“At present, synthetic fibre is taxed at 18%, yarn at 12% and final output at 5%, creating a tax structure where rate on inputs is higher than that on output. The textiles industry has complained that the absence of refund on input tax credit on the domestic sale of synthetic fabrics has blocked its working capital, while an inverted duty structure makes the rate on inputs higher than that on the output. “At present, synthetic fibre is taxed at 18%, yarn at 12% and final output at 5%, creating a tax structure where rate on inputs is higher than that on output. This inverted structure has made it easier to import synthetic textiles, (rather) than manufacture them domestically,” said Sanjay Jain, chairman, Confederation of Indian Textile Industry (CITI). “Refund of inverted duty is allowed, but it is complicated and leads to working capital blockage for months. Goods and services tax (GST) on capital goods is not refunded,” Jain added. Export of manmade yarn, fabrics and made-ups dropped 3% on-year in November, to $371million. As per industry estimates, the inverted duty structure made imports 15-20% cheaper for the domestic industry. Sales of manmade textiles such as polyester and viscose,” said another industry representative, requesting anonymity. Another grouse of the industry is that rules do not allow refund or adjustment of goods and services tax on services from output GST obligations, which has led to losses for smalland medium enterprises using job working services and having an inverted duty structure. “It is incorrectly framed and the refund rule needs to be rectified,” said Jain of CITI. To resolve the issue, the industry has sought refund for unused input tax credit that lapsed on July 31last year and extension of the refund to those selling in the domestic market.
Source: Economic Times
MUMBAI — The Union Textile Minister Mrs. Smriti Irani has called upon the Synthetic & Rayon Textiles Export Promotion Council (SRTEPC) to not only celebrate export excellence but also excellence in ‘Research and Development’ which is the foundation of MMF industry. Addressing the export award function of the council here Mrs. Irani also asked the SRTEPC to ensure that those individuals and organisations who contribute to sustainable methods of MMF manufacturing should be brought together from within the industry and celebrate their excellence in the field of sustainability. She informed that the Textile Ministry has recommended to Commerce Ministry provide to provide Rebate of State Levies (RoSL) on Export of fabrics and yarns. It is now for the norms committee under Commerce Ministry to do the data crunching and take the final decision while ensure that there is no leakage and mis-calculation of funds based on which the revenue industry will take final call she added. Earlier Mr. Narain Aggarwal Chairman SRTEPC informed that the demand for manmade fibre (MMF) textiles all over the world was increasing as main raw material amid changes in global fashion trends. Currently MMF dominates global textile fibre consumption with 70: 30 ratio i.e. MMF 70% and 30% is Natural fibre whereas it is just opposite in India. In India present consumption of MMF is below 40%. This means that India has strong growth potential he pointed out. Stating that India was one of the largest producers of man-made fibres (MMF) textiles in the world with present production of over 1441 million kg of man-made fibres and over 3000 million kg of man-made filaments Mr. Aggarwal informed that over 23000 million sq. mtr. of fabrics were produced from Man-made fibres and their blends. Major varieties of fibres and filament yarns are polyester viscose nylon acrylic and polypropylene. On export front SRTEPC Chairman said that current financial year has been encouraging for the MMF exporting community. Exports have been witnessing steady growth since 2016-17 and last year exports were to the tune of US$ 6.03 billion witnessing a growth around 3% as compared to the previous year. As per provisional data during April-November 2018-19 exports were US$ 4.07 against US$ 3.99 million during the same period of the previous year showing a growth of nearly 2%. The Ministry of Textiles has given us an export target of US$ 6.5 billion for the current Financial Year. So far during April – November 2018 63% of the export target has been achieved. “I am confident that with concerted efforts of all we will be able to achieve the target ” he emaphsised. The vision of the government he said is for enhancing size of the Textile industry to USD 350 billion by 2024-25 from USD 110 billion at present. To achieve this textile vision present domestic fibre base has to be doubled to minimum 20 bn. kgs. Natural fibres have inherent limitations and can be increased marginally. Manmade fibre & filaments such as Polyester Viscose Nylon and Acrylic are the only available alternative to create another 7- 9 billion kgs of fibre and achieving this Vision by 2024- 25. It will also require Annual Additional investment @ US$ 30 bn. for 7 years which converts to Annual additional investment of around Rs. 210 000 crores apart from the Rs. 50000 crores required for sustenance of the existing capacity. An estimated employment of about 2.1 million persons p.a. at the rate of minimum 20 persons per crore rupees of investment will be generated by the MMF textile segment Mr. Aggarwal said. Stressing that there are challenges before the Manmade fibre textile segment Mr. Aggarwal said that this segment has been used as a major source for revenue generation. It has been kept under different tax slabs in the GST regime which has created Inverted Duty Structure due to which huge working capital has been blocked. It has also deprived the MMF textile segment from availing rebate on GST paid on input services and IGST paid on import of capital goods. Double Taxation on Ocean freight in GST regime is additional burden on the exporters While our exports are grappling with these challenges imports have been increasing into India. Imports of MMF textiles such as fibres yarns and fabrics into India from world during 2017-18 was over US$ 2000 million of which from China alone was around US$ 1000 million which is 50% of our total imports of MMF textiles. SRTEPC has been briefing this concern to the Government at various forums he informed. The Ministry of Textiles SRTEPC Chairman said that been giving the council wholehearted support for our issues of concern. While the industry needs to do its best to fight competition, we need government support to supplement our efforts. China provides substantial government support and this needs to be matched in India also for development of the Indian MMF textile industry he added.
