The Synthetic & Rayon Textiles Export Promotion Council

MARKET WATCH 18 MAY, 2019

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INTERNATIONAL

 

Indian textile exporters to gain from US-China trade conflict

Cotton textiles, floor coverings, man-made filaments could benefit most, says industry. Textile exporters in India are optimistic that the additional tariff of 25 per cent imposed by the US on China as part of the on-going trade conflict between the two has opened up opportunities to increase their share in the American market. As per a recent analysis done by the Confederation of Indian Textile Industry (CITI), the list of notified $ 200 billion imports from China on which additional tariff imposed by the US places Indian textile exporters at an advantageous position. Of the $200 billion of imports from China , textile items comprise just $ 3.9 billion of the value, but it still provides enough scope to exporters in India. “The US’ total import of these textile products from India was approximately $ 1.71 billion in 2018, which is 43 per cent of its imports from China. Out of the total textile products, cotton textiles account for the largest number of tariff-lines. In terms of value, the most imported products belong to floor coverings, non-woven cordage and man-made filaments,” said Sanjay Jain, Chairman, CITI. The segments that have increased opportunities for Indian exporters include silk, wool, cotton, other vegetable fibres, man-made filaments, man-made stable fibres, floor coverings, non-woven cordage, special woven fabrics, knitted fabrics and coated and industrial fabrics. However, the additional tariff hike does not include garments and made-ups which won’t have an advantage like the other segments, Jain added.

Source: The Hindu

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US-China trade war: Dumping of Chinese goods in India likely, says Ind-Ra

Dumping of goods at predatory rates will lead to disruption of demand-supply dynamics in local markets. The rise in US-China trade tensions could lead to dumping of Chinese goods and weaker flow of foreign investment from the United States to emerging markets, including India, India Ratings and Research (Ind-Ra) said on Friday. The India arm of global rating agency Fitch said that in the past, China has showcased such tendency and dumped its products at predatory rates in many markets, including India. "Ind-Ra believes the rise in trade tensions between the US and China could lead the latter to guide its exports towards emerging markets... This could potentially disrupt the demand-supply dynamics in the Indian domestic markets, especially for products such as electronic goods, iron and steel, and organic chemicals," it said in a statement. Chinese exports accounted to about 18 per cent of the total US imports in 2018, representing 2.34 per cent of the US GDP. Ind-Ra further said that given the substantial share of Chinese imports in comparison with the size of the US GDP, lower imports or a rise in the cost of imported goods could stimulate inflationary pressures in the US. "This could provide fillip to the US credit market yields, which in turn could push up discount rates and reduce the arbitrage opportunity for US investors, resulting in weaker foreign portfolio investment (FPI) flows to Emerging Markets, including India," Ind-Ra said. The report further noted that "a fall in Chinese exports to the US could potentially put downward pressures on the Chinese Yuan. A likely devaluation of the Yuan could stimulate a competitive depreciation in the Indian rupee, failing which the competitiveness of Indian exports could be affected." It further said that India is unlikely to benefit much from the ongoing trade frictions between the US and China as there is a stark difference in the nature of commodities exported by India and China to the US. For instance, pharmaceutical products, and gems and jewellery accounted around 30 per cent of the Indian exports to the US, while electronic goods and capital goods accounted for 47 per cent of the Chinese exports to the US in 2018. In 2018, the US imported goods worth $540 billion from China. The US last week increased tariffs on import of $200 billion Chinese products from 10 per cent to 25 per cent. In a retaliatory move, China on Monday hiked tariffs on a revised list of $60 billion worth of products imported from the US.

Source: Business Standard

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India's apparel exports to UAE decline 33% on higher import duty

