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MARKET WATCH 07 JULY, 2018

NATIONAL

INTERNATIONAL

90% subsidy to weavers for technological upgradation: Irani

Weavers are getting 90 per cent subsidy for technological upgradation of their handlooms and accessories under a scheme aiming to improve quality of the fabric and productivity, Union Textiles Minister Smriti Irani said on Friday. In her address after felicitating handloom exporters at the 28th National Handloom award function here, she said the Hathkargha Samvardhan Sahayata Yojana, launched in August 2016, meets the needs of the handloom weavers for assistance on a larger scale for looms and accessories. Irani also urged the weavers to utilise the benefits provided under schemes like Mudra, under which as much as 28 per cent of the beneficiaries were new entrepreneurs and 70 per cent of them were women. She said Tamil Nadu was one of the states which has a major share of beneficiaries under the scheme. Irani also sought to assure small weavers that they would not be affected by the Goods and Service Tax (GST), as most of them earn less than Rs 20 lakh per year and hence would not fall under the tax's ambit. She urged the exporters to create awareness among the weavers not only on the GST issue, but also regarding the subsidies and other welfare schemes of the government.

Source: Business Standard

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Clear misconceptions about GST among weavers: Smriti Irani

Chennai :Union Textiles Minister Smriti Irani urged the Tamil Nadu government and handloom exporters to redress the lack of information about Goods and Services Tax (GST) among weavers. Ensure small weavers and artisans, who think they are within the ambit of GST, understand that those earning less than ₹20 lakh a year are exempt, she said. Speaking at the 28th National Handloom Export Awards function organised by the Handloom Export Promotion Council(HEPC), the Minister urged handloom exporters to highlight various subsidies and welfare schemes available to the weaving community. After giving away the best performance awards to handloom exporters for the years 2014-15 and 2015-16, she said that the maximum number of awards going to a place like Panipet, which is not a premier in handloom industry, is a matter of pride. “Under the Hathkargha Samvardhan Sahayata (HSS) Yojana, weavers are trained and supported by the government through financial assistance to the extent of 90 per cent of the cost of new looms along with accessories. “Exporters should guide small weavers to avail themselves of this facility. The Minister also asked weavers to benefits from schemes like the MUDRA. “Twenty-eight per cent of the beneficiaries under the MUDRA scheme are new entrepreneurs and 70 per cent of them are women.” Irani said adding that Tamil Nadu is one of the State which has the maximum number of the beneficiaries under the scheme. Citing a 2009 handloom industry census, Irani said that only one per cent of children from the handloom community are completing higher education and highlighted a Memorandum of Understanding (MOU) executed between the textile industry and the National Open University, under which the government will bear up to 75 per cent of the fee of the children from the community. The Minister also urged exporters to explore product diversification, design innovation and product placements to grow in the international market.

Source : Business Line

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In the net: GST evasion of Rs 2,000 crore detected, says CBIC

The indirect-tax department has detected goods and services tax (GST) evasion of Rs 2,000 crore over the last few months, John Joseph, member, Central Board of Indirect Taxes and Customs (CBIC), said on Friday, adding that a tenth of this came to light only last week. Independent analysts have, however, felt that the tax evasion exposed may be only a fraction of its actual incidence, given the “very high” transitional credits — a total of `1.6 lakh crore by December-end — claimed by a section of taxpayers for the taxes paid in the pre-GST regime. Suspected instances of undeserved input tax credit (ITC) claims — scores of such claims made in the summary returns GSTR-3B have been detected and investigations into these are going on — and the continuing (though narrowing) gap between the registered eligible taxpayers and those who file the returns also indicate incidence of evasion at a much larger scale. Joseph, who also happens to be the director general of the GST investigation wing, clarified that the evasion cases cited by him included use of fake invoice bills to claim ITC and cases where businesses deducted tax from consumers but failed to deposit the same with the government. “While there is a need to ensure that GST evasion is detected and plugged in time, it is necessary to have safeguards to ensure that inadvertent omissions are not treated at par with evasion and taxpayers are not put to hardship,” said MS Mani, partner, Deloitte India. As much as 30% of the 1.15 crore taxpayer base for GST doesn’t file returns by the deadline every month. Although the percentage of those filing has improved from 55% in July last year to nearly 65% in May this year, the ideal compliance of around 80% has remained elusive. Responding to a question on why the department was manually checking transitional credit claims instead of allowing the same automatically, finance secretary Hasmukh Adhia said that data showed that large amount credit was built up in the credit ledger prior to GST compared to the average Cenvat (excise and service tax) credit balance in taxpayers’ ledger a year ago (June 30, 2016). This, Adhia said, was the reason for carrying out detailed verification of transitional credit claims. Calling the e-way bill system a silent revolution, CBIC member Mahender Singh said that the expenditure incurred by truck drivers on a daily basis had gone down drastically under GST as they were not forced to bribe officials at the interstate check posts. He added that earlier a truck driver would need Rs 15,000 as expenses for week-long trip but in the GST regime Rs 4,000 is sufficient as the system of bribes has been curbed. Under GST, a supplier has to inform the common GST portal before moving any cargo worth over Rs 50,000. The portal issues an e-way bill has the details of cargo, origin, destination and other specifics of the vehicle. The information can then be used by the department to cross-check with tax returns and catch under-reporting of sales.

