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MARKET WATCH 03 OCT., 2018

NATIONAL

INTERNATIONAL

NIFT-TEA to offer employability skill training in knitwear sector

Tirupur: AIC-NIFTTEA Incubation Centre for Textiles and Apparels has signed a memorandum of understanding (MoU) with the Avinashilingam University for employability skill training in knitwear sector. The centre, which had already inked a pact with VLB Janakiammal College of Arts and Science for the same programme, also has plans to join hands with the Periyar University and colleges affiliated to the Anna University in this regard. “The idea is to absorb students, who are interested to know about the knitwear industry, enhance their employability and train them to come up with innovative ideas to support the industry,” said R Periyasamy, chief executive officer, AIC-NIFTTEA Incubation Centre for Textiles and Apparels. “Before taking in such virtual incubatees, we will conduct boot camps in respective institutions and prepare them to join us, if they are interested.” First, we would help them understand problems existing in different sectors of knitwear industry and find out their root causes and probable solutions, which may be technical, managerial discipline or labour-oriented issues, he said. “For instance, dyeing sector faces the issue of coming up with apt colour recipes, which match to the colour of sample given by buyers. Incubatees will be exposed to such puzzles.” Periyasamy said they would purchase special machines, including body mapping sportswear producing machine, jean knitting and flat knitting machines, which are new to the industry. “Students, who pursue textile courses, will be exposed to these machines and trained to come up with innovative ideas. In future, engineering students will be asked to share innovative ideas on smart factory concepts.” The centre would also support the incubatees to market innovative products, if they were to come up with any.

Source: Times of India

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Commerce ministry focusing on nine sectors to boost exports; eyes 16 per cent growth this fiscal

NEW DELHI: The Commerce Ministry is focusing on nine sectors, including pharma, food processing and textiles, to boost exports in the current fiscal, an official said. The ministry is targeting a minimum growth rate of 16 per cent in exports this fiscal. Commerce and Industry Minister Suresh Prabhu Monday held inter-ministerial consultations with different departments to work on ways to promote the exports from these segments. "The ministry is targeting nine sectors as part of their strategy to boost exports. The minister held discussions on strategy with line ministries," the official said. Gems and jewellery, textiles, leather, engineering, electronics, defence, pharma, agri and marine products are the sectors. To push exports, the ministry has suggested several steps including demanding priority sector lending to exporters. During the meeting, the Defence Ministry sought cooperation of the Commerce Ministry to boost defence exports from Rs 5,000 crore to Rs 35,000 crore in the coming years. All other departments and ministries suggested steps to boost overseas shipments. Ministry of Electronics and IT suggested formulating a strategy to attract companies that are shifting their manufacturing bases from China due to high wages. The Department of Chemicals stated that they are looking at new countries for exports and raised delay in environmental clearance for agro-chemical sector. Since 2011-12, India's exports have been hovering at around USD 300 billion. During 2017-18, the shipments grew by about 10 per cent to USD 303 billion.

Source: Indian Express

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India’s lamented & lacklustre export record can change; this sector may hold the key

