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MARKET WATCH 10 OCT, 2018

NATIONAL

INTERNATIONAL

Smriti Irani assures Manipur of central govt’s support to develop textile industry

Union Minister of Textiles Smriti Irani has assured Manipur of sustained support from the Government of India for the growth of the textile industry and welfare of weavers and farmers in the state. The union minister on Tuesday inaugurated a three-day Silk Expo and Workshop on “Silk Samagra” in the presence of Chief Minister N Biren Singh and Textiles, Commerce and Industries Minister Th. Biswajit at Manipur Sericulture Project Management Complex, Sangaipat in Imphal East District. She also informed that the Central Government had recently approved setting up of an Eri Spinning Mill worth Rs 22 crore for the expansion of silk industry in Manipur. The foundation stone for the mill would be laid next month. Irani noted that various studies had indicated that wherever weavers had received benefits under Mudra Yojana, their income had gone up by 50 per cent. She urged the state government to provide the weavers with the benefits of the scheme. She said Silk Samagra is an initiative of Prime Minister Narendra Modi to ensure the possibilities of exponential growth in the silk sector. “It is an endeavour not only to enhance the income of farmers and weavers but also to ensure occupying the No. 1 position in silk production and cultivation in the world. India is now in the No. 2 position,” she said. The Government of India had announced Rs 6,000 crore package for the development of apparel and make-ups sector in the country, she added. Under Prime Minister Narendra Modi’s supervision, the GoI had enhanced funding to North East Region Textile Promotion Scheme (NERTPS). A large number of textile parks and textile units are currently functional in the North East region due to that, Irani added. In 2013-14, the fund allocated under NERTPS was only Rs. 2.86 crore. However, in the past four years of NDA Government, Rs. 839 crore had already been spent for the growth of textiles industry in the North East region, she said. Manipur CM N. Biren Singh said that the Iri mill to be inaugurated next month is expected to give employment to around 2,500 people. He said that Manipur has a very small population, so it would not take much time in bringing a developmental change in the textile industry, he added. The union minister also distributed Rs. 1,73,97,200 through DBT to 322 beneficiaries of Integrated Sericulture Development Project (ISDP-Hills) for the construction of Individual Adult Rearing House (IARH). The three-day Silk Expo and Workshop on Silk Samagra is jointly organised by the Department of Sericulture, Government of Manipur and Central Silk Board, Ministry of Textiles, Government of India.

Source: Indian Express

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India imposes anti-dumping duty for 5 years on nylon filament yarn import from Vietnam, EU

India has imposed an anti-dumping duty of up to USD 719 per tonne for five years on import of nylon filament yarn from the European Union (EU) and Vietnam following recommendations by the commerce ministry’s investigation arm DGTR.”The anti-dumping duty imposed… shall be effective for a period of five years (unless revoked, superseded or amended earlier) from the 6th day of October, 2018 and shall be paid in Indian currency,” the department of revenue has said in a notification. The Directorate General of Trade Remedies (DGTR) in its probe has stated that nylon filament yarn (multi filament) has been exported to India from these two regions below normal values, and the domestic industry has suffered material injury on account of such dumped imports. Imposition of duty aims at guarding domestic manufacturers of this yarn from cheap imports coming from EU and Vietnam. The anti-dumping duty imposed ranged between USD 719.44 per tonne and USD 128.06 per tonne. Import of this yarn from the EU and Vietnam has increased to 13,799 tonnes during October 2015 March 2017 (which was the period of investigation) from 7,201 tonnes in 2013-14. JCT, Gujarat Polyfilms, Gujarat State Fertilizers and Chemicals, Prafful Overseas and AYM Syntex had jointly filed for initiation of the investigations and imposition of the duty. The major uses of this yarn are in home furnishing and industrial application such as curtains, sewing and embroidery thread and fishnets. To recommend duties, the DGTR in its probe would have to establish that dumping has caused material injury to domestic players. Anti-dumping duties are levied to provide a level-playing field to the local industry by guarding against below-cost import. Imposition of anti-dumping duty is permissible under the World Trade Organization (WTO) regime. Both India and China are members of the Geneva-based body. The duty is aimed at ensuring fair trading practices and creating a level-playing field for domestic producers vis-a-vis foreign producers and exporters.They are not a measure to restrict import or cause an unjustified increase in cost of the products.