Source: Tecoya Trend
Union Textiles Minister Smriti Irani Wednesday said the textiles ministry alongwith the Clothing Manufacturers Association of India (CMAI) will identify powerloom clusters in the country and go ahead in a big way for skilling of powerloom sector. "CMAI, along with its members, has resolved that in conjunction with the textiles ministry, powerloom clusters will be identified from which adequate resources for retail businesses will procured, with assistance to powerloom weavers by the government," Irani said at a function here. The government is going to go ahead in a big way for skilling of powerloom sector, in synergy with CMAI, she said. Textiles secretary Raghvendra Singh recalled that MoUs were recently signed with industry players wherein government will facilitate sourcing of handloom products from handloom clusters, based on requirements of industry, so that cost of production comes down for weavers. He said that specific discussions were held today with CMAI members, and it has been decided that government and industry will work together for enhancing income of weavers and generating employment. Textiles minister also launched 'India Size' project and study of Apparel Consumption in India, at the event. A first-of-its-kind project, India Size aims to arrive at a standard Indian size for the ready-to-wear clothing industry, on the lines of the standardized sizes available in countries such as the US and the UK. A size chart that is specific to Indian consumers' measurements will be developed. This will help Indian apparel manufacturers to tailor their cuts closer to the actual body measurements of consumers. The India Size project will benefit manufacturers, consumers and will also generate data for textile ministry. The minister also launched a study of Apparel Consumption in India. Representing over 45,000 apparel manufacturers and retailers, CMAI will be conducting a study spread across three to six months, for arriving at an accurate assessment of the total apparel consumption in the country, thereby resulting in more accurate business projections, better marketing strategies and investment into the industry. The study aims to bridge the lack of accurate and reliable data on the size, spread, and extent of the domestic market. The study will attempt to come up with region-wise and product category-wise consumption patterns in the country, to arrive at a statistically reliable database, which could then become the foundation to study growth patterns in the coming year. The report would be ready for release by July 2019.
With direct export sops under WTO scrutiny, Centre may look at expanding scope of RoSL. With India’s eligibility to extend direct sops to exporters coming under the World Trade Organisation (WTO) scanner, the government is examining the industry’s suggestion of expanding the scope and coverage of the Rebate of State Levies (RoSL), a scheme which does not flout global trade rules as it involves refund of taxes and levies paid by exporters, and is not a subsidy. “At the consultations between exporters and the government, exporters made a case for extension of RoSL scheme to more sectors as the policymakers are not too keen on giving more direct export subsidies such as the Merchandise Export Incentive Scheme. The suggestion for RoSL extension is under consideration,” a government official said. The RoSL, a scheme under which exporters can claim refunds from the Centre for all the levies and duties they pay at the State level, is extended only to exporters of apparel and made-ups. “The textile sector was most vocal about the need to extend the ROSL scheme to other categories as well. The representatives claimed that their exports were under pressure and needed the support,” the official said. The meeting between exporters and officials was attended by representatives of all export promotion councils and bodies. Exporters argue that due to the current State levies and duties on various products including embedded taxes, a substantial amount of working capital gets blocked and exports becomes uncompetitive. Since the government is not keen on giving more direct export subsidies such as the one given under the MEIS, the ROSL becomes more relevant. At present, bulk of the incentives to exporters is under the popular MEIS wherein the government gives incentives to exporters equivalent to a certain percentage of their export value in the form of duty credit scrips that can be used to pay customs duties and are freely transferable.
But with the WTO now ruling that since India’s per capita Gross National Income is over $1,000 it is no longer eligible to give direct subsidies such as the ones offered under MEIS, such schemes have to be phased out. “India’s exports have posted a growth of 10 per cent in the first three quarters and there are expectations that exports will touch an all-time high of $325 billion in 2018-19. The government wants to take all steps to ensure that growth doesn’t go off-track,” the official said.
Source: The Hindu Business Line
Modernisation in the country’s largest man-made fabric (MMF) textile industry in the city will come to a grinding halt with Central Government reducing allocation under Amended Technology Upgradation Funds Scheme (ATUFS) to Rs700 crore in the revised outlay for the textile sector in 2019-20. The textile sector has been left in the lurch with the Central Government reducing the outlay for it from Rs6,943 crore to Rs5,831 crore for 2019-20. Moreover, the ATUF scheme and Rebate on State Levies (ROSL) have been reduced from Rs2,300 crore to Rs700 crore and Rs2,164 crore to Rs1,000 crore, respectively. Industry sources said backlog in the ATUFS would be over Rs2,000 crore as over 3,000 projects that got implemented are yet to receive subsidy due to complicated guidelines of ATUFS. The government had earlier allocated Rs17,822 crore, including Rs5,151 crore for ATUFS for the 13th Five Year Plan in order to clear long-pending committed liability. Leader of power loom sector, Ashish Gujarati said, “ATUFS is lifeline of the textile sector. With just Rs700 crore for the ATUFS, modernization in the textile industry will be affected. The power loom weavers who have to repay loan instalment will face a difficult situation.” Power loom weavers stated that 1,500 files from Surat are pending for subsidy approval at the textile commissioner’s office under the ATUFS for 10% subsidy. The weavers had ordered machinery from foreign countries for taking benefit of the subsidy. The complicated guidelines of ATUFS have resulted in non-reimbursement of the subsidy amount to the weavers. Federation of Gujarat Weavers’ Association (FOGWA) president Ashok Jirawala said, “FOGWA has demanded a joint inspection team consisting of textile association, MANTRA and textile commissioner’s office be formed to hold an open house with the weavers who are yet to get the subsidy amount. Out of the total 7,000 files submitted for subsidy under ATUFS, only 70 have been approved for disbursal across the country.”
