donald Trump withdrew its membership from TPP , with the plea that TPP would work against his America First‖ policy. After a year , he overturned TPP ‗s redundancy and resuscitated TPP‘s significance as an economic weapon to banish Chinese bellicose in the trade war. Considering tariff barriers not enough to stop China‘s retaliation, Trump administration gave second thought to escalate pressure by volume trade in co-partnership with its economic allies in TPP , who are the major importers of Chinese goods. China is an export based economy. Trade accounts for 37 percent of its GDP. China depends substantially on TPP for its exports. TPP accounts for 49 percent of China‘s global trade. Trump‘s administration warning for imposing high tariffs on steel and aluminum and bringing US $100 billion worth goods in the high tariff net, seemed to have little impact on China‘s dumping goods in USA. China fumed to retaliate on the same velocity, arguing that its steel export accounted for barely 1.1 percent of USA‘s total steel import in 2017. To sully the Chinese obstinacy, Trump asked his administration to reinvent the scope for re-joining TPP, if the terms are renegotiated. Seemingly, he thought that 8 member countries of TPP ( out of 12 members) , who are largely dependent on imports from China and bear the brunt of large trade deficit with China, will vie for USA‘s support to dampen the Chinese exports. The 8 member countries of TPP, which are the concentration of China‘s exports, are USA, Japan, Vietnam, Singapore, Malaysia, Australia, Mexico and Canada. They accounted for 97 percent of China‘s exports to TPP in 2015. China‘s substantial exports to these countries created big trade deficits of these countries. Against these backdrops, can USA bring a major jolt to China after rejoining TPP? Can it play a lead role for trade diversion ? Presumably, it can dampen China‘s exports to these countries by supplanting, after reaping the benefits of tariff concessions within the trade block. It was observed that the major component of China‘ basket of exports to these 8 member countries were electric and mechanical machineries and equipment. Nearly one-fourth of Chinese exports to Japan relate to electrical machineries and equipment. In case of Vietnam, the share was 35 percent in 2015. This means that to wean away the Chinese predominance in these countries, USA has to supplant Chinese exports of electrical and mechanical machineries, by offering competitive pricing after reaping the benefits of low or no tariff in the region. Besides tariff advantages, TPP provides exemption from non-tariff barriers to its member countries, which are imposed in case of imports from China. USA and Canada imposed TBT ( technical barriers to trade ) to several home electrical appliances imported from China. The USA also imposes TBTs on children products ( such as toys) imported from China. Textile products from China are subject to TBT by Canada. Japan imposes technical barriers on imports of furniture and construction machineries from China. TPP, without USA, would have unleashed more space for China to flex its muscles. Now, with USA rejoining, TPP will impart a big burden on China‘s exports. This is because USA is the main export destination for some TPP member countries, who are diagonally major importers of Chinese goods. For example, USA is the main export destination for Japan , Vietnam and Singapore , accounting for 20 , 19 and 6 percent of their exports respectively. And USA, Japan , Vietnam and Singapore are among the top ten importers of Chines goods. Together, they accounted for 29.5 percent of Chinse exports in 2016. This means that in the export – import balancing, USA has much power to influence these countries to buy more from USA. Against this backdrop, it is likely that USA will exert more pressures on these four nations in TPP region to reduce their imports from China and buy American goods. India is not the member of TPP. Threats of adverse impact loomed large as four TPP member countries , viz, USA , Singapore, Malaysia and Vietnam, are the major trading partners of India. They account for one-fifth of India‘s global export. Given this, a large scale trade diversion was feared. It was feared that the rise in the intra-regional trade in TPP due to preferential tariff and curbing of non-tariff barriers would squeeze India‘s exports to these countries. Biggest trade diversion feared for India‘s exports was textile products. Textile is the single major item of India‘s export in its total exports to the world. It accounts for 10-11 percent of India‘s world export. USA alone accounts for 40 percent of India‘s total export of textiles. With the duty preferences granted by USA to TPP members, concerns were raised on India‘s export of textiles to USA. Vietnam would have been the main obstacle to India‘s export of textile to USA. Vietnam is the second biggest