India's overall exports of apparel or readymade garments were marginally lower at $16.1 billion, compared to $16.7 billion a year ago, according to data from the commerce ministry India has lost over a third of its apparel and garments exports to the UAE in FY19, due to the 5 per cent import duty levied by the Gulf nation to restrict trading activity and encourage local manufacturing. Data from global consultancy firm Wazir Advisors suggests India’s cumulative apparel exports to the UAE declined by a steep 33 per cent to $1.78 billion from April 2018-February 2019, versus $2.66 billion in the corresponding period last year. As a matter of practice, exporters were shipping their consignments to the UAE for repackaging and distributing to neighbouring countries. “Indian exporters were using the UAE as a gateway for apparel shipment to the Middle Eastern countries, Africa and Europe. However, the UAE government levied import tax a few months ago on all merchandised products, including apparels. On the contrary, apparel exports to the US and Europe are increasing. Therefore, the decline in apparel exports to the UAE was majorly compensated for,” said H K L Maghu, chairman of the Cotton Textile Export Promotion Council (Texprocil). India’s overall exports of apparel or readymade garments were marginally lower at $16.1 billion, compared to $16.7 billion a year ago, according to data from the commerce ministry. According to industry sources, Indian exporters enjoyed a robust banking system between the UAE and African countries. Now, individual countries in Africa have developed their own strong banking systems. Consequently, importers in African countries have started approaching Indian apparel exporters directly. “Thus, India’s direct apparel exports to African countries have improved. With this, India’s direct shipments of apparels have jumped significantly to African and European countries, at the expense of the UAE. This trend is likely to continue,” said Rahul Mehta, president of the Clothing Manufacturers Association of India (CMAI). Direct shipment to consuming countries, however, leads to lower delivery time, said Mehta. Most important is the fact that there has been no major cost advantage or arbitrage of India’s apparel exports directly to importing countries in Africa or Europe.

Source: Business Standard

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Efforts must be made to reach double-digit growth, says PM’s Economic Council member

India needs to make all efforts to reach ‘double digit’ growth and should not treat 7 per cent expansion as the ‘new normal’, Economic Advisory Council to the Prime Minister (EAC-PM) member Shamika Ravi said on Friday. Ravi also refuted the contention of her EAC-PM colleague Rathin Roy that India could fall into the middle income trap — a term used by the World Bank to refer to nations that get stuck at a middle level of economic development as they attempt to grow rich. “But emphasis now needs to be on how do we get back with the vision to that double-digit growth. The new normal of 7 per cent or perhaps weakening further because of the global trends cannot be the new normal for a country with per capita income that we do have,” Ravi said at event organised by Brookings India. The Central Statistics Office (CSO) had in February revised downwards the growth estimate for 2018-19 fiscal from 7.2 per cent to 7 per cent — the lowest in five years.

Aspire for growth

Ravi also asserted that there needs to be reinforcement of mechanisms through which India can continue to aspire for double-digit growth. She maintained that India is unlikely to fall into the middle income trap. “I don’t think India can afford that (middle income trap). I don’t think India is going to fall into the middle income trap like Brazil or South Africa,” the EAC-PM member opined. Recently, EAC-PM member Rathin Roy had said the Indian economy is heading for a structural slowdown. Ravi also pointed out that India should not lose fiscal discipline which it maintained during the last five years of the Narendra Modi government.

Source: Business Line

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Miffed at import surge, aluminium firms want products in RCEP negative list

Inward Aluminium shipments peaked at 2.3 million tonnes in FY19, resulting in forex outgo of $5.5 bn, or 1.1% of country's total importsUnnerved by the deluge of imports, the Indian aluminium makers have pushed for including critical products, including aluminium, in the negative list of imports under Regional Comprehensive Economic Partnership (RCEP). Imports of aluminium and its finished products scaled an all-time high of 2.3 million tonnes in FY2019, resulting in a forex outgo of $5.5 billion (or Rs 40,000 crore), representing 1.1 per cent of the country's total imports. While total aluminium imports increased 19 per cent, scrap imports soared 21 per cent. The unabated stream of imports has eroded the domestic aluminium players' market share from 60 per cent in FY11 to 40 per cent in FY19. In the face of festering US-China trade conflict, the Indian aluminim market has turned into a favoured hunting ground for countries surfeited with aluminium like China, Russia, Canada and Middle East. But, the South East Asian region accounts for nearly 35 per cent of the total aluminium products flowing into India, riding on Free Trade Agreements (FTAs). Imports are propelled by RCEP countries -- China, Malaysia, Australia, South Korea, New Zealand, Japan, Thailand, Singapore and other ASEAN (Association of South East Asian Nations) nations. Majority of aluminium imports into India are coming under the FTA route. The domestic aluminium industry suspects rerouting happening from China taking advantage of existing FTAs like the India-ASEAN and India-Malaysia FTA. “The ongoing negotiations for RCEP includes China and ASEAN as partner countries. The presence of China is a severe threat which will worsen India’s trade deficit, adversely affecting the Indian aluminium industry. Due to fallout of recent global developments, the Indian aluminium industry is facing immense threat by imports post imposition of US tariffs on aluminium and sanctions on Russia, followed by China imposing 25 per cent duty on US scrap,” an industry source said. India's aluminium industry fears that if the laxity on Rules of Origin (RoO) is not overcome, China may dump its products into the country. “Circumvention of RoO criteria can lead to a surge in imports from China. Thus, a strict RoO criteria is needed to check cheaper imports into India”, the source said. Historically, India has not profited much from FTAs. Imports from FTA countries into India increased more than India’s exports to FTA partner countries. The trade deficit with ASEAN, Korea and Japan have almost doubled since the signing of the respective FTAs. Moreover, metals are most sensitive to import surge due to reduction in tariffs. With China too, India's trade balance is heavily skewed in favour of the former. Data from NITI Aayog shows aluminium imports from China into India are almost 30 times of India's aluminium exports to China. According to a report by the Parliamentary Standing Committee on Commerce, India's trade deficit with China stood at $63 billion (as on July 2018), accounting for 40 per cent of our global trade deficit. The Parliamentary panel felt that trade remedial measures like anti-dumping and countervailing duties in certain cases of imports are not effective as Chinese suppliers are apparently re-routing the products from markets of other countries with which India has FTAs. There are also concerns about the RCEP Agreement where India is constructively engaged with China, the panel noted. The Aluminium Association of India (AAI), too, feels that RCEP be a potential disaster to Indian aluminium industry by way of complete elimination of tariff lines.

