The Synthetic & Rayon Textiles Export Promotion Council

MARKET WATCH 30 JULY, 2018

NATIONAL

INTERNATIONAL

Exports must get priority sector lending tag: Suresh Prabhu

Commerce and Industry Minister Suresh Prabhu has said his ministry wants to include the export segment under the priority sector lending category and it has taken up the issue with the Reserve Bank of India. "Exports is a strategic issue which promotes India's interest and therefore its a strategic priority for India (but) not a priority sector lending for banking sector. This is a complete paradox," he said. Prabhu, who is also the Civil Aviation Minister, was speaking at the 44th India Gem & Jewellery Awards organised by Gem and Jewellery Export Promotion Council (GJEPC) here late evening. This is not a commercial banking problem, but the one related to the regulator, he said adding, "I have already told the RBI governor that you must treat exports as priority sector lending." "Banking is a very important issue and we must address it and we will continue to work on it and make sure that the genuine credit requirements of the sector are met," the minister added. Treating exports under the priority sector lending will help India achieve the target of becoming a USD 10 trillion economy by 2035 amid the current operating environment, Prabhu said. With joint efforts of the government, industry and other stakeholders, India will definitely be able to become a 5-trillion dollar economy within 7-8 years, he said adding, "India will become a 10 trillion dollar economy by 2035." "We want to grow at a rate which is closer to 8-9 per cent, and it can't be done without global trade...this is the first time that world trade itself is facing fundamental challenges...the entire edifice of WTO has been challenged, and that the future of the institution is in crisis. ”This raises the need for us to chart a path forward, based upon international trade as a key driver," Prabhu said. He said India's exports in last fiscal were the highest in the last six years and have been growing at a higher rate in the last few months. "I think we are now growing at over 20 per cent. If we continue this, India may be be able to again register record growth in exports this fiscal as well," he added. Stating that the jewellery industry has immense potential, the minister said, "There are black sheep every where. And there are possibilities of system failure which can lead to default. But that does not mean we have to throw the baby in the hot water. ”We have to find out a way of how the industry will be supported by getting the genuine financial needs met." "Sometimes, there are system failures too but that doesn't mean banks would stop lending. We must develop a protocol for both the industry and banks to follow and must start lending to genuine players," the minister said. He was apparently referring to the Rs 13,400-crore crore fraud allegedly committed by fugitive diamond trader Nirav Modi and his uncle Mehul Choksi on PNB. Both diamond traders are facing multiple-agency probe in connection with the scam, which came to light in February this year. The minister also announced that a Domestic Council is being set up to improve domestic support for the industry. He said the council will work towards industry development, employment generation, building of regional clusters and strengthening of value chains. Prabhu said the government is planning to set up export promotion offices globally in order to push overseas shipment of goods in a targeted fashion. Prabhu said the GJEPC and the government are working together to formulate a strategy for the same, which he said, will be unveiled soon. "A coordination committee will be set up consisting of senior officials of the ministry and the gem and jewellery industry, who will meet monthly, to ensure that industry concerns are addressed on priority," he added.

Source: Economic Times

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Commerce Ministry to replace export subsidy schemes banned at WTO

The Commerce Ministry will soon be ready with a road map to replace export subsidy schemes incompatible with World Trade Organisation norms with ones that cannot be legally challenged at the multilateral organisation, a senior government official has said. “Schemes that are being targeted by countries, including the US, at the WTO will be re-designed so that they do not lead to disputes being lodged against India. A competent team of trade lawyers is advising the group of officials, industry representatives and trade experts working on the new schemes,” a government official told BusinessLine. While some re-designed schemes could be announced in a review of the Foreign Trade Policy in 2018-19, some may be replaced even before, the official said. This is a difficult exercise as incentives can no longer be targeted at exporters alone and giving sops to all enterprises, whether domestic or export-oriented, could put a huge burden on the exchequer. The Centre is in a hurry to put its house in order as the WTO’s Dispute Settlement Body (DSB) has already agreed to constitute a panel to rule on a US complaint on certain programmes in India, including the popular Merchandise Export from India Scheme, the Export Promotion Capital Goods scheme such as the Electronics Hardware Technology Parks Scheme and some Special Economic Zones incentives. Washington says the schemes don’t comply with existing rules. Under existing WTO rules, a country can no longer offer export subsidies if its per capita GNI has crossed $1,000 for three years in a row. In 2017, the WTO notified that India’s GNI had crossed $1,000 in 2013, 2014 and 2015.

Phase-out time

While India refuted the US allegation by arguing that it should be entitled to a eight-year phase-out period, chances of the argument working in the dispute is weak as this demand has been ignored at the WTO since 2011. “The team re-working the schemes is going through all WTO disputes on export incentives in details with the legal team to see what has been successfully challenged and which schemes have stood up to legal scrutiny,” the official said. The Commerce Ministry will also hold discussions with the Finance Ministry once it has a plan in place as the alternative schemes would need ample funds. “We do not want the level of compensation and incentives that exporters are getting at present to be reduced. While schemes will be re-designed, the support is likely to remain unchanged,” the official added. According to the US complaint filed at the WTO, the targeted measures provide producers of steel products, pharmaceuticals, chemicals, information technology products, textiles and apparel with benefits to the tune of around $7 billion per year.

Source: The Hindu Business Line

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Gujarat: GST order to cost textile players crores

A recent order by the Union Finance Ministry has put a question mark on the tax credit, worth hundreds of crore of rupees, that was due to textile players. Accordingly, the accumulated input tax credit (ITC) lying unutilised in balance, on purchased received up to July 31, 2018 shall lapse. Textile players say they will urge the government to amend the order. As the GST got rolled out a year ago, textile fabric was subjected to 18% tax. Traders across the country had held protest. Finally, the tax was brought down to 5% with a condition that they will not get tax credit on purchases made. Meanwhile, the sector — one of the major providers of jobs — suffered a severe slowdown and businessmen suffered shortage of liquidity. The recent GST Council meet decided that tax credit will now be available. Finance Ministry came out with a notification, which according to experts will deprive businessmen of surplus credit lying with the government. "Accordingly, the accumulated input tax credit lying unutilised in balance, on the inward supplies received up to July 31 shall lapse, leading to huge losses," said Monish Bhalla, founder and director of Taxolegal. Bhalla said the notification is confusing. There is uncertainty about which credit will lapse. Will the credit pertaining to input services and capital goods would lapse as well? "Such a provision will have far reaching consequences. Textile product manufacturers accumulate stock on seasonal basis as credit on their stock on July 31, 2108 would lapse. For those in expansion phase, the cost of capital will rise," he said. Naresh Sharma, president of Ahmedabad Textile Processors Association said that they will urge the government to amend the notification so that the intent of GST Council could materialize. Bhalla said that it seems that GST Council didn't have such an intention while recommending the provision of refund; however the bureaucrats had something else in their mind, which is reflected from the language of the notification. "The government of the day should ensure that the draft notifications are approved in the GST Council before releasing. An immediate amendment to this notification is the need of the hour," said Bhalla.

UNUSED FUNDS

Accumulated input tax credit (ITC) lying unutilised in balance, on purchased received up to July 31, 2018, shall lapse. Textile players say they will urge the government to amend the order.

Source: Daily News & Analysis

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Textile sector welcomes refund of input tax credit

The GST Council at its recent meeting decided to refund accumulated credit on account of inverted duty structure to fabric manufacturers. This is a huge relief to the textile sector, according to the industry. The Confederation of Indian Textile Industry (CITI) chairman Sanjay K. Jain said in a press release the fabric sector already faced several difficulties in the international market. The decision to allow refund of accumulated input tax credit at fabric stage will benefit the weavers. The Government has also reduced the rate on Chenille fabrics and handloom dhari to 5 % from 12 %. This will boost employment in the power loom sector. For every Rs. 1 crore investment in the segment, it generated 40 jobs.