exporter of readymade garments to USA ( after China) . But, there is a catch. In TPP, the duty preference for textile trade is governed by yarn forward rule. Under the rule, it is mandatory for the TPP members, exporting textiles, have to procure yarn, fabric and other inputs from any or combination of TPP partner countries. At present, Vietnam procures yarn and fabrics mainly from China. Given the existing structure of logistic and low cost procurement of yarn and fabrics from China versus TPP rules, it will not be an easy task for the Vietnamese exporters to divert its procurement from China to domestic market or to any other TPP member countries. Further, none of the TPP members are globally known for manufacturers of yarn and fabrics. Nevertheless, in the cross-fire of US- China trade war and USA returning to TPP, India should have a relook at its trade pattern. India‘s surplus export to USA dragged it under US lens. It has already been alleged that India‘s export subsidies were non-compliant to WTO, after India achieved threshold of per capita income of US $ 1000 per annum. India‘s large trade deficit with China raises concern over its BOP.
Source: Eurasia Review
There is a huge demand for linen fabrics in the Indian market, and the proposed imposition of anti-dumping duty on ‘flax yarn’ originating in or imported from China would harm small players in the domestic linen fabric industry. Most of the flax fibre is sent to China after scutching to be spun into yarn, which is then woven into linen fabric. Linen is a very premium product, as flax is the third most expensive fibre after silk and cashmere. “Yet, there has been a three-fold increase in the consumption of linen in India in the last five years and is only going to continue growing, largely due to the efforts of brands like Linen Club, Linen Fiesta and Raymond that played a large role in bringing the fibre to India and developing the market for it,” said a member of the newly formed India Flax Weavers Association. The Directorate General of Anti-Dumping & Allied Duties (DGAD), ministry of commerce and industry, Government of India initiated an anti-dumping investigation in February this year concerning imports of ‘flax yarn’ of below 70 Lea count originating in or exported from China. The period of investigation (POI) is from October 1, 2016 to September 30, 2017. However, for the purpose of analysing injury caused to the domestic industry, the data of previous three years, i.e. Apr’14-Mar’15, Apr’15-Mar’16, Apr’16-Mar’17 and the period of investigation will be considered, DGAD said. “The consumption of linen in India has already crossed 20,000 metric tonnes per annum (mtpa) and is projected to cross 25,000 mtpa in the next two years. The current capacity for domestic linen spinning is less than 10,000 mtpa. Hence, Indian weavers will still need to source yarn from China in the short-term at much higher rates,” according to the association which has started initially with just five members. So, if there is a shortage of linen yarn (due to anti-dumping duty) in the short-term, foreign companies looking to source linen fabrics and garments will look outside India for alternatives and might even have to help develop this industry in other countries. Once developed, it’ll be hard for Indian weavers and garmenters to bring them back, the association argues. In theory, exporters could buy the yarn against an Advance Licence for exports and get it duty free, but in practice, it isn’t viable for small exporters to get the licence owing to all the paperwork and formalities involved in it. Atul Agarwal, director of Vrijesh Natural Fibre & Fabrics, said, “The monopolistic market argument plays a role here too. Even in the long-term, if there are just a few big players controlling the supply chain, they’ll take a piece of the pie from smaller exporters, which will largely affect the entrepreneurial spirit and employment in the textile industry. This will also affect the ‘Make in India’ efforts that have been made in the industry.” Many weavers in weaving clusters across India, including Surat, Bhiwandi, Erode, Bhagalpur, Champa and Varanasi are making sarees, shirting and furnishing fabrics out of linen now. "An increase in price of the yarn and the monopolising of weaving will largely affect the handloom and powerloom weavers across India that are now exclusively weaving linen. This will eventually play a role in killing the dyeing art and tradition of handloom and powerloom weaving that has been passed through generations in India," added Agarwal. While requesting the government to not to impose anti-dumping duty on flax yarn from China, the association said doing so would create a damaging shortage in the industry, promote a monopolistic market in an infant industry, make India uncompetitive in the export market, and help kill an art and tradition that has been in India for decades.
