The trade gap with Brunei, Japan, and Malaysia has increased to $0.5 billion, $7.1 billion and $3.8 billion, respectively in the last fiscal. It was $0.4 billion, $6.2 billion and $3.3 billion in 2017. India has registered trade deficit in 2018-19 with as many as 11 Regional Comprehensive Economic Partnership (RCEP) member countries - including China, South Korea and Australia - out of the grouping of 16 nations that are negotiating a mega trade pact since November 2012. The RCEP bloc comprises 10 Asean group members (Brunei, Cambodia, Indonesia, Malaysia, Myanmar, Singapore, Thailand, the Philippines, Laos and Vietnam) and their six FTA partners - India, China, Japan, South Korea, Australia and New Zealand. According to the provisional trade data, India's trade deficit - the difference between imports and exports - with three countries (Brunei, Japan, and Malaysia) has in fact increased marginally in 2018-19 as compared to the previous fiscal. The trade gap with Brunei, Japan, and Malaysia has increased to $0.5 billion, $7.1 billion and $3.8 billion, respectively in the last fiscal. It was $0.4 billion, $6.2 billion and $3.3 billion in 2017-18. However, deficit with Australia, China, Indonesia, Korea, New Zealand and Thailand has narrowed in 2018-19 as compared to the preceding fiscal. With Australia, China, Indonesia, Korea, New Zealand and Thailand, it narrowed to $8.9 billion, $50.2 billion, $10.1 billion, $11 billion, $0.2 billion, and $2.7 billion, respectively, in 2018-19, compared to $10 billion, $63 billion, $12.5 billion, $11.9 billion, $0.3 billion, and $3.5 billion in 2017-18. Interestingly, the trade surplus with Singapore ($2.7 billion) in 2017-18 has turned into deficit of $5.3 billion in 2018-19. India has trade surplus with Cambodia ($0.1 billion), Myanmar ($0.7 billion), and the philippines ($1 billion) in 2018-19. India did not carry out any trade with Laos in the previous fiscal. Experts have mixed views over the impact of increasing trade gap on India's position in negotiating mega free trade agreement. An industry expert on these negotiations said as this is a comprehensive trade deal, India will get greater market access in other countries not only in goods, but in services also. On the other hand, some experts said that India needs to be cautious while negotiating the pact, as trade deficit is increasing with several of the RCEP member nations, which would impact domestic manufacturers. "Free trade pacts are not about only giving market access, but also getting that access in other countries. Our exports to countries like Singapore, with which India has trade surplus, is not increasing. In 2018-19, we have a trade deficit with Singapore," said Biswajit Dhar, the professor of economics at Jawaharlal Nehru University. He said that as the strength of the domestic manufacturing is weak, India would not be able to take advantage of such free trade agreements. An official said that India does not have free trade agreement with two of its biggest trading partners - the US and China - but the country has highest positive balance of trade with America, while it has highest deficit with China. RCEP negotiations, which started in Cambodian capital Phnom Penh in November 2012, aims to cover goods, services, investments, economic and technical cooperation, competition and intellectual property rights. Pressure is also mounting on India for early conclusion of the proposed trade pact. Member countries are looking to conclude the talks by end of this year but many issues, including the number of products over which duties will be eliminated, are yet to be finalised. Domestic steel and other metal industries wants these sectors to be kept out of the deal. Under services, India wants greater market access for its professionals in the proposed agreement. India already has a free trade pact with Association of South East Asian Nations (ASEAN), Japan and South Korea. It is also negotiating a similar agreement with Australia and New Zealand but has no such plans for China.