Reverse charge

The Cotton Textiles Export Promotion Council said there are certain decisions that would lead to procedural simplifications. A significant change was the deferment of the reverse charge mechanism till September 2019. However, the GST council should address issues related to refund of input tax credit related to capital goods on exports, payment of IGST on exports in the case of domestic procurements under deemed exports, and refund of transitional credits. Southern India Mills’ Association chairman P. Nataraj said the GST council’s decision would create a level-playing field for independent weaving units, power loom and handloom sectors. The Government should consider given retrospective effect to the decision. At present the council said this came into effect from July 27. A. Sakthivel, southern region chairman of Federation of Indian Export Organisations, said this was one of the long-pending demands of the industry. The textile sector was seeing negative export growth for the last few months. Refund of the input tax would revive the sector and improve its global competitiveness.

Source: The Hindu

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New textile policy to be beneficial for women

 ‘Govt. plans to give incentive to investors’

The proposed new textile policy to come up for discussion in the next Cabinet meeting would focus on offering more employment opportunities to women by promoting textile industries across the State, Industries Minister N. Amaranatha Reddy said on Saturday. Interacting with the Self Help Groups (SHGs) at the Indira Priyadarshini Auditorium of Sri Padmavati Mahila Viswa Vidyalayam here, Mr. Reddy said the government would come up with one of the best textile policies in the country that would be more beneficial for women. During training period it was proposed to give women a stipend of Rs. 7,500 to Rs. 10,000 and wages of Rs. 1,000 to Rs. 3,750 to those working in an industry or groups, he said. “The government is also planning to offer an incentive of 45% to those keen on investing in the industry,” the Minister said. Referring to the welfare schemes being implemented by the government, Mr. Reddy said Chief Minister N. Chandrababu Naidu was committed to developing the State despite deficit budget. Mr. Reddy later gave away 500 sewing machines to women beneficiaries and released a cheque for Rs. 20.69 crore to the SHGs as loan via bank linkage. MLA M. Suguna was among others present.

Source: The Hindu

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GST regime brings in nearly 50 lakh new taxpayers

New Delhi : The Goods and Services Tax (GST) regime has seen a significant change in the assessee segmentation compared to the pre-GST era when VAT and Central excise were in place. There are fewer assessees now in the lowest and highest slabs while all the other slabs have seen an increase. As on July 25, a total of 63.7 lakh taxpayers migrated from the old system, while 49.53 lakh new taxpayers became part of the indirect tax system taking the total number of taxpayers under GST to more than 1.13 crore. These include 17.66 lakh taxpayers who have opted for the composition scheme. The government expects the total number of assessees to go up as the GST Council has decided to give businesses one more chance to migrate to the new system. To incentivise them, migrants may be allowed to file GST return for the July 2017-August 2018 period without any late fee. The GST regime requires any business with an annual turnover of ₹20 lakh or more (₹10 lakh in some North-Eastern States and hilly States) to get registered. Earlier, different States had different slabs for registration under VAT/ST, which was as low as ₹1 lakh and could go up to ₹10 lakh: the thresholds for service tax and Central excise were ₹10 lakh and ₹1.5 crore, respectively. The GSTN study found that during the pre-GST regime, more than 60 per cent taxpayers were in the turnover slab ‘up to ₹20 lakh’. Post-GST, that came down to 52.24 per cent. Since some States earlier had a threshold of below ₹20 lakh or even below ₹10 lakh, many small businesses went out of the tax net, lowering their share in the total GST payers. The share of taxpayers with turnover of ₹5 crore or less has fallen to 93.29 per cent, against 94.25 per cent earlier. The share of taxpayers in the ₹100-crore slab has fallen by eight basis points. This could be because some products are — crude oil, petrol, diesel, ATF and natural gas, and alcohol for human consumption — are still under the old regime. Also, big taxpayers are smaller in numbers, so even if a few don’t come under the new regime, it will have a significant impact on the share of the highest turnover slab.

Source: Business Line

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GST credit curbs on fabric splits industry

The government's move to allow input tax credit to fabric makers, using raw material with higher GST rates, had brought an all-round cheer last week. But a recent notification is causing some heartburn. At last weekend's GST Council meeting, ministers had agreed to allow input tax credit to fabric makers, which face a 5% levy, but pay 15% on some of the yarn, the key input. There is no issue for the cotton fabric makers. In cases involving polyester yarn and fabrics, there is an inverted duty structure, which has now been addressed through credits for taxes paid on the raw material. The credit can be used to clear the tax dues on the fabric when it is sold. Implementing the decision, the government has said that accumulated input tax credit, which remains unutilised after payment of tax up July, 2018, will lapse. "If this notification is implemented, accumulated credit of over 1,000 crore with fabric manufacturers will lapse and those having multiple products such as garments will not be able to use the credit balance. The government needs to delete the condition otherwise flood of litigations will start," said tax lawyer R S Sharma. Tax consultants, however, said that the government move is justified as input tax credit for all taxes paid kicked in after GST was launched. It also allowed for refund in case of a sector with an inverted duty structure (where the final output has lower levy than the input), which was not the case before July 1, 2017 when GST kicked in. "Some of the garment manufacturers were hoping for a bonanza after the Council's decision as they thought that even pre-GST tax credits can now be used," said a consultant with a leading firm. Eligibility for claiming of refund of inverted duty is available only prospectively, which has been the principle for all GST rules, he added. Government officials, however, said that the decision to provide a relief for the inverted duty structure was a major gain for the textile industry, going forward.

Source: Times News Network

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‘Govt is subsidising foreign shipowners by easing cabotage rule’

Mumbai : The Centre will lose revenue by allowing foreign ships to carry cargo on local routes through the recent relaxation in cabotage rule together with a move to scrap the ROFR, a top shipping industry official has said. Besides, these decisions will not fetch lower freight rates for Indian charterers and consumers, Atul Agarwal, a former president of the lobby group Indian National Ship Owners Association (INSA), told BusinessLine, countering the Shipping Ministry’s argument that the decisions were aimed at reducing logistics costs. The cost of operating an Indian flag vessel is reckoned by the local industry to be some 20 per cent more expensive than a foreign flag, mainly ship due to higher bunker rates, crew taxation, Goods and Services Tax etc. By giving them entry to operate along the coast, the government is subsiding foreign flag ships to the extent of 20 per cent because the government will not be collecting the 20 per cent, mostly in taxes, from them. “You are giving that benefit to them. I’m not looking for any subsidy from the government. My argument is, I don’t want the government to lose that money. I want the government to levy that 20 per cent on him. You allow him to come on the Indian coast, please collect the 20 per cent from him. “I’m prepared to compete with him on merits. I’m competing with him even today and matching their freight. But, don’t make it an uneven playing field for me in future. The government should collect revenue from him,” Agarwal said. Foreign flag vessels, according to Agarwal, will not make the freight cheaper. They will charge the same freight. Charterers will still pay the same and foreign flag vessels will make more money. So, the government is not subsidising either the Indian shipowners or the Indian consumers, but the foreign flag vessels. “The government is giving a 20 per cent subsidy to encourage foreign ships. As it is, how much EXIM cargo are Indian ships carrying? Eight per cent or even less. You are removing the ROFR so that foreign flag vessels get the balance eight per cent. If I had a 92 per cent share of India’s EXIM cargo, then I would have been the one setting the freight, not at eight per cent. I don’t have the power to do it. So, am I dictating anything?” Agarwal argued.

 ‘A myth’

 “It is a myth that if you allow foreign ship owners on the coast or if you remove the ROFR, freight rates will come down. On the contrary, the rates will go up. One hundred per cent,” Agarwal asserted. And, nobody will realise that the government has indirectly subsidised foreign ships. The total collection of taxes from the shipping industry — both direct and indirect — will not be more than ₹8,000 crore. But in the accounts of the government, there is no separate shipping sector. No one will be wiser that the government lost this revenue. No one will understand that the government has subsidised foreign ship owners, he said.

Forex outflow

The decision, he fears, will lead to greater outflow of foreign exchange. “By encouraging foreign ship owners on the coast, are we not encouraging more out flow of foreign exchange. Most of my earnings, even if it is in foreign exchange, is retained within India - salaries goes to Indian crew and operational expenses in the office goes to Indians. What will the foreign ship owner do with his earnings. He will take them away. So, what is the benefit to India? Nothing,” he adds.