Source: Fibre2fashion
London – A pair of prominent UK retailers are publicly getting behind the Cotton Egypt Association‘s accreditation process. Launched by the Cotton Egypt Association (CEA) to help eliminate falsely labeled Egyptian Cotton goods from the supply chain, the process uses DNA testing to verify fiber content. Manufacturers who do not meet the new criteria will no longer be licensed to produce Egyptian Cotton products or use the trademarked logo. The testing method was developed by Bureau Veritas. John Lewis category technical manager for home, Tracy Saunders, said: While we are confident that all Egyptian Cotton products sold through John Lewis are 100% genuine, we support the need for auditing and testing. We will continue to insist that our suppliers meet the CEA standards as a condition of trade with John Lewis. UK home furnishings chain Dunelm Group is also endorsing the transparency process. We fully support the new accreditation process put into place by the CEA to protect the Egyptian Cotton brand, and will be continuing to insist suppliers meet those standards as a condition of trade with Dunelm,‖ said Catherine McCann, Dunelm technical and sourcing director. Khaled Schuman, executive director of the Cotton Egypt Association, said the support from key retailers helps to bolster confidence in the Egyptian Cotton brand name. Our cotton is the most luxurious in the world, and our commitment to retailers is to ensure that everything licensed as Egyptian Cotton, will be 100% Egyptian Cotton,‖ he added. The CEA‘s initial focus is on products in the U.S., Canada, Egypt, Europe, Australia and India. The organization noted that the Egyptian Ministry of Agriculture recently announced plans to double production of Egyptian Cotton over the next fiscal year.
Source: Home Textiles Today
All eyes are on Miami as of late. The sunny city in South Florida has been garnering much attention due to its growing fashion and art scene, college expansion and economic development. Miami has always been an influence on the Americas and Caribbean due to its close proximity. But, now it looks like Asia has been taking note. Is Miami the next place for Chinese business investment? Apparel Textile Sourcing and developer Moishe Mana think so.
China + Miami
A driving force behind the renaissance of Miami is developer Moishe Mana. The Miami Herald were flies on the wall during a conference in which him and ATSM organizer Jason Prescott waxed poetic about Miami‘s growing international influence. Moishe expressed a particular potential for the city to be an, ―East Coast home for Chinese businesses.‖ Interestingly enough, there isn‘t a large Asian population in the city currently but there is an allure already present for Chinese brands already looking to establish a U.S location. He continued that the establishment of Apparel Textile Sourcing Miami is laying the groundwork for the vision to come to fruition.
China + Apparel Textile Sourcing
The Apparel Textile Sourcing brand has had a strong relationship with China for years. China has had a strong presence at both the ATSC shows in Toronto. And now, The China Brand Show, administered by the Ministry of Commerce of China, will make its Canadian debut at the third ATSC in Toronto this August. This May 21st-23rd at the Maya Wynwood, there will be about 150 Chinese companies at the inaugural ATSM show. Chen Zhi Rong, director of the Chinese Chamber of Commerce has expressed his excitement of Chinese participation in the show. He said, The [China Chamber] is very excited to explore one of the world‘s greatest and untapped trade hubs — Miami. We are investing in Miami not just for Chinese companies, but to create a global trade show that inspires Americans and the Americas.