Source: Financial Express

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“MSMEs need more support in complying with GST”

Micro, medium and small scale enterprises (MSMEs) need more support in complying with GST through proactive helpdesk and grievance redressal mechanism, said senior Charted Accountant, R. Sridhar. Addressing a discussion on GST organised by Commissionerate of GST, Madurai and Tamil Nadu Chamber of Commerce and Industry here on Thursday, Mr. Sridhar said that corporates and big business enterprises could afford to get the services of experts in filing the GST returns. However MSMEs were unable to afford such a luxury. They had number of doubts on categorisation of goods under various labels – nil taxation, exempted from taxation and non taxable. “In many cases, the queries raised through the helpdesk and the grievance redressal mechanism were not replied,” he said. Mr. Sridhar suggested that all the queries raised under the grievance redressal mechanism should be copied to the jurisdictional assessing officer concerned for effectively resolving the grievances. “Any further changes in the GST should be implemented only after a public discussion. Similarly, there were many deviations in the e-way billing exemptions. Different States followed different rules on e-way exemption, when GST is said to be one-nation, one tax” he said. Speaking on the occasion, chamber senior president, S. Rethinavelu, said that GST was good as it had done away with many taxes. It was also transparent and has increased the compliance of tax paying. However, he said that tax rates on various goods should be brought down considerably. Similarly, he wanted liquor, petrol and diesel, electricity and real estate to be brought under GST net. While filing four returns (three every month and one yearly) was a great burden to the trade and industry, he said e-way bills was a solution to do away with filing of multiple returns. Joint Commissioners, V. Pandiraja (Central GST) and S. M. Saraswathi (State GST), Principal of American College, M. Dhavamani Christober, and chamber president N. Jagadessan, were among those who spoke.

Source: The Hindu

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Textile entrepreneurs demand power tariff on lines of Maharashtra

Surat: Textile entrepreneurs have made a strong representation to Gujarat’s industries commissioner to reduce power tariff in textile sector and make fabrics manufactured in Surat competitive to those made in Maharashtra and Rajasthan. Gujarat’s industries commissioner Mamta Verma on Friday visited Southern Gujarat Chamber of Commerce and Industry (SGCCI) here to hold discussions on the new textile policy to be implemented by the state government in October. Textile industry leaders stated that power tariff in Gujarat is almost double than Maharashtra. The textile units have been paying Rs7.5 per unit for electricity usage, while the units in Maharashtra pay Rs3.75 per unit. The fabrics manufactured in Surat are costly by almost Rs5 per meter because of the tariff structure, Textile entrepreneurs, who had made investments under Technology Upgradation Fund Scheme (TUFS), are yet to get subsidy amount of Rs650 crore for the last two years from the government. This hampered the growth of TUFS and stalled modernization in the textile sector. Powerloom sector leader Devesh Patel said, “In the last six months, many textile entrepreneurs have shifted to Tarapur and Navagam in Maharashtra. Both these spots are just 150km from Surat. They were attracted to move to Maharashtra due to its investor-friendly textile policy and economical power tariff.” The textile entrepreneurs also pointed out that unfinished fabrics manufactured in Surat reach Vietnam and China via Kolkata and Bangladesh. The finished fabrics from Vietnam then is dumped at cheap rates in India. SGCCI president Hetal Mehta said, “The new textile policy should address the issues of power tariff, capital subsidy, interest subsidy and investment on top priority. If the government fails to address such important issues, then Surat’s textile industry would be in trouble.” Mamta Verma said, “Surat is the textile hub and we are ready to listen to the issues of the entrepreneurs here. The new policy will be framed after taking the opinion of textile sector into consideration.”

Source: Times of India

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Provide direct subsidy to farmers: CITI tells Centre

Taking a cue from the Chinese government which has shifted to a direct subsidy route, a couple of years back, the Indian government should devise some direct subsidy scheme for farmers, the Confederation of Indian Textile Industry (CITI) has suggested. It has also asked the government to spell out a clear policy for Cotton Corporation of India (CCI). Welcoming the ₹1,130 per quintal hike in minimum support price (MSP) on cotton for 2018-19 season announced by the government, CITI chairman Sanjay K Jain said, “At one level, the move would certainly increase farmers’ income, leading to an increase in domestic consumption that would eventually support the overall Indian economy.” “However, we need to examine the event from different perspectives and understand that the lakhs of farmers gain should not impact the $120 billion industry which employs directly and indirectly more than 10 crore people,” he added. According to Jain, the impact of around 26-28 per cent increase in MSP would be huge and possibly unprecedented because MSP increased by mere ₹1,320 per quintal from 2009-10 to 2017-18, compared to ₹1,130 per quintal hike for the upcoming season. The proposed hike in MSP is based on 1.5 times the A2+FL costs and would impact each segment along the supply chain raising the final price of the product. Further, this intervention would also make Indian cotton fibre relatively expensive with respect to international prices. As textile and clothing exports are still reeling under the pressure to perform, absorbing a hike of 28 per cent would be difficult for the entire textile industry. In spite of some favourable factors like China’s imposition of an additional 25 per cent import duty on American cotton and depreciation of rupee against the dollar, cotton and yarn would face headwinds, Jain said. He emphasised that the real impact would depend on the movement of international prices of cotton. In case, prices stay above MSP, there will be no issue. However, if prices fall below it, the impact would be severe. The industry is fully integrated with the global market and India being a significant player, cannot work in isolation. Post 2008 recession, Indian MSP was higher than international prices which finally led to a huge loss to the industry and exports dipped significantly. To meet the twin ends of ensuring reasonable profit for farmers and making cotton available at internationally competitive prices to the industry, a direct subsidy scheme for farmers should be considered at least partly. This would ensure that employment in the labour-intensive textile and clothing industry is not affected and the growth targets of output, export and employment are met. Giving China’s example, Jain said that a few years back, China had also increased their buying price from farmers significantly which made their domestic prices much higher than the international prices leading to the government accumulating almost 50 per cent of the global cotton which it is still liquidating even after 5 years. This made the Chinese cotton yarn industry unviable and imports of cotton yarn zoomed from India, Vietnam and Pakistan. The Chinese government realised that holding cotton by buying at higher price is not a solution and hence, a couple of years back, it shifted to a direct subsidy route which has made the Chinese cotton industry again competitive and also reduced the government burden of stocking high priced cotton and then selling it at a loss. Jain hoped that the Indian government would devise some direct subsidy route so that interests of both farmers and the largest industrial employer are equally protected for a win-win situation. Jain also pointed out that higher MSP would further compel huge cotton procurement by the state-run CCI. In the past, for instance, the Centre raised cotton MSP (medium staple) by a record 39 per cent in 2008-09, driving up CCI’s procurement to an all-time-high of 8.9 million bales. He said the industry is expecting that “a clear CCI Policy is spelt out, so that in case they need to make massive procurement, the industry gets regular offering from them throughout the season at international parity prices (system linking offered prices to ICE may be formulated).”