Source: Business Line

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Amending the GST law: Let the numbers speak

The GST Council should simplify the structure of the IGST and truly zero rate exports, as well as reduce the compensation cess if the Compensation Fund continues to record surpluses after the recent rate decreases. The government proposes to amend the goods and services tax (GST) laws after the GST Council gave its approval in its 28th meeting held on 21 July. The GST laws are a package of five enactments. Four of these have been enacted by the Central government. These are: the Central Government Goods and Services Tax (CGST) Act, the Union Territory Goods and Services Tax (UTGST)Act, the Integrated Goods and Services Tax (IGST) Act, and the Goods and Services Tax (Compensation to States) Act. The fifth enactment—the State Governments Goods and Services Tax (SGST) Act—has been separately enacted by each of the 29 states. The department of revenue has published the proposed 46 amendments to these Acts on its website. These proposals comprise 38 amendments to the CGST Act, six to the IGST Act and two to the Compensation Act. These amendments appear to be driven by three forces. First, for operational convenience. Second, for plugging loopholes in the GST base. Third, for accelerating devolution of receipts to states, though on a provisional basis. The basic structure of the GST is not being touched. The purpose of this article is to highlight the opportunity to further amend the GST laws to simplify the IGST structure, lighten the compliance burden on dealers, and encourage exports. The chart details collections of CGST, SGST, IGST and the aggregate GST collections (which includes compensation cess, which is not shown in the graph) over the past eight months. Two questions arise here. First, why is there a consistent difference between CGST and SGST collections over this eight-month period? Second, why have IGST collections significantly increased and CGST/SGST collections fallen correspondingly over the last three months? First, it should be noted that CGST and SGST are applied at the same rate on the same base. For example, the GST rate of 18% comprises a CGST of 9% and SGST of 9% levied under their respective acts, but collected in aggregate through one return. When the same rate of tax is levied on the same base by both the Central government and the state governments, the collections from these taxes should be the same. As the chart shows, this is not the case. The collections are different. The difference was about ₹13,150 crore in January. While this difference has narrowed to ₹6,000 crore in June, the gap remains. One explanation is that it arises from a differential set off of input tax credit on CGST and SGST due to divergent rates of Central excise and state value added tax (VAT) applied on goods which were held in stock as on 1 July 2017, when GST was implemented. Since transitional stocks have different levels of Central excise and state VAT embedded in them, the input tax credits set off for CGST and SGST are different and therefore the collections of CGST and SGST are different. This is a valid explanation, but only in so far as it relates to transitional stock. More than a year has elapsed since the GST was implemented. Most companies turn over their inventory at least twice a year if not more. Using this conservative guideline, all transitional stock should have been sold by December 2017. Once fresh inventory is acquired under the GST framework, there should be no difference between CGST and SGST collections after December 2017. Another explanation is that the difference arises from the carry over to the subsequent year of input tax credit on capital goods purchased, which could be different for central excise and VAT. If so, the difference should steadily decrease from July 2017. While the variance has decreased, a significant difference persists and is unexplained. Second, IGST has more than doubled over the last three months. How has this striking increase taken place? The e-way Bill was introduced in April. Could this be correlated with this significant rise ? However, there has been an equally significant fall in the CGST and SGST revenue over these three months . Why have CGST and SGST revenue fallen during this period? Is this fall linked to the rise in IGST revenue? Further, the present unreconciled balance in the IGST account is reportedly about ₹1.5 trillion. The present unreconciled balanced in the Compensation Fund is about ₹38,000 crore with a cumulative cess collection so far of about ₹86,000 crore against which about ₹48,000 crore has been released to states so far. A state government has accused the Central government of unreasonably crediting the unreconciled balances in these two funds to the Consolidated Fund of India, unwarrantedly bolstering the Union’s fiscal position, to the detriment of the fiscal position of the states. Apparently, in response, one of the proposals under consideration seeks to amend the Compensation Act “to distribute the amount remaining unutilized in the Fund amongst the Centre and the States in the manner provided”. This proposal seems to recognize that the compensation being collected is beyond the requirement of the state governments. Two points arise for consideration. First, the priority should be providing relief to the consumer by lowering the rates of compensation cess (which is anyway supposed to be temporary) rather than going against the grain of the GST and enriching the states by redistributing excess balances in the Compensation Fund. Second, the GST Council in its recent meeting reduced the tax rates for a number of items in the 28%, 18%, 12% and 5% slabs. This would involve a loss of revenue, which may result in increased compensation claims over the next few months. For both these reasons, is the proposal to distribute unutilized Compensation Fund balances to the Centre and states appropriate? The answers can be determined only after goods and services tax network (GSTN) publishes intrastate and interstate-wise details of tax and cess collected and adjusted, sales and purchase data, tax rate and commodity wise. Like census data is released for research purposes, individual firm data could be aggregated to address privacy concerns and released to the public. GSTN carries a wealth of trade transactional data and any policy change in the GST design should be based on analysis of its data. It is not clear that the present amendment proposals have benefitted from such an analysis. One step that can be taken immediately by the Central government to address the large outstanding and unreconciled balances in the IGST account is to simplify the IGST. GST is the sum of CGST and SGST. In interstate transactions, SGST cannot be levied since states cannot levy taxes across their borders. To prevent arbitrage and promote tax efficiency, the dealer must face the same tax rate for interstate and intrastate transactions. The IGST levied is essentially a “wash” tax, applied as an equivalent to SGST in interstate transactions. Thus, ideally IGST should comprise only the SGST and nothing else. For intrastate transactions, the dealer should pay the sum of CGST and SGST. For interstate transactions, the dealer should pay the sum of CGST and IGST. CGST revenue will remain distinct and allocable to the government of India. SGST revenue will remain distinct and separable and allocable to the individual state governments. IGST will be allocated to the states where the downstream sales have occurred on the basis of adjustments claimed by the relevant dealers. The present IGST framework is unnecessarily complex, leading to convolutions in reconciliation. The IGST at present is the sum of SGST and CGST, not only SGST as proposed above. This results in the anomalous requirement that the CGST Act which has been legislated by the Union be made applicable only to intrastate transactions and not to interstate transactions. This is a jarring approach, restricting the application of a tax levied by the Union to intrastate transactions, when the Union has the powers to levy tax on all transactions both within and across states. This modus has made the IGST framework lumbering and ponderous while contributing to unreconciled balances in the IGST Fund. If the IGST were made the equivalent of the SGST only and CGST had been applicable to both interstate and intrastate transactions, then the unreconciled balance in the IGST account today would have been at half its present level, i.e. about ₹75,000 crore instead of the present ₹1.5trillion. The government could have legitimately recorded a rise in CGST revenue to the extent of half the IGST presently collected (representing the CGST portion of the present IGST). States would have been reassured that the entire balance in the IGST account (excluding B2C transactions) is earmarked for allocation to states based on claims made by dealers in the downstream sales states. A countervailing duty (CVD) on imports to the extent of CGST would need to be applied, but otherwise this arrangement will simplify the levy, collection and allocation of IGST revenue. A further simplification will be to amend the IGST Act to truly zero rate exports. Internationally, in countries which have adopted the GST, exports are zero rated. This means a zero rate of tax is levied on exports, enabling a refund of input tax credit to the exporters. Under the present IGST law, the dealer is required to pay IGST on his exports (net of input tax credit claims) and then seek refund of the IGST paid by him. Admittedly, a letter of undertaking mechanism is in place in lieu of IGST payment, but many are unable to avail it. The levy of IGST on exports increases an exporter’s compliance burden, enlarges his working capital requirements and expands his turnaround time. This also inflates IGST revenue to the extent of IGST levied on exports (which needs to be refunded) and presents an incorrect picture of not only the IGST balance available for adjustment to states, but also the gross GST revenue. If the IGST Act is amended to truly zero rate exports, these problems will be resolved. In sum, as part of its process of amending the GST Acts, the GST Council should simplify the structure of the IGST and truly zero rate exports by making appropriate amendments to the IGST and the CGST Acts. It should also consider reducing the compensation cess if the Compensation Fund continues to record surpluses after the recent rate decreases. In addition, the GST Council could consider publishing aggregates of GSTN data commodity and rate-wise as well as interstate and intrastate-wise so that researchers can examine questions related to GST policy. V. Bhaskar and Vijay Kelkar are, respectively, former special chief secretary (finance), government of Andhra Pradesh, and vice-president of the Pune International Centre.