Source: Business Standard
India should do more to fill the vacuum caused by the trade tiff: Convenor, Indian Texpreneurs Federation. With trade tensions increasing between the US and China, the Indian textile manufacturing industry is eyeing a share of China’s lost business. Can Indian players make use of this big opportunity? BusinessLine caught up with Prabhu Damodaran, Convenor, Indian Texpreneurs Federation (ITF), a textile entrepreneurs association that works towards improving the competitiveness of the Tamil Nadu textile sector. Excerpts: Following the US-China trade war, do you see Indian traders getting more orders from China for cotton? Will our quality grades — in terms of consistency in fibre and purity — match the requirement of China? China always prefers contamination-free cotton, and its first preference will be Brazilian and Australian cotton. Moreover, with Indian cotton prices being high at the moment, India is in a disadvantaged position to export cotton. So, not much of a shift is happening. In terms of quality, Indian cotton matches with that from the rest of the world. But in the process of farming and ginning, man-made contamination introduced to cotton is high in India. For example, India offers cotton with 3 per cent trash; whereas Australia offers it with 1.5 per cent trash; even West Africa offers the same. Apart from less trash and contamination-free quality, these countries’ cotton also have better fibre maturity and uniformity. This leads to higher level of yarn realisation for yarn manufacturers. We need to catch up a lot, in terms of quality of cotton, to gain similar preference like that for Australian cotton in China. US has slapped 25 per cent duty on cotton fabrics and yarn imported from China. So, will Vietnam and Brazil take it all or does India stand a chance to take a share of that business? At present, of its total textile imports, the US buys 36 per cent from China and around 7 per cent from India. But we see an increase in Indian textile exports to the US in the coming months as the US buyers want to spread risk, and are looking for alternative destinations to buy textiles from. The government should also, at this point, encourage our textile industry. Support to the textile manufacturing sector will create jobs and address the job creation challenge our economy is facing. If, for instance, ₹500 crore is invested in the textile and apparel sector, it will create about 40,000 jobs. A similar investment in a heavy engineering factory would create only 1,000-1,500 jobs. So, the new government that will come (into power) has to take some proactive steps to engage with the US government and explore opportunities. Do you think Indian textile manufacturers have some advantages over players from countries such as Bangladesh and Vietnam? We had some advantages in the past, such as low-cost skilled workers, good raw material availability, etc. But over the years, other countries such as Bangladesh and Vietnam have not only built a strong manufacturing ecosystem, but have also improved their operational efficiency. Today, they also boast of better innovation, scale and a bouquet of products in different fibres. So, we need to work with new models suitable to the changing dynamics of the global market. India lacks competitiveness in the global market. How do you think the textile industry can work around this and attract more buyers for its products? Indian manufacturers need to make more blended products instead of focussing on cotton-based products. They also need to make more value-added products to earn higher value per garment, by focussing on design innovations. On the process front, there is a need to incentivise large-scale projects with flexible labour laws and see how manufacturing efficiency can be improved at the factory level. To attract global buyers, India needs to highlight its brands and the sustainable manufacturing ecosystem it has in textile manufacturing. There are many buyers outside who are looking for environmental-friendly products. For example, the Tamil Nadu textile industry operates under the ZLD system (zero liquid discharge refers to a waste water management system that ensures there is no discharge of industrial waste water into the environment), and almost 70 per cent of the State’s textile industry runs 100 per cent on renewable energy. What changes need to made in the textile industry, and what role should the government play in this? For the long-term good, we need to address some fundamental issues. First, the government has to bring a fibre-neutral policy — bringing all raw materials under one tax rate is the best way to encourage blended textiles. Second, apart from continuing our efforts on the India-EU free-trade agreement, we need to quickly complete the India-Eurasia free-trade agreement to enter into the lucrative Russian market. Our current market share is just 1 per cent of Russia’s total import of textiles. Further, there should also be efforts to diversify our markets. To do this, we need to use our embassies in trade promotion activities. South Korea is a great example on how to effectivey use of embassies for trade promotion. The government and the industry should also work together to design a new incentive scheme within the framework of the WTO (World Trade Organization) to encourage the textile sector.