Source: Business Standard

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External woes: on India's foreign trade

Given the widening trade deficit, urgent measures are needed to boost exports. The estimates for foreign trade showing a sharp slowdown in merchandise export growth in April, to 0.64% from a year earlier, ought to add to concerns about the economy. If one were to strip away the 31% surge in shipments of petroleum products to overseas markets, India’s export of goods actually contracted by over 3% in dollar terms last month. In contrast, overall merchandise exports had expanded 11% year-on-year in March, with the growth in shipments excluding petroleum products exceeding that pace by about 50 basis points. The slump in exports was fairly widespread, with 16 of the 30 major product groups listed by the Commerce Ministry reflecting contractions, compared with the 10 categories that had shrunk in March. Worryingly, shipments of engineering goods declined by over 7% after having expanded by 16.3% in March, while the traditionally strong export sectors — gem and jewellery, leather and leather products, textiles and garments and drugs and pharmaceuticals — all weakened. These are all key providers of jobs and any protracted pain across these industries will impact jobs, wages and consumption demand in the domestic market. While the contraction in gem and jewellery exports widened to 13.4% in April, from 0.4% in March, the slump in the leather segment broadened to 15.3% from 6.4%. And the pace of growth of garment exports decelerated to 4.4% from 15.1% in March. Imports grew by 4.5% to $41.4 billion in April, accelerating from March’s 1.4% pace as purchases of crude oil and gold continued to increase. While the 9.3% jump in the oil import bill, from March’s 5.6%, can partly be explained by the rise in international crude prices (Brent crude futures, for instance, advanced 6.4% in April), India’s insatiable appetite for gold, as reflected in the 54% surge in imports last month, must give policymakers cause for reflection. Excluding oil and gold, however, imports shrank by more than 2% last month, signalling that import demand in the real productive sectors is largely becalmed. As a result of merchandise imports outpacing exports, the trade deficit widened to a five-month high of $15.3 billion. The widening trade shortfall will add pressure on India’s burgeoning current account deficit, which at a provisional $51.9 billion in the first nine months of fiscal 2018-19 had already surpassed the preceding financial year’s 12-month shortfall of $48.7 billion. With stronger headwinds ahead in the form of an escalating trade war between the U.S. and China, and its knock-on impact on global growth, the outlook for export demand is far from reassuring. Add the rising military tensions in West Asia and its potential to further push up oil prices, and the scope to contain the trade and current account deficits seems significantly challenging. Clearly, this would be one more pressing concern for the new government to address.

Source: The Hindu

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Govt mulls giving more power to RBI to deal with stress assets under IBC