Source: Times of India
The onslaught of goods and service tax (GST) may have adversely hit the textile business of Surat, but traders here are bating for Prime Minister Narendra Modi and have already started campaigning. Many textile traders owing shops at Ring Road have printed bill-books and challans with pictures of PM with slogans ‘Namo Lao Desh Bachao’ ‘Namo Again’, ‘Vote for BJP’ etc. These traders are issuing bills to their counterparts across the country appealing them to bring Modi back to power in 2019. At least 25 textile traders have printed such bill books to send out a message to their clients mainly in Uttar Pradesh, Delhi, Maharashtra, Kolkata, Tamil Nadu and Hyderabad. In 2014 Lok Sabha election, the textile traders in the city had supplied saris and dress materials in the bags having Modi’s images and message ‘Sab Ka Saath, Sab Ka Vikas’. They repeated this in 2015 Bihar Assembly election too. There are over 165 textile markets in the city housing over 65,000 textile shops. The daily turnover of the saris and dress material is pegged at Rs 110 crore. Market sources said that around Rs 70 crore worth of saris are dispatched on daily basis from Surat to various destinations including Delhi, Mumbai, Uttar Pradesh, Bihar, Odisha, Kolkata, Punjab etc. Bihar and Uttar Pradesh account for Rs 15 crore worth daily business in sari. Textile trader Bharat Rangolia said, “GST and demonetisation had a very bad impact on the trade, but things are settling down. Modi did not worry about vote bank while implementing GST. My bill book has his picture and message ‘Namo Again’.” Natthu Sharma, a trader dealing on the e-commerce platform, said, “In the last few days, I have issued 200 bills carrying image of PM and a message to vote for him in 2019. I have got 40 calls from my clients in many states appreciating this initiative.” Apart from bill books, the traders sending textile goods to other states are using specialized laces for packaging with the message ‘Namo Lao, Desh Bachao’.
Source: Times of India
The regional pact goes far beyond trade liberalisation to impose a common set of rules on investment and IPRs. India’s participation in the mega-trade agreement, Regional Comprehensive Economic Partnership (RCEP), has long been debated and sentiments around the subject are quite divided and divergent. Geethanjali Nataraj and Garima Sahdev (henceforth N-S), while inferring that the long-term benefits of joining the bloc far outweigh the short-run costs, state, “…if India wants its ‘Make in India’ to become a global success it must participate positively to become a part of the Asian Value and Supply chain which either begins or ends in India” (BusinessLine, January 7, 2019). There have also been compelling arguments that RCEP will facilitate micro, small and medium enterprises (MSMEs) to effectively integrate into the regional value and supply chains. Detractors to the above theses point out that India’s trade deficits with nations have always widened after signing free-trade-agreements (FTAs) with them, citing the cases with ASEAN, Japan, Korea, and Singapore, most of which are RCEP nations. However, FTAs should not be judged on the basis of trade deficit only, but also through the impacts on the participants in the commodity value-chain. At the same time, it has also been pointed out that India’s vulnerable agriculture and dairy sectors, which are not in positions to compete with Australia and New Zealand, will be exposed to vagaries of global trade. My contention in this article is, however, a bit different. I am not against India’s participation in RCEP. Given that this is the first mega-trade, I intend to raise six cautionary points, so that the costs of entering into this deal are considered. This is to create the understanding that what is being perceived as long-term benefit by N-S might turn out to be long-term costs. My propositions are: a) regional trade agreements like RCEP need not always be beneficial from the ‘Make in India’ perspective; b) impact on value chain from RCEP need not be positive; c) issues of complementarity in trade are still unclear; d) issues with services; e) raising relative trade barriers with non-members; and f) reduction in long-run trade policy manoeuvrability. For the time being, the geo-strategic issue of existence of China in this trading bloc is being left out, as India has been getting into bilateral deals with China under the RCEP umbrella. On the issue that ‘Make in India’ will be a success with India’s entry in RCEP, the fact, unfortunately, is that Indian manufacturing is not competitive enough to face the vagaries of a free trade regime. Even after 27 years of liberalisation, inefficiency prevails due to a host of unimplemented reforms in the product and the factor markets. Despite the implementation of GST with the idea of creating more efficient supply-chains, rationalisation of multiple GST rates is still a work-in-progress. Further, the compliance with the existing complex norms of GST adds to the transaction costs.
On the factor side, labour market reforms are incomplete. Labour productivity in manufacturing is still one of the lowest in the world with spatially fragmented labour laws are escalating the costs of doing business. Given this, Indian industry is hardly in a position to compete in the level-playing ground in a free-trade region. If domestic industry has to thrive, it needs protection as also the enabling conditions created by factor and product market reforms. ‘Make in India’ aims to create enabling conditions for both domestic and foreign industries and attract foreign investments. In no way, it is conceived at the cost of domestic industry. Complementarity in trade is the most critical element to examine before getting into any trade agreement. Lack of complementarity may make things work the other way round. There is no assessment on this aspect placed in public forum in the context of RCEP. Rather, the rise in India’s trade deficit with its FTA partners is attributed to imports of final products that are cheaper than the domestically produced ones. On the other hand, cheaper intermediate goods can rather help in making Indian exports competitive. The issue of trade liberalisation with services is still a matter of contention among RCEP nations. In the FTAs with East and South-East Asian economies, beginning with Singapore in 2005 to the last one signed with South Korea in 2011, India has been insisting on capitalising on its pool of skilled labour from improved access to employment opportunities in these economies. This has been expected to come about by increasing the ease of movement of professionals through the liberalisation of what is called Mode 4 in services trade. To this end, India has been willing to trade up its remaining tariff policy manoeuvrability in the manufacturing industry (and even in the agricultural sector). Under RCEP, India has sought binding commitments to simplify services trade. However, given the conditions of the manufacturing and agriculture sectors, it is definitely not a good idea to sacrifice their causes for services. This is prone to promote a skewed nature of sectoral growth.
