Surat: Union minister for textiles Smriti Irani, who was on a day‘s visit to Surat to propagate the achievements of Narendra Modi government in last four years, avoided meeting the stakeholders from the textile sector, including the leaders of power loom weaving industry, on Friday. Irani refused to meet anyone from the textile sector, stating that she has come to attend the party‘s programme. The power loom weavers have been demanding the refund of input tax credit (ITC), which the central government has not agreed upon. Addressing a media conference, Irani said, The government has launched special refund fortnight starting from May 31 to June 14 wherein the claims under IGST on or before April 30, 2018 will be cleared. According to Irani, the central government has accepted some of the demands put forth by the textile sector, including the increase of 20 per cent duty, on the import of silk and 5 per cent GST on job work etc. When asked about the refund of ITC to the power loom weaving sector, Irani failed to give satisfactory answer and avoided speaking to media persons. Irani said, If the textile traders and power loom weavers are concerned about the dumping of imported fabric from China, they should gather official details and file a complaint with directorate general of foreign trade (DGFT) for action. When there was massive dumping of jute in the country, the manufacturers complained to DGFT and the dumping has stopped. I would urge the textile leaders to approach DGFT for imported fabrics. Talking to TOI, president of Federation of Gujarat Weavers‘ Association (FOGWA) Ashok Jirawala saidBeing the Union minister for textiles, it is her responsibility to meet all stakeholders. The power loom weaving industry is literally on the deathbed and only the refund of ITC will be able to rescue them. President of Pandesara Weavers Association Ashish Gujarati said, TUFS no longer attracts power loom weavers due to the issues of GST and refund of ITC. Even the power loom scheme under PowerTEX initiative has few takers from Surat. We would urge the central government to reconsider the refund of accumulated credit for weavers.
Source: Times news Network
The Tiruchi Customs Commissionerate, which covers Coimbatore and Tirupur districts too, is conducting a fortnight-long special drive to clear pending drawback, ROSL (Refund of State Levies), and IGST refunds. Ashok, Commissioner of Customs - Tiruchi, had a meeting here on Thursday in this regard. He told The Hindu that the IGST claims received by the Commissionerate so far is Rs. 94.59 crore and 88.76 % (Rs. 83.96 crore) of it has been paid. In the case of drawback, 98,636 shipping bills, for amount involving Rs. 40.02 crore, were cleared during the current financial year. The remaining bills are 4,261 for Rs. 7.33 crore. Regarding ROSL, he said the amount is paid whenever the respective ministry releases the fund. An advisory was received on May 24 to clear ROSL applications till April 30. Since the implementation of GST, We have so far paid Rs. 223 crore as ROSL and since receiving the recent advisory from the Government, we have disbursed Rs. 7.52 crore, he said. This is a special drive with focus on IGST, drawback, and ROSL refunds. The Inland Container Depots at Chettipalayam and Irugur and the Coimbatore Air Cargo are three major destinations under the commissionerate for cargo movement.
Additional personnel
The commissionerate will focus on these three by posting additional personnel depending on the cargo load, educating the people concerned to avoid errors while filing the claims. The commissionerate takes steps to ensure there is no delay in disbursements and is continuously educating the exporters and the cargo custodians on filing of returns, he added.
Source: The Hindu
Surat: The finance and textile ministries of the Government of India have turned down the request to allow the refund of input tax credit (ITC) to the power loom weaving sector. This was made clear at a meeting held with the Synthetic and Rayon Textile Export Promotion Council (SRTEPC) on Wednesday. SRTEPC chairman Narain Agarwal had called upon finance minister Piyush Goyal and textile minister Smriti Irani in New Delhi to discuss important issues concerning the man-made fibre (MMF) sector. In a one-on-one meeting, Agarwal said both the ministers categorically refused allowing refund of the ITC to the power loom weaving sector and stated that the accumulation of ITC in other segments, including textile processing, embroidery and yarn spinning will be released soon. Talking to TOI, Agarwal said, The refund of accumulated credit in the weaving sector has not been accepted by the ministers. The government officers were also asked to examine the rebate of duty on electricity levied by state governments, which works out to around Rs 3 per metre of fabric. Agarwal added, Rebate of taxes on fuel levied by state governments, which is about 0.66%, will be examined for further consideration. Also, the government has assured that they are studying the issue regarding the increase of effective duty on imports of cheap fabric.
Source: Times New Network
NEW DELHI: In view of an adverse impact of the goods and services tax (GST) on exports — particularly in the handicrafts, apparel and carpet sectors — the government is looking at making certain concessions in rates and allowing additional input tax credits to the industry, including a likely reduction of rates on finished carpets and expanding the list of duty-free imports of essential embellishment to make them competitive in the international market. The carpet industry had demanded the duty to be brought down from the existing 12% to 5% to make Indian carpets competitive internationally. The proposals are being worked out by the ministries of finance and textiles after a marathon meeting finance minister Piyush Goyal and textiles minister Smriti Irani had with representatives of various export promotion councils and industry captains last Sunday. The J&K and Uttar Pradesh governments had made a strong case for concessions and the decision to reduce rates was on the table at least since last November. The government is concerned over the fact that since October last year, exports of ready-made garments have significantly declined. It was found that the introduction of GST had unintended consequence of reducing tax refunds by 5-7% as compared to the pre-GST period, making Indian apparel uncompetitive in the international market, a top functionary privy to the meeting said. More than Rs 5,700 crore of refunds are stuck due to procedural issues after implementation of GST, contributing to cost escalation and slowdown in exports. Soon after the meeting, the FM on Tuesday announced setting up of a fortnight-long special refund drive by the Central Board of Indirect Taxes and Customs from May 31 to June 14 to resolve the input tax credit- (ITC-) and integrated GST- related refunds. The government is also looking at giving exporters input credit for certain embedded state and central levies for which no such provision is available at present.