Source: The Live Mint

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American small businesses rally behind India in GSP review

New Delhi : A number of American small businesses across sectors have urged the United States Trade Representative’s (USTR) office to continue extending tariff benefits under the Generalised System of Preferences (GSP) to India as withdrawing them could hit their own bottomlines, employment capabilities and the welfare of employees working for them. In representations made to the USTR as part of the ongoing GSP Country Practice Reviews of India, Indonesia and Kazakhstan, the businesses have argued that for the sake of the dairy, pork and the medical equipment industry that want the benefit to be withdrawn, the US government should not ignore the interests of numerous other sectors. “The USTR should not bow to the demands of three industries when it has the potential to harm hundreds, if not thousands of US businesses in other markets,” pointed out a representation from Connection Chemical, LP, a chemical distributor of industrial and fine ingredients in North America. The company pointed out that the GSP programme contributed to the cost efficiency of imports from India, Indonesia, and Thailand. “These imports are made with long-standing suppliers and should the GSP status of India, Indonesia, and Thailand be revoked, it would be extremely time-consuming to identify new suppliers with the same quality and price point,” it said. The GSP allows market access at nil or low duties for about 3,500 Indian products, including chemicals and textiles. The scheme was, however, not renewed for India by Washington in April as the US Trade Representative’s office said that it wanted to hold an eligibility review. The complainants urging the USTR to remove the benefit are mainly from the dairy industry and the medical devices manufacturers who are not happy with certain restrictions in the Indian market.

Will hurt expansion plans

“If GSP benefits for India were revoked, we would look at cutting benefits to our staff, we would delay hiring additional workers, we would cut costs across the board where possible,” pointed out a petition from Lance Kirkland, from Kirkland Associates Ltd, small business from Oregon. The company, which imports radiators from India, plans to expand and hire more people. “If GSP is not maintained it would severely hurt these plans,” it added. Albaugh, a producer and marketer of post-patent products for agriculture, offers to US farmers unbranded alternatives at lower prices, stated a representation from the company to the USTR. “Many of the raw materials used by Albaugh are not available from domestic producers and therefore are sourced from BDCs such as India. If GSP eligibility for India is withdrawn, this will greatly impact Albaugh’s business, which employs approximately 300 people throughout the US, and its ability to offer such opportunities for savings to the American farmer,” the representation added. According to figures furnished by the USTR, imports from India in 2017 under the GSP scheme was about $5.6 billion, which was a fourth of total imports under GSP at $21.2 billion.

Source: Business Line

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Abolish APMC cess, professional tax under GST: Maha traders

Maharashtra traders have urged the government to abolish the APMC cess and professional tax under the goods and services tax (GST). The Chamber of Associations of Maharashtra Industry and Trade (CAMIT) along with the Poona Merchant Chamber and Federation of Associations of Traders Pune also noted that the plastic ban in Maharashtra was ill-timed. They appealed to the state government to postpone the ban unless viable and durable alternate to plastic is identified. "We are in favour of protecting the environment but without viable and durable alternative of plastics - specifically plastic for packaging - the blanket ban on plastic is creating more hassle to general public, traders and Industries of Maharashtra," they said in a statement. The traders also strongly opposed FDI in retail and objected to the back-door entry of Wall Mart in India via domestic e-commerce player Flipkart. Salt-to-software conglomerate Tata Group said today it has re-opened its global headquarters Bombay House, marking the 114th birth anniversary of its former chairman J R D Tata. Built in 1924, the 94-year-old heritage building has undergone refurbishment and restoration for the first time in its history. The entire exercise took nine months. Tata Sons Chairman Emeritus Ratan Tata inaugurated it in the presence of group Chairman N Chandrasekaran and other employees. "The new office space wears a modern look with well- designed common and collaborative spaces to meet the requirements of business today," it said in a statement. Bombay House was built on two plots of land bought by Sir Dorabji Tata, the group's second Chairman and Jamsetji Tata's elder son, from the civic body of Bombay (now Mumbai) in 1920.

Source: Business Standard

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Redefining MSMEs

Using turnover, rather than investment criteria, is a more pragmatic way to incentivise industry. The Centre has set in motion a long-pending reform in its policy dispensation for MSMEs (Micro Small and Medium Enterprises), by tabling the MSME Development (Amendment) Bill 2018 in Parliament this week. The Bill’s most significant provision is the proposed change in the decade-old official definition of an MSME. As per the current definition, manufacturing units are defined as micro, small or medium enterprises depending on whether their investments in plant and machinery were below ₹25 lakh, ₹25 lakh to ₹5 crore or ₹5 crore to ₹10 crore. The thresholds were lower for services units. But the new Bill proposes a uniform MSME definition based on more realistic turnover criteria. Now, units will be ‘micro’ enterprises if their annual sales turnover is less than ₹5 crore, ‘small’ if they fall in the ₹5-75 crore range and ‘medium’ if they are in the ₹75-250 crore band. This change in the outmoded MSME definition has much to commend it. For starters, the new definition will result in fairer comparisons between older and newer ventures in a sector for utilising MSME sops. Given steady escalation in project costs, comparing investments in plant and machinery over time illogically puts newer units at a disadvantage over older ones, actively militating against modernisation efforts in industry. Two, annual turnover criteria can be directly verified from the GST Network, thus putting an end to physical inspections, and the Inspector Raj necessitated by the investment-based regime. Three, turnover-based sops may be friendlier to technology-intensive sectors such as engineering, auto components or pharmaceuticals where substantial capital investments are needed to ensure even minimal scale. Hopefully, the rebooted definition will allow more MSMEs to benefit from recent policy incentives. Turnover criteria will also allow a unit to graduate from its MSME status on reaching a fair size and discourage the proliferation of inefficient units created mainly with an eye to tax sops. Some industry bodies have expressed the concern that under the new dispensation, medium enterprises with ₹250 crore turnover may crowd out smaller peers in cornering the sops. But a higher turnover limit is welcome because one of the primary problems plaguing Indian industry is the mushrooming of tiny units that stand little chance against competition. The latest NSSO survey of 6.34 crore unincorporated ventures in India noted that 84 per cent of these were own-account enterprises which didn’t employ even one worker. For the Make in India initiative to take wing, and for Indian firms to stand a fighting chance in the export market, the policy regime for MSMEs needs to actively push them to scale up over time, rather than shower them with sops to remain small-scale. In fact, the Centre should mull a sunset clause on MSME benefits to encourage these units to climb up the value chain.

Source: The Hindu Business Line

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Textile revival package a non-starter

Panel has mooted a one-time fund infusion of ₹494.81 crore for the sector. The State government plan to implement a package to modernise and revive the ailing textile sector remains a non-starter. Despite having a track record of resuscitating and taking over sick public sector undertakings, including those owned by the Centre, the State government had not made any serious initiative for implementing the package, sources said. An expert committee headed by P. Nandakumar had conducted a detailed study and submitted a comprehensive package for rejuvenating the sector that had immense employment potential. The committee, most importantly, recommended a one-time fund infusion of ₹494.81 crore — ₹317.89 crore as capital investment and ₹176.92 crore as working capital — for putting the 17 mills in the public and cooperative sectors back on track. A review report of the Public Sector Undertakings Restructuring and Internal Audit Board had pointed out that all textile mills are incurring loss and the Kerala State Textile Corporation was on top of the list of loss-making units. The corporation’s turnover increased from ₹9.73 crore in 2016-17 to ₹32.13 crore the past year, but the loss also grew from ₹29.36 crore to ₹31.60 crore. Sitaram Textiles and other units too share the same plight. The 17 mills together offer direct employment to 5,000 persons and indirect employment to 15,000 persons. The package had suggested a slew of reforms to give a fresh lease of life to the mills and thus optimise its employment potential. Implementation of the package was expected to address the problems thrown up by demonetisation, inherent problems plaguing the sector such as lower capacity utilisation, and outdated technology. The government had approved the report, but the uncertainty in releasing funds has halted its execution. Textile and garment making are two sectors that do not demand a massive investment, but has immense job employment potential, compared to other areas. States such as Jharkhand, Bihar, Andhra Pradesh, Telangana and Maharashtra are placing due accent on this sector and have yielded instant results too. Compared to these States, Kerala has more advantages as it has spinning and weaving infrastructure, skilled manpower and a potential market. Implementation of the revival package would give instant results, sources said. A resources stressed government could even opt for a phased implementation of the package, but it had not figured in its priorities so far, sources said.