The government is considering various options to adequately empower the RBI to deal with banks' stressed assets under the Insolvency and Bankruptcy Code following the Supreme Court order, quashing February 12 circular of the central bank. February 12 circular on stressed assets had brought some discipline among bankers, and discretion with regard to dealing of non-performing assets (NPAs) was done away with, sources said. But, it was stiff and every sector was part of it, sources said, adding that the circular attracted lot of criticism, including from a Parliamentary panel. Last month, the Supreme Court quashed the circular and termed it as ultra vires. Against the backdrop of the Supreme Court order, the blanket provision of referring a loan defaulter to the National Company Law Tribunal (NCLT) under the IBC is no longer available. However, the RBI after consultation with the government can ask any bank to refer a stressed case to the NCLT as per the provisions of Section 35 AA of the Banking Regulation Act. There is a need to have a balanced approach to deal with stressed assets, sources said, adding it cannot be left to the discretion of banks but there has to be some regulatory supervision. The government is keen to have a more robust framework with the oversight of the regulator to deal with NPAs under the IBC, sources said. Even the Banking Regulation Act is being looked at with a view to strengthen the regulatory framework and not allow discretion of banks in dealing with large NPAs, sources added. Reserve Bank of India's February 12, 2018 circular had mandated banks to refer an NPA account for insolvency proceedings in case a resolution is not found within 180 days. This was for accounts where the outstanding dues were at least Rs 2,000 crore. In a report last year, the government had favoured additional 180 days to be provided for resolution of 34 stressed power projects with a view to avoid potential value erosion of operating plants. The Supreme Court quashed the circular following a petition filed by around 70 stressed companies from the power, shipping and textiles sectors. A Parliamentary panel was among the critics of the now impugned circular. "Although the new guidelines have been termed as harmonised and simplified generic framework, yet they are far from being so," the Standing Committee on Energy said in its report tabled in Parliament last year. "The committee is of the opinion that the coinage of restructuring in resolution plans is hollow without having any serious meaning or business which only reflects the blurred vision of the RBI in understanding and appreciating the problems. "The committee expects that clarity of thought and transparency in approach should be the guiding factor to streamline and strengthen the sector squirming under ineluctable hardships," it had said

Source: Times of India

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The long and the short of quality cotton

Incentivising farmers who grow the extra long staple variety could help increase its production. While India tops the world in cotton production, there is little to celebrate in terms of quality. At a recent conference in Mumbai on developing a comprehensive roadmap to incentivise the production of extra long staple (ELS) cotton, particularly Suvin, the chairperson of Cotton Corporation of India (CCI), Dr P Alli Rani, asked why India should not be leading the world in terms of quality as well. Since British times, quality in Indian cotton has been defined as longer stapled, fine cotton. One tends to forget that the finest muslin woven in the world came from a short-stapled, silky cotton grown on the banks of the river Meghna, in Bengal. That history has been consigned to dust, though a few people are trying to revive the fine muslin weave. However, for the Indian government, it is reviving Suvin (a hybrid of Sea Island cotton from St Vincent in the Caribbean Islands, and Sujatha, an Indian variety) that has been a priority for some time. ELS denotes a category of cotton fibre with a staple length of more than 32.5 mm. India now imports 5-6 lakh bales of ELS to meet its requirement of higher quality yarn for fabrics and ready-mades. The Central government and the Textiles Ministry have, for some time, focused on the expansion of Suvin cultivation, which has fallen behind over the years due to various reasons. The main concern is also the increasing imports of long stapled cotton by garment and luxury segments in India, which cannot find enough of it here. But the way forward doesn’t seem easy. Dr MV Venugopalan, principal scientist, (agronomy), Central Institute for Cotton Research (CICR), Nagpur, said the areas under ELS cannot be extended beyond a point as it cannot grow everywhere. The aim must be to recapture the areas lost to Bt cotton. There is already a roadmap prepared by the Centre last year to increase Suvin cultivation to an additional 2 lakh hectares to produce an extra five lakh bales but the problem is to generate the large amount of seeds this will require. Ironically, India is also the second largest exporter of cotton in the world but, as Sanjay Sharan, joint secretary and textile commissioner, said, ELS production has come down from 24.5 lakh bales in 1983-84 to a mere five lakh bales now. There is an urgent need to boost ELS production, as a considerable amount of foreign exchange was spent on importing it. However, ELS is a long duration crop (182-210 days) and the yields were low, at 15 quintals cotton per hectare. More important, the ginning out-turn was 25-33 per cent as against 34-40 per cent for other cotton. ELS is only grown in four States — Karnataka, Tamil Nadu, Madhya Pradesh and Rajasthan. Ajit B Chavan, secretary, textiles committee, pointed out there was a need to incentivise Suvin production by offering farmers World Trade Organisation (WTO)-compliant subsidies to produce more. Farmers growing ELS have faced a lot of disappointment over the years. Manohar Sambandam worked with farmers in Thiruvarur district, Tamil Nadu, to grow the extra long staple cotton DCH 32 in 2013. However, the farmers didn’t get a good price and the yields were only ten quintals an acre. Sambandam leased 25 acres, paying a lease of ₹4.15 lakh but could not even recover his costs of cultivation. However, buyers and importers of ELS cotton lament that while countries such as the US and Egypt have done considerable research to improve ELS cotton varieties like Pima and Giza, India was lagging behind. There was also the big question of contamination of cotton, prompting buyers to look for better quality abroad. Improving fibre quality has its problems, according to Dr AH Prakash, project coordinator and head, All-India Coordinated Research project. “When you increase the yield, the fibre quality suffers. With the advent of Bt cotton, there is a total imbalance in the genetic diversity of cotton,” he pointed out. Another issue is the investment on research, which is given least importance, according to Dr Rajesh Patil, principal scientist, department of genetics and plant breeding, University of Agricultural Sciences (UAS), Dharwad. In fact, he said Suvin came out of a public-private research partnership as Madura Coats had sponsored the effort for their own requirement of fine cotton. Meanwhile, the Karnataka State Seed Corporation and UAS have worked on developing transgenic ELS cotton and the results were surprising as it outperformed Bt cotton with an extra 10 per cent yield, Dr Patil said. This year, long stapled cotton DCH 32 with the Bt gene will be given free to 100 farmers to incentivise growing ELS cotton as a demonstration, he added. That was one way to increase the area under ELS. The writer is a senior independent journalist and author based in Maharashtra