Source: Business Standard

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Organize joint study tour to understand Maha’s textile policy: FOGWA

Surat: Federation of Gujarat Weavers’ Welfare Association (FOGWA) has urged the state government to organize a joint study tour to Maharashtra along with leaders of power loom sector from Ahmedabad, Surat and Umbergaon before framing a new textile policy. In a letter to chief secretary, JN Singh, FOGWA office-bearers stated that the new textile policy under formulation needs a better understanding of the textile policy framed by Maharashtra government and benefits provided to textile entrepreneurs there. Many entrepreneurs, especially embroidery and power loom weavers, have shifted their base from Surat and south Gujarat to Navapur and Tarapur in Maharashtra, which are located just 125 kilometres from Surat. The electricity tariff for textile units in Maharashtra comes at Rs3.50 per unit whereas it is 7.50 per unit in Gujarat. FOGWA president Ashok Jirawala told TOI, “A joint study tour is must before framing the new textile policy. Many benefits are being provided by Maharashtra government to textile entrepreneurs, including 35 per cent capital subsidy on investment. Industry leaders from Ahmedabad, Surat and Umbergaon should accompany government officials on the study tour.” Jirawala added, “Many small weaving units have downed their shutters in the last one-and-a-half-year as grey fabric manufactured in Navapur and Tarapur are comparatively cheaper than Surat, Umbergaon and Ahmedabad. Power loom weavers are unable to sustain and are looking at Gujarat government for policy changes.”

Source: Times of India

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Analysts see challenges for Asian suppliers under USMCA

Asian manufacturers may find it tougher to sell in American markets under the United States-Mexico-Canada Agreement (USMCA) and may face long-term isolation in key industries, say some Asian analysts. Tighter country of origin rules and labour standards for the car and garment sector mean production could shift back to North America, affecting Asian businesses. The new agreement announced recently includes tougher regulations that say raw materials used in garment manufacturing like sewing thread must be sourced from suppliers in one of the three signatory countries.If supply chains shift towards North America, it will be harder for countries elsewhere to break into the North American market, a top Hong Kong-based English-language daily quoted Henry Gao, professor of trade policy at Singapore Management University, as saying. The rules may limit Vietnamese firms’ ability to fill demand for inputs in the textile sector, says Maxfield Brown, head of Dezan Shira’s business intelligence unit for the Association of Southeast Asian Nations (ASEAN). Vietnam exported about $60 million worth of sewing thread, pocketing fabric, narrow elastic bands and coated fabric to the three North American countries, according to Dezan Shira & Associates, a pan-Asia, multi-disciplinary professional services firm, providing legal, tax and operational advisory to international corporate investors. China might also be affected by conditions that prevent USMCA members from signing deals with ‘non-market economy’ countries. (DS)

Source: Fibre2fashion

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Rupee slips to record low of 74.39 on CAD fears, fund outflows

The rupee on Tuesday crashed to new lows hitting 74.3935 against the dollar in intra-day trade before staging a mild recovery to close at an all-time low of 74.3875. The currency depreciated 32 paise amid deepening concerns over India’s current account deficit (CAD), fund outflows and the continued pressure from RBI’s unexpected decision of keeping the repo rate unchanged. The currency markets had been hoping that RBI would defend the currency with an interest rate hike in its monetary policy announcement last week. Despite the turmoil in currency, the premium on three-month forward contracts closed at the same rate as on Monday of 4.55%.Experts believe the markets had factored in a rate hike from the central bank as other emerging markets such as Phillipines and Indonesia are actively pursuing interest rate defense to keep their currency stable. An expert said: “China has made sure there is ample liquidity in the market by cutting RRR by 100 basis points (bps) over the weekend to support uncertain growth amid slowing exports. The domestic market expected an intervention on behalf of currency from the central bank” Meanwhile, bonds sold off sending the benchmark yield to 8.08%, up eleven basis points from the previous close of 7.97% on Monday. Indranil Sengupta, economist, Bank of America, estimates that liquidity deficit in the money markets will average Rs 50,000 crore in the December quarter even after Rs 90,000 crore of OMO and Rs 10,000 crore cut in the net borrowings by the government in H2FY19. Manish Wadhawan, MD and head of fixed income, HSBC India, had earlier told FE that India may need durable long term funds and NRI bonds seem to fit well in this situation. “The possibility of issuance of NRI bonds is not ruled out primarily because our current account deficit (CAD) as we face a mismatch due to the foreign institutional investors (FII) flows,” he said. With currency weakness likely to persist, foreign funds sold $1.2 billion worth of bonds in September, taking the total sales since April to $7.3billion. A money market expert observed, “Selling in equity markets will continue; where foreign investors would choose to exit and, perhaps, re-enter at a later stage.”