Source: Times News Network
Prabhu to argue against linking renewal with New Delhi’s price cap on medical devices. India will ask the US for speedy renewal of the generalised system of preferences scheme (GSP) — the preferential import tax scheme that allows market access at nil or low duties for about 3,500 Indian products, including chemicals and textiles. The scheme was not renewed for India by Washington in April as the US Trade Representative‘s office said that it wanted to hold an eligibility review. Commerce and Industry Minister Suresh Prabhu, who will be in Washington later this month, is likely to point out that extension of the GSP scheme should not be linked to India‘s policy on pricing of medical devices or the dairy industry since the US had been unilaterally offering the concession to help labour intensive sectors so far. There is no reason why India should not be considered eligible for the GSP scheme as it has not taken any measure that could negatively affect bilateral trade between the countries, a government official told BusinessLine. Though the US Congress had voted to extend the GSP scheme through 2020, it was not done so for India, Indonesia and Kazakhstan. The USTR said it was launching a self-initiated GSP eligibility review of India based on concerns related to its compliance with the GSP market access criterion and was also accepting two petitions related to the same criterion. The US dairy and medical device industries had filed petitions pointing out trade barriers in India and had requested a review of India‘s GSP benefits. Pricing caps on medical devices is an issue which the USTR‘s office also wants to discuss separately with Prabhu as the medical devices industry in the US is unhappy with recent caps imposed on products such as stents. We have to explain to the US that decisions on pricing caps are taken by an independent national pharmaceuticals pricing authority and it is not possible for the Commerce Minister to give a guarantee on the issue, the official said. India is one of the biggest beneficiaries of the GSP scheme, which was introduced by the US in 1976. As per figures furnished by the USTR, imports from India in 2017 under the GSP scheme was to the tune of $5.6 billion, which was a fourth of total imports under GSP at $21.2 billion.
Source: The Hindu Businessline
SINGAPORE: Asia and the world will have a better future when India and China will work together with trust and confidence, Prime Minister Narendra Modi said on Friday, over a month after his first informal summit with Chinese President Xi Jinping. In his keynote address at the Shangri-La Dialogue here, PM Modi said India and China have displayed maturity and wisdom in managing issues and ensuring a peaceful border. He asserted that an Asia of "rivalries" will hold the region back while an Asia of cooperation will shape the century. "It is a world that summons us to rise above divisions and competition to work together," the Prime Minister said. Referring to regional maritime issues, PM Modi said India does not see the Indo-Pacific region as a strategy or as a club of limited members. "India stands for a free, open, inclusive Indo-Pacific region, which embraces us all in a common pursuit of progress and prosperity," he said.He further said, "We believe that our common prosperity and security require us to evolve, through dialogue, a common rules-based order for the region." On issues relating to trade, Modi said India stands for an open and stable international trade regime. Modi and Xi had held an informal summit in Chinese city of Wuhan in April last week during which they exchanged views on solidifying the relationship between the two Asian powers.
Source: The Economic Times
Survey signals weakness in output, new orders and employment; predicts RBI rate hike Factory performance appears to have taken a small hit as the Nikkei India Manufacturing Purchasing Managers‘ Index (PMI) slipped a tad to 51.2 in May from 51.6 in April. The index is based on the survey conducted among purchasing executives in over 400 companies. The companies are divided into 8 broad categories: basic metals, chemicals & plastics, electrical & optical, food & drink, mechanical engineering, textiles & clothing, timber & paper and transport. An index over 50 shows expansion while below 50 means contraction. According to the report prepared by IHS Markit, the latest survey data signalled a further, albeit weaker, improvement in Indian manufacturing conditions. This was reflected by weaker expansions in output and new orders and employment. Inflationary pressures intensified with both input and output prices rising at the fastest pace since February. Looking ahead, business optimism was weak by historical standards. Commenting on the latest number, Aashna Dodhia, Economist at IHS Markit and author of the report, said that latest PMI survey signalled a further, albeit slower, improvement in the health of the manufacturing sector in May. This was reflective of weaker expansions in output, employment and new business. On the other hand, the gain in new orders from overseas markets was the strongest since February.
Inflationary pressures
A build-up of inflationary pressures re-emerged with input cost and output charge inflation at the strongest since February, due to the upswing in global oil prices. As a net importer of crude oil, this could potentially destabilise India‘s recovery, particularly in private consumption, she said. At the same time, IHS anticipates that high oil prices will lead to a further depreciation of the Indian rupee and a wider current account deficit. Subsequently, in efforts to contain inflation and maintain financial stability, it is likely that the RBI will raise interest rates over the summer, she concluded.The report also mentioned that the latest upturn signalled a marginal improvement in the health of the manufacturing sector. However, the rate of increase slowed to a modest pace. Greater production in consumption and intermediate groups continued to outweigh a decline in investment goods. In line with the trend for output, new orders placed at Indian manufacturing companies rose in May. Participating managers suggested that enhanced marketing initiatives supported new client wins.
Job data
However, the good news is on the employment front. The report said the latest data pointed to a sustained rise in Indian manufacturing staff numbers midway through the quarter. The rate of payroll growth was little-changed from April and marginal overall. According to anecdotal evidence, firms were encouraged in expanding their capacity in response to greater production requirements. Job creation was evident in consumption and intermediate goods. It also mentioned that purchasing activity declined for the first time in seven months in May, albeit only fractionally. Meanwhile pre-production items held by Indian manufacturing companies rose at a slower pace. Stocks of finished goods, on the other hand, declined further in May. Despite easing from April‘s survey record, the rate of contraction was sharp.
Higher input costs
Indian manufacturing companies faced higher input costs in May, thereby stretching the current sequence of inflation to 32 months. Participating managers commented on higher prices for raw materials such as oil and steel. Reflecting higher cost burdens, firms raised their selling prices in May. Businesses remained confident towards the 12- month outlook for output in May. An expected improvement in demand conditions boosted optimism, according to anecdotal evidence. That said, the respective index remained below the historical average.