Preferential trade pacts
Axiomatically, “preferential trade agreements” (PTAs) are not really the best moves for “small” economies (ones that are “price-takers” than “price makers” in the global economy). India, despite its huge population and increasing income levels, is a price-taker in global trade, especially in commodities. Neither could the nation wield forces to affect global commodity prices, nor does it have world-class global price discovery platforms. For such a price-taking economy, a preferential reduction of trade barriers with partners in a PTA tantamounts to raising the relative trade barrier against non-member countries. On the other hand, RCEP in the long run goes far beyond trade liberalisation. In its attempt to harmonise foreign investment rules, intellectual property rights (IPR) laws, and several other laws and standards, beyond what has been agreed by developing countries at the WTO, it takes away an economy’s ability to customise trade policies according to the needs of specific time periods. This will be another long-term cost that the Indian economy has to bear. Therefore, there are several costs that may arise in the short and long run, and they need to be accounted for before India launches for RCEP.The writer is Director, Observer Research Foundation, Kolkata.
Source: The Hindu Business Line
Union Textiles Minister Smriti Irani Wednesday said the textiles ministry alongwith the Clothing Manufacturers Association of India (CMAI) will identify powerloom clusters in the country and go ahead in a big way for skilling of powerloom sector. "CMAI, along with its members, has resolved that in conjunction with the textiles ministry, powerloom clusters will be identified from which adequate resources for retail businesses will procured, with assistance to powerloom weavers by the government," Irani said at a function here. The government is going to go ahead in a big way for skilling of powerloom sector, in synergy with CMAI, she said. Textiles secretary Raghvendra Singh recalled that MoUs were recently signed with industry players wherein government will facilitate sourcing of handloom products from handloom clusters, based on requirements of industry, so that cost of production comes down for weavers. He said that specific discussions were held today with CMAI members, and it has been decided that government and industry will work together for enhancing income of weavers and generating employment. Textiles minister also launched 'India Size' project and study of Apparel Consumption in India, at the event. A first-of-its-kind project, India Size aims to arrive at a standard Indian size for the ready-to-wear clothing industry, on the lines of the standardized sizes available in countries such as the US and the UK. A size chart that is specific to Indian consumers' measurements will be developed. This will help Indian apparel manufacturers to tailor their cuts closer to the actual body measurements of consumers. The India Size project will benefit manufacturers, consumers and will also generate data for textile ministry. The minister also launched a study of Apparel Consumption in India. Representing over 45,000 apparel manufacturers and retailers, CMAI will be conducting a study spread across three to six months, for arriving at an accurate assessment of the total apparel consumption in the country, thereby resulting in more accurate business projections, better marketing strategies and investment into the industry.The study aims to bridge the lack of accurate and reliable data on the size, spread, and extent of the domestic market. The study will attempt to come up with region-wise and product category-wise consumption patterns in the country, to arrive at a statistically reliable database, which could then become the foundation to study growth patterns in the coming year. The report would be ready for release by July 2019. A size chart that is specific to Indian consumers' measurements will be developed. This will help Indian apparel manufacturers to tailor their cuts closer to the actual body measurements of consumers. The India Size project will benefit manufacturers, consumers and will also generate data for textile ministry. The minister also launched a study of Apparel Consumption in India. Representing over 45,000 apparel manufacturers and retailers, CMAI will be conducting a study spread across three to six months, for arriving at an accurate assessment of the total apparel consumption in the country, thereby resulting in more accurate business projections, better marketing strategies and investment into the industry. The study aims to bridge the lack of accurate and reliable data on the size, spread, and extent of the domestic market. The study will attempt to come up with region-wise and product category-wise consumption patterns in the country, to arrive at a statistically reliable database, which could then become the foundation to study growth patterns in the coming year. The report would be ready for release by July 2019.