Source: Financial Express

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Manufacturing sector sees 69% rise in online hiring

New Delhi : Hiring by the production and manufacturing sector witnessed an impressive 69 per cent year-on-year growth in September making the sector the leader in online hiring for six months in a row, according to Monster Employment Index September 2018. There has been a 24 per cent spurt in online hiring in the last three months since June, it further said. Retail was the second-most actively hiring sector, registering 36 per cent growth from the year-ago level. Home appliances came third in the index with a growth rate of 23 per cent on y-o-y. Oil/Gas/ Petroleum/Power and Healthcare also were among the industries that registered growth at 16 per cent and 13 per cent respectively.

Key sector

 “Production and Manufacturing continues to lead the online hiring scenario, emerging a key sector. The government’s impetus towards making India a manufacturing hub has put the sector in a high- growth trajectory, which will definitely enhance India’s position in the world economy,” said Abhijeet Mukherjee, CEO, Monster.com, APAC and Gulf. On the other hand, NGO/social services registered an annual decline of 33 per cent among all the monitored sectors. It was followed by printing/packaging, which witnessed a decline of 22 per cent, and the online hiring came down by 18 per cent in garments/textiles sector. City-wise, non-metros outperformed metros with Chandigarh (up 15 per cent) and Jaipur (up 2 per cent) as the only cities to register positive growth year-on-year even in September. Month-on-month e-recruitment activity in these two cities expanded by 3 per cent and 2 per cent respectively. Online hiring activity was lower than the corresponding period a year-ago in the five key cities of Hyderabad, Bengaluru, Chennai (down three per cent), Delhi-NCR and Mumbai.

Source: Business Line

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Crude oil prices may have peaked

Has the simmering crude oil market peaked, even if for the time being? This is the multi-million dollar question everyone is asking. Since the start of September, prices had spiked by over 10 per cent reaching a four-year high despite the fact that at the Algiers meeting last month OPEC had declared that the market was comfortably supplied. Now, crude prices have come off the boil, having lost about $3 a barrel from the highs of last week and $10 from the rate a month ago. Brent has dropped to $83.5 a barrel while WTI is below $74. While the persistent fear of a supply shortfall triggered by sanctions on Iran coming into effect by early November had provided the market the thrust upwards, the huge flow of speculative capital prompted by worries over supplies has created huge net-long futures positions for financial investors which has exerted an exaggerated price action. Many market observers believe the world crude oil market is currently facing no significant shortage, but the fear of outages is what has lent a bullish tendency. Even in the case of Iran there is an expectation that its oil exports may fall less sharply than feared, while Libya’s oil production has stated to rise.

Softer stance

Importantly for the market, the US appears to be softening its tough stance against buyers of Iranian oil and the possibility of some exemptions or in some cases, extension of time limit is real. India is widely seen as a potential beneficiary of the softening US stand on Iran. It is likely other buyers of Iranian oil — the EU, Japan and South Korea — may also be allowed to continue to buy from Iran for some more time. In the event, concerns over supply tightening will ease considerably. At the same time, US crude oil stocks are on the rise. They increased by 8 million barrels last week, more sharply than at any time in the last 18 months, according to an expert. Additionally, seasonal factors come into play. The season for refinery maintenance is round the corner. Strangely, the market has ignored the fact that total OPEC output last month was at its highest level this year; and also the fact that Russia and Saudi Arabia had agreed informally to raise output in the coming months. Indeed, Saudi production in October could reach a record 10.7 million barrels per day and Russia, 11.3 mbpd. It is likely that the market fundamentals will soon start to assert themselves. In the event, the current risk premium of about $12 will begin to dwindle, which, in turn, will prompt the exit of speculative capital. On current reckoning, the forecasts of crude touching $90-100 a barrel soon appear outlandish. If anything, the market appears ripe for a correction. Rates could first drop to $80 a barrel and towards the end of the year close in on $75 a barrel unless of course the crude bulls discover a red rag. The writer is a policy commentator and commodities market specialist Views are personal

Source: Business Line

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Rupee’s slide is stinging Indian firms with unhedged foreign debt