Source: Fibre2Fshion

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New silk cocoon market unlikely to ‘boost’ sector

A few of the markets that had been opened in the district had to be shut down for want of reelers. The announcement of a cocoon market on the lines of the one in Ramanagaram, in the budget by Chief Minister H.D. Kumaraswamy, may not give a big boost to the sericulture industry in the region. For, the places around Mysuru lack a well-established weaving industry and the cocoon markets largely depend on the reelers, who buy silk cocoons. Moreover, the cultivation of mulberry which is a prime source of food for silkworms has seen a decline here, according to industry sources. “Another reason why a new cocoon market may not be of much use is that similar markets, though not on the scale of Ramanagaram which is reckoned to be Asia’s second biggest, developed at T. Narsipur, Hunsur and Tandavapura in the district were shut down owing to lack of patronage,” argues S.S. Sadananda, former Joint Director of Sericulture, who has vast experience in the area of sericulture. The market at Kollegal in Chamarajnagar district is operating, thanks to the presence of weavers with reelers from the bordering towns of Tamil Nadu coming there to buy cocoons. The markets at Santhemarahalli in Chamarajnagar district and Malavalli in Mandya district do not make noticeable transactions, he said. The market in Hunsur was shut down with the taluk being one of the largest producers of tobacco in the state. “When there are no buyers, how will a market survive,” Mr. Sadananda asked, on the logic behind announcing the market in the budget. Minister for Sericulture and Tourism S.R. Mahesh, who hails from Mysuru, had said here recently that he had proposed a cocoon market for Mysuru and had asked the department officials for submitting a proposal for its inclusion in the budget. This correspondent had spoken to a senior department official a few days ago following the Minister’s statement and he too expressed a new silk cocoon market here was not viable. The officer added that the existing markets in the region can be developed instead of establishing a new one. The new market had been planned at a cost of ₹3 crore and ₹1 crore had been set aside for it in the budget.

Chawki rearing centres

Arguing that the government should focus on establishing more chawki rearing centres, Mr. Sadananda said, “If the government really wants to boost the sector, then it should take steps for rearing silkworms and supply them to farmers. This will go a long way in boosting the sector since not all farmers are fully aware of the new technologies.” He said the silkworm rearing houses lacked ventilation, humidity and many were ill-equipped to rear them for the entire period. The farmers can as well buy 10-day old worms from government-run centres and rear them for the remaining days at sheds or homes in hygienic conditions.

Source: The Hindu

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GoM expected to finalise views on reverse charge under GST, to meet on July 8

Another GoM on incentivising digital payments will be meeting for the second time and will look at offering discount to consumers making online payment. Group of Ministers (GoM), along with a panel of government officials, will meet on Sunday to firm up their view on the possibility of bringing back the liability to pay tax on reverse charge, as well as on the issue of tax discount on digital payments under Goods and Services Tax (GST). Both the groups will submit their report to the GST Council that is expected meet on July 21 in New Delhi. Bihar Deputy Finance Minister Sushil Modi, Punjab FM Manpreet Singh Badal, Kerala FM Thomas Issac, Excise and Taxation Minister of Haryana, Capt. Abhimanyu, West Bengal FM Amit Mitra, among others, are expected to be present at the meeting. Since the implementation of GST in July last year, reverse charge mechanism (RCM) — one of the key measures against tax evasion — has been deferred thrice, with the latest deadline of September 30. Earlier this year, some states had insisted that RCM should be re-introduced, as it will help tax authorities plug revenue leakages. Thereafter, a GoM headed by Modi was formed to decide on the exact shape and form of RCM if the government decides to implement it. The panel is also open to tweaking some of the rules, a senior government official said. “For instance, RCM can be levied only on a particular category of taxpayer. Or there could be some kind of monetary exemption for which tax (on reverse charge basis) may not have to be paid,” the official said. Reverse charge is a mechanism where the recipient of the good or service will have to pay GST, which is otherwise paid by the supplier. The charge is applicable on a registered dealer, if he buys goods from a dealer not registered under GST. However, the receiver of the good/service is eligible for input tax credit, while the unregistered dealer is not. Registered taxpayers (supplier) were not willing to take the burden of paying tax, while small or unregistered taxpayers were running out of business as these registered dealers were hesitant to buy goods from them. Keeping this in mind, GST Council in October, 2017 had temporarily suspended RCM, as it was increasing compliance burden on taxpayers. The idea was to discourage registered dealers to purchase goods or avail services from unregistered dealers, who are not under the ambit of GST or do not pay tax, which will ultimately boost the government's revenue. The first meeting of the GoM on reverse charge in April largely remained inconclusive. This will be the final meeting before the panel submits its report to the Council for approval. The panel will also explore if RCM should be applicable for dealers under composition scheme. In January, the Council had already decided to re-introduce RCM, but only for dealers under composition scheme — a simpler scheme for small taxpayer aimed at easing compliance burden. However, some officials fear that the move can lead to more tax evasion as dealers under the composition scheme are anyway portraying negligible tax liability and liability to pay tax on reverse charge will only affect compliance. Another GoM on incentivising digital payments, also headed by Modi will be meeting for the second time and will look at offering discount to consumers making online payment. The Council on May 4 discussed the proposal of a concession of 2 percent in GST rate (where tax rate is 3 percent or more) on B2C supplies, for which payment is made through cheque or digital mode. The ceiling for the discount will be capped at Rs 100 per transaction. However, due to lack of consensus among states, Finance Minister Arun Jaitley had said that the GoM would deliberate on the subject and present their report to the Council in the next meeting.