Source: BT Economy
What could be seen as major relief for the exporters, the Gujarat High Court has struck down the October 2017 notifications of the Central Board of Indirect Taxes & Custom (CBIC) and correspondingly by the Directorate-General of Foreign Trade (DGFT) prescribing pre-import conditions to avail I-GST (Integrated Goods and Services Tax) exemption. The ruling will bring clarity on liquidity issue being faced by the exporters. “The Gujarat High Court, through a landmark decision pronounced in various cases, put a permanent end to this misery by striking down the pre-import condition as arbitrary, ultra-vires and violative of the Constitution,” Abhishek A Rastogi, Partner at Khaitan & Company, who argued in this matter, said. Commenting on the decision, Ajay Sahay, Director-General at FIEO, said, “This will end all doubts on the liquidity issue during the intervening period between October 2017 and January 2019).” The CBIC notification dated October 13, 2017, prescribed certain conditions, which in practical term denied benefits to exporters who import input goods after their finished products are exported. This notification was challenged in the High Court. Though, the Finance Ministry did issue another notification in January this year to remove pre-import condition and include specified deemed export supplies for exemption from integrated tax and compensation cess for materials imported against Advance Authorisations and Advance Authorisations for Annual Requirement. However, this relief was given prospectively while demand was to allow relief from October 2017 itself. Accordingly, the petitioners continued challenging the issue in the High Court. It was said that exporters importing duty-free items under Advance Authorisation licences have been going through unfair and undue hardships ever since the GST introduced from July 1, 2017. Advance Authorisation While BCD (Basic Customs Duty) exemptions continued under GST, the Government did not extend the exemption to IGST on imports under Advance Authorisation. Though, the Government extended exemption to IGST as well, when imported against valid Advance Authorisation licences but with ‘pre-import’ condition. The petitioners argued that the ‘conditions were arbitrary and violative of Article 14 of the Constitution. Rastogi said the imposition of ‘pre-import’ condition on imports made under Advance Authorisation licences by the Government on October 13, 2017 was causing enormous hardships to exporters. Advance authorisation licences are issued to allow duty-free import of inputs, which are used to make finished products for export. There was no such condition imposed on the scheme in the pre-GST period. Change in the condition meant that imports done after exports cannot avail exemptions from IGST and compensation cess. The Directorate of Revenue Intelligence (DRI), the anti-smuggling agency, started issuing show-cause notices to exporters for wrongfully availing of exemptions in cases where their exports preceded imports. They were asked to pay IGST in cases where raw material was imported only after goods were partially or fully exported. Now, after the ruling, exporters will not face such problems.
Source: The Business Line
Govt to present a “shelf of 150 investable projects” in 17 sectors before potential investors. The annual edition of Bengal’s showcase business summit, which begins on Thursday, will test chief minister Mamata Banerjee’s pull among India’s top industrialists as the two-day event unfolds within days of a high-decibel political standoff with the Centre and about three months before the general election. Reliance Industries chairman Mukesh Ambani will be the top draw at the fifth edition of the Bengal Global Business Summit 2019 that will also see participation from JSW Group’s Sajjan Jindal and Rajan Mittal of Bharti Enterprises, apart from a host of foreign delegates. Ambani is expected to outline his plan for the 40-acre plot Reliance Jio took up in Silicon Valley at Rajarhat where a telecom equipment unit may come up. He will also have a one-on-one with Banerjee. Around 12 nations will be “partner countries” at the summit with the UK, Italy and Poland joining the event at the Biswa Bangla Convention Centre in Rajarhat along with Luxembourg, which will be participating in a business summit in India for the first time. “There is a palpable expectation that Banerjee’s Trinamul Congress may play a pivotal role in the formation of the next government in Delhi. Businessmen, who always hedge their bet among various political combinations, would not let such an opportunity go abegging to meet and greet her,” a city-based industrialist said. The West Bengal Industrial Development Corporation, the nodal agency in charge of holding the summit in association with Ficci, along with other entities of the state government, however, is not banking on the optics of investment jamborees alone. Under the leadership of Amit Mitra, who wears several hats in Banerjee’s ministry, including finance, industries and information technology, the government will present a “shelf of 150 investable projects” in 17 sectors before potential investors to pick and choose from. All put together, they represent an investment opportunity of $17.8 billion, or Rs 125,000 crore, according to a booklet that will be made available on Thursday. The areas of highest investment potential are MSME and textiles, multi-product industrial parks, power and mining, chemicals, iron and steel and logistics and port, contributing to almost 90 per cent of the total opportunity in the state. The Tajpur port, which was slated to be developed jointly with the Centre, will account for nearly one-sixth of the total opportunities. Last month, the Bengal cabinet decided to walk out of the project and develop it alone with a private partner. Investors will keenly watch for an announcement on this project. There is also a possibility that an announcement regarding the container port at Kulpi could be made at the event. However, Banerjee’s high-pitched opposition to Prime Minister Modi will spell one casualty. Union ministers are unlikely to attend the summit. None of the ministers have confirmed their participation even as invitations were sent to all, sources in Nabanna said. “This year we invited them. Suresh Prabhu has sent a video message. I have no issues. Because government is government and it is a constitutional obligation. I wish to keep in touch with the Centre always,” Banerjee said. Investors will also look out for the success stories other than mere optics before committing their money. For instance, Luxembourg decided to join the event primarily because of the two companies already operating out of here. “In Bengal, we have, among others, two companies — Ceratizit and Amer-Sil Ketex — who have an impressive track record in their domain in the country,” Jean Claude Kugener, ambassador of Luxembourg, said while explaining why it chose Bengal first. Luxembourg is heading a delegation of six companies.