Source: The Hindu Business Line
The USA has hiked additional tariff to 25% on US$ 200 billion imports from China, which is an opportunity for the Indian textiles industry, said CITI chairman Sanjay K Jain. He stated that due to the ongoing trade war between the United States of America (USA) and China, the USA has hiked additional tariff to 25% on US$ 200 billion imports from China, applicable from 10th May 2019. He further stated that the additional tariff hike covers Textile Chapters: 50-60. Jain observed that CITI’s analysis of Chapters 50-60 which are part of the list of notified US$ 200 billion imports from China and on which additional tariff has been increased to 25% (as given below in Table 1) reveals that India is at an advantageous position due to tariff hike on China’s Textile Products and we must grab this opportunity to increase our share of Textiles exports to the USA. CITI Chairman mentioned that the value of above-mentioned textile products is approximately US$ 3.96 billion in 2018 which is only 2% of USA’snotified US$ 200 billion imports from China. Whereas, USA’s total imports of these textile products from India is approximately US$ 1.71 billion in 2018, which is 43% of USA’s imports from China. Out of the total textile products, cotton textiles account for the largest number of tariff-lines (520 at 10 digit level). In terms of value, the most imported products belong to floor coverings, nonwoven cordage and manmade filaments. Jain stated that the additional tariff hike does not include Garments and Made-ups Segments which means that there will be no additional advantage for the Apparel & Made-ups exporters from the above development. He felt that the above-mentioned additional tariff hike provides an opportunity for the Indian Textile Industry to increase its exports to USA, particularly for the products belonging to the categories; cotton textiles, floor coverings, and manmade filaments.
Source: SME Times
The state must play a greater role in creating manufacturing jobs. Setting up more textile SEZs is an option. Rapid creation of productive and better paying jobs reduces poverty. It also mitigates inequality. One can actually have high GDP growth rates with modest employment generation. One can also have higher expenditure on anti-poverty and welfare measures, without having a major impact on jobs. Job creation should, therefore, be the key development goal. States, instead of signing MoUs for thousands of crores of investment, should be seeking job creation commitments in their Investment Summits. Seeing the economy through the prism of job creation would bring into focus labour intensive sectors and generate discussion around policy instruments which could be used to get these sectors to grow more rapidly. This would require fresh thinking beyond the traditional macroeconomic parameters such as inflation, the fiscal and current account deficits, and interest rates on the one hand, and, on the other, infrastructure development; power, highways, ports and airports. To illustrate, the garment industry is a classic labour intensive sector. India fought hard in the WTO negotiations for the phasing out of the quota system which used to govern textile exports and where (presumably for geopolitical reasons) the Chinese had a quota which was many times that of India’s. It was felt that once quota restrictions ended, apparel exports from India would rise rapidly and catch up with Chinese exports. After the quota regime ended in 2005, textile and garment exports from India did not rise more rapidly. China’s per capita income and wages are now about five times that of India’s. Yet its textile exports are over $270 billion whereas India’s are around $40 billion. India’s growth rates remain modest whereas Vietnam and Bangladesh have been having sustained export growth of over 20 per cent per annum. Fresh thinking on feasible measures to achieve a breakthrough is overdue. Garment exports, given India’s low wages, should be covering the whole range of products for the global market rather than being restricted primarily to cotton apparel as is the case now. Given the nature of the global supply chain of ready made garments with rapidly changing designs and fashions, hassle-free zero duty imports of synthetic fabrics specified by designers of global brands is an essential prerequisite for becoming part of global supply chains. This is not the case now. The mechanism of advance licensing on input-output norms for exports works for standard industrial products, but not for garments. One radical option would be to do away with the duty protection available to the domestic synthetic fibre and fabric industry. However, a viable approach which does not hurt the upstream domestic industry would be a dispensation where garment exporters exporting more than ₹100 crore per annum are given the freedom to import fabrics duty free, maintain records of usage for exports and be subject to annual audit to ensure that there is no misuse. Bangladesh runs such a scheme. India could easily do so. This would enable garment exporters across the country to attempt diversification using imported fabric and accessories.
Textile SEZs
A more ambitious approach would be for the government to develop large integrated textile and apparel Special Economic Zones, where there are no import duties, and invite investors from India as well as overseas to put up plants. There is one good precedent in the 1,000-acre Brandix textile SEZ, promoted by a Sri Lankan entrepreneur near Vijayawada. It has specialised in women’s underwear and is a major supplier to the global luxury brand Victoria Secret. They claim that 60 per cent of the bras sold by Victoria Secret in the US are made here. It has been growing and now employs over 18,000 women from nearby villages who come in chartered buses for two shifts in the day. The Andhra Pradesh government provided land in 2007 at a nominal rate in the expectation of the creation of a large number of jobs. But since then no other such SEZ has come up. The allotment of land at reasonable/nominal/subsidised rates for industrial parks for job creation has to be the guiding principle if labour intensive organised sector manufacturing jobs for global supply chains are to be created. Expensive land can undo the cost advantage of low wages. The SEZ regime could also be tweaked to treat sales to the domestic market on normal import duties as meeting the foreign exchange earning obligation of units in the SEZ. Some production for the growing Indian market would shift to the SEZ creating jobs for Indians.