Source: TopTen Wholesale News
The government is working on a new package to facilitate exporters with a special focus on promoting the trade of value-added products to boost exports from the country. The government is working on a new package. Keeping in view the prevailing circumstances, this package will focus on the increase of non-traditional and value-added exports,‖ official sources said. Due to the export package of Rs180 billion provided by the government during the fiscal year 2017-18 and the exchange rate adjustments, exports increased by 13 per cent in the first nine months of the current fiscal year and 24 per cent in March 2018, they added. For the promotion of external trade, the government had introduced many export-promotion incentives that would help promote exports during the upcoming fiscal year and reduce trade deficit to a great extent.Since cotton was one of the major export products, the government has been working with provincial governments to formulate and enforce a policy to halt conversion of cotton growing area into a sugarcane growing area while Plant Breeders Rights Act has been recently enacted to help produce higher yield varieties of cotton and other crops locally through availability of better quality seed. During the last five years, the government took several measures for the promotion of exports of different sectors, particularly the textile sector. These included reductions in markup rates of long-term financing facility (LTFF) and export refinancing facility (ERF) to historic lows of 5 per cent and 3 per cent respectively, duty free import of textile machinery, uninterrupted supply of gas and electricity for industries, zero-rating of five key export sectors, and introduction of export package of Rs180 billion. During the upcoming year (2018-19), the government plans to rationalise subsidies and concurrently reduce the cost of production.For the upcoming year, the government introduced a zero-rating regime, freight support on the export of potatoes, reduction in LTFF and ERF rates, Export Promotion Schemes under Textile Policy and Strategic Trade Policy Framework, tariff restructuring and zero rating of import materials for the export sector which will significantly reduce the creation of new refund claims. To provide an incentive to exports an inter-ministerial review has identified certain raw materials, used in export-related sectors, hence the government would exempt or reduce the existing rate of customs duty on various raw materials.
Source: Pakistan Today Profit
The perspective for growth in the hydrocarbon-based alternative to cotton can only get better. This is against the backdrop that the rising demand for clothing materials may stretch cotton supply to the limit. Despite the discovery of this substitute, cotton still continues to be highly relevant as the demand for natural fibres continues to increase and cotton remains the primary natural fibre used within the clothing sector. For non-clothing use, however, demand for artificial fibres is increasing. In the medium-term, given the economic and demographic projections, global consumption of all textile fibre projected to increase by roughly 2.3 percent per year in 2010 should, by now, have exceeded 62 million tons, earlier projected for about a decade ago. The diverse modes of liberalisation and their impacts on the cotton and textile industry cannot be ignored. Liberalisation of the cotton sector, observed in most of the countries, was the result of a number of homogeneous trends. On one hand, state corporations have been gradually transferring a number of functions (research and development activities, production standards, inputs supply, production and primary collection of cotton and ginning activities) to the farmers‘unions or other private actors. This alone has contributed in no small measure in leading the sector down the slope. The revival of the textile industry in Nigeria requires urgent interventions, cutting across government policies, institutional supports, finance, market reforms, research, and development. Fundamental to the reforms of the cotton and textile industry in Nigeria is a vibrant seed sub-sector. The decline in cotton production was further compounded by the inadequate release of seeds to farmers as well as insufficiency and poor quality of seeds. These must be addressed qualitatively and quantitatively. Our seed companies must respond well to the challenge. We need to facilitate the establishment of world-class seed processing plants in the first instance. Farmers must be at the centre of any intervention aimed at repositioning the textile industry, in Nigeria and Africa. The perennial lack of adequate inputs, dependence on manual farm operations, poor pricing policy, activities of middlemen, poor product standards, effects of climate change, poor roads infrastructure and lack of security are afflictions that need to be cured in a committed manner. Input support services will expedite the cotton industry‘s rebound. Nigeria and indeed Africa must engage in technology transfer, particularly from other countries, embark on use of fertiliser, herbicides, pesticides, and agricultural extension workers for yield improvement, in ways that make it a game-changer