Source: The Hindu Business Line
With the market condition gaining momentum, early clearance of IGST and ROSL (Refund of State Levies) dues will enable textile and clothing exporters tap the potential, said chairman of Southern India Mills‘ Association (SIMA) P. Nataraj. The SIMA representatives were among those who met the Union Ministers of Finance and Textiles recently to discuss how to stop the decline in textile exports. Clearing the pending dues of ROSL and IGST will benefit the exporters as they will not face financial crunch. The ministers had also assured them of measures to prevent imports and to stop migration of investments to countries such as Ethiopia. They had advised the industry associations and export promotion councils to take up with the respective State Governments reimbursement of all State levies through ROSL. The Union Government would also work out alternative schemes for some of the non-WTO compatible programmes such as MEIS and EPCG. The government would advise Exim Bank to work out a special scheme to reduce interest rate burden on exports instead of increasing the IES benefits.
Source: The Hindu
India and Singapore have agreed to upgrade their Comprehensive Economic Cooperation Agreement soonto boost bilateral trade as the two sides on Friday signed eight agreements in the fields of the training of public service officials, cyber security, narcotics control and defence cooperation. The two sides concluded the second review of the Comprehensive Economic Cooperation Agreement (CECA) in the presence of Prime Minister Narendra Modi and his Singaporean counterpart Lee Hsien Loong. The review includes expanded tariff concessions for an additional 30 products and improved rules to provide more flexibility for Singapore exports into India to qualify for preferential tariffs under the agreement, Singapore’s Ministry of Trade and Industry said after the completion of review.“I am especially happy about the completion of the second review of our Comprehensive Economic Cooperation Agreement. But both of us agree that second review is not our destination, it is just a halt. Our executives will soon start discussions to upgrade and improve this agreement,” Modi said after his talks with Lee. Modi is here on a three-day visit. “The upgraded agreement will enable more Singapore companies to qualify for lower tariffs,” Singapore's Minister for Trade and Industry S Iswaran said. “This improves local exporters' access to the Indian market. I encourage our companies to make full use of the upgraded agreement and explore more opportunities for collaboration in India.” Another key benefit from the upgraded CECA includes a mutual recognition agreement on nursing to facilitate a better understanding in regulating training and practice of nursing. The India-Singapore CECA entered into force on August 1, 2005, and had its first review concluded on October 1, 2007. During Modi’s visit, the two sides signed eight agreements, including a mutual recognition pact on nursing. Implementation agreement signed between the Indian Navy and Republic of Singapore Navy concerning mutual coordination, logistics and services support for naval ships, submarines and naval aircraft (including Ship borne Aviation Assets) visits. Extension of the Memorandum of Understanding signed between the Indian Computer Emergency Response Team (CERT-IN) and the Singapore Computer Emergency Response Team (SINGCERT) in the area of cyber security. The Narcotics Control Bureau (NCB) of India and the Central Narcotics Bureau (CNB) of Singapore signed an MoU on cooperation to combat illicit trafficking in narcotic drugs, psychotropic substances and their precursors. Memorandum of Understanding on cooperation in the field of personnel Management and public administration. Memorandum of Understanding signed between the Department of Economic Affairs, India's ministry of finance, and the Monetary Authority of Singapore on the constitution of a Joint Working Group (JWG) on Fintech between India and Singapore. The NITI Aayog and Singapore Cooperation Enterprise (SCE) also signed an MoU on cooperation in the field of planning. In 2017, total bilateral trade between both countries amounted to 25.2 billion Singapore dollar, an increase from the 16.6 billion Singapore dollar when the CECA was signed in 2005. Top imports from India in 2017 include petroleum oils, jewellery and precious metals while top exports to India include machinery, petroleum oils, styrene and gold. The two sides will also start reviewing the civil aviation agreement soon to further boost links, given the potential of strong growth in air services. "Within our own country, we have a new civil aviation policy and the domestic civil aviation sector is going to come up in a big way," Preeti Saran, Secretary (EAST) at Ministry of External Affairs, told reporters during briefing on Modi's three-day visit to Singapore. "We are interested in holding an early review on the civil aviation agreement," she said, adding that dates would be worked out on return to New Delhi. The fact that this civil aviation sector is likely to grow much more, there is a need to do that, she stressed. There are nearly 500 weekly flights between Singapore and 16 different destinations in India. There were also talks of collaboration between India and Singapore in startups sector, technology and innovation. Both Prime Ministers also discussed the need for early conclusion of Regional Comprehensive Economic Partnership (RCEP) stressing that it be fair, comprehensive and balanced. "We are looking at newer areas of collaborations we are moving away from the traditional to the more innovative. To grow, to develop you must innovate," Saran said. She pointed out that new technology and startup companies must come up with cheaper and affordable technology. That is something of interest to India and Singapore companies will benefit, given the scale of operation that they will have in a country like India. "There are opportunities following the reforms. India is a big market for technology and we look towards Singapore as an important partner," she said.
Source : Business Standard
Farmers are shifting to other remunerative crops like soybean and paddy in major growing states. Sowing area under cotton is likely to decline by 10-12 per cent this year as farmers shift to other remunerative crops such as soybean and paddy to fetch better prices for their produce. The area under cotton is likely to decline to 10.7 million ha this year compared to 12.2 million ha last year as distressed farmers in Punjab, Maharashtra, Telangana and Andhra Pradesh have evinced weak interest in this cash crop. Farmers‘ dissatisfaction can be attributed to two major factors. Firstly, cotton was heavily impacted by pink bollworm last year which farmers fear spoil the crop this year as well. Secondly, prices remained subdued throughout last year, prompting farmers to look for the alternative crop. We estimate at least 10-12 per cent decline in the cotton acreage this year, said Atul Ganatra, President, Cotton Association of India (CIA), the representative body of cotton traders in India. Farmers are facing a spate of issues such as water shortage, unfavourable weather and the persistent menace of pink bollworm which could dent cotton sowing this kharif season by about 10 per cent as against the previous year. Farmers may shift from cotton to groundnut in Gujarat, paddy in Haryana and soybean in Maharashtra and the Telangana belt as cotton is still not remunerative compared to other options. Similarly, soybean, pulses and sugarcane area could surpass cotton in acreage as prices were firm and pest infestation in those crops are less. Cotton prices on the Multi Commodity Exchange of India (MCX) are trading at Rs 21,700 for bales of 170 kg each, up 3.23 per cent year-on-year, well ahead of the kharif season this year. Price outlook remain firm for this year and we can see prices jump 8-10 per cent, as support can be seen on the expectation of lower cotton acreage in India, said Ajay Kedia, Managing Director, Kedia Commodity. Meanwhile, gains in cotton prices may be capped even as good quality seeds and an improved yield are not making much impact on crop output. The decline in acreage may lower cotton output proportionately. India‘s cotton output was estimated at 37.7 million bales in the first advanced estimate by the Cotton Advisory Board (CAB) under the Ministry of Textiles. With monsoons forecast to be normal this year, Kharif output is expected to be bumper this season.