In 2017, the world merchandise trade (the average of exports and imports) registered strongest growth in six years, by 11% in value terms. Do you recall the 2015 midterm FTP review aiming at $900 billion of goods and services exports from India, to garner 3.5% share of world exports by 2020? That target appears to be a mirage. After a brief interregnum of stagnant exports, India registered just 10% growth in 2017-18, to $302.8 billion, against expectations of $325 billion, and also a 45% jump in trade deficit at $157 billion, the highest in last five years. As RBI data reveals, the country’s merchandise exports, having peaked at 17% of GDP in 2013-14, dropped to around 12% in 2016-17. India has underperformed even amidst robust global trade growth. In 2017, the world merchandise trade (the average of exports and imports) registered strongest growth in six years, by 11% in value terms. Global merchandise exports include more than 70% share of manufactured goods, which rose from $16.03 trillion in 2016 to $17.73 trillion in 2017, over 80% of it emanating from top-10 exporting countries—China commanded 12.8% share ($2,263 billion), followed by the US with 8.7% share ($1,547 billion), Germany (8.2% share; $1,448 billion), Japan (3.9%; $698 billion), and then the Netherlands, South Korea, Hong Kong, France, Italy and the UK. India’s share was just 1.7%, at $298 billion. Sixty years ago, India’s share in world exports was higher than China’s; by 2013, its exports fell to less than 15% of China’s. Historically, world merchandise trade volumes have grown 1.5 times faster than world real GDP at market exchange rates—they rose more than twice in the 1990s. Asia recorded the highest increase in trade value with growth of 8.1% in 2017, also the highest growth in volume (6.7% for exports and 9.6% imports). Growth in developing economies was strongest; imports in developed economies too strengthened in H2-2017 to 4.3% versus 2.3% in H1-2017. World exports can broadly be put in five categories: (1) energy and resource-intensive goods such as fuels and mining products, iron and steel, paper, etc, aggregating about 30% of total global exports; (2) sunrise industrial goods largely in the electronics and telecom sectors, accounting for 25%; (3) automotive products, machinery, chemicals, pharmaceuticals, etc, another 25%; (4) agricultural products, 10%; and (5) labour-intensive tradeables such as textiles, clothing, leather goods, and miscellaneous manufactures, another 10%. Indian export basket includes around 60% of manufactured goods (in addition to petroleum, oil and lubricants products, agricultural and allied products, and others), within which there has been a shift from labour-intensive categories such as textiles and leather to engineering products—iron & steel, auto parts, capital goods. India has remained a peripheral player in industrial sectors that command a lion’s share in global trade, and its export thrust is confined largely to sectors that account for less than one-fourth of global exports. Globally, agricultural products exports in 2017 comprised of processed products (chocolate, processed coffee; 44% share), semi-processed products (oilseed cake, vegetable oils; 27% share), primary bulk products (wheat, coffee beans; 16% share), and horticulture products (13% share). Among the top-10 exporters of agri-products, accounting for three-fourths of total world exports in this sector, India is at the ninth spot ($39 billion), behind the EU ($647 billion), the US ($170 billion), Brazil ($88 billion), China ($79 billion), Canada ($67 billion), Indonesia ($49 billion), Thailand ($43 billion) and Australia ($40 billion). The top-10 exporters of automotive products accounted for 95% share of world exports in 2017 in this segment. With an export amount of $738 billion, the EU was at the top, followed by Japan ($150 billion), the US ($135 billion), Mexico ($109 billion), South Korea ($64 billion), Canada ($63 billion), China ($54 billion), Thailand ($29 billion), Turkey ($24 billion) and Brazil ($15 billion). Whereas Brazil recorded a 32% increase, and Turkey 22%, India dropped from 10th position to 11th. Around half of world trade now happens through global value chains. As much as 48% of exports of developing economies in value-added terms involve global value chains (OECD-WTO). The EU carmakers, especially German companies, have relocated some steps in the automotive production process to East Europe, whose value added in EU exports of motor vehicles increased from 3% in 2000 to 7.5% in 2014. Non-EU economies contribute more and more to production and exports of EU motor vehicles, and their value-added share in EU automotive exports increased from 14.8% in 2000 to 21.8% in 2014; the share of China alone rose from 0.5% to 2%. In the office and telecom products, China (exports of $592 billion) topped the top-10 exporters, followed by the EU ($359 billion), Hong Kong ($281 billion), the US ($145 billion), South Korea ($136 billion), Singapore ($121 billion), Taiwan ($119 billion), Mexico ($67 billion), Malaysia ($66 billion) and Vietnam ($66 billion). With $972 billion worth of exports in 2017, the EU accounted for 49% of world chemical products exports, followed by the US ($206 billion; 10%) and China ($142 billion; 7%). India’s exports of $41 billion trailed behind Switzerland’s ($100 billion), Japan’s ($71 billion), South Korea’s ($70 billion) and Singapore’s ($50 billion). Representing almost 85% share of 2017 world iron and steel exports, the top-10 exporters included the EU at $156 billion (38% market share), China ($56 billion), Japan ($29 billion), South Korea ($26 billion), Russia ($20 billion), the US ($16 billion), India ($14 billion), Brazil ($11 billion), Taiwan ($11 billion) and Turkey ($10 billion). India had only a 3.4% share, although it recorded highest growth (69%), ahead of Russia (39%) and Brazil (37%); China registered just 1% growth rate. Notwithstanding India being reckoned as the third top exporter of textiles in 2017 at $17 billion (5.8% of world textile exports), it lagged far behind the top-two exporters: China at $110 billion (37.1% of world exports), and the EU at $69 billion (23.4%).The similar is the story of clothing exports—while India ($18 billion; 4.1% share in 2017) was fifth among top-10 world clothing exporters, China was way ahead ($158 billion; 34.9% share), ahead of the EU ($130 billion; 28.6%). India trailed far behind Bangladesh ($29 billion; 6.5%) and Vietnam ($27 billion; 5.9%). India’s textiles and apparel exports grew from $30 billion in 2011 to $34 billion in 2016, while those of Vietnam jumped from $20 billion to $32 billion, and Bangladesh’s from $19 billion to $28 billion. With $187 billion, the EU is the largest clothing importer (38.5% share), followed by the US ($88 billion; 18.2%) and Japan ($28 billion; 5.8%). The aggregate export growth in labour-intensive sectors—textiles, leather, gems and jewellery, electronics and agricultural products—has remained anaemic. The share of leather sector in India’s exports dropped from 7.1% in FY92 to 4.4% in FY02 and 1.9% in FY17; of textiles and readymade garments from 26.3% in FY92 to 23.3% in FY02 and 12.3% in FY17. The petroleum, oil and lubricants products’ share rose from 2.3% in FY92 to 11.4% in FY17; and of engineering goods doubled (from 12.5% in FY92 to 23% in FY17). The services sector may play to India’s strength. Its services exports, having risen from 30% to 40% during 2003-08, have plateaued. Even after Make-in-India, the services sector has been an attractive FDI destination, drawing 61% of total FDI inflows in the last fiscal. The CSO’s provisional estimates with regards to gross value added in 2016-17 indicate a year-on-year 7.74% growth of the services sector, at Rs 21.43 trillion ($333 billion). Contributing almost 55% of gross value addition to the country’s economy, the services sector logistics, hospitality, insurance, financing, communication, personal, business, social services, real estate and construction is a key driver of India’s economic growth.