in the revival of our textile industry. Collaboration through Public-Private Partnership is very much needed in this sector to tap into the combined strength and synergy between the public and private sector practitioners. We need to influence decisions in a number of areas, notably on price fixing, quality, modern technology, environment and sustainable production. Increase in cotton production in some parts of the world has benefitted from the deployment and use of modern biotechnology. The adoption of Bt cotton, which has helped China, US, India, Brazil and Burkina Faso should be part of the continental and national strategy to mitigate the effects of climate change and boost production. Across Africa, we need a robust platform for knowledge sharing and solution to problems that have trans-boundary impacts. We need to acknowledge the economic values of the utilisation of other co-products of cotton processing, specifically cottonseed oil for cooking, cotton seed cake for feeding livestock, poultry and aquaculture as well as cotton seed shell for power generation. In Africa, increase in capacity utilisation is desirable and indeed an imperative. This is crucial to the revival of the sector. Recently, India, the second largest textile producer in the world after China, announced a $1 billion US$ 1.7 trillion, constituting around two percent of the world‘s GDP, with EU, USA and China having a combined share of approximately 54 percent. The leaders in this industry operate mechanised cotton farming. The global apparel market size is expected to reach US$ 2.6 trillion in 2025, growing at a projected rate of four percent. The contemporary geography of African cotton is quite different from the reality that prevailed in the 1960s. Following the wave of nations‘independence, West Africa accounted for an average of only 15 percent of African production compared to nearly 40 percent for Egypt and 20 per cent for East Africa. The pervasive droughts in the Eastern and Southern Africa in 2017 was a cause for concern as dry weather, leading to poor harvest, might recur, with dire consequences for food crops as well as non-food crops such as cotton. Significant challenges will have to be overcome to achieve the level of agricultural productivity required to meet the production volume of food, fibre, and fuel in 2050. Mechanisation is one factor that has had a significant effect on Total Factor Productivity since the beginning of modern agriculture. Mechanised harvesting, for example, was a key factor in increasing cotton production in the last century in those leading producer countries. In the future, mechanisation will also have to contribute to better management of inputs, which will be critical to increasing Total Factor Productivity in global production. Mechanisation must be treated as an imperative rather than an option if Africa is to compete favourably in the global cotton-textile value chain. Policies and investment interventions across the continent must address this all-important issue. A 1980 survey of the impact of mechanisation in India, covering 815 farming households in 85 villages, showed an increase of 72 percent in sorghum and seven percent in cotton as compared to those who used traditional bullocks. We thus need a robust mechanisation intervention in form of irrigation to boost production reliably. West Africa occupies a modest place, with the region ranking fifth in the world and contributing only five percent of global cotton production. But production within the region depends largely on small-scale farmers using manual labour. It is projected that the major growth drivers of the global apparel market will be the developing economies. Nigeria, and indeed Africa, should aspire to have a significant share of this market. But how far can they go without mechanisation? Africa produces about 100 varieties of cotton grains, with the history stretching centuries back. This also meant that climatic factors were very important in the varieties cultivated. In countries with low rainfall, therefore, cotton must be irrigated as done for most of the areas cultivated in Egypt and Morocco. By contrast, however, sub-Saharan Africa cotton production is mainly rain-fed, as dry and humid seasons alternate. Of the six cotton basins in Africa, the largest in the West African basin, stretching from Senegambia to South-Eastern Chad and to the heart of the Central African Republic. It accounts for nearly two-thirds of Africa‘s total cotton production. West Africa is very significant in cotton production and textile industry in Africa. Out of the 12 leading African cotton-producing countries, eight are in West Africa. The rest of Africa‘s cotton is distributed among four zones along a North-South strip stretching from the Nile Valley to South Africa. To compete, therefore, there must be a sea change in approach to cotton business, cutting across the entire value chain from the soil to the factory. In between, factors such as input supply, logistics, post-harvest handling, human capital, finance, processing and price competitiveness all require deep introspection and practical actions if the cotton-textile and garment industry in the continent is to return to the true reckoning.
Source: Business a.m.