Source: The Telegraph
India recently changed the name of the Department of Industrial Policy & Promotion (DIPP) to the Department for Promotion of Industry and Internal Trade, with enhanced responsibilities in four new categories: promotion of internal trade (including retail trade); welfare of traders and their employees; facilitating ease of doing business; and start-ups. Earlier responsibilities included general industrial policy, administration of the Industries (Development and Regulation) Act, 1951, industrial management, productivity in industry, and matters related to e-commerce. The inclusion of the promotion of internal trade in the name and responsibilities of the body has been welcomed by the Confederation of All India Traders, according to Indian media reports. (DS)
The United States Reciprocal Trade Act, if signed into law, could have consequences on bilateral trade with countries like India. US President Donald Trump on Wednesday vowed to rectify “calamitous” trade policies and sought to expand his power to impose reciprocal tariffs which could have implications on bilateral trade with countries like India. Trump during his annual State of the Union address told Congress that Washington’s aggressive trade negotiations with China would mean an end to its alleged “theft” of US jobs and wealth. “We are now making it clear to China that after years of targeting our industries, and stealing our intellectual property, the theft of American jobs and wealth has come to an end,” Trump said in his address to the joint session of the US Congress. “Therefore, we recently imposed tariffs on $ 250 billion of Chinese goods -- and now our treasury is receiving billions of dollars a month from a country that never gave us a dime. But I don’t blame China for taking advantage of us, I blame our leaders and representatives for allowing this travesty to happen. Trump said he has great respect for Chinese President Xi Jinping and his administration was working on a new trade deal with China. “But it must include real, structural change to end unfair trade practices, reduce our chronic trade deficit, and protect American jobs,” Trump said. To build on American incredible economic success, he said one priority is paramount — reversing decades of calamitous trade policies. So bad. “I am also asking you to pass the United States Reciprocal Trade Act, so that if another country places an unfair tariff on an American product, we can charge them the exact same tariff on the same product that they sell to us,” Trump said. The United States Reciprocal Trade Act, if signed into law, could have consequences on bilateral trade with countries like India. The Reciprocal Trade Act would give him authority to levy tariffs equal to those of a foreign country on a particular product if that country’s tariffs are determined to be significantly lower than those charged by the United States. It would also allow Trump to take into account non-tariff barriers when determining such tariffs. Trump has been alleging that many countries all over the world have taken advantage of the US. India in February last year slashed the customs duty on imported motorcycles like Harley-Davidson to 50 per cent after Trump called it “unfair” and threatened to increase the tariff on import of Indian bikes to the US. During a White House event on the Reciprocal Trade Act in January this year, Trump flashed out a green colour board with examples of non-reciprocal tariffs from various countries, including from India. “Look at motorcycles as an example. (In) India, it was 100 per cent. I got them down to 50 per cent, just by talking for about two minutes. It’s still 50 per cent vs 2.4 per cent (on imported motorcycles to the US). Again, other than that, it’s a very fair deal,” the president had said. Trump at that time also pointed out to the high tariff by India on import of wines. “India has a very high tariff. They charge a lot of tariffs. You look at whisky... India gets 150 per cent, we get nothing,” he had said. The Reciprocal Trade Act is likely to face an uphill fight in Congress, where many lawmakers in both parties have opposed Trump’s trade policies. A bipartisan group of lawmakers introduced legislation to limit Trump’s ability to use national security as a rationale for tariffs. The business community is rallying behind the bill.
Source: Hindustan Times
GENEVA : Neither protagonist in the US-China trade war stands to benefit from their stand-off the UN said Monday suggesting others could cash in instead with the EU possibly winning big. In a report the UN Conference on Trade and Development (UNCTAD) examined the repercussions of the tariff tit-for-tat already under way between the two trade giants as well as the expected impact of a significant tariff hike scheduled to take effect on March 1. The report titled “The Trade Wars: The Pain and the Gain” said that “bilateral tariffs alter global competitiveness to the advantage of firms operating in countries not directly affected by them”. It predicted that the European Union would be the biggest winner taking home some USD 70 billion in additional trade thanks to the trade war. Last year Washington and Beijing imposed tariffs on more than USD 360 billion in two-way trade after Trump initiated the trade war because of complaints over unfair trade practices. The two countries hailed “progress” in talks held in Washington last week aimed at avoiding an escalation of the conflict. But if no deal is reached by March 1 US duty rates on USD 200 billion in Chinese goods are due to rise to 25 per cent from 10 per cent. “Our analysis shows that while bilateral tariffs are not very effective in protecting domestic firms they are very valid instruments to limit trade from the targeted country” Pamela Coke-Hamilton head of UNCTAD’s international trade division said in a statement. “The effect of US-China tariffs would be mainly distortionary. US-China bilateral trade will decline and replaced by trade originating in other countries” she said. The study estimated that out of the USD 250 billion in Chinese exports subject to US tariffs some 80 per cent would be captured by firms in other countries while 12 per cent would be retained by Chinese firms and only six percent would be captured by US firms. A similar scenario would apply to the USD 85 billion in US exports hit by Chinese tariffs the report said estimating that 85 per cent would go to companies in other countries 10 per cent would remain in the US and only about five per cent would go to Chinese firms. “Countries that are expected to benefit the most from US-China tensions are those which are more competitive and have the economic capacity to replace US and Chinese firms ” UNCTAD said. The report indicated that the EU stood to benefit the most with companies in the bloc likely to capture around 50 billion of Chinese exports to the US and about USD 20 billion of US exports to China. Japan Mexico and Canada would meanwhile each capture more than USD 20 billion in additional trade thanks to the tariff war the study found. Australia Brazil India Philippines Pakistan and would also notice “substantial effects relative to the size of their exports” it said. But the trade war will also have a number of negative effects on global trade especially within certain markets.