Source: Business Standard
Cotton prices, Cotton prices in gujarat, cotton export, China, US According to the industry experts, Indian cotton is currently the cheapest in the world and that is why global demand has been diverted here. Cotton prices are on the upswing in Gujarat and have moved up by Rs 3,000 per candy of 356 kg in past 10 days on the back of good export demand and rising international rates of the commodity precipitated by adverse weather conditions in US and China. According to the industry experts, Indian cotton is currently the cheapest in the world and that is why global demand has been diverted here. Cotton prices are presently at about Rs 45,000 per candy, up from Rs 42,000 ten days ago in Gujarat. One of the reasons being cited for the increase in prices is the decrease in arrivals to 40,000 bales (a bale of 170 kg) per day in the state with the cotton season drawing to a close. Looking to the present scenario of the market, cotton prices may continue to grow as the arrival of the quality cotton is limited. “Due to unfavoUrable climate condition in major cotton growing countries like China and US, international prices have gone up sharply and global demand has diverted to the India as our cotton in terms of price is cheaper. China, Bangladesh and Vietnam are aggressively buying Indian cotton which lifted prices in domestic markets,” said Arun Dalal, leading trader and exporter from Ahmedabad. As on 31 May, India has exported about 6.5 million bales of cotton and of it nearly 3.5 million bales have been exported from Gujarat alone. Last year, the country’s exports had touched some 58 lakh bales.
Source: Financial Express
JAGATSINGHPUR: With an aim to revive the handloom industry, Department of Textiles in collaboration with district administration decided to open handloom village tourism at Jaipur under Raghunathpur block of the district.On Friday, Collector Yamini Sarangi laid the foundation stone for the handloom village tourism in the presence of hundreds of women weavers. It is aimed at reviving the fortunes of the 90 handloom houses in the neighbourhood and providing a platform for the weavers to sell their products. At a time when traditional handlooms are fading into oblivion due to declining patronage and lack of marketing, the efforts of the administration to open handloom village tourism at Jaipur with the help of Sri Sri Parbati Weaver Cooperative Society has brought hopes to revive the traditional handlooms. To attract more tourists to the village, overall infrastructure roads, walkways, toilets and parking facilities will be developed while street lights will be installed. The weavers‘looms and their surroundings will also be renovated as part of the project. The weavers will also get an opportunity to sell their products to tourists visiting the handloom village while the tourists can get a feel of the tradition. The guesthouse would be designed in accordance with the theme to draw the attention of tourists. As many as 442 handloom weavers of 90 households in the area are expected to benefit from the project. A woman weaver Saraswati Prusty said, With powerloom products flooding the market, the traditional handloom sector in our district is fighting for survival. The handloom village tourism project will provide us with an opportunity to overcome the competition. It will give us a platform for live display of weaving for the benefit of tourists visiting the village. Apart from promoting tourism, the project is also expected to lead to overall development of Jaipur village, they added.
Raghunathpur BDO Panchanana Pasyat, Textiles Inspector Niranjan Pradhan, Chapada Sarpanch Bijay Kumar Swain and Secretary of WEC Manas Prusty were present.
Revamp plan
Govt to open handloom village tourism at Jaipur under Raghunathpur block. On Friday, Collector Yamini Sarangi laid the foundation stone for the project 442 handloom weavers of 90 households in the area are expected to benefit from the project
Source: The New Indian Express
The Indian rupee stormed ahead to end at a near one-month high of 67.06 against the US dollar, surging by 35 paise after a flurry of upbeat economic data bolstered confidence in the growth outlook. A broadly stronger Indian unit also rallied against British pound, euro and Japanese yen. Beating the street estimates and signalling a turnaround, the nation's economy expanded at 7.7 per cent in the January-March period against 7.2 per cent achieved in Q3 FY18, retaining the fastest growing major economy tag. The economic expansion was significantly higher than China's 6.8 per cent in the January-March period. In addition, infrastructure industries grew 4.7 per cent in April and also fiscal deficit for 2017-18 worked out to be 3.53 per cent of the GDP, broadly in line with the government's revised estimates. However, the upbeat Q4 GDP data damped bets of rate cut from the Reserve Bank of India next week, a forex dealer commented. The rupee has gained a healthy 80 paise in the latest bout of three-day rally. Though, renewed fears about trade war after the US imposed new tariffs on imported steel and aluminum kept forex sentiment little shaky with the rupee depreciating in early trade.The domestic unit touched a low of 67.45 before staging a strong rebound. On the energy front, crude futures regained ground after early losses, but the US benchmark is set for a second consecutive week of declines as US oil output comes close to matching that of top producer Russia.Brent crude futures, an international benchmark, is trading weak at USD 77.04 a barrel in early Asian trade. At the inter-bank foreign exchange (forex) market, the local unit resumed virtually flat at 67.41 against the US dollar.After briefly hitting a low of 67.45 in early morning deals, the rupee surprisingly sprung back to life following a heavy dollar unwinding exporters and banks. It touched a fresh intra-day high of 67.00 towards the tail-end trade before ending at 67.06, showing a solid gain of 35 paise, or 0.52 per cent. In a second weekly rally, the rupee has appreciated by a whopping 72 paise against the USD. The RBI, meanwhile, fixed the reference rate for the dollar at 67.1840 and the euro at 78.4104. However, the 10-year benchmark bond yields rose to 7.85 per cent from 7.83 per cent. The dollar index, which measures the greenback's value against a basket of six major currencies, was sharply higher at 64.17. In the cross currency trade, the rupee recovered against the pound sterling to settle at 89.34 per pound from 89.92 and rebounded against the euro to end at 78.41 as compared to 78.86 earlier. The home currency also strengthened against the Japanese yen to finish at 61.35 per 100 yens from 61.89 yesterday. Elsewhere, the euro traded little changed against the greenback as the manufacturing activity in the Eurozone registered the slowest pace of expansion in last 15 months, copying the development in Germany, the Eurozone's largest country, amid some caution ahead of the US employment report. The headline manufacturing PMI fell to 55.5 in May, confirming the flash estimate published earlier in May, but it was down from 56.2 in April and off multi-year high from the turn of this year. The British pound remained on a soft note despite positive manufacturing sector activity in the UK economy data which surprisingly rebounded in the month of May, the latest data revealed. In forward market today, the benchmark six-month forward premium payable in October and the far-forward April 2019 contract finished at 112-114 paise and 251-253 paise, respectively.