Source: The Hindu

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Punjab to enforce "best" industrial policy: Minister

Punjab Industry and Commerce Minister Sunder Sham Arora today said the government would soon implement "the best industrial policy" in the state to boost its industries. He also said the new policy would be aimed at giving relief to the industry from the state GST, the property tax, the electricity duty and the stamp duty. Arora made the statement while inviting greater investment in the state and urged the industrial captains across the country to invest in the state, especially in the textile and other sectors. The minister said the new policy, which would be unveiled soon, would also give a chance of one time, lump sum settlement to the sick industrial units. On the issue of VAT refunds, the minister said the deliberations have been held with the Finance Department and the government has decided to release funds to the tune of Rs 300 crore every two months with an aim to refund the whole balance by December 2018. He further said the new industrial policy has been framed after consultations with various stakeholders and would soon be put up before the state Cabinet for its approval. Arora, in a statement here, further said the new policy would give a major thrust to encourage the small and medium industries. The minister claimed the state government has provided employment to 1,56,000 jobless youth in the government as well as the non-government sectors during the past one year. He said during the past a year, the sanction has been accorded for establishment of many industries at an investment of Rs 9,200 crore, which would provide employment to 50,000 youths in the state.

Source: Business Standard

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Asian economies to surpass US by 2030: Report

India and 9 other major economies of Asia are expected to surpass the GDP of the US by 2030, according to a recent report. The total GDP of the 10 economies, viz, China, Hong Kong, India, Indonesia, Malaysia, the Philippines, Singapore, South Korea, Taiwan, and Thailand, is expected to be more than $28 trillion, while that of the US will be $22.33 trillion. Asia’s economic future is bright, however, certain factors like climate change, rising inequality, technological disruption and worsening environment for trade can hinder growth, says a report by global financial services major, DBS. The report adds that several dynamics that have supported the economic development of the Asian economies in recent decades are weakening, and there are many changes in the international environment. Asian countries have benefitted from multiple demographic dividends in the past, but these dividends are not as valuable anymore. Asian countries like India and Philippines have a young population, which poses a challenge of generating jobs. On the other hand, aging countries like Japan, China and Singapore can offset the demographic drag with the help of technology, says DBS in the report. DBS has also listed the rise of protectionism in global economies as a threat to investment flow in Asia.

Source: Fibre2Fashion

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RIL reports upswing in polyester chain margins

MUMBAI— Polyester markets witnessed active restocking with  the onset of peak textile season.  Producers maintained high operating rates  supported by a  low inventory base. Polyester filament yarn prices were firmer by 3% Q-o-Q improving margins  by 3% ($ 282/MT).However  PSF markets  were sluggish in anticipation of  relaxed norms for imports of  recycled feed. Prices declined 2%  Q-o-Q from significant highs of  last quarter  resulting in 29% Qo-  Q drop in margins ($ 153/MT)  informed RIL in its release for  the quarter ended 30th June  2018.  Global PET markets RIL  said  were healthy owing to firm  seasonal demand from beverage  segment  tight supplies and curtailed output. On Q-o-Q  PET  prices surged 12% pulling up the  margins by 56% to highest levels  in over a decade at $320/MT.  Domestic polyester markets were largely stable during the quarter. Filament demand grew by 16% Y-o-Y  supported by healthy FDY sales.  Staple fibre demand down by 4% Y-o-Y. PET demand grew by  18% Y-o-Y. Reliance polyester chain expansions have fully stabilized and are operating at  optimal levels. Fibre intermediate production during 1Q FY19 surged 12% Y-o-Y to  2.4 MMT while Polyester  production increased 7% Y-o-Y  at 0.63 MMT  RIL informed.  PX prices increased 3% Qo- Q tracking the uptrend in  crude prices. PX-Naphtha delta decreased 9% Q-o-Q ($ 336/MT)  in anticipation of long supplies  with start-up of new capacities.  PTA markets were healthy supported by tight supplies and improved downstream demand  arising from a peak textile season  in China. Prices remained firm up 7% Q-o-Q boosting delta by 25% Q-oQ to $187/MT surpassing the 5-year average.  MEG prices crossed $1000/MT mark early in the quarter amidst tight supplies and low Chinese port inventory. The bullish trend was supported by firm energy values and improved downstream demand.  However towards the end of the quarter a slowdown in downstream buying and rising  port inventories led to short  selling and weakness in Chinese  MEG futures. During the quarter average MEG prices slipped 3% Q-o-Q  weakening  delta over naphtha by 11% Q-o-  Q ($ 531/MT) but  remained  above the 5-year average. RIL’s major MEG capacities are now based on ethylene produced from  US Ethane and refinery off-gases  as cracker feedstock. This has helped in offsetting the weaker MEG Naphtha deltas.  Reliance has a large footprint in recycling postconsumer PET bottles into highquality  polyester for apparel applications. Each year over 2.0 billion PET bottles are recycled at two manufacturing sites.  These facilities have state-of-theart hardware to ensure efficient manufacturing of fibre used for  making apparel  home textiles  technical textiles  filling etc  RIL  informed.  Commenting on the  results  Mukesh D. Ambani  Chairman and Managing  Director  Reliance Industries  Limited said: “We continue to  focus on strong delivery through  operational excellence in our  portfolio of businesses. Financial results of 1Q FY19 underscore the strength of the petrochemicals we have  reinforced over the last  investment cycle. Our petrochemicals business generated record EBITDA with strong volumes and an upswing in polyester chain margins.”

Source: Tecoya Trend

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Global Textile Raw Material Price 29-07-2018

Item

Price

Unit

Fluctuation

Date

PSF

1293.87

USD/Ton

0.06%

7/29/2018

VSF

2098.95

USD/Ton

-0.90%

7/29/2018

ASF

3053.02

USD/Ton

0%

7/29/2018

Polyester POY

1438.44

USD/Ton

0%

7/29/2018

Nylon FDY

3419.97

USD/Ton

0%

7/29/2018

40D Spandex

5137.30

USD/Ton

0%

7/29/2018

Nylon POY

3155.77

USD/Ton

0%

7/29/2018

Acrylic Top 3D

3522.72

USD/Ton

0%

7/29/2018

Polyester FDY

1636.60

USD/Ton

0%

7/29/2018

Nylon DTY

5540.95

USD/Ton

0%

7/29/2018

Viscose Long Filament

3089.72

USD/Ton

0%

7/29/2018

Polyester DTY

1654.94

USD/Ton

0%

7/29/2018

30S Spun Rayon Yarn

2781.48

USD/Ton

-0.26%

7/29/2018

32S Polyester Yarn

2091.62

USD/Ton

0%

7/29/2018

45S T/C Yarn

2862.21

USD/Ton

0%

7/29/2018

40S Rayon Yarn

2524.62

USD/Ton

0%

7/29/2018

T/R Yarn 65/35 32S

2436.55

USD/Ton

0%

7/29/2018

45S Polyester Yarn

2231.06

USD/Ton

0%

7/29/2018

T/C Yarn 65/35 32S

2950.28

USD/Ton

0%

7/29/2018

10S Denim Fabric

1.37

USD/Meter

0%

7/29/2018

32S Twill Fabric

0.84

USD/Meter

0%

7/29/2018

40S Combed Poplin

1.18

USD/Meter

0%

7/29/2018

30S Rayon Fabric

0.66

USD/Meter

-0.22%

7/29/2018

45S T/C Fabric

0.70

USD/Meter

0%

7/29/2018

Source: Global Textiles

Note: The above prices are Chinese Price (1 CNY = 0.14678 USD dtd. 29/7/2018). The prices given above are as quoted from Global Textiles.com.  SRTEPC is not responsible for the correctness of the same.