Source: The Hindu Business Line

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Textiles major Arvind reports muted revenue growth in Q4 FY19

"Denim volumes were lower by 30 lakh metres in the year-on period although they grew by the same number compared to sequential quarter," it said in a statement. Textiles and clothing major Arvind Limited on Friday reported sluggish growth in revenue during the fourth quarter of 2018-19 at Rs 1,859 crore, one per cent up from Rs 1,843 crore in the corresponding period of the previous fiscal year. "Denim volumes were lower by 30 lakh metres in the year-on period although they grew by the same number compared to sequential quarter," it said in a statement. "This was offset by 52 per cent increase in revenue of advanced materials business." The earnings before interest, tax, depreciation and amortisation (EBITDA) grew four per cent to Rs 184 crore from Rs 176 crore in the same period, said the company. Profit after tax before exceptional items increased 14 per cent to Rs 68 crore from Rs 60 crore in Q4 of FY18 while PAT after exceptional items was Rs 63 crore, up eight per cent from Rs 59 crore. Beginning 2011, Arvind has brought in some of the biggest global fashion brands like Calvin Klein, Tommy Hilfiger, Gap, Ed Hardy, Hanes, Nautica and Elle to India. In October 2018, Arvind obtained nod from the National Company Law Tribunal (NCLT) for demerger of its branded apparel and engineering businesses into separate entities. Sanjay Lalbhai-led Arvind Ltd is a billion dollar (about Rs 7,000 crore) diversified Indian conglomerate with business interests in fabrics and apparel, brands and retail, real estate, engineering, internet, telecom, environmental solutions and advanced materials.

Source: ET Retail

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Trade war with US could slice 1% of China's GDP: Top Chinese official

A high ranking Chinese official has said that the ongoing trade war with the US could slash China's GDP by one per cent, in the first such admission by Beijing that the tariff war with Washington is biting the world's second largest economy. The Chinese economy which is on a downward trend slowed down to 6.8 per cent last year and the government this year officially slashed the GDP growth to be between 6.5 and six per cent. US President Donald Trump, who kicked off the trade war last year, is demanding China to reduce the massive trade deficit which has climbed to over USD 539 billion last year. He is also insisting on Beijing for verifiable measures for protection of intellectual property rights (IPR), technology transfer and more access to American goods to Chinese markets. The US-China trade war could slash one percentage point off Beijing's economic growth this year, Wang Yang, one of the seven members of the elite Politburo Standing Committee of the Communist Party of China (CPC) which virtually rules the country, was quoted as saying by the Hong Kong-based South China Morning Post. Speaking to a group of Taiwanese business people whose companies are based in mainland China on Thursday, Wang said the government had assessed the impact of the near year-long dispute and estimated that in the worst-case scenario gross domestic product growth would be one percentage point lower than expected. While Wang did not outline any plans for dealing with the fallout from the trade war, he is the first official from the top policymaking body to speak so candidly about its possible impact on headline targets, the report said. A member of the audience at the event in Beijing said despite the official's frank assessment, he did not seem too worried about the long-term effects of China's spat with the US. "Wang said that although the trade war would have an impact on the mainland's economic development, and had caused significant waves it would not lead to any structural changes," the unnamed delegate was quoted as saying. China and US had 11 rounds of talks headed by trade officials of both the countries to work out a trade deal. So far the two countries slapped billions worth of tariffs on each other's exports. Trump had threatened to slap tariffs on the remaining Chinese exports. He has also been asserting that China is at a disadvantage as its economy was not so good and the tariff war would hurt Beijing badly. The Chinese Foreign Ministry on Wednesday said Trump's remarks were baseless. "The fact is, the Chinese economy is growing steadily with a positive momentum. Trade protectionist measures of the US side will have some impact on our economy, but we can totally overcome it. We have the confidence and capability to guard against any external risks and impacts," Chinese Foreign Ministry spokesman Geng Shuang had told a media briefing.