Source: Tecoya Trend
Exports fetched $3.68 billion in January, up 7.92 percent year-on-year, on the back of robust growth of garment shipments. With January proceeds, export earnings in the first seven months of the fiscal year come to $24.18 billion, up 13.41 percent from a year earlier and comfortably past the periodic target of $22.41 billion. The jump in receipts come despite four major export earning sectors -- leather and leather products, jute and jute goods, home textiles and shrimps -- logging in lower shipments, according to data from the Export Promotion Bureau. Earnings from leather and leather products, the second biggest export earner after the garment, dropped 11.71 percent year-on-year to $626 million between the months of July last year and January this year. Export of jute and jute goods, which account for part of the livelihood of tens of thousands of growers, tumbled 24.66 percent to $498 million during the period. The sector hit a rough patch earlier this fiscal year in the face of waning demand for economic slowdown in Turkey, one of its biggest market, and anti-dumping duty slapped by India. Export of shrimp, which is grown in the southwest and southeast costal region by more than 8 lakh farmers, also continued to suffer for ample production of vannamei shrimp in other countries, particularly in India. Processors bagged $257 million in the July-January period, which is 12.37 percent lower than a year earlier. Home textiles exports declined 0.79 percent to $494.09 million. And yet, a 14.51 percent spike in shipment of garment products helped the overall earning scenario to remain positive. The apparel sector, which typically accounts for more than 80 percent of total export earnings, logged in $20.21 billion in export receipts in the first seven months of the year. Agricultural products extended additional support to the growth in export earnings. Export of agricultural products such as dry food, vegetables and spices rose 61 percent to $579 million in the seven months to January. In addition, export earnings from petroleum bi-products, pharmaceuticals, plastic products, paper and paper products, cotton and cotton product, specialised textiles, footwear other than leather and engineering products increased in the first seven months of fiscal 2018-19.
Source: The Daily Star
The Vietnamese ministry of industry and trade recently issued a circular stipulating the certificates of origin (C/O) rules in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). CPTPP has some different clauses compared to other free trade agreements (FTAs) that Vietnam has signed, according to the ministry’s import-export department. The differences include clauses related to rule of origin of goods and rules of origin of refurbished and recycled goods. The circular will take effect from March 8, 2019.Goods exported from Vietnam would be applied with the C/O mechanism by agencies and organisations authorised by the ministry, according to Vietnamese media reports.The transition time to implement the mechanism of exporters eligible for self-certification of goods origin is carried out from 5 to10 years under the ministry’s guidance. The mechanism of Vietnamese importers certifying their origin is implemented after 5 years from the effective date of the CPTPP. For Vietnamese goods exported before the effective date of this circular, C/O-granting agencies and organisations shall consider granting C/O forms to enjoy tariff preferences under the agreement and regulations of importing member countries. Only when the origin requirements are met can Vietnamese products be exported to new markets to enjoy preferential tariffs. This is a strict rule of origin to prevent countries that are not members of the agreement from taking advantage of tax incentives. CPTPP rules of origin for yarns are a big bottleneck for the industry. Vietnam still has to import nearly 99 per cent cotton, 1.3 million tonnes of fibre and 80 per cent fabric.
For the more than 120 workers at the Pedrosa & Rodrigues garment factory in northwestern Portugal, events in another country 2,000 kilometers (1,200 miles) to the north could jeopardize their livelihood. Sales to Britain make up about half of this family business’s annual revenue of about 14 million euros ($16 million). But the U.K.’s impending departure from the European Union could make “Made in Portugal” labels less attractive once borders go back up between Britain and the 27 other countries in the bloc. “The worst-case scenario is losing 7 million euros” a year, says Ana Pedrosa Rodrigues, the company’s client relations manager. “It would be extremely worrying.” Companies like Pedrosa & Rodrigues fear they could be part of the collateral damage from Britain’s withdrawal from the EU’s single market, which guarantees no tariffs on trade and free movement for goods, workers and money. As Brexit-inspired economic adjustments ripple across the bloc, small countries like Portugal could feel a lot of economic pain, although the extent of the disruption remains unclear because the terms of Britain’s divorce deal with the EU remain unresolved. Some economic forecasts have produced scary numbers. The Portuguese government says Brexit could wipe out up to 26 percent of Portuguese exports of goods and services and shave 1 percentage point off the country’s GDP. The Organization for Economic Co-operation and Development, a policy adviser to developed economies, estimates that if Britain leaves without an agreement on new trade terms with the EU, it could reduce the EU’s GDP by around 1 percentage point by 2020. That’s more than half a year’s economic growth at current rates. It could be three times worse for Britain, the OECD says. The OECD notes that some countries, sectors and businesses across the EU will feel more pain than others. A report last year by the European Committee of the Regions, an EU advisory body, identified Ireland as the likely major casualty of Brexit due to its geographic proximity to Britain, which historically has tied them together commercially. Some German regions, such as Stuttgart, that rely on auto industry exports to Britain could also feel the economic shockwaves, it said. Chemical and plastics companies in Belgium and the Netherlands are at risk, too. In Portugal, which has had close ties with Britain since the Treaty of Windsor in 1386, the textiles sector based in the northwest is one of the country’s most exposed industries. It is largely located in what is one of the poorest regions of Portugal and western Europe. The textile companies already have felt a chill, with sales to Britain dropping by more than 3 percent since the 2016 Brexit referendum, according to Paulo Vaz, director-general of the Portuguese Textile and Clothing Association, which represents about 500 companies in the sector. He puts that down to the weak pound, which makes purchases from countries like Portugal that use the euro more expensive, and cautious spending by British consumers at a time when their financial future is uncertain. He says these are tense times for Portuguese companies, especially with the U.K. playing such a central role in the local textile industry. “We’re talking about a market that is our fourth-largest, that’s