Source: Money Control

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Import cover dips to 10.8 months

India’s import cover decreased to 10.8 months as of December 2017-end from 11.3 months as of March 2017-end, according to the Reserve Bank of India’s latest report on the management of foreign exchange reserves. Import cover of reserves is the traditional trade-based indicator of foreign exchange reserve adequacy. It tells us how long imports can be sustained in the event of a shock. According to the IMF, traditionally, the import coverage measure has been based on months of prospective imports, with three months’ coverage typically used as a benchmark. The ratio of short-term debt to foreign exchange reserves, which was 23.8 per cent at March 2017-end, remained at the same level at December 2017-end. The ratio of volatile capital flows (includes cumulative portfolio inflows and outstanding short-term debt) to foreign exchange reserves declined from 88.1 per cent at March 2017-end to 86.9 per cent at December 2017-end.

Forex reserves

As per the report, foreign exchange reserves in nominal terms (including valuation effects) increased by $39.1 billion during April-December 2017, against a depletion of $1.3 billion during the same period of the preceding year. Foreign exchange reserves stood at $400.21 billion as of September 2017-end. By March 2018-end, the reserves rose to $424.55 billion. The RBI said it holds 560.32 tonnes of gold, of which, 268.01 tonnes are held overseas in safe custody with the Bank of England and the Bank for International Settlements (BIS). Gold as a share of the total foreign exchange reserves in value terms (US Dollar) stood at about 5.0 per cent as of March 2018-end, against 5.3 per cent as of September 2017-end.

Source: Business Line

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JNPT SEZ to bid out 280 acres; Tata Motors, DP World keen to set up base

The Jawaharlal Nehru Port Trust (JNPT) is planning to put up 280 acres of land at its proposed special economic zone (SEZ) for bidding in September. According to sources, Dubai-based DP World and Indian auto major Tata Motors are interested in taking up a large space to set up their bases at the SEZ. Of the 280 acres, according to JNPT officials, a single plot of 250 acre is proposed to be bid out on a co-development basis for setting up a processing zone. This means the infrastructure such as roads, electricity and water will be provided by JNPT while the development of the buildings and manufacturing facilities will be done by the winning bidder. The winner can utilise the entire land for itself or lease it out to other companies. However, the agreement with the lessors have to be within the ambit of the parent agreement. JNPT has set the base price at Rs4,800 per sqm. The lease agreement with companies is being drafted for a period of 30 years, which can be extended to 60 years. Companies need to make an upfront payment as well as pay annual rental and maintenance charges. Of the 280 acres, the remaining 30 acre has multiple plots which will be bid out to micro, medium and small enterprises (MSME) to set up their manufacturing units. The tender for both the 250-acre and 30-acre plots will be released on September 18. JNPT has already leased out six plots spread over 16 acres till date and has invited bids for 13 more plots over 70 acres. The total area within the SEZ is 277 hectares and is envisaged to be a multi-product SEZ for manufacturing and warehousing. JNPT, the country’s largest container port, is in the middle of a Rs 13,000 crore infrastructure upgrade which includes the development of a coastal berth, capital dredging, improving road connectivity to and from the port, centralised parking plaza and development of the fourth container terminal.

Source: Financial Express

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Shortfall in crude supply may lead to oil crossing $150 a barrel: Experts