Source: Financial Express

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India signs 17 pacts with Uzbekistan

India and Central Asia’s biggest military power Uzbekistan on Monday signed a slew of 17 pacts across all possible sectors including defence training besides agreeing for joint partnership in defence industry as Delhi looks to fully realise its strategic partnerships in the region where China has made inroads taking advantage of its geographical contiguity. While a Memorandum between the two defence ministries were concluded on cooperation in the field of military education, the two sides agreed to work closely together to expand and strengthen defence cooperation as well as defence industry cooperation. In this context, both sides agreed to hold joint military training exercise in the area of counter terrorism, cooperate in the field of military education and military medicine, setting up of Joint Working Group to support and sustain enhanced mutually beneficial defence related activities and setting up of Defence Wing at the Embassy of Uzbekistan here. Delhi and Tashkent also agreed to promote peaceful use of nuclear energy and outer space as India eyes uranium supply from Uzbekistan. The two sides with high stakes in Uzbekistan also agreed to have regular dialogue in stabilising the landlocked country. Delhi and Tashkent also agreed to promote peaceful use of nuclear energy and outer space as India eyes uranium supply from Uzbekistan. The two sides with high stakes in Uzbekistan also agreed to have regular dialogue in stabilising the landlocked country. These arrangements were put in place after visiting Uzbek President met Shavkat Mirziyoyev met PM Narendra Modi. India laid down a red carpet for the two-day visit of the Uzbek President setting tone for further engagements with the Eurasian region -- Indo-Russian annual summit here on Friday followed the President’s state visit to Tajikistan and Foreign Minister’s visit also to Tajikistan for SCO Heads of Govt meet. ““We took a long term view on the regional issues of security, peace and prosperity and cooperation,” Modi said at joint press meet with Uzbek President. Noting the importance of a safe and secure regional environment for development and prosperity, Delhi and Tashkent also agreed to cooperate in addressing threats and challenges to national as well as regional security. The two sides agreed to strengthen cooperation between the law enforcement agencies and special services of the two countries, including under the framework of the Uzbekistan-India Joint Working Group on Counter-Terrorism. Uzbekistan may offer its territory to set up an Indian defence manufacturing unit. The extensive use of Russian origin equipment by both India and Uzbekistan is contributing to the growing bilateral defence relations. Uzbekistan has the best-equipped armed forces in Central Asia and during the post-Soviet era it has maintained the largest military force in the region. India and Uzbekistan set an annual bilateral trade target of $1 billion to be achieved within two years and the 17 pacts included several investment and trade related initiatives.