Incubation centres
Another bolder approach would be for the state to finance the creation of Incubation Centres of plug and play garment manufacturing units in Textile Parks. This would mean that work sheds with state-of-art stitching machines are provided at a token rent to a start-up, say, a fresh graduate from a fashion/ design institute with the agreement that as she succeeds, she would pay higher rents and even buy the garmenting unit paying the full cost. Those who fail, and some would fail, could leave and look for jobs without any liabilities. The cost of the failures could over time be borne by the successes so that the Incubation Centre could grow and nurture an increasing number of entrepreneurs. To have global scale, the Textile Parks need to be large. These may be promoted by the state directly, or, through innovative public-private partnerships. These could also break new ground by developing rental workers housing which has so far been missing in industrial area development. However, staff housing is intrinsic to the IT SEZ development. Decent housing at a reasonable distance from the work place makes a huge difference to worker productivity. These ideas are equally relevant for other labour intensive sectors ranging from toys to shipbuilding. The state needs to assume a larger responsibility than it has so far been prepared to do for India to begin creating manufacturing jobs for global supply chains on the scale needed. It also needs strategic thinking, patience and willingness to take risks. The writer is Distinguished Fellow, TERI, and former Secretary, DIPP
Source: The Hindu Business Line
Industry body Association of Power Producers (APP) has urged the Finance Ministry to provide relief from double taxation on imported coal for the dry fuel-starved electricity generating firms. APP has shot off a letter to Revenue Secretary Ajay Bhushan Pandey seeking removal of Good and Services Tax (GST) on import freight for coal. Power producers' troubles have mounted since the GST regime came into effect in mid-2017. They are compelled to pay GST on import freight for coal even after paying tax on the CIF (cost, insurance and freight) value of the imported dry fuel, it said. "We understand that several importers have challenged this levy of GST on ocean freight in various courts on the ground that once having paid IGST on full value of imported coal inclusive of freight element, charging GST again on ocean freight amounts to double taxation and is bad in law. However, till date necessary notifications to address the same has not been issued," APP Director General Ashok Khurana said in the letter. He added that while the High Level Empowered Committee is devising means to alleviate stress in the power sector, the issue of avoidable double taxation still remains unresolved. Close to a dozen imported coal dependent companies have approached the high courts of Mumbai, New Delhi and Gujarat to get the relief from double taxation. In the past couple of years, companies such as JSW Energy, Global Coal Ventures, Victory Ventures, Sarogi Udhyog, Anmol India and Vertigo Impex have filed the petitions. Petition by trade body All India Bulk Importer and Exporters Association too is pending before the Mumbai High Court. Power producers are arguing that input credit of GST paid on imports is not available since power is out of the GST ambit. India imported over 160 million tonnes of coal in 2018-19 and the dry fuel deficit is only likely to rise due to growing electricity demand coupled with sluggish coal production in the country. Double taxation is resulting in additional burden on already stressed power sector. India has one of the largest coal fired power generation capacities in the world with close to 200 GW of installations. A number of power generation projects are turning into non-performing assets due to unavailability of coal and delayed payments from financially weak distribution utilities, among others, the letter added. Requesting anonymity, a senior official of an independent power producer said, "Power sector continues to struggle to secure fuel and to save itself from the double taxation. The government must ensure adequate coal supplies to ensure uninterrupted electricity at an affordable cost to the end users instead of increasing fuel costs through e-auctions and double taxation." He added that officials of the Finance Ministry should not wait for the formation of the new government or the next meet of the GST Council to deal with the issue. Power producers have been pursuing the government on this issue since 2017. "It is a well-accepted that double taxation is unreasonable and against the principles of equity. Accordingly, the double taxation needs to be avoided. This anomaly should have been ratified long time back. However, it is surprising to note that this issue still remains unresolved," Khurana wrote.