Oil investors may regret urging companies to cough up cash now instead of investing in growth for later as the dearth of exploration is setting the stage for an unprecedented crude price spike, according to Sanford C Bernstein & Co. Companies have been compelled to focus on boosting returns and shareholder distributions at the expense of capital expenditures aimed at finding new supplies, analysts including Neil Beveridge wrote in a note Friday. That’s causing reserves at major producers to fall and the industry’s reinvestment ratio to plunge to the lowest in a generation, paving the way for oil prices to surpass records reached last decade, according to Bernstein. “Investors who had egged on management teams to reign in capex and return cash will lament the underinvestment in the industry,” the analysts wrote. “Any shortfall in supply will result in a super-spike in prices, potentially much larger than the $150 a barrel spike witnessed in 2008.” The world’s oil majors including Royal Dutch Shell Plc and BP Plc navigated the price crash of 2014 by cutting costs, selling assets and taking on debt to help satisfy investors with hefty dividends. The biggest, Exxon Mobil Corp., was punished by shareholders earlier this year after compounding disappointing results with a massive spending plan and a lack of buybacks. The oversupply of crude globally in recent years has masked “chronic underinvestment,” Bernstein said in the report. Oil has rebounded to the highest in more than three years as the Organization of Petroleum Exporting Countries and its allies started curbing output at the beginning of last year to trim a global glut. The producers aim now to pump more to help cool the market, but disruptions from Libya to Venezuela are keeping prices elevated. Proven reserves of the world’s top oil companies have fallen by more than 30 percent on average since 2000, with only Exxon and BP showing an improvement, helped by acquisitions, Bernstein said. Meanwhile, more than 1 billion people will urbanize in Asia over the next two decades and this will drive demand for cars, as well as air travel, road freight and plastics that also require oil, according to Bernstein. “If oil demand continues to grow to 2030 and beyond, the strategy of returning cash to shareholders and underinvesting in reserves will only turn out to sow the seeds of the next super-cycle,” the analysts wrote. “Companies which have barrels in the ground to produce, or the services to extract them, will be the ones to own and those who do not will be left behind.” Brent oil rallied to an all-time high above $147 a barrel in 2008 as booming demand growth and a lack of readily available resources fueled a synchronized surge across commodities that was dubbed the super-cycle. The global benchmark was at $76.78 a barrel as of 11:57 a.m. in London on Friday, up about 60 percent in the past year.

Source: Financial Express

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Tariff jitters: India, US may soon agree trade package

Senior trade officials of India and the US will meet later this month in Washington to wrap up negotiations on a “mutually-acceptable trade package”, according to an official source. The meeting comes amid an escalation of the global trade war, with the US and China having imposed additional tariff against each other on Friday. The trade package is expected to have specific goals for boosting Indo-US trade through greater market access. Late last month, an American team, led by assistant US trade representative Mark Linscott, held talks with Indian officials here on several contentious issues, including the extra US duty on Indian steel and aluminium and the next meeting will be a follow-up of that. Since India’s proposed additional tariff worth $235 million on 29 US goods — including almonds and apples — are retaliatory in nature, any roll-back of the additional duty on Indian steel (25%) and aluminium (10%) by the US will lead to a withdrawal of such tit-for-tat action by New Delhi as well, said the source. Otherwise, India’s proposed additional tariffs will take effect from August 4. For India, greater access to the American market in the food, farm, engineering goods, auto and auto parts segments holds promise in the long term (over five years), said the official. The US sees good prospects for its companies in the Indian civil aviation, oil and gas, education service and agriculture segments. Any successful outcome of this meeting could later be announced by the political leadership of both the nations. Apart from relief on the metal duty, India wants relaxed visa regime for skilled professionals and delinking of a special tariff regime — generalised system of preference (GSP) — from market access talks, among others. For its part, the US wants greater market access to reduce its trade imbalance with India and removal of price curbs on stents and other medical equipment by New Delhi, among others. Under the GSP programme, select developing countries are allowed to export specified products duty-free to the US. According to trade sources, India was a major beneficiary in 2016, as it shipped out goods worth $4.7 billion to the US under GSP, which was equal to over 11% of its exports to the world’s largest economy. Exports of select items in the textiles, engineering, gems and jewellery, and chemicals sectors are allowed duty-free access to the US. While China alone accounted for a massive $375 billion, or 46%, of the US goods trade deficit of $810 billion in 2017, India made up for just 2.8% and occupied the ninth spot in the list of nations with which the Trump administration seeks to pursue a trade balance agenda. However, India is the only major country whose goods trade surplus with the US narrowed in 2017 — a fact New Delhi has recently highlighted in its talks with Washington.

Source: Financial Express

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Hike in minimum support price of cotton will make fibre expensive, may hit textile sector, says industry body CITI

New Delhi: The hike in minimum support price of cotton would make Indian cotton fibre relatively expensive with respect to international prices and inflate prices of its products, the Confederation of Indian Textile Industry (CITI) said on Thursday, while urging the government to establish a delivery mechanism for the industry to procure raw material at reasonable prices. The government on Wednesday raised the minimum support price of cotton (medium staple) to Rs 5,150 per quintal from Rs 4,020 per quintal and that of cotton (long staple) to Rs 5,450 per quintal from 4,320 per quintal. "The Textile & Clothing being an integrated industry, the proposed hike in MSP based on 1.5 times the A2+FL costs would impact each segment along the supply chain raising the final price of the product. "Further, this intervention would also make Indian cotton fibre relatively expensive with respect to international prices. As Textile & Clothing exports are still reeling under the pressure to perform, absorbing a hike of 28 percent would be difficult for the entire textile Industry," Confederation of Indian Textile Industry (CITI) Chairman Sanjay Jain said. He said there was a need to examine the event from different perspectives and understand that the farmers' gain should not impact the $120 billion textile industry which employs over 10 crore people, and hoped the government would devise a direct subsidy route so that interests of both farmers and the industry are protected. "From 2009-10 to 2017-18, MSP increased by Rs 1,320/quintal and in 2018-19, it has been increased by Rs 1,130/quintal. The impact is huge and possibly unprecedented. Although, China has imposed an additional 25 per cent import duty on American cotton and the rupee has also depreciated against the dollar, still cotton and yarn would face headwinds," Jain said. He emphasised that the real impact depends on the movement of international prices of cotton, and also pointed out that higher MSP would further compel huge cotton procurement by the state-run Cotton Corporation of India (CCI). "In the past, for instance, the Centre raised cotton MSP (medium staple) by a record 39 per cent in 2008-09, driving up CCI's procurement to an all-time-high of 8.9 million bales. Industry hopes that a clear CCI Policy is spelt out, so that in case they need to make massive procurement, the industry gets regular offering from them throughout the season at international parity prices," Jain said.