Source: Economic Times

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‘Rupee depreciation need not be fought at all times’

Chennai :  “Generally positive but some headwinds” were the words that Montek Singh Ahluwalia, former Deputy Chairman of the Planning Commission, used to sum up his impression of the Indian economy today, while speaking at an evyin Chennai last week. Business Line caught up with the renowned economist for amplification. Excerpts: There are claims about formalisation of the economy, either as unintended consequence of demonetisation or as an intended consequence of GST. Do you think formalisation of the economy is happening and is good? Formalisation involves bringing the informal units into the tax net and the regulatory net and this is definitely desirable. We don’t have reliable data on whether the pace has accelerated but it is a desirable structural change. However, we have to recognise that the process can be disruptive. Many units that thrive in the informal sector do so because they escape regulation — labour safety regulations, health regulations and also pollution control and of course taxes. If they are forced to comply fully, they will become uncompetitive and be squeezed out by those who can comply. I can envisage the following type of structural change. Some units that are in the informal sector will definitely upgrade themselves to become formal and they should be helped to do so. These units, including some already in the formal sector, will expand and squeeze out other informal sector units that are unable to upgrade themselves. In fact, formalisation involves a cost and to be able to bear that cost you have to expand. This means there will be fewer units but of larger size. Some enterprises that were informal will get squeezed out. This is the bit that can be disruptive in the short run. In the medium term the economy will adjust.

 

Is this a positive feature of the economic conditions today?

I think formalisation is the way to go and that is positive. But we must also remember that if the livelihood of some people is affected we must do whatever we can to ease the pain of transition. They will have to find other ways of earning a living. This adjustment would be much easier if the economy were producing many more jobs. That is not happening and we should look to see how we could help create more jobs. That is not easy. Talking of jobs, we still do not have proper employment data and the absence of data gives room for all kinds of opinion. How would you react to that?

Yes, we do not have the data we need on employment, given the importance of the subject. And the data we have is extremely unreliable. For example, a large part of our labour force is engaged in self employment in the informal unorganised sector. They may be shown as employed in the surveys, but they are really ‘underemployed’ in the sense that they do not have a turnover that will give them a living wage. If you don’t have unemployment insurance, and people are too poor to stay out of employment, they will take up whatever job they can find and will be shown in the data as ‘employed’. But we can hardly take credit for this sort of employment. We need to do a major revamp of our employment data situation . It is not easy for self employment but we should certainly be in a position to say what is happening to employment in the formal sector on a quarterly basis. The organised sector is currently very small - about 20 percent of the total but if we set targets about the growth of employment in this part of the economy we should at least be able to judge how we are performing on this front. If we could say with confidence that employment in the organised sector is growing as per target and wages are rising, we can be more sure that the overall employment situation is good.

On the burning issue of rupee depreciation, with the US economy doing better and Fed raising interest rates, trade wars, etc, is rupee depreciation a one-way bet, and if it is, what should be the policy response?

You have raised a lot of issues so let me offer a few comments that will answer your question, even if in a round about way. First, I do not think we should view a depreciation of the rupee as something to be fought at all times. Politicians have a natural desire to want a strong currency. If a country’s economy is strong — exports are booming, oil prices are low, the current account deficit (CAD) is low and FDI flows are strong — it is likely that the and the currency will be strong. Here the strength of the economy leads to a strong currency. But this does not mean that if the economy is not strong — i.e. export performance is weak, oil prices are rising, the CAD is widening and FDI flows are not as strong as you would like — then pushing the rupee to appreciate is not the right policy. Pushing for a strong currency when the economy is not strong will only weaken the economy further. In fact it will also weaken the currency, if markets get the impression that the government does not know what to do. We should consider why the rupee has been under pressure and adopt policies on that basis. There are two possible reasons why the rupee could account for the pressure on the rupee. One is when the CAD widens beyond the level which can be financed by stable capital flows. In this situation you can either let the rupee depreciate or intervene by using reserves. I think use of reserves in the face of a rising CAD is justified only if you think the problems are temporary and self-reversing. If they are not, then some depreciation is to be expected, and you must use other supportive policies to bring the CAD under control.

A second situation is where the CAD remains in the acceptable range, but there is a shift in capital flows out of the country. Again if the capital flow shift is temporary , there is a case for intervening by using reserves to cushion the effect, but if it is not, then the CAD should be made to adjust to what is a financeable level. Again a depreciation is not unreasonable in such cases, combined with other policies to reduce the CAD. Today both factors are at work. The CAD has widened and is moving into uncomfortable territory (anything close to 3 per cent is uncomfortable). The prospects for oil prices and the weakness in exports does not suggest an early reversal capital flows are also moving away from emerging markets and therefore also India. And all this is happening at a time when the real effective exchange rate had been allowed to appreciate quite a bit in real terms in the last few years. In the circumstances I think the RBI has done the right thing. They have let the rupee depreciate and they have also used reserves, about $30 billion or so, just to let the market know that they are not sleeping. The depreciation will help Indian business competing against cheap imports in the same way as import duties do. Relying on depreciation is much better than raising import duties because it also helps exporters. Import duties do nothing for exports and to the extent that they raise the cost structure of the economy exports are actually hurt. However, having let the rupee depreciate we should do something to bring down the CAD. We cant do anything about oil prices., But we can do something about exports. The depreciation will help but we need a thorough revamp of our ease of doing policies towards exports. I recall that once Mr Chidambaram said, “good economics works for everybody.” Against that principle, do you think it is good economics to relentlessly keep after fiscal deficit, as the government is now doing?