As the rupee slides to fresh lows and US rates move sharply higher, unhedged Indian firms that swapped overseas debt into the local currency and that don’t have foreign-currency revenues face sharply higher repayment costs.(PTI/Picture for representation) The rupee’s freefall is hurting the minority of Indian firms that haven’t hedged their overseas borrowings. India Inc. overall is better off than several years ago, after more companies with foreign-currency debt bought protection against rupee declines, which otherwise would push up the cost to service those obligations. But there’s still a group of debtors that lack such safeguards, just as the rupee’s tumble worsens and a wall of debt comes due. As the rupee slides to fresh lows and US rates move sharply higher, unhedged Indian firms that swapped overseas debt into the local currency and that don’t have foreign-currency revenues face sharply higher repayment costs. The plight of such borrowers stands out after many peers boosted hedges in recent years. As much as 75 percent of the external commercial borrowings of Indian companies are now hedged, according to Samir Lodha, managing director and forex hedging strategist at QuantArt Market Solutions. Indian companies went on a borrowing spree abroad in the past few years, when the local currency was stronger. The rupee has lost more than 13 percent this year and touched fresh lows against the dollar, making it the worst performer among major Asian currencies, amid a sell-off in emerging-market assets. While hedging has become more common, there is still a lot of foreign debt out there. Indian firms, both hedged and unhedged, face $28 billion of non-rupee bonds and loans coming due in 2019, according to data compiled by Bloomberg. That level is similar to elevated figures in recent years, when borrowing costs were lower. “Many Indian companies are not fully hedged due to high costs for covering exchange risk or a natural hedge,” said Abhishek Dangra, a Singapore-based analyst at S&P Global Ratings. “Some of these companies may see higher refinancing risks.”

Source: Hindustan Time

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IMF projects economic growth for India at 7.3% for FY19

The International Monetary Fund (IMF) has projected a 7.3 per cent growth rate for India this fiscal and 7.4 per cent in the next in its World Economic Outlook (WEO) report. India’s growth rate in 2017 was 6.7 per cent. This acceleration reflected a rebound from transitory shocks with strengthening investment and robust private consumption, according to IMF. With a strong medium-term growth prospects of 7.75 per cent because owing to ongoing structural reforms, the projections are slightly lower than those estimated in the April 2018 WEO for 2019, a news agency reported quoting the document released in Bali on October 8 during the annual meeting of the IMF and the World Bank. If the projections prove right, then India will reclaim the tag of the fastest growing major economies of the world, crossing China with more than 0.7 percentage point in 2018 and an impressive 1.2 percentage point growth lead in 2019. China was the fastest growing economy in 2017, being ahead of India by 0.2 percentage points. A high interest burden and risks from rising yields in India require continued focus on debt reduction to establish policy credibility and build buffers. "These efforts should be supported by further reductions in subsidies and enhanced compliance with the Goods and Services Tax," the IMF report said. Noting a rising inflation in India, IMF estimated that to be 3.6 per cent in fiscal 2017-18, with a 4.7 per cent projection for fiscal 2018-19, compared with 4.5 per cent in fiscal year 2016-17, amid accelerating demand and rising fuel prices. IMF’s 2019 growth projection for China is lower than the April one in light of the latest round of US tariffs on Chinese imports. Growth is projected to moderate from 6.9 per cent in 2017 to 6.6 per cent in 2018 and 6.2 per cent in 2019 in China, implying a slowing external demand growth and necessary financial regulatory tightening, according to the document. The US growth rate for 2018 is 2.9 per cent and that of 2019 has been powered to 2.5 per cent. The impact of the US-China trade conflict is likely to be felt beyond the two economic superpowers. Aggregate growth in the emerging market and developing economy group stabilised in the first half of 2018, while emerging Asia continued to register strong growth, supported by a domestic demand-led pick-up in the Indian economy from a four-year-low pace of expansion in 2017. (DS)

Source : Global Textiles

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NIFT-TEA to offer knitwear skill training for employment

The Atal Incubation Centre (AIC) at the National Institute of Fashion Technology (NIFT)-Tiruppur Exporters' Association (TEA) Knitwear Fashion Institute in Tirupur has signed a memorandum of understanding (MoU) with the Avinashilingam University for skill training in knitwear for employment. It will also support the trainees to market innovative products. The centre, which already has an agreement with the VLB Janakiammal College of Arts and Science for the same programme, plans to collaborate with the Periyar University and colleges affiliated to the Anna University, all in Tamil Nadu state, in this regard. The centre will conduct boot camps in institutions and prepare the students first, according to a report in a top Indian English-language daily. New variety of machines, including body mapping sportswear producing machine, jean knitting and flat knitting machines, will be purchased for the training. (DS)

Source:Fibre2Fashion

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Global Textile Raw Material Price 09-10-2018