Source: The First Post

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From pork to cotton: What'll be the impact of US-China tit-for-tat tariffs

Washington imposed tariffs on $34 billion of Chinese imports on Friday and Beijing has said it will retaliate with punitive measures on US products worth a similar amount, including soybeans, pork and cotton. The Chinese government had not officially confirmed on Friday afternoon that the retaliatory tariffs had taken effect. But the tit-for-tat measures have escalated the trade dispute between the world's two largest economies and the world's commodities markets are increasingly embroiled in the bust-up. The higher US tariffs went into effect just after noon in Beijing (0401 GMT). The US and China have also issued a second batch of proposed duties on $16 billion of each other's goods. These would hit US energy exports, such as coal and crude oil, among other areas. It is unclear when these will come into effect. Below is a detailed breakdown of the markets affected by the tariffs imposed and proposed:

Food:

* Beijing's tariffs will have the biggest impact on soybeans, the United States' top agricultural export to China in 2017 worth about $12.7 billion, hurting US farmers in states, such as Iowa and Texas, which backed Republican President Donald Trump in the 2016 election. Buying interest in US beans from China, the world's top importer of the oilseed, has slowed to a trickle ahead of the tariffs, with one remaining US cargo heading for China still on the water. The vessel, Peak Pegasus, carrying 70,000 tonnes of the US oilseed for state grain trader Sinograin, was due to arrive in the port of Dalian at 5:00 p.m. (0900 GMT) on Friday, just hours after the duties went into effect. Some shipments marked for China were due to be loaded from the US Pacific Northwest, and are likely to get sent elsewhere as exporters scramble to avoid paying the tariff, a US trader said. In the months ahead though, China will struggle to replace the US beans, forcing processors, which crush the beans to make oil and animal feed, to pay the extra duty or find substitutes. Rabobank reckons China may have to buy up to 15 million tonnes of US beans at tariff prices. Crushers may not pass on the inflated cost at least in the short term, further eroding their already low margins, the bank said in a research note. The biggest impact will likely be seen in sales of the next US crop, which will come to market in September. In the meantime, Brazil, the world's top exporter, will likely pick up the slack, although a trade association warned on Thursday the South American country may need to import the oilseed from the United States this year to satisfy demand from local processors.

 * US pork was already saddled with duties enacted in an earlier round of the trade row and now faces an extra 25 per cent tariff that would raise the total charges up to 62 per cent. European pork will gain some ground over the US , which shipped almost $500 million worth of pork to China last year. US shipments have nearly ground to a halt since the 25 per cent tariffs implemented on April 2.

* A record volume of US crude oil is heading to China even as Beijing's planned tariffs threaten to cut off a relatively new and burgeoning business for US exporters. Nine vessels with 26.6 million barrels of crude oil loaded in Texas and Alaska and worth about $2 billion are due to land over the next five weeks, Thomson Reuters trade flow data shows. That equates to 700,000 barrels per day, 8 per cent of China's daily imports and a large volume for the United States, a newcomer to the Chinese market. If enacted, the import duty would make US oil less competitive than other crudes, likely causing a decline in Chinese purchases and forcing US oil firms to find other buyers. Amid a relatively well-supplied global oil market, energy consultancy Wood Mackenzie said the United States "would find it hard to find an alternative market that is as big as China," as Chinese buyers make up 20 per cent of US overseas crude sales. China would likely replace the lost US barrels from their top sellers Russia or Saudi Arabia, which have recently announced plans to raise output. Among other energy products, China noticeably spared US liquefied natural gas (LNG) exports from potential import tariffs, but in doing so, it has preserved a potential weapon should the trade war with Washington deepen. However, coal could be caught in the crossfire if the second batch of duties is introduced. Replacing American shipments with coal from other places would not be difficult for China, but a loss of business with the world's top importer of the fuel would hurt companies in West Virginia, a state that heavily favoured Trump in the 2016 presidential election.

Source: Business Standard

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Over 5000 buyers attend the Heimtextile and Ambiente textile exhibition

NEW DELHI: The 5th edition of Heimtextile India & Ambiente India 2018 concluded recently in Delhi. More than 100 business deals were generated during the three days show in the capital. The fair saw representation from 165 exhibitors. Over 5000 international and domestic buyers visited the show to source home, lifestyle, fashion and textiles products. Executive Director and Board Member, Messe Frankfurt Asia Holding Ltd, Raj Manek in a statement said, "Every edition of the show has successfully managed to curate exclusive programmes for the benefit of its buyers and exhibitors. From the international perspective we announced our association with the Office of Small and Medium Enterprises Promotion and Federation of Thai Industries and welcomed the industry associations from Greece and Korea along with international designers from France and Finland." Minister of State for Textiles, Government of India, Ajay Tamta in a statement said, "The event has been creating job opportunities for small scale handloom & textile artists. This yearly event also gives a push to Indian economy - both for handlooms and handicrafts. The fair included top brands including D'décor, Aditya Birla, RR International and Manorma. Several startups too displayed their unique designs and artefacts in Dining, Living, Giving and the Home furnishing segments.

The maximum number of buyers came from USA, UK, Germany, Japan, Australia, France, and China.