worth around 450 million euros ($516 million) a year to us and that was growing, and that now can be severely harmed by all this,” Vaz said, referring to Brexit. For some businesses, the British market is their lifeblood. The two-story Pedrosa & Rodrigues factory sits amid green fields on the fringes of a small town in Portugal’s industrial heartland, where textile companies are an economic mainstay and provide about 130,000 jobs. Inside, there is a hum of sewing machines, a hissing of irons and a rumble of high-tech cloth-cutting machines. Ana Pedrosa Rodrigues remembers sitting as a child on the running boards of these machines after her parents started the company with five employees in a garage in 1982. Ana and her two older brothers recently joined their parents at the company. The other employees include husbands and wives, fathers and sons, brothers and sisters. Generations of workers are common in the industry. Almost all of the workers live in town, many of them within walking distance, and have served on average of 19 years. Pedrosa & Rodrigues has prospered in part by selling “affordable luxury” brands to some of Britain’s well-known fashion labels. The company makes ME+EM T-shirts that can be found at Selfridge’s in London and produces some of the All England Club’s range of Wimbledon tennis wear. In an ironic twist, it also delivers to British brand L.K. Bennett — a label occasionally worn by British Prime Minister Theresa May. Every Friday, workers stack dozens of brown cardboard boxes at the factory’s loading bay and place them on trucks for the 2-3 day trip to warehouses in central Britain. At the moment, the trucks drive straight across the EU’s open borders. If they are shut, the paperwork, delays and tariffs could add 12 percent to the cost price. A loss of British business would translate, inevitably, into job losses— and not just at this company, Ana Pedrosa Rodrigues says. “We are at the front end of a supply chain, and the losses would have a knock-on effect for our suppliers,” she said. That includes the fabric producers, dying companies, printers and embroiderers. Most of them are their neighbors. “Nobody would escape the impact.” Sofia Cardoso, a 43-year-old employee of Pedrosa & Rodrigues whose husband also works for a textile company, refuses to be gloomy, saying the sector has built up a lot of resilience over its long history. “We’ve been through crises before and we’ve survived,” she said. “I think we’ll get through this one too.”
Source: The Tribune
The East African Community (EAC) has reaffirmed plans to develop a strong textiles and leather sector in East Africa. The announcement was made at the 20th Ordinary Summit of the EAC Heads of State in Arusha. This shows the determination of the member states to offer citizens competitive options in regional textiles and footwear in the face of neoliberal globalisation. Tanzania’s government also plans to boost its cotton exports to $150 million by 2020, up from the current $30 million, according to the country’s Deputy Minister of Agriculture, Ms Mary Mwanjelwa. Meanwhile, Rwanda has already launched a multi-agency task force to embark on a training programme targeting local factories and small and medium enterprises in leather processing. The country’s government wants manufacturers to adopt cleaner production technologies. “Nothing should hold us back from achieving our regional goals in trade and other sectors of development,” explained New EAC Summit, Chair and Rwandan President, Paul Kagame. He was speaking at the Arusha International Conference Center in Tanzania. Kagame recently took over as Chair of the Summit from President Yoweri Museveni of Uganda. The Summit received a report of its Council of Ministers covering the period from 23rd February 2018 to 31st January 2019 and commended the council for the progress made in the implementation of the programmes and projects of the community. Among other things, the Summit directed the Council to review relevant policies and harmonise the framework for the importation of goods into the EAC within three months with a view to supporting the growth of local industries. Also speaking at the event, outgoing EAC Summit Chair, Museveni stated that business within the East African Community will grow with a reduction in the cost of power, transport, labour and interest rates. He also expressed confidence in the EAC’s ability to drive its agenda. Leaders at the event concluded that if managed properly, their ambitious policies will soon take root and improve the livelihoods of millions of people across East Africa. Prior to this time, the EAC members states had agreed on a phase-out plan and eventual ban on the importation of used clothes and leather products by 2018 to support industrialisation and job-creation in the region. Textile industry players in the region were challenged to start making garments that require low-level technology and skills. Regional sector players and governments were called to put in place programmes that will help stimulate a localised value chain. Emphasis was laid on the region’s cotton industry, which was said to be facing huge challenges including low yields, low ginning out-turn ratio and inefficient value addition which was affecting its competitiveness. When the EAC resolved to prioritise the development of a competitive domestic textile and leather sector to provide affordable clothes and leather products in the region, this was a positive step towards determining its own development path. However, the laissez-faire economic liberalism has impeded the inward-oriented structure which hoped to offer domestic protection and privileges. Cotton production, processing and trade were said to be highly influenced by policies of major producing countries through price support, tariff protection, production subsidies and stockpiling that destabilise cotton prices. As the result of liberalisation, policy shifted towards export-led growth in textile and garment which has not developed the sector; instead, Tanzania’s cotton leaves the country unprocessed and second-hand clothing, as well as cheap and illegal imports, have flooded the country. The development of the industry under those trade dispensations failed to significantly develop full value chain production in Tanzania from cotton through spinning, weaving, knitting, design and finished goods production processes. Kenya has the largest garment sector amongst the EAC countries and produces predominantly for the US. EAC countries including Tanzania lack a sufficient domestic garment production base to meet domestic needs with local or regional production. Certainly, this move aimed at developing the textile and garment industry indicates EAC’s desire to articulate and implement an African approach for the best utilisation of African resources within the region, with a greater focus on domestic consumption. Producing affordable clothes and leather products in the region for local consumption could assist in the reduction of poverty, stabilise employment and improve the social wellbeing and the dignity of East African communities. It could also acknowledge and include informal sector traders in regional value chain developments.
Source: Venture Africa