I would put it a little differently. Good economics works for everybody in the medium run. Sometimes good economics may not produce positive results in the short run, at least for some people, and that is the big challenge for politicians. How to persuade people that it is the medium term they should focus on. On the fiscal deficit there is general agreement that good economics requires a sustainable fiscal deficit. Two factors are relevant in determining what is a good fiscal deficit. First, is our fiscal deficit much higher than other comparable countries? The answer is yes. Our combined fiscal deficit (Centre and States combined) is more than twice that of other emerging market countries. Another consideration is what is the total debt to GDP ratio? India’s debt-GDP ratio is also much higher than the rest of the emerging market countries. Since the fiscal deficit is the yearly increase in the net debt, if we want to reduce the debt to GDP ratio we have to keep the fiscal deficit in check. If we want to look good to financial analysts and attract long-term capital, we should bring our fiscal deficit down to a reasonable trajectory.

Is our debt-to-GDP ratio higher even than China?

Chinese government debt-to-GDP ratio is not very high, but the Chinese banking system does all the lending. There is a great deal of opaqueness in China because we are not sure how much of public debt is hidden in the form of bank debt to public sector organisations.

Are we in a Situation where we can allow a slippage in the deficit temporarily?

I don’t think the objective circumstances justify a departure for the fiscal deficit targets. Exports are doing badly and investments have not yet recovered but we should not use these as an excuse for increasing fiscal deficit. We should instead focus on what can be done to promote these sources of aggregate demand. The Finance Minister has said he will meet the fiscal deficit target of 3.3 per cent of GDP. That has sent a good signal but if we keep changing the targets everyday, people are going to say the government of India is not serious about managing the fiscal deficit. A little bit of fiscal fundamentalism becomes inevitable to maintain credibility. That is why I have advocated a shift to the concept of a ‘structural deficit’ where the size of the deficit can be adjusted on the basis of objective circumstances that are verifiable. But we haven’t done that. Of course in practice people will make allowances for temporary disruptions. Take for example, GST. It is a major reform, and in the medium term it will have a big impact on the economy. However there seems to be a shortfall in tax realisations. If there is a slippage which are entirely because of GST shortfalls observers may be willing to make some allowances. But the fiscal trajectory must look credible. So, if there is formalisation of the economy, rupee depreciation is as is warranted, fiscal deficit is under control, things are okay with the economy?

Actually, each of these issues has come up because there is a problem, and the question is are we addressing the problem? The depreciation is the right thing to do, but the real question is are we doing enough to bring the CAD under control? Are we doing enough to help exports? And are we doing enough to revive investment? On the fiscal deficit, if we achieve the 3.3 per cent target in a credible manner that will be good but I don’t know what the underlying situation is. There are said to be tax shortfalls and the disinvestment target is unlikely to be met. If oil prices rise, the subsidy on LPG will go up. So, the jury is out on that one. We will get a better idea of the situation when the mid-year fiscal assessment is presented. Also, the fiscal issue relates to the combined deficit of the Centre and the States and there are question marks on the States. All these loan write-offs — none of the States can afford the loan write-offs that they are doing. Will a loan write off mean a deviation from the fiscal deficit target? And if not, does it mean other programmes will be cut? We have to ask the State governments these questions. Many State governments are acting in a manner that doesn’t, in my view, reflect good economics. I think we need to energise much more intellectual activity focussing on the quality of policy making at the State level. We have a lot of intellectual inputs into policy making at the national level, but hardly any at the State level. And yet in many areas, especially in implementation, it is the States that are the key players. I wish chief ministers would appoint State-level economic advisory councils which make their reports public.