Source: Financial Express
Foreign investors are dumping Indian bonds at a record pace as surging oil prices threaten to worsen the nation’s finances, stoke inflation and hurt the fastest pace of economic growth among world’s major economies. Overseas funds pulled $4.5 billion from the domestic debt market since Jan. 1, the most in any year-to-date period in data going back to 1999. Second-quarter outflow was the biggest among the major Asian nations as Brent crude rose above $80 a barrel, the highest since 2014. Every $10 per barrel increase in oil prices will worsen India’s current-account balance by 0.4 percent of gross domestic product and raise inflation by 30-40 basis points, according to Nomura Holdings Inc. Standard Chartered estimates inflation to climb 20-40 basis points and the fiscal deficit to widen by 0.1-0.4 percentage points of GDP. High crude prices have also roiled financial markets of other oil-importing nations in Asia, including Indonesia. “Concerns about rising inflation and fiscal dynamics, in conjunction with lack of demand from key market participants, have contributed to the move higher in yields,” said Stuart Ritson, Singapore-based head of Asian rates and foreign exchange at Aviva Investors, which oversees about $482 billion. “More recently, this has been coupled with a less supportive macro backdrop of a rising dollar and higher oil prices.” Indian sovereign bonds declined in May for the ninth month out of 10 as overseas investors dumped $2.6 billion of rupee-denominated bonds. The selling spree resulted in the rupee’s worst performance in Asia this year after Philippine’s peso, sliding 4.8 percent against the dollar. The benchmark 10-year yield is up 52 basis points since end of 2017.
Growth Outlook
While India’s economy expanded 7.7 percent in the March quarter -- the fastest pace among the major growing economies -- elevated oil prices pose risks to consumer prices and future growth prospects. Amundi SA, Europe’s largest asset manager, said last week they have reduced expose to Indian government bonds. Pacific Investment Management Co. said they are “cautious on both the rupee and duration in India.” The foreign exodus marked a sharp U-turn from 2017 when overseas investors plowed $23 billion into Indian bonds, the most in three years. Aside from worries of wider fiscal deficit and inflation, the local debt markets have been crippled by a lack of market participants as state-run banks, the biggest buyers of such securities, lie low due to losses.
Source: Bloomberg
China will cut import tariffs on nearly 1,500 consumer products ranging from cosmetics to home appliances from July 1, in a bid to boost imports as part of efforts to open up its economy. The move would be in step with Beijing’s pledge to its trade partners – including the United States – that it will take steps to increase imports, and offers a boon to global brands looking to deepen their presence in China. The finance ministry published a detailed list of products affected and their new reduced tax rates on Thursday, following early announcements of the broader plan. Chinese demand for foreign consumer goods remains strong. From next month, the average tariff rate on 1,449 products imported from most favoured nations will be reduced by more than half to 6.9 per cent from 15.7 per cent, the ministry said in a statement on its website. That followed an announcement from the State Council, China’s cabinet, on Wednesday that it would cut import tariffs on consumer items including apparel, cosmetics, home appliances, and drugs. The tariff cuts this time are more broad-ranging than previous reductions.Import tariffs for clothing and footwear, kitchen supplies and fitness products will be more than halved to an average of 7.1 per cent from 15.9 per cent, with those on washing machines and refrigerators slashed to just 8 per cent from 20.5 per cent. United States’ threat of tariffs on Chinese imports ‘just a negotiating tactic’, business leader says Tariffs will also be cut on processed foods such as aquaculture and fishing products, and mineral water, from 15.2 per cent to 6.9 per cent. Cosmetics, and some medical and health products, will also benefit from a tariff cut to 2.9 per cent from 8.4 per cent. In particular, tariffs on drugs, including penicillin, cephalosporin and insulin, will be slashed to zero from 6 per cent before. Tesla responds to cuts in import tariffs by Beijing with price reductions for mainland customers. In the meantime, temporary tariff rates on 210 imported products from most favoured nations will be scrapped as they are no longer favourable compared with new rates. In December, China cut import taxes on almost 200 consumer products including food, health supplements, pharmaceuticals, garments and recreational goods to 7.7 per cent on average from 17.3 per cent, the finance ministry said.