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US set to announce major Indo-Pacific economic, developmental initiatives

WASHINGTON: The Trump administration is all set to roll out its major policy initiatives to address the massive infrastructural and energy needs of the Indo-Pacific region where India is seen as one of the anchor countries for greater connectivity and trade. President Donald Trump has lined up his top Cabinet members - Secretary of State Mike Pompeo, Commerce Secretary Wilbur Ross and Energy Secretary Rick Perry - at US Chambers of Commerce which is hosting the first Indo-Pacific Business Forum meeting tomorrow. The Forum will introduce the economic and commercial elements of the US' whole-of-government Indo-Pacific strategy and will include participation from senior administration officials, private sector and officials representing Indo-Pacific nations. The move comes nine months after the Trump administration openly spoke against the "predatory economic policies of an Asian giant" that threatens to eat into sovereignty of countries in Indo-Pacific, which has now emerged as a critical engine for growth. Asian economies are now projected to create 50 per cent of global GDP in coming decades. To realise that potential, countries of the Indo-Pacific will need to attract nearly $26 trillion in capital from the private sector and not the government to fund their energy and infrastructure needs, Nisha Desai Biswal, president of the US India Business Council (USIBC) said. She said American companies will be critical players in both investment of capital and technology-building and infrastructure that the region requires. "It's an event that brings together business, private sector and many of our partners from the region to have a conversation about how we can boost engagement investment across the Indo Pacific," Biswal, a key player in this initiative, told PTI ahead of the first Forum. In addition to Pompeo, Ross and Perry envisioning the administration's policies for the Indo-Pacific region, other top administration officials include USAID Administrator Mark Green, OPIC President Ray Washburne, Acting Ex-Im Bank Chairman Jeffrey Gerrish, and US Chamber President and CEO Thomas J Donohue. "All would be making announcements or sharing key investment opportunities that they are advancing in the Indo-Pacific region," Desai said. The Indian Ambassador to the US, Navtej Singh Sarna, is among the few diplomats from the region who have been invited to speak during the forum event. Senator Mark Warner, co-chair of the Senate India Caucus, would provide Congressional perspective on how it's important for the US public and private sector to be engaged in the Indo-Pacific region. "What we hope that there will be a lot of outcomes that come from this Indo Pacific Business Forum," said Biswal, who served as the Assistant Secretary of State for South and Central Asia in the second term of the Obama administration. "The forum will highlight US government initiatives to advance economic engagement in the region, particularly on key sectors including energy and infrastructure and the digital economy," State Department Spokesperson Heather Nauert said. "The forum will also emphasise the importance of public-private partnerships, the benefits of transparency and good governance, and unlocking the power of markets for sustainable development, and the need for US collaboration with regional partners," she said. Immediately after the event, Pompeo would leave for Singapore to attend the ASEAN ministerial. He will have an opportunity to engage with his counterparts in the region and be able to take the business strategy and the economic strategy for the Indo-Pacific that has been articulated in this event and be able to engage with his counterparts from the region to further have conversations and discuss next steps, Biswal said. Responding to a question, the former State Department official asserted that the $26 trillion infrastructure gap across the Indo-Pacific region would come from the private sector and not from the government. "It's largely going to be how we leverage private investment into the region to build the infrastructure and the connectivity, whether it's the energy infrastructure or the transport infrastructure, or the digital infrastructure where India is such a leader for the region," Biswal said. India is a critically important player in the entire scheme of things, she argued, noting that over the years it has emerged as a much more consequential player in Southeast Asia. "We really do see that India is one of the anchor countries in how we bring this whole region into greater connectivity and boost commerce and trade across the region," she said. "We also know that in many areas, including in the digital economy, India is a leader and a pioneer that has a lot of knowledge to share. We know that India is a very important market for the countries of Asia and we want to support that greater collaboration in the region," she said. "The US has a strong interest in also supporting all of the trading connectivity and being part of it," she said, adding that American business, technology and capital has an important role to play. "So, the Chamber is hosting this gathering as an effort to really bring together different players and different perspectives and create some opportunities for those connections to be made," she said. Biswal refuted the notion that the forum is intended against China. "I don't think that this is in any way intended to be a message to any particular country. This is meant to be an articulation of a robust policy and engagement from the US, from the government and from the business community and desire to do so in a way that is collaborative and consultative with our partners and counterparts across the region," she said.

Source: Business Line

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Donald Trump claims US is ‘economic envy of the entire world’

Trump, who has repeatedly attacked the economic record of his predecessor's administration, pledged during the 2016 campaign to double growth to 4 per cent or better. President Donald Trump Friday celebrated the release of new economic data, claiming the U.S. is now the “economic envy of the entire world.” Trump was responding to new growth numbers announced today that show the US economy surged in the April-June quarter to an annual growth rate of 4.1 per cent – the fastest pace since 2014. “We’ve accomplished an economic turnaround of historic proportions,” Trump told reporters during hastily arranged remarks on the South Lawn of the White House, where he was joined by Vice President Mike Pence and flanked by members of his economic team. “Once again, we are the economic envy of the entire world,” Trump said, adding that “America is being respected again.” The numbers were driven by consumers who began spending the tax cuts Trump signed into law last year and exporters who have been rushing to get their products delivered ahead of retaliatory tariffs. Trump, who has repeatedly attacked the economic record of his predecessor’s administration, pledged during the 2016 campaign to double growth to 4 per cent or better. And he has been trying to highlight economic gains ahead of the mid-term elections. But Trump, ever the salesman, predicted even higher growth as he renegotiates the nation’s trade deals, saying, “We’re going to go a lot higher than these numbers.” And he insisted the economic numbers are “very sustainable” and not “a one-time shot.” Private forecasters cautioned that the April-June pace is unsustainable because, they say, it stems from temporary factors, including a rush by exporters of soybeans and other products to get their shipments out before retaliatory tariffs took effect. They predicted the rest of the year is likely to see solid, but slower growth of around 3 per cent. The transformation is also not as dramatic as Trump claims – and in many ways the 4.1 per cent annualised growth during the second quarter is in line with an economic expansion that just entered its tenth year. During Barack Obama’s presidency, there were four quarters when annualised growth exceeded the level that Trump praised today. And in 2015, full-year economic growth nearly reached the 3 per cent level being targeted by the Trump administration this year when it hit 2.9 per cent. Unlike in 2015, growth has accelerated this year, in part, because of the stimulus from Trump’s deficit-funded tax cuts. Trump has said he sees annual growth of 3 per cent or more as sustainable. But Federal Reserve officials and outside economists don’t expect a permanent upshift. Their forecasts predict that growth will return to roughly 2 per cent, which largely reflects a demographic change beyond the White House’s control. Due to declines in birth rates, workers will be joining the economy at a slower pace and this hurts overall growth levels.

Source: Indian Express

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Why Are Production Lines In China Moving Away To Other Asian Nations?

The US-China trade war has made industrialists in China concerned over their future prospects as they have started to move out of China. Manufacturers from Hong Kong who relocated their production units in mainland China about 30 years ago are now moving to Malaysia, Vietnam and other safer havens in Southeast Asia in the wake of the US-China trade war.

The Wave Of Relocations

As reported by the South China Morning Post, manufacturers from Honk Kong are leaving the Chinese mainland to avert losses inflicted on them by hiked wages and increasing land costs. The trade war has also set in tougher rules for these manufacturers and hence they are happier to move away from mainland China. The President of the Hong Kong Young Industrialists Council stated that there has been a relocation wave in the wake of the US trade war. These relocations triggered by the US trade war is being primarily seen in the production lines of toys, plastics, textiles and electronics. These production lines have been hit the hardest by the trade war that Trump administration has inflicted on China. Trump recently threatened to further increase the tariffs on Chinese imports and take the worth of the tariffs to as much as $500 billion.

ASEAN Nations – Favorite Destination

The relocation process has already started and many of these manufacturers have shifted their production line partially or wholly to Penang in Malaysia or other places which fall under the ASEAN nations. Besides relocation, the manufacturers will also need to innovate and bring in a larger dependence on artificial intelligence to cut on costs. The devaluation of global currencies as the collateral damage of the US-China trade war poses another challenge. Will this wave of relocation hurt China even more amid the ongoing fiasco of the trade war?