Source: The Economic Times

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Is the EU Wrong on Rights in Cambodia?

The EU’s approach risks undermining Cambodia’s development and harming its own image in the country. In February 2019, the European Union launched an 18-month process to determine whether or not to maintain Cambodia’s preferential access to the EU market under the Everything But Arms (EBA) trade scheme. The review follows what the European Union perceives as “the deterioration of democracy, respect for human rights and the rule of law in Cambodia.” Analysts, civil society members, and many in the private sector have expressed concern over the European Union’s potential suspension of the trade scheme, due to how much is at stake for Cambodia. The EBA scheme allows Cambodia to export anything to the EU market, with the exception of weapons, duty-free and quota-free. In return Cambodia must fulfill its obligations to the core UN and International Labor Organization conventions. Cambodia was granted access to the scheme, offered to most Least Developed Countries, in 2001. In 2018, exports to the European Union accounted for more than a third of Cambodia’s total exports and were valued at 4.9 billion euros ($5.5 billion), of which 99 percent were eligible for EBA preferential duties. Textiles and footwear, prepared foodstuffs, vegetable products, rice, and bicycles represented 97 percent of exports to the European Union in the same year. The textiles and footwear industries alone employ more than 700,000 Cambodians, indirectly benefiting millions of others. How much the EBA scheme has contributed to Cambodia’s economic development is difficult to precisely determine. Cambodia’s merchandise exports have grown from $1.5 billion in 2001 to over $12 billion in 2017. Over the same period, its GDP per capita has more than doubled, from $454 to $1,137. The poverty rate also declined from 50.2 percent in 2003 to 13.5 percent in 2014. It is also difficult to predict the economic consequences of the EBA removal in the long run. A recent report by the World Bank hints only that “losing EBA preferences … would likely result in slower export growth.” The suspension of the EBA would increase tariffs by 12 percent in the garment sector and by 8–17 percent in the footwear sector. It will likely cost Cambodia’s economy $676 million in additional taxes. It is reasonable to speculate that in the short term — depending on the effectiveness of the Cambodian government’s economic reforms — the EBA withdrawal could deprive hundreds of thousands of Cambodians of decent jobs and plunge them into poverty. This could create conditions for social unrest and political instability. Data from the World Bank indicates that 4.5 million Cambodians, or 28 percent of the population, remain “near-poor” — extremely vulnerable to returning to poverty if exposed to economic and external shocks. The Cambodian government is launching a 17-point strategy to stimulate Cambodia’s economy in response. Measures include reducing the number of national holidays, reducing costs in shipping and electricity and reforms in railway management. These measures — if effectively implemented — should save the private sector around US$400 million. The EBA review has soured Cambodia–EU relations, rendering Cambodia more dependent on China. The Cambodian government blasted the EU’s move as an “extreme injustice,” vowing not to trade the country’s “sovereignty and independence” for “foreign aid.” The European Union has acknowledged that recently “the Cambodian authorities have taken a number of positive steps, including the release of political figures, civil society activists and journalists,” but continues to expect more. The ordeal began following a number of domestic events in Cambodia that were to the European Union’s chagrin. In late 2017, Cambodia’s Supreme Court disbanded the opposition Cambodia National Rescue Party (CRNP) and imprisoned CRNP leader Kem Sokha on the charge of treason. This occurred a few months after the June 2017 local government elections and ahead of the July 2018 national election. The CNRP was the country’s only effective opposition prior to its dissolution, posing a credible threat to the ruling Cambodian People’s Party that has held power for decades. In its February 2019 statement, the European Union demanded “more conclusive action” from the Cambodian government to ensure continued EBA participation but fell short of publicly addressing concrete specifics. China pledged to help Cambodia overcome the hardships of an EBA suspension, promising $588 million in aid to Cambodia from 2019–2021. Reports suggest China had already promised to import 400,000 tons of rice and increase investment as part of the Belt and Road Initiative. Since overtaking Japan in 2010, China has become Cambodia’s largest donor. China has also been Cambodia’s largest foreign investor for several years. The European Union is engaging in political dialogue with the Cambodian government to promote democracy. Before the European Union makes a final decision over whether or not to withdraw, it should aim to reach a win-win deal with the government. This deal should give enough incentive to the government to pursue economic reforms, including the full and effective implementation of its 17-point economic strategy, and to foster further democratization. A full EBA removal would be counterproductive to Cambodia’s socioeconomic and political development. It may also change the European Union’s image as a goodwill provider in the eyes of Cambodians and nations sympathetic to Cambodia, including China. Kongkea Chhoeun is a PhD candidate at the Crawford School of Public Policy, The Australian National University.