Source: Business Line

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Rupee recovers to end at 72.91 as oil spurts to near 4-year high

The rupee on Monday weakened to 72.9375 against the dollar in intra-day trade before recovering to close at 72.9125. In the offshore markets, the three-month non-deliverable forwards (NDF) was around 73.58/$ on Friday but fell to about 73.96/$ by the time Indian markets closed on Monday. A month ago, the NDF was trading at 72.08/$.The Reserve Bank of India (RBI) on Monday announced open market operations (OMO) where it has decided to conduct purchase of Government securities worth `36,000 crore throughout October during different weeks, primarily based on an assessment of the durable liquidity needs going forward, and the seasonal growth in currency in circulation observed in build-up to the festive season. Ashhish Vaidya, MD and head of trading and money markets at DBS Bank India, says that the recent OMO suggests the RBI could be softer on the interest rate side. “The expectation the hike in the coming monetary policy meeting may not be very big, might have contributed to the weakening of the rupee together with rise in oil prices during Monday’s trade,” Vaidya said. He added that the OMO should be looked at as a liquidity measure and not an yield signal. The fall in the Indian rupee was in sync with the other emerging market currencies which remained volatile owing to fears of trade tariffs and the US Fed’s stance on continuing to hike rates further. The dollar index – dollex remained strong at 95.32 levels, up 19 points over Friday’s close. Ashutosh Khajuria, ED and CFO of Federal Bank, pointed out that the prices of Brent crude oil hovering at a nearly four-year high is the primary reason for the rupee to weaken by 42 paisa at the end of Monday’s trade session. “India has perenially been a current account deficit (CAD) country wherein, the foreign currency demand is always higher than the supply and, in that situation, the rupee has a tendency to depreciate, unless funded by the capital account,” Khajuria said. The price of Brent crude oil hovered around $83.31/barrel, up 6.60% in the past one month. Previously, similar levels were seen in November, 2014. The premium on three-month forward contracts fell three basis points (bps) on Monday to around 4.47%, over Friday’s close. A month ago, on September 3, the premium on the forward contract was at 4.32%. Further, the perception of foreign investors about rupee assets also plays into NDF betting. The sentiment in the NDF markets coupled with a negative view on rupee assets was the reason behind the rupee’s 42 paisa fall on Monday.

Source: Financial Express

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Manufacturing sector activity rises in September

New Delhi: The country's manufacturing sector activity improved in September amid gains in new orders, output and employment, a monthly survey said Monday. The Nikkei India Manufacturing Purchasing Managers' Index strengthened slightly in September to 52.2, up from 51.7 in August, as sales rose from both domestic as well as foreign clients. This is the 14th consecutive month that the manufacturing PMI remained above the 50-point mark. In PMI parlance, a print above 50 means expansion, while a score below that denotes contraction. "Growth of India's manufacturing sector picked up during the latest survey period, reflective of strengthening demand especially from foreign clients, which helped to drive export growth up to its highest level since the turn of the year," said Paul Smith, Economics Director at IHS Markit and author of the report. Meanwhile, price pressures intensified, as input costs rose the most since June. A strong US dollar and supply shortages had exacerbated high global prices for steel and fuel, the survey noted. "Output charges increased subsequently, albeit at a rate that remains well below the equivalent measure for input prices," Smith added. Amid rising price pressures, RBI Governor Urjit Patel-headed Monetary Policy Committee will start deliberation on the fourth bi-monthly monetary policy for 2018-19 on October 3 and announce its decision on October 5. "Rising prices continued to weigh on sentiment, with confidence dropping a little to reach a three month low. Nonetheless, on balance, firms remain confident that output will continue to rise, buoyed by recent new business wins and expectations this will continue over the next 12 months," Smith said. Manufacturing firms boosted their workforce amid gains in new work orders. "Staffing levels rose for a sixth successive month and at the fastest rate since June," the survey said. Meanwhile, according to official data, the economy grew at a two-year high of 8.2 per cent in the April-June quarter of the current fiscal on good show by manufacturing and farm sectors.

Source: Financial Express

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New trade deal could lead to more textiles production in U.S.

New York — The Home Fashion Products Association (HFPA) shared its review of the new tri-lateral trade agreement. The agreement just struck between the United States, Canada and Mexico would encourage more production of textiles in this country, it said.