Source: Eurasian Times

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Economic challenges wear down garment sector as Jordanians’ purchasing power wanes

AMMAN — The garment sector recorded a 35 per cent decline since January as the demand on clothes and shoes is witnessing its lowest rate yet since three years ago, Garment Traders Association President Munir Dayeh has recently told the Jordan News Agency, Petra. “Due to the current economic challenges, the clothing sector is suffering from a major drop in purchasing power,” said Ziad Ghaleeth, owner of a garment shop near Al Madina Al Munawwara Street in Amman. Ghaleeth said the economic situation in the country affected the majority of Jordanians, explaining that households have more commitments and challenges to deal with, which makes it difficult for many families to shop for clothes and shoes at this time. “Local liquidity is seeing an obvious decline, which explains why many garment shops are now either closing down, not making profit, or are at debt,” he told The Jordan Times. He added: “I had two employees working with me here at the store  however, when the sector started declining, I could not renew their contracts and asked my son and daughter to help two to three days a week.” As a parent, he said, he had to cut off expenses at home in order to afford the monthly financial commitments. “We recalculated all the expenses and had to prioritise some over others.” Apparel stores did not receive many customers in Eid Al Fitr, Ghaleeth said, expecting even lower rates for Eid Al Adha next month. “The quality is of little importance to the customer nowadays  they care about the price more than the piece’s worth, which indicates there are several issues facing the garment sector,” the store owner added. Dayeh said the sector “witnessed zero profit”, despite the return of Jordanian expats for the summer, adding that the imports of the sector amounted to JD195 million for the first half of the current year, compared to JD220 million for last year’s first half.  In recent years, he said, the Kingdom’s imports of clothing and shoes have seen a noticeable decline, with around JD280 million in 2015, and then dropping by 25 per cent over the past two years, adding that there was a similar drop in sales. With Eid Al Adha approaching, garment store owners “have minimal preparations, with little-to-no expectations on a higher demand on clothes and shoes”, Said Abu Lahab, a garment retailer at Jabal Al Hussein said. “We do not expect high turnout  the whole situation is frustrating… customers are not ready to spend money while they have debts to repay. It is visible to all of us and we know the sector is going through an ‘unlucky’ phase, especially now that the children are going back to school,” he said. Raed Sabateen, owner of a garment store near Al Quds Street, said Jordanians are “careful about what they prioritise in light of government policies”, adding that the retailers and store owners are now calculating their losses instead of their profits. “I know how difficult the situation is because even my children were enrolled in private schools a few years ago. Now I had to register them in public schools. It is a circle and all the dots are connected to each other,” Sabateen told The Jordan Times. Dayeh said the custom duties and taxes are some of the major challenges facing the traders and retailers, which amount to 57 per cent of the product’s price — the highest in the region, Petra reported.

Source: The Jordan Times

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Councils face pressure to collect food waste

Food waste businesses and the anaerobic digestion (AD) industry have many reasons to be optimistic now that the Government has confirmed it would take the EU’s circular economy (CE) package into domestic legislation. This should mean England will follow the example of the other home nations and commit to introducing mandatory separate food waste collections by 2023, something the AD sector has been crying out for. But major barriers to separate collections are in the way – not least that many councils say they simply cannot afford to do it. The UK is heading for a crunch moment: will the forthcoming resources and waste strategy support mandatory collections or not? Earlier this year, the CE package was agreed by EU member states and it became binding from 4 July. Cheered by this progression, Anaerobic Digestion & Bioresources Association (ADBA) chief executive Charlotte Morton called on councils in England to prepare for mandatory separate food waste collections. She said: “We fully expect the UK to implement these targets as an existing member of the EU. “December 2023 is just over five years away, so local authorities in England need to start factoring the requirement for separate food waste collections into their plans, and use contract renewals as an opportunity to introduce collections at the lowest possible cost and with maximum effectiveness.” In July, the National Infrastructure Commission’s long-awaited assessment of UK infrastructure called for ‘universal food waste collections’ in order to increase the amount of energy produced by AD. It said the move could avoid the need for 20 new energy-from-waste (EfW) facilities. But AD should not yet be counting its chickens. The UK’s impending exit from the EU means it is not certain whether the CE package will be retained in its entirety. There have also been indications that resource minister Therese Coffey is not in favour of mandatory collections. England is the only home nation not to have mandatory food waste collections  last year in Northern Ireland, they helped to boost the recycling rate by five percentage points to 47.1%.But many councils in England struggle to come up with the cash to introduce separate collections. In December last year, Defra chief scientific adviser Ian Boyd warned that converting all councils to separate food waste collections would cost up to £20m and “require a robust business case”. A flashpoint has arisen in London over this issue, with Barnet Council planning to abandon food waste recycling on the grounds of cost. Collections cost the council £300,000 a year for around 5,000 tonnes, equating to £60 a tonne collected. This is at odds with the Greater London Assembly (GLA), which wants all boroughs to offer food waste collections – including from flats – by 2025 as part of the London Environment Strategy (LES). London mayor Sadiq Khan has accordingly warned Barnet he will consider using his powers to prevent the council from implementing the plan. Khan said: “I do possess, through the GLA Act, the backstop power to direct authorities, where I consider it necessary, for the purposes of implementing the municipal waste provisions of the LES. Moreover, waste authorities have a duty under that Act to undertake their waste responsibilities in such a way as to be in general conformity with the strategy.” But council leader Richard Cornelius argued the mayor would not have the authority to use the powers because they can only be used when compliance by the authority did not lead to ‘excessive additional cost’. Cornelius added: “Our recycling performance is already making a meaningful contribution to the LES target of 50% recycling by 2025, as Barnet is within the top third recycling London authorities. “We have paused the cessation of the food waste service for six weeks, following a request from the mayor. We will be discussing the issues, and how those services he wishes London boroughs to deliver will be sustainably funded.” Under Barnet’s proposal, food waste will go for incineration. It said the LES made it clear that incineration is “equivalent to AD” in terms of recovery. Barnet is not the only council to bin its food waste collections. Wolverhampton City Council is ending its service, carried out by contractor Amey, because it is facing “huge funding reductions”. The council said: “The food waste collection service is very costly (approximately £500,000 a year) and only used by very few households across the city, therefore, the council has taken the difficult decision to stop this service.” Wirral Council has also ruled out setting up food waste collections. After being urged at a council meeting to press ahead with collections, cabinet member for environment Matthew Patrick said the authority could not afford it: “In Wales there is a government subsidy issued to councils because it is quite an expensive endeavour to go and collect this.” According to WRAP, 123 local authorities in England currently offer separate food waste collections. While a steady stream of councils are announcing a reduction in residual waste collections in conjunction with introducing separate food collections, continued restrictions in local government funding means it is likely that many authorities will not want to follow. Philip Simpson, commercial director at food recycler ReFood, is a long-time critic of the Government’s attitude to food waste. He said: “Despite widespread commitment from industry on food waste reduction, including recycling and redistribution initiatives (mainly by grocery stores, hospitality businesses and food manufacturing sites), as homeowners we still landfill the vast majority of our food waste. “While many forward-thinking nations have mandated the separate collection and recycling of food waste for a number of years now, district councils across England are still given the choice whether or not to provide food waste collections.” The Government will need to make a decision before the end of the year on whether to carry on with voluntary food reduction drives, such as WRAP’s ‘Love Food, Hate Waste’ and Courtauld 2025 initiatives, or plump for mandatory separate collections. If it does go down the mandatory route, councils will need to be given the financial backing.

Source: MRW, UK

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Uzbek trade house opens in Paris, textile items pact inked

Uzbekistan recently signed an agreement to supply textile products worth $1 million to France as the first trade house of Uzbekistan, UzFranceTrade, opened in Paris. Issues of promotion of Uzbek agricultural and textile products and support to entrepreneurs were discussed at a meeting between the Uzbek delegation and French industry representatives. The primary objective of the trade house, with a showroom, is to promote the export of Uzbek products to France and other European countries, according to Central Asian media reports. As Uzbek non-raw export is represented in insignificant volumes in France, the trade house will help realize the trade potential and meet the demand for fruits, vegetables and textile products from Uzbekistan, said the country’s minister of foreign trade Jamshid Khodzhaev. Trade between the two countries has fluctuated since 2010 at around €200 million a year. Some 30 French businesses operate in Uzbekistan.