Source: Business Standard
Punjab’s unemployment rate rose from 4.9% in November 2016 to 7.6% last month: Centre for Monitoring Indian Economy. Across swathes of north and central India, the election has been about the “vocal” and “aggressive”, even confident, BJP supporter; the Congress cadre has been more “subdued”, some would say silent. But in this holy city of Sikhism, the Goods and Services Tax (GST), dubbed Gabbar Singh Tax by the Congress, has triggered a role reversal. In a typically crammed walled city kite shop in Amritsar’s Chowk Passian, garment trader Vikram Bhatia and shawl manufacturer Vikram Dhawan are spending an afternoon cracking jokes with “Coach” Anil Kapoor. Kapoor — in his late 20s — is a legend of the street for his kite flying skills. He also sells them for a living. “A BJP leader asked me to contribute 1000 printed kites — that cost Rs 15,000 — with Hardeepji’s (BJP candidate Hardeep Singh Puri) picture and the lotus symbol. I refused for two reasons. Post-GST my cash flow has been so low that I can’t accept such large orders. Two, first they impose GST — even on a cottage industry like kites — and then they ask us to donate kites to them. Punjabis are generous but we don’t like it when our business is disturbed,” says Kapoor. Kites attract 5 per cent GST, the paper used to make it has a levy of 12 per cent. Large designer kites that used to cost Rs 30 now cost Rs 45. Kapoor claims he loses money on accountants and there are delays in refunds. He is forced to depend on his parents’ savings to make ends meet. Union minister Puri, a retired IFS officer, is the BJP candidate against Congress incumbent Gurjeet Singh Aujla. In the previous Lok Sabha polls, the Congress’s Amarinder Singh — now chief minister of Punjab — defeated the BJP’s Arun Jaitley — now the Union finance minister — by over 1 lakh votes. “Have you asked yourself why we businessmen are killing time here on a work day? There is simply no work. In the absence of subsidies, garment manufacturing here has moved to Surat. Now I mainly procure from there, and travel to Himachal to sell them. Earlier we provided jobs and material, now we are mainly salesmen,” adds Bhatia. At a street near the Durgiana Temple, tailors narrate the same tale of decline over the last three years. They are promptly interrupted by goldsmith Swaran Lal, a BJP supporter, who has just returned from a road show for Puri. “These are small changes in the economy which cause some difficulty but eventually will make India rich. India is at a much better position in the world due to (PM) Modiji who has taught a lesson to Pakistan like none have done before,” he says. Lal faces a counter from cable TV operator Rakesh Sharma: “Did Indira Gandhi go around beating a drum after 1971? Even your business had shrunk, but you don’t have the guts to ask Hardeep Puri all that. Bhakti karna hai bas!” Sharma’s set-top boxes used to cost Rs 70; they cost Rs 130 after GST. He has steadily lost customers to DTH platforms. Punjab’s unemployment rate rose from 4.9 per cent in November 2016 — when demonetisation happened — to 7.6 per cent last month, according to the Centre for Monitoring Indian Economy, a thinktank. The scene repeats itself in several huddles of working men this paper finds in the city. At one such gathering, a BJP voter counters narration of economic woes with Modi’s achievements and the Congress’s failures. Textile wholesaler Surender Kumar points out that power tariffs in Punjab — up to Rs 7.33 per unit for domestic consumers — is the highest in north India, crippling an already sinking industry here. He blames the Congress for this and sees Modi as the bulwark against corruption. He is interrupted by his neighbour, a Sikh wholesaler of Phulkari embroidered garments, in Shastri Market, who points out that Nirav Modi and Vijay Mallya went into hiding during this government. He says that although GST is the “enemy No. 1”, he is disappointed with the Congress government as his family has not benefited yet from the one-job-per-family promise. In the last two years, the Congress claims to have created around 7.5 lakh jobs and increased minimum wages. But the Phulkari trader — who has an MBA in finance — says he isn’t able to leave the family business as