Source: Financial Express
Redington, Chennai, iPhone distributors in India, Redington India, Turkish Lira The company revealed that due to problems in Turkey it had suffered a 2% drop in revenue growth and a 4% slip in net profit in terms of its overseas business operations. Chennai-based IT and lifestyle product supplier Redington, popular for being one of the iPhone distributors in India, said its overseas business during financial year 2018 had been impacted by economic turmoil in Turkey. The company revealed that due to problems in Turkey it had suffered a 2% drop in revenue growth and a 4% slip in net profit in terms of its overseas business operations. Raj Shankar, managing director, Redington India, said that as the company look at the performance overseas, Turkey for the full year was extremely challenging with the effective income tax rate at 90%.It was an extremely difficult period in Turkey with the exchange rate, which was somewhere stabilising at about 3.75 Turkish Lira to the dollar, depreciated as much as 4.5 Turkish Lira to the dollar. And this had a telling effect on the performance, he told analysts recently after the release of the fourth quarter and FY18 earning performance. Turkey’s economy has been in a tailspin with an inflationary currency and the ballooning inflation leading to dwindling value of the Lira. “So, without Turkey, the overseas revenue growth for the full year would have been 13% and the profit after tax would have been 20%. However, with Turkey, it is at 11% and 16%, respectively,” he said. The contribution of Turkey from revenue stand point was approximately about 7% to 8% while the contribution from profit standpoint was around 3%.So, honestly, it does not have a serious material impact to the overall revenue and the profits of the company. We have very clear plans on how we want to address this. But, we also have to take into consideration that there is now a presidential election, which was slated for 2019 but advanced to June 24 of 2018. So, this quarter, let that play out. We are hoping that whomsoever ends up being the president for the next 5 years, at least, there is not going to be any more of these elections, which can slow down the economy,” he said. Regarding India business performance, Raj Shankar said the mobility business had shown a de-growth. “So, what really happened is at a given point in time all the distributors were saddled with inventories with different customs duty. So, this led to a complete mayhem in the market where there was different market operating price and therefore we decided consciously to slow down our (mobility) business. But no matter what we were, we had to inevitably go with the flow. When, therefore, customers paid late during this period we had to accept it and because the market operating prices had crashed we also had to go with it. This led to a sort of an impact on account of the mobility business de-growing and hence the overall business de-growing marginally,” he said. Redington had reported consolidated revenue of Rs 43,498 crore for FY18 against Rs 41,156 crore in FY17 and a net profit of Rs 484.42 crore against Rs 476.74 crore. “If we disaggregate this between India and overseas, India de-grew by 2% whilst overseas grew by 11%,” he said.
Source: Economic Times
Tons of rubbish is piling up in port cities in United Kingdom, United States, Japan, Australia and other western countries. This is a result of China‘s ban on foreign waste that countries like United Kingdom, United States, Japan, Australia and other western countries were faced with growing piles of recyclables and no place to put them. Similar buildups have been reported in Canada, Ireland, Germany and several other European nations, while tons of rubbish is piling up in port cities like Hong Kong. For many years, these countries have relied on China to process and reuse waste products like plastic, textiles, and mixed papers. China had been processing at least half of the world‘s exports of waste paper, metals and used plastic 7.3 million tons in 2016, according to recent industry data. Plastic waste is particularly lucrative. In 2016 alone, Chinese manufacturers imported 7.3 million metric tons of recovered plastic from the US waste is the sixth-largest US export to China and other countries. Once in China, bales of plastic waste are trucked off to reprocessing facilities and turned into pellets for manufacturing. China has accepted the materials to make new products like bins or other items. Last year, China announced that from January 1 it would no longer import certain waste products from overseas due to contamination concerns. The ban extends to various recyclables including several plastics such as PET and PVC, certain textiles and mixed waste paper. Also in April, China banned another 32 types of solid waste – including stainless steel scraps, compressed car scraps and ship scraps. 16 of them will go into effect at the end of this year, and the other half at the end of 2019.
Source: Devdiscourse
Talks between China and Sri Lanka for a free trade agreement have hit major hurdles, mainly because Beijing will not agree to Colombo's demand for a review of the deal after 10 years, Sri Lanka's top negotiator said. China has invested billions of dollars building ports and roads and power stations in the Indian Ocean island nation just off the southern toe of India as part of its Belt and Road Initiative to increase its trade and other connections across Asia and beyond. But concerns have grown in recent months that such investments can drive the country of 21 million people deeper into debt and undermine its sovereignty, prompting greater scrutiny of deals with China. China's exports to Sri Lanka dwarf the trade that goes in the other direction, leaving Colombo with a big deficit with Beijing. Sri Lanka’s chief trade negotiator KJ Weerasinghe said this week that Colombo was insisting on a right to review the free trade pact after ten years, but China was not ready to agree that. Ministerial level discussions about an agreement have not been held since March 2017. Lower-level discussions between officials have made little progress, according to Weerasinghe. "The talks have come to a standstill. China wants to remove the review clause," Weerasinghe told Reuters. Beijing was opposed to such an option because it wanted longer-term stability, he said. China‘s commerce ministry did not respond to Reuters‘ requests for comment. The review clause that Sri Lanka wants would allow it to change some of the deal terms if they were hurting the island nation‘s local businesses.
Another Contentious Issue
Weerasinghe said another point of contention was that China wanted zero tariffs on 90 percent of goods the two countries sold to each other as soon as an agreement is signed while Colombo would rather it started with zero tariffs on only half of the products concerned and expanded gradually over 20 years. China has been pushing for free trade pacts with countries in the region and last year sealed an agreement with the Maldives that drew criticism from opposition political groups in the tropical islands' nation. They said it had been rushed through parliament with less than an hour of debate. Sri Lanka has previously said it wanted more time to negotiate the free trade deal with China as it is concerned about the economic impact of a rushed deal on its economy. Sri Lanka imported $4.2 billion worth of Chinese goods in 2016, mostly raw materials for garments, machines and electronics, metals, transport equipment and chemicals. Its exports to the world's second largest economy were just $211 million the same year, which included textiles, tea and vegetables, footwear and rubber. The 2017 figures for China trade have still not been released by the Sri Lankan authorities. The trade deficit with China accounted for nearly half of the nation’s total deficit in 2016, adding pressure on the country’s current account deficit, central bank data showed. Sri Lanka‘s foreign debt rose nearly 17 percent to 4.72 trillion rupees ($30 billion) last year, a fifth of that coming from loans from China to finance the massive construction programme across the island. Colombo is separately negotiating a trade pact with India, but that is also moving slowly because Sri Lankan businesses fear they will face competition from a flood of cheap goods made by Indian firms.
Source: The Quint
The Cradle-to-Cradle Institute’s Fashion Positive+ programme is celebrating its first anniversary. Backed by major brands like Stella McCartney and H&M, the initiative strives to ‘reinvent the basic building blocks of fashion’. The international apparel industry was worth almost US$ 1.4 trillion last year, witnessing some 4.8% growth per year since 2011. Growth will be even higher in the next couple of years, according to analytics firm MarketLine, which estimates an annual rise in total market value of nearly 6%. This means that, by 2020, the global market will be worth over US$ 1.65 trillion, up 60% since 2011. Whether reducing waste, including recycled content, recycling offcuts or avoiding chemicals, the Fashion Positive+ collective is confident steps can be taken towards a more sustainable fashion industry. ‗Together, we can make our demands impossible to ignore,‘ it urges.