Item

Price

Unit

Fluctuation

Date

PSF

1536.08

USD/Ton

0%

10/9/2018

VSF

2188.40

USD/Ton

0.07%

10/9/2018

ASF

3008.51

USD/Ton

0%

10/9/2018

Polyester POY

1612.74

USD/Ton

0.90%

10/9/2018

Nylon FDY

3485.82

USD/Ton

0%

10/9/2018

40D Spandex

4946.69

USD/Ton

0%

10/9/2018

Nylon POY

3644.93

USD/Ton

0%

10/9/2018

Acrylic Top 3D

5467.39

USD/Ton

0%

10/9/2018

Polyester FDY

1829.70

USD/Ton

0.40%

10/9/2018

Nylon DTY

3232.70

USD/Ton

0%

10/9/2018

Viscose Long Filament

3182.08

USD/Ton

0%

10/9/2018

Polyester DTY

1779.07

USD/Ton

0%

10/9/2018

30S Spun Rayon Yarn

2863.87

USD/Ton

0%

10/9/2018

32S Polyester Yarn

2162.37

USD/Ton

0%

10/9/2018

45S T/C Yarn

2979.58

USD/Ton

0%

10/9/2018

40S Rayon Yarn

2328.70

USD/Ton

0%

10/9/2018

T/R Yarn 65/35 32S

2545.66

USD/Ton

0%

10/9/2018

45S Polyester Yarn

3167.62

USD/Ton

0%

10/9/2018

T/C Yarn 65/35 32S

2690.30

USD/Ton

0%

10/9/2018

10S Denim Fabric

1.35

USD/Meter

0%

10/9/2018

32S Twill Fabric

0.83

USD/Meter

0%

10/9/2018

40S Combed Poplin

1.16

USD/Meter

0%

10/9/2018

30S Rayon Fabric

0.66

USD/Meter

0%

10/9/2018

45S T/C Fabric

0.70

USD/Meter

0%

10/9/2018

Source: Global Textiles

Note: The above prices are Chinese Price (1 CNY = 0.14464 USD dtd. 09/10/2018). 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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Ethiopia to begin work on three more textile centres before July 2019

Ethiopia will start work on three more industrial parks that will play a “critical role” in the country’s bid for economic take-off on the back of its textile industry. The developments, which are to begin before next July, are in are Aysha and Semera, near the Djibouti border and Assosa, next to the Sudanese border. Lelise Neme, chief executive of the Ethiopia Industrial Parks Development Corporation (IPDC), told the Xinhua news agency that the three parks were expected to play a “critical role in Ethiopia’s plan to transform its still largely agrarian economy into an industrialized one by 2025, using the textile and garment sector as a key component”. The announcement follows another in September, which said a further four would be built in Jimma, Adama, Arerti, and Dire Dawa. In addition to these manufacturing facilities, four agro-industrial parks are being developed to capture more value from Ethiopia’s farming output. These are to be built in the north eastern regions of Amhara, Oromia, Tigray and SNNPR. Ethiopia has based its industrialisation effort on the development of low-carbon, tax-exempt “plug & play” industrial parks along development corridors. So far, this has resulted in four operation ventures, at Bole Lemi, Hawassa, Mekele and Kombolcha (see Further reading, below, for more on these). On Sunday (7 October), these four were joined by a fifth at Adama, about 100km southeast of Addis Ababa. This was opened by Abiy Ahmed, the prime minister of Ethiopia (pictured). The 120ha, $150m development will host a number of international manufacturers, such as Spanish synthetic yarn specialist Antex, Hong Kong’s Charter Ventures Apparel, Jiangsu Shinshine Wool Textile of China and Kingdom Linen Ethiopia, the local subsidiary of  Zhejiang Jinyuan Flax. Ethiopia plans to increase the number of operational industrial parks from the current four to around 30 by 2025, increasing the share of the economy contributed by manufacturing from 5% to 22%.

Source: Global Construction Review

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Pakistan : Textile Industry: 100 mills to open as Govt allows subsidy