Source: The Diplomat

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Vietnamese firms strive to increase apparel exports to Canada

Vietnamese textile and garment exports to Trans-Pacific Partnership (CPTPP) markets have failed to match the country's stature as the world’s second largest apparel exporter. General Director of the Việt Nam National Textile and Garment Group (Vinatex) Lê Tiến Trường delivered this statement during a workshop held in the Canadian city of Montreal on Thursday. The event was organised as part of a trip by officials of Vinatex and its five member companies to Canada to promote their textile and garment exports to the nation. It also attracted representatives of 35 Canadian enterprises. According to Trường, total textile-garment demand in member nations of the CPTPP, which gathered 11 members with a combined population of 500 million, was estimated at US$83 billion annually. In 2018, Việt Nam’s textile-garment exports to CPTPP markets were $5.3 billion, making up 6.3 per cent of the market. Canada’s demand for textile-garment products was worth some $13-14 billion each year, only 5 per cent of which was provided by Việt Nam, Trường said, adding that there was room for Vietnamese exporters to accelerate their exports to Canada, especially as both countries had ratified the CPTPP. He said all businesses had the opportunity to enjoy a better tariff policy if they satisfy rules of origin. Therefore, Vinatex has organised trade promotion activities in 2018 and 2019 to meet with Canadian importers. At the workshop, David Ostroff, President of David O International, agreed there remained huge co-operation potential for the two countries thanks to Việt Nam's competitive prices and its organised and effective businesses. Notably, Canada could access the Vietnamese market with a tariff rate of zero per cent, especially important with the Canadian dollar weak internationally. This was the right time for Việt Nam to enter the Canadian market, he said. The CPTPP, which took effect in Việt Nam on January 14, was expected to boost exports of Vietnamese textile and garment products to Canada as 42.9 per cent of the shipments of these products to the market would enjoy an import tariff of zero per cent in the first year the deal comes into force.

Source: VNS

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China could pay a high price for US tariffs

By putting more barriers in China’s path to US markets and, in the process, risking some short-term damage to the domestic and global economies, the US President Donald Trump could exact a heavy long-term cost on the world’s second-largest economy. Indeed, he may even threaten China’s chances of eventually entering the ranks of high-income countries. Chinese leaders have long known that they need to change their development model if they are to make this difficult transition, powering through the dreaded “middle-income trap” that’s tripped up so many other developing countries. For two decades, they relied on global markets to provide a crucial tailwind while they pursued reforms at home. But this is changing now that the US is increasing tariffs on Chinese imports and limiting their tech companies’ access to US markets. Also, some US companies have already begun to reorient their supply chains away from the mainland. With external tailwinds turning into headwinds, China will need to rely far more on domestic demand to generate prosperity. To do so without building up risks in the financial system, Beijing would need to promote far greater household consumption and private investment, rather than relying on the debt-fuelled government investment and inefficient state owned enterprises that have helped drive domestic engines of growth for most of the last several decades. This effort will fail unless the government can overcome three habits that tend to reassert themselves whenever eco­no­mic and financial insecurities increase in China. The first is the tendency for households to sock away more money as a form of self-insurance. Especially when they’re uncertain about their economic prospects, Chinese households revert to parking away higher savings to safeguard their future ability to pay for things like hospital bills, education for their family, and retirement. China’s success in prudently reducing its household saving rates in recent years appears to have stalled in the last 12 months. The latest high-frequency economic data, including this week’s lower-than-consensus expectations for retail sales and industrial output, suggests the problem may get worse before it gets better. China needs to do more to provide households with pooled insurance mecha­­ni­­sms (including improving health insurance, education and pension systems) so that they can feel more confident spending. The second trend is the tendency for the government to revert to fiscal and monetary stimulus whenever the economy hits a soft patch. Recent evidence suggests that such measures are less effective than they used to be, requiring much more debt per unit of GDP to stabilise growth. This only adds to the risks building up in China’s financial system. Most development economists argue that to avoid the middle-income trap, countries instead must lead with the supply side, securing further productivity gains and diversifying their domestic economic base. The third is the government’s tendency to fall back on state-owned enterprises to boost GDP. Most available evidence suggests that the efficiency and productivity of these companies is low and declining, while their contributions to China’s debt load and resource misallocations are increasing. China instead should be empowering its more efficient private companies to be responsible for the bulk of jobs and growth in the economy. So far China has resisted following the examples of Canada and Mexico in making concessions to the Trump administration in order to defuse trade tensions and build a more sustainable economic relationship with the US. If it also cannot resist indulging these three habits, its multi-decade record of impressive economic performance, not to mention its future prospects, will be at serious risk. That would only further embolden those US policy makers who, driven by both economic and national security considerations, hope their actions now will dampen China’s ability to challenge America’s global dominance.