Source: Economic Times

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Turkey imposes anti-dumping evasion duties on Vietnam’s POY yarn

Turkey has decided to levy anti-dumping evasion duties of 8 percent on partially oriented yarn (POY) products imported from seven countries and territories including Vietnam, according to the Ministry of Industry and Trade. The ministry cited the Turkish Ministry of Economy’s announcement 2017/23 on June 21 on the final results of its anti-dumping duty evasion investigation into POY products from China, Indonesia, Malaysia, Indonesia, Taiwan (China), Thailand and Vietnam. POY imported from Vietnam, coded HS: 5402.46, is the material to produce polyester yarn (PTY) which is currently subject to anti-dumping duties. Turkey said the investigation found that from January 1, 2010 to December 31, 2016, the imported quantity of the POY had surged significantly, thus reducing the effect of anti-dumping measures applied to PTY. The investigation was initiated on February 25, 2017 following a complaint filed by Turkish textile manufacturer Korteks Mensucat ve Sanayi Anonim Sirketi.

Source: Vietnam Plus

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US tariffs may boost trade credit insurance business

Trade tensions sound like a great opportunity to underwriters of a little-known insurance product. US President Donald Trump set off fears of a global trade war with tariffs on metals and an array of imports from China. As countries ratchet up the rhetoric and retaliation, insurers are weighing how companies will deal with the pressure. For some providers of trade credit insurance, the saberrattling is the jingle of product placement. Trade credit insurance protects companies from the risk that buyers will be unable to pay. If governments implement more tariffs, it could increase the cost of production and ultimately put stress on retailers and distributors to either raise prices on consumers or shrink profits. If the stress is enough to put the buyer out of business, the supplier would activate its trade credit insurance to get reimbursed for defaulted payments. Trade credit insurance has been relatively slow to catch on in the US. The global market is about $7 billion of premiums, mostly in Europe, according to the International Credit Insurance and Surety Association. Of that, $1 billion is attributed to companies in the US.

Source: Business Line

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The Netherlands and India: Partners for Sustainable Business

The Netherlands Trade Mission to India 2018 unfurled from 22nd May to 25th May. With over 200 participants, 140 companies/knowledge institutions, 4 cabinet ministers, and Prime Minister Mark Rutte, this was the biggest ever Dutch Trade Mission to India and almost twice the size of previous flagship-mission in 2015. During the course of the trade mission, Indian and Dutch companies brainstormed, discussed and shared ideas about collaborations in the below-mentioned sectors: Agribusiness & Horticulture Life Sciences & Healthcare Water Management, Logistics & Maritime High tech & IT and Smart Cities Startups Sustainable Business.  Let's make all trade and investments between India and the Netherlands Sustainable and Inclusive’is the motto the The Indo-Dutch Sustainability Forum or the INDUS-Forum breathes. One of the key themes that got a major push during this trade mission was sustainable business and innovation. Sigrid Kaag, Minister of Foreign Trade and Development Cooperation “The SDG’s are our shared global agenda and sustainable business forms a critical part. Global value chains create a high level of interconnectedness. Working for people, planet and profit is the only way to go. Innovation is key and the private sector is showing us the way.” Through the business connections forged within this INDUS forum, Indian and Dutch partners work to make sure that sustainable and inclusive decisions make clear business sense. An example of this INDUS approach is the Circular Yarn Initiative. Indian and Dutch textile companies are joining forces to produce circular textiles for the European market. Innovative techniques have made it possible to turn textile waste into new high quality materials. This Indo-Dutch collaboration can cause a major shift in the textile industry. Transforming waste into high quality materials will save water and reduce the use of chemicals, while at the same time staying competitive, producing high quality circular textiles for the mainstream market. Pals Brust, Co-Founder of Upset-Texitiles - part of Clothes the Circle, a consortium of industry players, with the ambition to realize 100% circular textiles production: We often get asked why we are starting in India. That's because we've seen in India an intrinsic motivation to be sustainable. I've experienced this through CSR Netherlands, but also through the embassy. And of course, all the people in India are fully aware that change is really necessary in the textile sector.

Source: Netherlands and You

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Indonesia’s Textiles Exporters Brace for Trump's Trade War

Jakarta. US President Donald Trump has warned that he may revoke special trade tariffs for Indonesia, especially on textiles, in a bid to reduce his country's trade deficit, an official said on Thursday (05/07). The United States was Indonesia's second-largest export destination last year, at 11 percent of total exports, or $17 billion. Indonesia enjoyed a surplus of $9.59 billion. "[Trump] is now doing as he wishes, including to us. He has warned us that we cannot export more than the United States. He has warned that there are several special tariff arrangements that will be revoked, especially on textiles," Sofjan Wanandi, chief advisor to Vice President Jusuf Kalla, said during a discussion on Thursday (05/07). Indonesia exported textile products, both knitted and unknitted, worth a total of $4.12 billion to the United States last year. According to Industry Ministry data, the United States currently imposes import tariffs of between 5 percent and 20 percent on Indonesian textile products, while there are no tariffs on textile imports from Vietnam. Sofjan, who recently visited the United States to meet with officials, said it is uncertain what Trump will do in the near future as "no one understands what he actually wants," he said. According to Sofjan, who is also advisory board chairman at the Employer's Association of Indonesia (Apindo), the US economy is currently thriving, which enables Trump to create and change trade policies as he considers most beneficial. "We don't know when Trump will start the trade war; maybe tomorrow, maybe never," Sofjan said.