All Pakistan Textile Mills Association (APTMA) announced a decision to reopen a hundred former mills in Punjab. The decision was borne out of the promised Rs.44 billion subsidy for exporters mentioned by Finance Minister Asad Umar in his supplementary budget speech. The subsidy itself will be derived from a massive regulatory hike in gas prices which has raised the price by 40% from Rs.600 per million British thermal unit (mmBtu) to Rs.780 mmBtu for commercial consumers. The plan to create a new category for those industrial consumers who are registered manufacturers or exporters of one of five zero-rated sectors is to charge them the unchanged rate of Rs.600 per unit.    Although the Economic Coordination Committee of the cabinet has been taking steps to reinvigorate the Rupee, a global surge in oil prices is posing significant challenges to a country industrially dependent on gas. These five export sectors would be textiles (including jute), leather goods, carpets, surgical tools, and sports goods business which the Government of Pakistan intends to capitalize on by offering them internationally competitive gas rates. In a statement made at a ceremony for the Export Excellence Awards organized by the Pakistan Textile Exporters Association (PTEA), Asad Umar called the textile industry the ‘backbone of the economy’. “The government has a strong belief that economic revolution can only be possible through trade promotion and all possible support is being extended to the export sector to achieve optimum growth,” he remarked. Pakistan’s domestic gas production ranges between 3.8 to 4 billion cubic feet per day (bcfd) while importing 1.1 bcfd LNG. At a total of 5.1 bcfd, the country still runs short when its demand stands around 6 bcfd and the shortage is most acutely felt in the cold season. The combination of increased gas prices, devalued Rupee, plummeting stock, decreased exports and increased inflation has already landed the new government into its first crisis. While the PTI government attained power with ambitious plans to turn around the economy, create more jobs and deliver on its promise, it has set off to quite an unlucky start.    The hike in interest rates, depreciation of the Rupee, and the 143% rise in gas tariffs are all measures taken in the ‘right direction’. Not only have external factors caused the Rupee to fall against the dollar for the 6th time since December 2017, but a culmination of a debt crisis, water crisis and now an energy crisis have caused divisions in the new cabinet. Although the Economic Coordination Committee of the cabinet has been taking steps to reinvigorate the Rupee, a global surge in oil prices is posing significant challenges to a country industrially dependent on gas. During the previous government, over 100 textile mills were shut down in Punjab once the provincial government gained greater autonomy and reduced the commercial availability of gas to only 2 days a week. The impact of poor fiscal policies without long-term planning led to the crossroads of today. Thus while the leadership is currently driven on not worsening the debt crisis and keeping the currency afloat, economic advisers are trying to keep the long-term benefits in mind and recommended going for another – and hopefully the last – IMF bailout package. Thus, after much deliberation, the cabinet went against its electoral promises and officially approached the International Monetary Fund (IMF) for a bailout but not without putting the entire economy into freefall against the supply and demand metrics of the competitive global.    The PTI government had promised jobs and homes for the populace but will be tasked with taking more ‘decisive action’ by the time talks with the IMF would have ended. Of course, going to the Fund not only means letting the Rupee free float but also allowing inflation adjustment and bringing in the heavy blow of rising oil prices before a bailout package is decided. This would mean doing away with the loose fiscal and monetary policies that have been institutionalized in the previous governments who had adopted a culture of borrowing. The corrective steps taken since December of 2017 have been appreciated by the IMF but are apparently not enough to fix the high fiscal and current account deficits, as well as low foreign currency reserves. The hike in interest rates, depreciation of the Rupee, and the 143% rise in gas tariffs are all measures taken in the ‘right direction’. Much more is obviously required, with even further Rupee depreciation as the stock market falls further (already closed by less than 1,328 points on Monday) and privatization of public-sector enterprises such as Pakistan International Airlines (PIA). While the dollars Pakistan will receive in loans might help prevent it defaulting on foreign payments, the structural adjustment, macroeconomic reforms and other conditions that come with them will hit even harder. Higher inflation (currently 8% and climbing), higher interest rates (projected upwards of 10%), the decrease in growth rate (down to 4.2% by 2019) and increased gas prices will hurt PTI’s agenda, especially in the next elections. The new government may mean well by sticking to their policy of emancipating domestic exporters and overcoming the reliance on foreign debt. The PTI government had promised jobs and homes for the populace but will be tasked with taking more ‘decisive action’ by the time talks with the IMF would have ended. Such policies would include more exchange rate flexibility and stricter monetary regulation, further fiscal adjustment notwithstanding costs incurred from having to revive a struggling economy such as providing subsidies to exporters. PTI’s plans to construct 5 million houses have already been deterred by a 30 percent increase in gas rates for the cement industry, which will make it even more difficult to meet large-scale welfare requirements. Efforts to control gas theft and supply losses will have to be revamped to coordinate federal and economic action. Recovery from gas defaulters may add to the Rs.112 billion rupees being generated out of the gas price hike. More than half of the Rs.44 billion subsidy for Punjab’s industries will most likely come from that. However, the problem lies with the fact that this figure was decided before an IMF bailout was an option. Although the figures have all moved up and down the charts by now, the amount remains the same. The government will be trying to maneuver uphill if it intends to prioritize revenue generation and public welfare at the same time that a 3-year IMF structural reform program is in place. A senior Petroleum Ministry official explained that the government will be abiding by the principle of providing 100 % gas at a fixed rate by paying the difference in subsidies. Weak economic scenario coupled with widening budget deficits has forced the government to take undesirable decisions knowing well that economic activities will only flourish if domestic industries receive competitive costs of production. By keeping the gas price unchanged at Rs.600 the government is trying to do just that. Most of these industries are textile mills located in the Faisalabad locality of Punjab where the PTI won seven out nine available seats. However, only 28 % of their gas arrives at subsidized rates from Sui Northern Gas Pipeline Ltd (SNGPL) while 72 % is imported Liquefied Natural Gas (LNG); the latter which costs around Rs.1,300 per MMBtu. More importantly, by reopening all the closed mills, the PTI government would be overcoming a major industrial challenge in Punjab by providing over 500,000 new jobs. A senior Petroleum Ministry official explained that the government will be abiding by the principle of providing 100 % gas at a fixed rate by paying the difference in subsidies. The new government may mean well by sticking to their policy of emancipating domestic exporters and overcoming the reliance on foreign debt. But there is still a lot of deliberation, calculation, and decisions to be made until the mini-budget is decided once the by-elections take place on October 14 and the IMF responds favorably.