3 months = 2 million tons
The programme has awarded US$ 50 000 to Worn Again, an innovator developing chemical recycling technology to separate blends and create recycled polyester fiber.‗Demand for these two fibres is set to increase to 63% by 2030 due to a rising global population,‘ the business comments. It goes on to state that, every year, the world produces over 55 million tonnes of new polyester and cotton to make our clothing and textiles. At the same time, over 50 million tonnes of textiles go to landfill or incineration. If the average lifespan of clothing was extended by just three months, it could reduce clothing‘s carbon and water footprints by 5 to 10%, as well as reduce waste generation, it is pointed out. Three months of lifetime increase will ultimately save two million tons of textile waste every year in the US.
Hopeful trajectory
The good news is that an increasing number of Cradle-to-Cradle certified members have recieved a ‗gold‘ label for their produts and processes. In 2017, 12 new companies attained gold status. This is the second highest rating, with platinum being the best. As fashion‘s trajectory towards a more circular economy rises, brands and innovators need greater access to the material innovators working on the frontlines of technology, sustainability and material health,‘ observes Lewis Perkins, president of the Cradle to Cradle Products Innovation Institute. Sharing best practices will help scale-up the good work being undertaken in the global textiles and retail community. To further encourage positive change, the programme recently published the Fashion Positive Emerging Material Innovators Report, detailing the innovative efforts of 12 new pioneers in the textiles value chain. The Fashion Positive+ programme also hosts webinars and workshops to educate industry stakeholders about anything from chemically recycled fibres, using all-natural dyes, and how to minimise the amount of energy and water used by clothing producers.
Source: Recycling International
The new Ethiopian ambassador to the UAE will work on labour rights, trade and cultural exchange. An agreement between the UAE and Ethiopia to protect the rights of domestic workers will be formalised by the year‘s end, Ethiopia‘s new ambassador announced. The agreement is one of several that Ethiopia has made with other Middle Eastern countries after a series of high-profile cases in the region of abuse of domestic workers. It‘s very important for the rights of domestic workers and at the same time for employers, said the incoming ambassador Tebege Berhe. You know it‘s always good to have a legal framework to work with. The process is currently under final review. A lot of it has to do with making sure that both legal systems are compatible, Mr Berhe said. With everything we sign up to, we have to make sure every article is consistent. Whether they sign it there or here, it has to be consistent with the laws in both countries and this is something that lawyers and experts in those areas are discussing to see how we can get a common understanding on all the issues, he said. We don‘t have major issues in terms of the majority of the content of the agreements because we‘ve been discussing it, so everything is OK. We just have maybe one or two final points. The new agreement will be legally applicable in the UAE and Ethiopia. Currently, domestic workers sign set contracts issued by the government in Ethiopia but the laws have no force once they travel overseas. In the UAE, President Sheikh Khalifa signed a law in September that guarantees domestic workers a day off, holiday pay and limited working hours. The framework will ensure that workers rights are protected in both countries and that women are aware of these rights. There‘s no other legal contracts or legal agreements between the two countries to say what is a right and what is an obligation, Mr Berhe said. There are good legal systems in the UAE to take care of their rights but if something happens, she doesn‘t know who to report to, she doesn‘t know who to talk to, she doesn‘t even know she has a right to do that, he said. She does not know, so she‘s completely in the dark. The majority of Ethiopian women currently travel through informal channels in search of employment, travelling to the UAE on tourists visas and changing their visas upon arrival when they secure work, often with the help of placement agencies. The new agreement will provide a stronger, safer passage. It will give them better protection. If you go through the back door you‘re taking risks, Mr Berhe said. Of course whenever you take risks there is a possibility that you will succeed. There‘s also a quite large possibility that something wrong will happen. That‘s what risk is. Sometimes, brokers or agencies bringing in domestic workers might not be telling them everything so they come here and they can find themselves in a situation that they‘re not prepared for. Coming through this legal framework we want to make sure that they know what employment they‘re coming for, what their working hours will be and what their rights will be. A lot of them don‘t know. They‘ll just do what they‘re told by the agent that brought them, so it takes away this darkness. If you have a clear transparent hiring process it‘s better for the protection of rights. The Ethiopian government had banned its citizens from employment as domestic workers in the UAE in July 2012 to protect them from abusive employers. As migration continued, the ban was lifted and negotiations for a formal agreement began. Under the new arrangement, domestic staff will be required to undergo training in Ethiopia before travelling to the UAE. According to a 2017 study published in the journal Globalisation and Health, many domestic workers were not only unfamiliar with the Arabic language and culture of the Gulf but also the safe use of household appliances and cleaning detergents. Domestic worker safety in the Gulf came under international attention this year when the body of Filipina Joanna Demafelis, 29, was found in a freezer at a home in Kuwait. Local media reported that there was evidence she had been tortured by her Lebanese and Syrian employers who were eventually found in Syria by Interpol. The Philippines subsequently announced a ban on women working as domestic workers in Kuwait, to which the government announced that it would recruit more domestic staff from Ethiopia, reported Agence France-Presse. Ethiopia had only recently lifted a five-year ban on its citizens working in the Gulf state. Last year, an employer in Kuwait filmed her Ethiopian maid falling from a seven-storey building. The proposed UAE-Ethiopia agreement is one of several under negotiation this year. Saudi Arabia‘s Ministry of Labour and Social Development and the Ethiopian government agreed on a unified contract for domestic workers in April that stipulated compulsory training before travel and evidence of a bank account for salary deposit, the Saudi media reported. A similar draft agreement is under review in Kuwait.