no firm in Amritsar is willing to hire him for more than Rs 9,000 per month. The trader, who favoured AAP in the previous Lok Sabha and Assembly polls, says they are no longer a factor here now. “I have lost faith in all parties. But now, in addition to this economic crisis, we also have social unrest in the country and those who question these incidents against Dalits and Muslims are called anti-nationals. Don’t mention my name in your story as it will only hurt my BJP-voting friends,” he says. Puri, a retired diplomat, also faces the barb of being an outsider. Dhalwant Singh, a goldsmith, explains: “We gave the Akalis a 10-year term because we had hope that they will do better than the Congress. The area around the Golden Temple got a makeover, but our trade has not grown as fast as inflation. People are not willing to judge the Congress so soon. We voted for them despite their role in 1984 (riots against Sikhs) because we want to move forward. We could have considered the BJP had it fielded a local candidate, but like Jaitley last time, they sent an outsider.” The Congress holds eight of nine Assembly segments here; one is with the Shiromani Akali Dal. Dhalwant adds: “We are at the border, our sons join the army and we know what the forces do for our safety. Asking votes for attacking Pakistan will not work here unless we see hope that our lives will improve.” At the Partition Museum in the spruced-up part of town near the Golden Temple, senior citizens lounge in the park after dinner. Here too the Congress voter is on the offensive. While BJP voter Saroj complains about power cuts under the Congress regime and praises Modi for making the country safer, Usha Sharma, a grandmother playing with her grandchildren, uses the Indira card to counter. “Can any PM ask for votes in the name of what our army has done? We wait for months for our cooking gas subsidy to be credited to our accounts after we took the Ujjwala scheme. Under Congress, if nothing else, there was at least peace in society,” she says.
Source: The Telegraph
The Indian rupee opened higher by 73 paise at 69.49 per dollar on Monday morning against the previous close 70.22 after the exit polls predicted landslide victory for Modi-led Bharatiya Janata Party (BJP) in Lok Sabha elections 2019. Rupee falls 19p on trade deficit, rising oil pricesRupee opens higher on Monday morning after Exit polls showed overwhelming victory for ruling BJP in Lok Sabha election results. The Indian rupee opened higher by 73 paise at 69.49 per dollar on Monday morning against the previous close 70.22 after the exit polls predicted landslide victory for Modi-led Bharatiya Janata Party (BJP) in Lok Sabha elections 2019. The final results will be announced on May 23. The experts said market gains would be kept in check ahead of the vote counting this week on Thursday. The global tensions and foreign investment flows will also drive the rupee besides major event of elections. “Based on the exit poll results which turned out to be favourable for the ruling Bharat Janata Party, the dollar,rupee pair will see a resistance around 69.80 on a higher side and the dollar could slip towards 69.30 against the rupee,” Amit Sajeja, Associate Vice President, Motilal Oswal, told Financial Express Online. The Indian rupee was under pressure for some time due to escalating trade tensions between the world’s two largest economies US and China and also because of the foreign investment outflows on the back of uncertainties due to another government coming to power at the centre. After the world’s largest economy US imposed tariffs on Chinese goods of $200 billion, China also hit back at the US and said it would levy tariffs on range of US goods of $60 from June 1. Yesterday, it also threatened the US for banning the products of Chinese technology giant Huawei in US networks. Foreign institutional investors (FIIs) offloaded shares worth Rs 1,058 crore on a net basis, while domestic institutional investors (DIIs) bought shares worth Rs 1,810 crore on Friday, according to NSE data. The foreign investors have pulled out Rs 6,399 crore from the Indian markets in May on a net basis on account of uncertainties related to Lok Sbaha election results and the escalating US-China trade worries.