Source: Globalvillagesspace

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Bangla parliament passes bill to boost garment sector

The Bangladesh parliament recently passed the Textile Bill that was introduced in June 2018 by state minister for jute and textiles Mirza Azam. The government wants to achieve higher numbers by streamlining multiple processes for market leaders in the textile industry as the country’s apparel sector grew from $28.2 billion in 2016 to $29.33 billion in 2017. Bangladesh total exports earned $36.67 billion for fiscal 2017-18. The textile industry contributes approximately three-fourths of the country’s total exports with the readymade garment (RMG) sector as the major contributor, according to a report by a Bangladesh news wire. The bill has a lot of amendments to earlier laws, including a one-stop service provision for companies that want to set up industries. This may raise investment in the RMG sector. (DS)

Source: Fibre2fashion

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Pakistan, China sign 8 MoUs worth $100m for investment

Pakistan and China have signed eight Memorandum of Understandings worth 100 million dollars for mutual investment in Seafood, Agriculture, Steel and Pharmaceutical sectors. Around fourteen private companies from both sides signed MoUs for mutual investment and joint ventures to expedite the trade and business between the two countries. Addressing on the occasion, Economic and Commercial Counselor of China Embassy, Wang Zhihua said Pakistan is a friendly country and we believe on peaceful con-existence and cooperation for shared property. The Counselor said the China Pakistan Economic Corridor under 'One belt one road' has given new height to mutual relations and cooperation between both friendly countries. Wang Zhihua said Pakistan and China are negotiating on phase -II of Free Trade Agreement (FTA) to increase trade and providing free trade opportunity in their markets. He said that Pakistan has huge potential market for international investors and its strategic location gives more comparative advantages to other trading partners. Addressing on the occasion, Additional Secretary ministry of Commerce and Textile, Syed Tariq Huda said Chinese investment in Pakistan give positive impact to local market of Pakistan. He said that 'One Belt and One Road' initiative also gives vision for inclusions and welfare all region.

Source : The Nation

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US-China trade war gives India chance to contain its trade deficit