Source: The National
NEW DELHI : Swedish furniture giant IKEA and American music mogul Sean Diddy Combs‘ clothing were among companies sourcing from Bangladesh that had failed to sign a new accord for the safety of millions of factory workers as it took effect on Friday. The new pact is a three-year extension of the Bangladesh Accord, a legally-binding agreement between global brands and trade unions drawn up after the Rana Plaza collapse, one of the worst industrial accidents in modern history. It established a fire and safety programme for the country‘s $28 billion a year textile industry, which employs about 4 million people. So far 175 of the 220 companies in the original accord have signed, but high-profile brands including Abercrombie & Fitch, Combs‘ Sean John apparel and Britain‘s Edinburgh Woollen Mill have not, the Clean Clothes Campaign said. (They) are doing themselves and their customers a disservice and are knowingly putting the lives of the workers producing for them at risk, said Christie Miedema of the Campaign, which lobbies to improve workers‘ conditions. More than 1,100 people were killed when the Rana Plaza factory complex collapsed in 2013, sparking outrage over poor working conditions in the garment sector. Since then Western brands that manufacture in Bangladesh have been under pressure to do more to ensure worker safety. Sean John did not respond to requests for comment and the Edinburgh Woollen Mill was not reachable. Abercrombie said it was reviewing the 2018 accord, while IKEA said it had chosen to focus on its own safety audit programme IWAY rather than signing up. Unlike the original accord, which expired on Thursday, the new one is open to non-garment companies like IKEA that produce home fabrics and textiles. Campaigners have urged them to sign up, arguing that other schemes such as IWAY lack transparency because they do not make inspection findings and reports public. We operate on a highly competitive market, and for competitive reasons we don‘t hand out a list of our suppliers in Bangladesh or any other country, IKEA told the Thomson Reuters Foundation in an emailed statement. Bangladesh, which ranks behind only China as a supplier of clothes to Western countries, relies on the garment industry for more than 80 percent of its exports.
Source: Reuters
The theory of comparative advantage suggests that a country should produce whatever it is most efficient in producing. In the simplest of cases; a country good at producing, say, guns should produce them and trade their excess production with the country which is good at producing, say, butter. Thereby maximising the welfare of consumers in both countries where they get each product at the lowest possible price. This being said we should keep this point in mind and move forward, we will come back to it later. In Pakistan, every seminar, policy discussion and debate starts with the ill fated textile industry since we are supposed to have comparative advantage in it, and ends with new resolves and policy options to improve upon its issues and boost the exports in textile sector with an aim to shirk the ever widening balance of trade crisis. Energy crisis, increased competition, lack of government support, and lack of technology are considered as the main hurdles to more growth in this sector. At present, the textile industry exports of Pakistan accounted for almost 60.03pc of our total exports in FY 16-17). The second in line is rice, which accounted for 7.75pc of the total exports. Pakistan earned revenue of Rs.953 billion from textile exports in 2016. So all the policy options that we discuss are focused on increasing these exports to capture more of the total textile demand in the world. We intend to beat Vietnam, Turkey, India, South Korea, US and China in this race for textile market. All of this under the umbrella of Comparative Advantage. Now let us take a trip down the memory lane and evaluate our not very recent textile performance. In the early period we restricted our cotton exports as it was the main ingredient for textile goods. Then up till Dec 2004 we could enjoy a quota in world textile demand. In short the industry was protected. There was no energy crisis in the country and everything was smooth and we had ample time to improve the textile sector technology that we now raise hue and cry about in every debate, discussion and seminar. Then the quota was lifted on January 1, 2005 and we met with competitors like India and China who increased their market shares in United States during Jan-Jul 2005. Pakistan‘s share in the most lucrative category in textiles; Apparel and Accessories, remained same while China‘s grew from 17.7 to 27pc, followed by India i.e. 3.7 to 4.5pc. While in Textile and Fabrics Pakistan‘s share fell by 24.5 percent. Around 25 percent of the quotas removed in the final stages were in fabrics category. Now let us look at the scenario from the other dimension of trade. Our imports are based on heavy machinery, transport equipment, electronics and crude oil. As per Economic Survey 2016-17 stats we had 46.33pc of our total imports in the form of electrical goods, non-electrical machinery, transport equipment, and petroleum products. This amounts to almost Rs1862 billion as against Rs.953 billion from exports. So we run trade deficit right at the start when our major exports which are 60pc of the total do not give use enough revenue to finance even few of our major import costs which are only 46pc of the total imports. Our major imports are more than twice in value to our major exports. Just answer this simple question: How many T-shirts do you have to produce and sell to pay for one laptop or one barrel of oil or an imported car? “The theory is perfectly right in its true sense; consumer’s welfare is maximised. But in the long run when government faces a deficit it increases taxes and squeezes out the same population” The theory is perfectly right in its true sense; consumer‘s welfare is maximised. But in the long run when government faces a deficit it increases taxes and squeezes out the same population. So the issue is not with the comparative advantage, the issue is our understanding of the theory. We must consider that governments need to function, and for that they need revenue. Free trade and comparative advantage suits the countries that have comparative advantages in cars, or laptop etc, i.e. in goods that pay more than an item from our domestically produced garments‘ list. I must add that every policy decision starts with Why?, then How? and When? We followed it in distant past for the first time when we choose textile as our main focus but in the present competitive context we always start with the later two for our trade policy, and assume that the Why?, which was answered some 40-50 years ago is still valid in the current global environment. We forget that in those times our imports, other than petroleum products, were far cheaper than an iPhone or a 1000cc fuel efficient fully featured car. In essence the objective of this article is not to discourage trade boosts in textile industry. After all it is almost 60pc of our total exports and we must make policy reforms to boost this number. The objective is to highlight the policy of attempting to buy laptops by selling T-shirts is not sustainable in the long run. We must focus on other industries as well, and formulate policies to enter agreements with other countries to boost technology based industry as well. We must also acknowledge that laptops and other electronics do not grow out of land like agriculture so countries like Japan, China, and Taiwan had to strive for their production efficiency; hence they achieved comparative advantage in those high paying products. When we talk about CPEC and China consider bringing in its industry, why can‘t we make agreements to bring in cell phone manufacturing or engine manufacturing into Pakistan (even if it is for an electricity generator). These small steps can later help in acquiring the desired technologies and take our export portfolio diversification out of nature given comparative advantage. The writer is a PHD in economics from Austria and works at State Bank of Pakistan
Source: Pakistan Today