Retaliation

Ade Sudrajat, chairman of the Indonesian Textile Association (API), emphasized that Southeast Asia's largest economy needs to retaliate soon if a higher tariff is enforced. "If [a higher tariff] is imposed, it will be a huge obstacle for the textile industry, so it must be countered. If we keep quiet, then we become the losers," Ade told the Jakarta Globe, adding that Indonesia's large imports of agricultural products from the United States could be used as a bargaining chip. Indonesia imported agricultural products worth $1.27 billion – mainly seed oil, fruits and medicinal plants – from the United States last year, followed by equipment and machinery, animal feeds and cotton. Indonesian textile exports rose 4.4 percent to $12.4 billion last year, exceeding the API's target of $11.8 billion and the Industry Ministry's $12 billion. The ministry has set a textile export target of $13.5 billion for this year and $15 billion for next year. The number of people employed in the textile industry increased 17 percent last year to 2.73 million, compared with 3.3 million in the processed food and drinks industry and 3 million in the automotive industry. The ministry seeks to increase the number of people employed in the textile industry to 2.95 million this year and 3.11 million next year. According to the Trade Ministry, total investment in the nation's textile industry amounted to Rp 10.9 trillion ($758 million) in 2017. Indonesia produced about 2 percent of the world's textile supply, which earned the country $11.87 billion in foreign exchange. "It will be unfair for us if the textile industry is targeted and the government prefers to do nothing," said Ade of the API.

Source: Jakarta Globe

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PAKISTAN: Cotton research station to be set up at Rajanpur

MULTAN: Secretary Agriculture Punjab Wasif Khursheed said Friday that a cotton research station would soon be established in Rajanpur district to improve cotton crop quality and increase per acre production. He was speaking at a Cotton Crop Management Group (CCMG) meeting at Central Cotton Research Institute (CCRI) Multan with Caretaker Minister for Agriculture Sardar Tanvir Ilyas in the chair. Farmers’ welfare was a top priority of the government and crop-friendly initiatives of the government improved agriculture growth rate up to 3.81 per cent in a year only, he said. Wasif said that many steps were being taken to cut down the cost of cultivation for farmers. Fertilizers controllers and pesticides inspectors were collecting samples from markets on regular basis to ensure availability of quality products. He said that so far 165 FIRs have been got registered and 87 accused involved in substandard pesticides business have been arrested. And fake pesticides worth over Rs32 million was taken into custody, he added. He added that fertilizers controllers arrested twelve accused during five raids in 2018 and recovered substandard fertilizers valuing over Rs1.9 million. He said that crop insurance scheme has been launched for the farmers and its first phase was witnessing insurance coverage to cotton and paddy crops of farmers in Lodhran, Rahimyar Khan, Sahiwal and Sheikhupura. The provincial government would pay 100 per cent premium of crop insurance in case of farmers owning land up to 5 acres and 50 per cent premium in case of landholding of 5 to 25 acres. To keep cotton crop safe against threats posed by monsoons, work on a pilot project worth Rs60 million has been completed.

Source: Profit by Pakistan

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PAKISTAN: What are we importing?

In the first 11 months of 2017-18, imports stood at $55.23 billion, an increase of 14.12 per cent. Exports increased by slightly more at 15.28, per cent. However, the absolute level of exports is just $21.35 billion, paying for only 38.7 per cent of imports. In theory exports do not have to be equal to imports, there being other means of paying for imports. But the gap in our case is humongous. What exactly are we importing? Are some of these dispensable at a time of foreign exchange crisis, with its gravity increasing by the day?

Imports are divided into nine groups. As one would expect, the largest is the Petroleum Group valued at $12.93 billion or 23 per cent of the total. This is understandable as Pakistan is dependent on the world for its requirements of petroleum products and crude oil. Savings are still possible by lowering energy intensity, a measure of the amount of energy used to produce a unit GDP. It has been consistently falling globally and in all major economies. Pakistan falls way behind its peers. A big time new entrant is the import of gas that contributes 18.4 per cent of the Petroleum Group imports. Next in importance is the Machinery Group with a share of 19.3 per cent in the total imports. Again, Pakistan is dependent on the import of capital goods to raise the investment-to-GDP ratio necessary for a respectable rate of growth of GDP. Power-generating machinery, electrical machinery and apparatus, telecom and textile machinery are, in that order, the major items in the group. The third largest group is the Agricultural and Other Chemicals Group, with a share of 14.7 per cent. These are essential inputs for agricultural and industrial production such as fertilisers, insecticides, plastic materials, medicinal products, etc. In a country still claiming to be agricultural, $915 million were spent on importing raw cotton. There is not much public awareness of the fact that the fourth-largest group of imports is the Food Group. In the period covered here, Pakistan incurred a huge expenditure of $5.72 billion to import food items. The share in total imports was 10.3 per cent. Around half of the amount went to the import of edible oils and tea due to insignificant local production. The indigenous oilseed crops such as sunflower, canola, rapeseed/mustard and cottonseeds cater for only 12 per cent of the demand. Not much import substitution is in evidence. Rapeseed/mustard showed a negligible growth of 0.1 per cent in 2017-18. The other half of food import bill was on milk & its products, dry fruits & nuts, spices and pulses. Despite claims that Pakistan is among the top milk producers of the world, the country imported $252 million worth of milk and related products in 2017-18, an increase of 8 per cent over the previous year. Pulses import cost the country $483 million. Domestic production of masoor has remained unchanged and that of moong has declined by 8.7 per cent. What is achievable is demonstrated by the fact that the import bill in the previous year was $903 million. The reduction was caused by the increase of maash production by 4.3 per cent. The usual suspects, cars and motorcycles, cost $1.3 billion, while buses and trucks cost $581. “All other items” claim a hefty $4.6 billion. Rupee depreciation and regulatory import duties will reduce imports, but the desired impact requires reinforcement by appropriate nontariff barriers against dispensable imports and incentives for domestic production, especially in the Food Group.

Source: The Express Tribune

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