India doesn’t export as many as 54 items where American supplies to China are substantial. Most of the other items are small-ticket ones where imports by China from the US are negligible and or up to million each.  The ongoing trade war between the US and China that has witnessed Beijing slapping higher duties on American goods in tit-for-tat action has opened up a window of opportunity for India that has long struggled to contain a widening trade deficit with its giant neighbour. But gains are contingent on getting market access and achieving competitiveness in many cases. According to a commerce ministry study, of the 603 American tariff lines (items) on which Beijing has imposed extra duties in the range of 15-25%, India can ship out more in case of 44 items without much difficulty, as it currently has access to the Chinese market in these products. However, in case of 17 items where American supplies are substantial, India doesn’t have market access; so, it can export these items only if China opens up further. The study, however, doesn’t provide a list of items where the potential for further exports to China exists (apart from just grapes and alloy steel seamless boiler). Also, as pointed out by independent analysts, most of the US supplies to China are expected to continue despite higher duties. India doesn’t export as many as 54 items where American supplies to China are substantial. Most of the other items are small-ticket ones where imports by China from the US are negligible and or up to $10 million each. Some analysts have, however, suggested that India explore the possibility of more exports in farm items like cotton, oilseeds, including soybean, oilmeals, maize, copper and chemicals, even if in some items, the Chinese demand may be much higher than what India can supply. China has either imposed or proposed tariffs on $110 billion of US goods, representing most of its American imports ranging from farm items like cotton to automobiles. The trade war may “bring about a shift in the global trading patterns due to spill-over effects and displacement of the bilaterally-traded commodities”, said the study, titled Sino-India Trade: A perspective. Currently, India’s supplies to China include cathode of copper, petroleum products, iron ore, cotton and textile items. However, India’s merchandise trade deficit with China touched a record $63 billion in 2017-18, forcing it to step up demand for greater market access. Importantly, the study has acknowledged the stark difference between policy-making in both these countries, which is key to boosting competitiveness. “China has always set aside political, social and ideological differences in the interest of getting investment, technology and export channels. However, India’s economic growth has always given in to the sentiments of the local industry—in many cases, foreign investments have been curbed or restricted,” it said. Highlighting some of the reasons why the world’s second-largest economy is more competitive, the study said average lending rate for China’s manufacturing sector stood at 4.4% in 2016, against India’s 9.7%. Although wage costs are higher there (China’s average hourly compensation cost per employee in manufacturing is $4.11 against India’s $1.6), each Chinese worker produces 60% more than his Indian counterpart. In the global Logistics Performance Report, China is placed at 27th while India at 35th despite a 19-notch jump since 2014. The study also points out that some of India’s competitors, including Asean members, are taking advantage of their free trade agreement with China and are exporting more there. For instance, while frozen shrimps from India faces a 6% duty in China, those from Asean are supplies duty-free. Many textile items and aluminium oxide feature on the list of items where India faces tariff disadvantage against some of its competitors.

Source: Financial Express

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The trade war will hit US and Chinese growth next year, the IMF warns

The International Monetary Fund on Tuesday cut its growth forecasts for the United States and China, citing the recent waves of tariffs the world's top two economies have imposed on each other. The more pessimistic forecast comes as the clash between Washington and Beijing threatens to keep escalating and cause damage in other countries. "When you have the world's two largest economies at odds, that's a situation where everyone suffers," Maurice Obstfeld, the IMF's chief economist, said at a media briefing about the fund's latest World Economic Outlook. Despite healthy momentum in the United States, which received a boost from recent tax cuts, IMF economists now expect growth to slow to 2.5% next year from 2.9% this year. They cut the 2019 forecast by 0.2 percentage points because of the trade conflict. The Trump administration has slapped tariffs this year on roughly half of the products that China sells to the United States annually. President Donald Trump has threatened to expand the tariffs to cover all US imports from China. Beijing has responded with tariffs on American goods worth more than $110 billion. The tit-for-tat is set to take a bite out of Beijing's economic growth next year, too. China's growth is now expected to drop to 6.2%, from 6.6% this year, according to the IMF. The new 2019 forecast is 0.2 percentage points lower than the fund's previous forecast, reflecting the waves of new tariffs that have taken effect since then.

Escalating trade war could do more damage

The impact of the US-China trade conflict is likely to be felt beyond the two economic superpowers. While global growth should remain strong next year, the IMF says the prospects are notably "less bright" than when it reviewed them in April.

Trade war looms over summit of global finance chiefs

The fund now projects economic growth to be steady but slightly lower in 2019 because of higher interest rates and trade barriers. It cut the global forecast 0.2 percentage points to 3.7%, and predicted a downward trend over the next few years. "The impacts of trade policy and uncertainty are becoming evident at the macroeconomic level, while anecdotal evidence accumulates on the resulting harm to companies," the IMF said. There's plenty of scope for further damage if Trump follows through on his threats of further measures and China retaliates. "An intensification of trade tensions, and the associated rise in policy uncertainty, could dent business and financial market sentiment, trigger financial market volatility, and slow investment and trade," the IMF said. The United States and China have slapped tariffs on hundreds of billions of dollars of each other's products this year. The United States and China have slapped tariffs on hundreds of billions of dollars of each other's products this year. At the briefing, Obstfeld said that "close to a percentage point" could be shaved off of global growth if the trade rift continues. "The possibility that China and US resolve their disagreements would be a significant upside to the forecast," he added. The fading effects of the tax cuts and other US stimulus measures will "subtract momentum" starting in 2020, the IMF warned. That's why the IMF is urging governments to act now as the "window of opportunity" narrows to enact reforms like dealing with the ballooning budget deficit in the United States and the low level of public investment in Germany.

Source: CNN Business

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