Source: Fibre2Fashion

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A post mortem of Nepal’s garment boom

After the 1990 restoration of democracy, and at the cusp of a new millennium, globalisation arrived in Nepal with a bang. Call centres catering to international clients sprang up, travel and tourism boomed, Nepalis started migrating overseas for work, and made-in-Nepal carpets, garments and pashminas started being exported all over the world. Weavers, tailors and workers needed for the factories flocked to Kathmandu Valley, feeding its rapid urbanisation. Nepal seemed to be living the prediction of Francis Fukuyama, who declared capitalism to be the end of history. It was also the end of geography. But Fukuyama was proven wrong, the global economy was hit by multiple economic crises and recessions, and Nepal’s export market collapsed. In her book Death of an Industry, Mallika Shakya traces the history of the rise and fall of Nepal’s garment industry. It all started in 1974 with the American Multi-Fiber Arrangement (MFA) which allocated quotas to garment imports from developing nations. Its actual intent was to protect its domestic industry, but it suited Nepal well and a garment manufacturing industry materialised almost overnight, becoming the country’s fourth-largest export at one point. When the MFA finally lapsed in 2004, Nepal’s garment industry collapsed. Shakya takes issue with how this demise was considered natural, even inevitable, by the state, and how workers were left to fend for themselves. Most opted to migrate to the Persian Gulf, fuelling another industry. ‘The state felt well grounded, technically in its assertion that the industry collapsed because it could not compete in the global market. It was felt that if it was not good enough, it did not deserve to live, and the state felt legitimacy in ignoring the plight of millions employed by the industry,’ Shakya writes. For Shakya, the garment saga epitomises ‘the hegemony of neoliberalism’, which became mainstream in Nepal in the 1980s with World Bank’s Structural Adjustment Program (SAP), and after 1990 with the free market principles. An industry once made up of 1,200 firms now has only 50, and survives on orders that have no other takers. Apparel exports from China, India and Bangladesh flourished even after the MFA because cheap labour made them more competitive. Nepal’s products were up to 30% more expensive in comparison. However, for Chandi Prasad Aryal of the Garment Association of Nepal, it was not just a question of free market competition. “We need state support to make our products competitive in the world market. Governments in India and China give 11-16% export subsidies to garments, and that makes their products cheaper. Without that, our products will always be more expensive,” he explained. Avinash Gupta, an apparel-industry researcher with Kathmandu based think tank SAWTEE, agrees that countries like Bangladesh benefitted from state support. “There was credible effort from the state through duty refunds, tax concessions, back to back Letter of Credits, bonded warehouse, training trips among others,” he says. “No manufacturing sector in the world has expanded without technological learning, and this almost always has been a function of industrial policies.” History also shows that industries have not developed with just a laissez-faire policy, and the state always has a role to play in industrialisation of now-developed countries like Korea, China and Taiwan. In Nepal though, the garment and carpet industries went through boom and bust cycles, but were left to fend for themselves. “In our neighbouring countries, such industries get state support in the form of land on lease and bank loans at low rates. Such support, and economic diplomacy to secure the right of seaport access for a landlocked country are necessary to make us competitive,” says Ram Bahadur Gurung of the Central Carpet Industries Association Nepal. Nepal’s pashmina export is another industry that boomed, then collapsed. It is still relatively well placed with its trademarks registered in 47 countries, but struggles to raise annual sales above Rs5 billion. “Our sales are based on fashion, and we cannot predict the ebb and flow of fashion in our markets. The state needs to help us send our young designers abroad to study, so that we are able to break into the design sector,” says Durga Bikram Thapa of the Nepal Pashmina Industries Association. In her book, Shakya cites how one garment factory tried to climb the supply chain hierarchy by sending a young scion abroad to study design. He realised that gauging global fashion trends set by a handful of influential European designers was beyond him, and declared his years of learning wasted. That is still the case in Nepal’s garment industry, where the design, size or fabric are all decided beforehand. Workers in Nepal’s garment industry were desperate enough to accept extremely low pay for arranging cut cloth, sewing the main body or the hands or the neck parts, quality checking by measuring against the size specifications as much as six times, and cutting the extra threads off the finished product. Shakya calls this the ‘penultimate satanic mill of faceless proletarianisation’. Workers had no creative inputs, no share of the profits, and their highly specialised skills were useless elsewhere. So, they had nothing to fall back on when the industry collapsed and western buyers simply gathered up their profits and took their orders elsewhere. They had no inkling as to why the industry came and went, or how it left Nepal’s environment polluted and increased urban poverty. Shakya returns to this theme of the helplessness of the Global South again and again in her book. Nepal is small fry on the world stage with no clout in matters affecting its citizens. Even while the US government and the World Trade Organisation decided the MFA’s time was up, factory owners in Nepal fell back on fatalism and conducted religious rituals to ward off the curse. Nepali businessmen did try to lobby for an MFA extension, but could not even find someone to table the bill in the US Congress. After the Rana Plaza collapse in 2013 in Bangladesh in which nearly 3,000 workers were killed, all of South Asia suffered from the negative western media coverage of exploited workers in dangerous sweat shops. The international media fell back on an orientalist view to blame lax building standards and corruption, ignoring that it was the end of the MFA had forced countries to be competitive by cutting corners. Shakya denies her book is angry or pessimistic in tone, and says she offers alternatives. Since the garment export business was created by global economic factors, the feeling here was that it was beyond Nepal’s control. Hence, its loss meant nothing to Nepal. Although the industry initially attracted Indian investors using Nepal’s quotas, over time the factories were populated by Nepal’s poor, and owned by Nepalis – and they suffered when the MFA lapsed. The alternative to this outlook, Shakya says, lies in policies that take ‘human economy’ into account, where the welfare of workers is priority. Nepal’s prolonged political transition is now replaced with ruling Communists who have promised economic prosperity through political stability. The country’s planners should read Shakya’s book to learn lessons from the recent past – the main one being finding alternatives to pervasive global neoliberalism that she says has done more harm than good to Nepal. Asked what she hopes her book can achieve, Shakya told us: “Agencies like the WTO, World Bank and countries like the US are powerful, but the bigger problem is our own lack of imagination, in believing in the supremacy of market forces over state regulation, competitiveness over social justice. It is about time we in Nepal questioned the hegemony of neoliberalism in global economic policies.”

Source: Nepali Times

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China's June industrial profit growth eases as production slows

BEIJING (Reuters) - Profit growth for China's industrial firms eased in June from the previous month, data showed on Friday, as factory production slowed amid the worsening trade U.S. dispute and Beijing's efforts to cut pollution and debt. Industrial profits rose 20 percent to 658.29 billion yuan ($96.69 billion) in June, according to data published by the National Bureau of Statistics (NBS) on Friday, compared with a 21.1 percent rise in May. NBS said in a separate statement on the data rising prices have cushioned firms' profits even as industrial production slowed in June. It did not provide separate reasons for the slower profit growth in the month. Steel, building materials and oil extraction sectors were key drivers behind profit growth in the first half of the year, it added. But profit growth in textile, non-ferrous metal smelting and processing, and telecommunications and electronic equipment manufacturing profits fell during the same period from a year earlier. For the first half of the year, industrial firms' profit grew 17.2 percent from a year earlier to 3.39 trillion yuan, accelerating from a 16.5 percent rise for January-May. China's economic growth slowed in the April-June period from the previous quarter while June's industrial output growth slumped to a four-year low, raising concerns about the outlook for the world's second-largest economy amid growing signs of stress. Beijing's ongoing campaign to cut debt and emissions have driven up borrowing costs and curbed production for some key industries, while threats of further tariffs on Chinese goods from Washington add to the headwinds for the second quarter even as Beijing insists the country's economic fundamentals are sound. China's central bank in June cut the reserve requirement ratio (RRR) for the third time this year and has pumped more money into financial markets. Policymakers have so far ruled out the odds of a major stimulus package but have vowed to take necessary fiscal and monetary steps to support growth while urging banks to ensure adequate liquidity for smaller firms. The country's industrial firms have benefited over the past two years from hot property and infrastructure construction markets, which boosted demand for building materials such as steel bars and cement. New home prices' growth on monthly terms accelerated to a near two-year high in June, suggesting continued momentum despite recent government curbs. However, there are challenges for producers with growth in fixed-asset investment hitting a record low in the first half of this year a war against pollution. Raw materials cost also rose at a faster clip than the producer price index in June, suggesting possible margin pressures.

Source: Business Standard

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