Retailers weigh in on NAFTA future

“The new provisions on textiles incentivize greater North American production in textiles and apparel trade, strengthen customs enforcement, and facilitate broader consultation and cooperation among the parties on issues related to textiles and apparel trade,” said Bob Leo, HFPA counsel and attorney with Meeks, Sheppard, Leo & Pillsbury, in a note on the agreement emailed to HFPA members. If passed by the legislatures of all three countries, the agreement would supersede the North American Free Trade Agreement (NAFTA), which came into effect in 1994. Leo said provisions of the new agreement would promote greater use of made-in-the-US fibers and yarns by limiting rules that allow for some inclusion of non-NAFTA inputs in the textile and apparel trade. The provisions require that sewing thread, pocketing fabric, narrow elastic bands and coated fabric, when incorporated in most apparel and other finished products, be made in the region for those finished products to qualify for trade benefits. The agreement establishes a textiles chapter for North American trade, including textiles-specific verification and customs cooperation provisions, fostering new tools to strengthen customs enforcement for fraud and circumvention prevention in this sector. “The new textiles chapter provisions are stronger than those in NAFTA 1.0 with respect to both enforcement and incentivizing North American production of textiles,” Leo said.  He added that it is unlikely that the U.S. Congress would vote on the new agreement before the mid-term elections on Nov. 6.

Source: Home Textiles

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China’s overall tariff level cut from 9.8% to 7.5%

The Customs Tariff Commission of the State Council has issued an announcement to reduce import tariffs for 1,585 tax purposes from November 1, People’s Daily reported. The total tariff level in China will be reduced from 9.8% in the previous year to 7.5%.  The import tariffs on goods with considerable production capacity in China will be reduced, including 677 tax items covering textiles, building materials, base metal products and steel. The average tax rate is expected to decrease from 11.5% to 8.4%. The average import tariffs on some electromechanical equipment in the areas of textile, engineering, metal processing, agricultural machinery, etc, will also be lowered from 12.2% to 8.8%. Import tariffs on resource commodities and primary processed products such as non-metallic minerals, inorganic chemicals, wood and paper products as well as gemstones will be cut to the level of 5.4% from 6.6%.

Source: Asia Times

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Hong Kong's new fight against fast fashion

HONG KONG - Despite Hong Kong's reputation for rampant consumerism, a nascent movement against fast fashion is taking root in the city, with clothes-mending workshops and pop-up swaps growing in popularity, and designers parading recycled fabrics on the catwalk. From broken umbrellas to discarded curtains, no material is too shabby for designer Jesse Lee, who showcased his creations at a recent sustainable fashion show in Hong Kong. Lee realised that humble household goods could be the springboard for creativity when his family was throwing out an old sofa. He turned the sofa's leather cover into a jacket and has since made clothes from old curtains and bed linen, as well as a raincoat using umbrella fabric. Lee also tries to make his designs unisex and adjustable so they can be easily shared. A model showing a jacket made with materials from discarded umbrellas. "If you don't feel like wearing this, you can give it to others and it doesn't matter if it is a boy or a girl," Lee told AFP. Global consumers purchased 60 per cent more clothing in 2016 than in 2000 and only kept each item half as long, a report by McKinsey consultancy found. Hong Kong alone sends 343 tonnes of textiles to the city's overloaded landfills every day and a 2016 report by Greenpeace found a sixth of clothes owned by residents were seldom or never worn after purchase. But Lee and others like him are hoping to capitalise on rising consumer awareness as shoppers become more conscious of the human and environmental cost of fast fashion after high-profile scandals like the deadly 2013 collapse of a building in Bangladesh that housed several garment factories. The tragedy, one of the worst industrial accidents in modern history, sparked global outrage and triggered a drive among activists to encourage shoppers to buy from local stores, rather than from large multinational fast fashion brands. Christina Dean, founder of Redress, says the tide is slowly turning and describes the industry as at a tipping point. The Hong Kong-based charity works to reduce fashion waste and hosted the recent show where Lee displayed his creations, alongside other designers who transformed vintage kimonos and bridalwear samples and even used silicone and rubber. "Many people are turning their backs and saying 'I have more clothes than I can possibly wear," she told AFP.

A stitch in time

Shocked by the volume of clothing and the pollution produced by major brands, Hong Kong designers Kay Wong and Toby Crispy founded "Fashion Clinic" to help people mend garments. They set up pop-up stalls at clothing stores providing repair and reshaping services and also hold workshops teaching basic needlework. Participants learning how to mend garments at a "Fashion Clinic" workshop in Hong Kong. "Fast fashion makes people dispose of their clothes so easily, because clothes are too cheap and it seems to cost nothing to toss out the old ones," Wong told AFP. "After they learn stitching, they can repair many things, like worn-out shirts or socks," Wong said. Jack Lam, 31, was learning to sew patches onto his torn jeans at a recent workshop, as curious shoppers looked on."The patches look like new embellishments," he told AFP, adding that the jeans were now more valuable to him because he had fixed them himself.