Source: Business Standard

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Indorama Ventures Announces Formation Of New Mobility Business Group At Techtextil Frankfurt, 2019

Indorama Ventures Public Company Limited (IVL) today announced the formation of a new business unit within the IVL Fibers division named the Indorama Mobility Group, which will comprise three business segments, namely Tire, Automotive Safety and Functional Materials. The formation of the Indorama Mobility Group is the culmination of successive strategic acquisitions over the past five years: PHP Fibers, Performance Fibers, Trevira Filaments, Glanzstoff, Kordarna and UTT. The Group collectively owns decades of industry knowledge, experience and brand equity and this creates a unique portfolio of fiber, yarn, single-end cord and fabric based on polyester, polyamide, rayon, aramid hybrid and PEN, emerging as an integrated global business unit. The Indorama Mobility Group’s target markets are tire reinforcement, airbags, seatbelts, mechanical rubber goods, sewing threads, fabrics, ropes and cordage, automotive interior, home textiles and composites wherein it has built strong positions over the years, notably in the automotive sector. This intra-group businesses merger creates a truly global presence and accelerates business growth through cross proliferation of product lines, expanded customer partnership and a global manufacturing footprint. The Indorama Mobility Group today has a sales revenue in excess of $1billion with 16 manufacturing sites in nine countries employing over 6,000 people. Headed by Mr. Jochen Boos, Chief Executive Officer of the newly-formed Indorama Mobility Group (formerly CEO of PHP Fibers), the new unit will pursue a growth path that is intertwined with the exciting development of the Mobility industry. “Today’s suppliers have to adapt to the strong and disruptive trends that are already approaching like e-mobility, autonomous driving, shared mobility and smart vehicles which are creating new opportunities for fibers and textiles”, said Mr. Boos. Spearheading the global Commercial and Operations is Mr. Arnaud Closson, Chief Operating Officer, Indorama Mobility Group (formerly CEO of Glanzstoff) who remarked, “the newly created Indorama Mobility Group, supported by its long-standing legacy brands, will integrate all of its assets and unify its go-to-market strategy. We aim to leverage our global operational footprint and tailor our product portfolio to deliver even better customer value.” The structure of the Indorama Mobility Group is aligned to provide functional leadership, driving market focus through the dedicated commercial organization of the three business segments, accelerating technology and product innovations through centralized R&D and benchmarking best practices across sites to deliver a new level of manufacturing excellence. Supporting these new initiatives is a geographically and culturally diversified workforce located worldwide. On sustainability, the Group is committed to have a positive impact on customers and on society, contributing to Indorama Ventures’ mission to be a responsible industry leader that creates value for our business and society. Moving forward as a new business, while there is a continuation of activities conducted under the legacy companies, the Indorama Mobility Group is the business partner and the brand to be reckoned with. “Empowering safety and performance” – fibers and textiles that move the world.

Source: Textile World

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Textile machinery expo in Africa

The India International Textile Machinery Exhibitions Society (India ITME Society) will organise ITME Africa 2020 between February 14 and 16 next year at Addis Ababa. It is co-organised by the Ethiopian Chamber of Commerce and Sectoral Associations. The exhibits will be under four major categories — textiles, textile engineering, financial institutions and allied segments. It will have country pavilions of Italy, Turkey, China and Switzerland, showcasing technology and engineering expertise in textiles. The pavilion of EEPC India will support engineering units from India to connect with African countries. The event is supported by the governments of India and Ethiopia and officials from 130 diplomatic missions are expected to visit. The event will include technology seminars, business-to-business meetings, and financial solutions, according to a statement. Apart from this, the 11th edition of India International Textile Machinery Exhibition (India ITME) will be held in Greater Noida between December 10 and 15 next year. The exhibition will have participants from more than 100 countries and about 1,800 exhibitors. It will cover products under 21 categories from fibre to finished products.

Source: The Hindu

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