Spinning yarn

While repair clinics, clothes swaps and second-hand shops are all doing their bit, some want to address the waste problem on an industrial scale. A cutting-edge "upcycling" spinning mill that turns discarded clothes into new yarns will go into full operation in the city in October, developed by the Hong Kong Research Institute for Textiles and Apparel (HKRITA). The 1,765 square-metre (19,000 square-foot) factory will sterilise, sort and turn used textiles into fresh fibre, processing three tonnes of textile waste each day.  Six workers will remove zips and buttons and categorise the fabrics before machines carry out automated colour sorting and re-spinning. Mixed-fibre clothing will go through a high-tech treatment to separate the different elements. Edwin Keh, CEO of HKRITA, said the recycled yarn will be "as good as virgin materials", while the selling price will be 30 per cent lower. The factory launch comes as mainland China moves to ban the import of most solid waste, including textile scraps, putting pressure on Hong Kong to find new ways to deal with its trash.  "Whereas China doesn't want to import other people's rubbish, they are very happy with importing yarns and fibres, so that's what we are going to do," Keh said. Keh hopes the new mill will serve as an inspiration for other cities."If in a crowded city like Hong Kong we have come up with this solution to deal with our own waste, any city in the world should be able to have that kind of local solution."

Source: Asiaone

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IMF's Lagarde warns trade conflicts dimming global growth outlook

WASHINGTON (Reuters) - International Monetary Fund Managing Director Christine Lagarde said on Monday that trade disputes and tariffs are starting to dim the outlook for global growth, calling on countries to resolve their differences and reform global trading rules. Lagarde, in a speech ahead of the IMF and World Bank’s annual meetings next week in Indonesia, said growth was at its highest level since 2011, but had plateaued, with fewer countries participating in the expansion. “In July, we projected 3.9 percent global growth for 2018 and 2019. The outlook has since become less bright, as you will see from our updated forecast next week,” Lagarde said, without providing new figures. “A key issue is that rhetoric is morphing into a new reality of actual trade barriers. This is hurting not only trade itself, but also investment and manufacturing as uncertainty continues to rise,” she added. While the United States is growing strongly because of tax cuts and easy financial conditions, there are signs of slowing in the euro area and Japan, she said. China is also showing signs of growth moderation, a trend that will be exacerbated by its trade disputes with the United States, which has imposed tariffs on $250 billion worth of imports from China and is threatening duties on $267 billion more. The trade war, along with higher interest rates and a stronger U.S. dollar, is starting to affect some emerging market countries, Lagarde said, citing new IMF research that suggests emerging market countries excluding China could potentially face debt portfolio outflows of up to $100 billion. That’s a level that would broadly match outflows during the global financial crisis a decade ago. “To be clear, we are not seeing broader financial contagion — so far — but we also know that conditions can change rapidly. If the current trade disputes were to escalate further, they could deliver a shock to a broader range of emerging and developing economies,” Lagarde added. The IMF and World Bank meetings in Indonesia come 20 years after the Asian financial crisis, in which the archipelago suffered massive capital outflows and had to turn to the IMF for a bailout package that brought painful austerity. Lagarde praised Indonesia’s efforts to build a more resilient economy and said the IMF would provide financial assistance where needed.

REFORMING TRADE RULES

Without specifically naming the United States and China, Lagarde called on countries to “de-escalate and resolve the current trade disputes” and start to work on building “smarter rules” for the global trading system, including reforms to the World Trade Organization. “The immediate challenge is to strengthen the rules. This includes looking at the distortionary effects of state subsidies, preventing abuses of dominant positions and improving the enforcement of intellectual property rights,” she said, citing issues affecting both Chinese practices and U.S. technology company dominance. But if agreement among all countries cannot be achieved, she said she would encourage them to work on more flexible trade deals by “like-minded” countries to work within WTO rules. Particular attention needs to be focused on e-commerce and trade able services, such as engineering, communications and transportation, Lagarde said. IMF research shows that reducing trading costs by services by 15 percent could boost total gross domestic product of G20 countries by more than $350 billion this year — the equivalent of adding another South Africa to the group. Lagarde also warned about the risks of a growing debt pile that has reached a record $182 trillion, about 60 percent higher than at the start of the financial crisis in 2007. She said emerging economies should take action to rein in the growth corporate debt and to make government borrowing more sustainable, while advanced economies should cut deficits and put public debt on a “gradual downward path.” Better management of public assets could help generate more revenues, she said, citing a new IMF analysis showing that 31 countries have total public assets of $100 trillion, well over twice their GDP.

Source: Returns

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