Source: Financial Express
Indian exports to Iran are likely to take a big hit over the next few months and may even come down to zero if the new government decides not to resume oil imports from the country in adherence with the US economic sanctions, say exporters. Ajay Sahai, Director-General, Federation of Indian Export Organisations (FIEO), said: “Assuming there is no breakthrough in the situation and the government sticks to the decision of not buying oil from Iran, whatever money is lying in the UCO Bank at the moment will get used up. We will not be able to sustain exports beyond four months. Virtually all exports to Iran will stop.” Rajesh Paharia, an exporter of rice to Iran, agrees with Sahai. “Right now exports are taking place to Iran and it will happen till the day there is money in the special rupee payment account of the UCO Bank for transactions with Iran. However, if oil imports don’t restart and the money dries up, from where will the government have funds to pay exporters to Iran?” Paharia asks. Although India’s exports to Iran were less than $3 billion last year, they could rise several-fold if the rupee payment mechanism is fully utilised, as per calculations made by exporters. India stopped buying oil from Iran from May 2 after the US sanction waiver for buying Iranian oil expired and the Trump regime refused to extend it. When Iranian Foreign Minister Mohammad Javad Zarif was in New Delhi last week to discuss India’s plans on oil purchase, he was informed by his Indian counterpart Sushma Swaraj that he must wait till after the general elections for a decision on the matter. Because of banking sanctions imposed by the US for doing business with Iran, India and Iran have been carrying out trade through a rupee account in the country’s UCO Bank, which has limited exposure in the US. As per the mechanism, India deposits payments in rupee in Iran’s account for the oil purchased and then uses it to make payments to Indian exporters of goods to Iran. “As per rough estimates, there would be around ₹12,000-15,000 crore in the rupee account. Even when we add some more to it for the payments that have to be made by the Indian government for the oil purchases made in the last two months, the money will not last for long,” said Paharia.
Uncertainty playing havoc
The uncertainty is playing havoc with prices of Basmati in the local market, which has gone down by at least 5 per cent recently, and if ambiguity about the future remains, things would get worse, he said. “Basmati rice will be one of the first items to be affected as when the money starts drying up. Iran will prefer to buy other essential items such as drugs or medical equipment with it. The country buys about 30 per cent of our exports and if that stops one can imagine the industry’s plight,” Paharia added. Many handicraft exporters, who have been carrying out business with Iran through banks other than UCO in Euros, say their exports have completely stopped. “Banks are not sending the required papers (GR forms) to the RBI for completion of a transaction as they are afraid of US sanctions. Because of this, exporters’ files are open throughout the country. We sincerely hope that when the government re-starts buying oil from Iran, it will help us export to Iran in rupee through the UCO Bank or any other bank it authorises,” said Satpal Pugla, an exporter based in Moradabad.
Source: Business Line
Overseas investors have pulled out a net amount of Rs 6,399 crore from the Indian capital markets in May so far on the back of election-related uncertainty and the US-China trade tensions. Prior to this, foreign portfolio investors (FPI) were net buyers for three consecutive months. They had infused a net Rs 16,093 crore in April, Rs 45,981 crore in March and Rs 11,182 crore in February in the domestic capital markets (both equity and debt). However, a reversal of the trend has been witnessed in May. As per latest depositories data, FPIs pulled out a net sum of Rs 4,786.38 crore from equities and Rs 1,612.62 crore from the debt market during May 2-17, taking the total net outflow to Rs 6,399 crore. The broader economic growth has slowed down while uncertainty over the general election results has prompted the foreign investors to adopt a "wait and watch" stance, experts said. "This change in trend is not entirely unexpected. It can be attributed to both domestic as well as global scenario turning unfavourable. The fallout of the US-China trade talk has waned investors' risk appetite globally," said Himanshu Srivastava, Senior Research Analyst, Morningstar Investment Adviser India. Additionally, slowing global economy and declining liquidity adversely impacted the flows into the Indian equity markets and the broader economy also does not augur well for India, he said.
Source: Times of India
Despite clear directions from the government to Handloom department to make uniforms from Power Loom Corporation, the State’s Handloom department has violated the order by giving Rupees 5 crore contract of SSA uniform to outside state. This decision has repercussions on power looms of they will not be in a position to manufacture uniforms. “As per government order No: 1456-GAD of 1983, issued by the General Administration Department, vide No: GD/(Adm)55/83-Ind, dated 20-09-1983 all the government departments are required to make the purchase of all types of textile items only from the J&K State Handloom Development Corporation Limited (J&KSHDC).” The order says that all government departments are impressed upon to make purchase of the textile requirements in their departments from the state handloom development corporation only on the prices/rates fixed by the High Powered Committee in its meeting held on 08-05-2015 and ensure compliance of the aforementioned Government orders. Every year government’s education department asks the Handloom Corporation to purchase uniforms for its students. Officials in the Handloom Corporation say that these uniforms have to be manufactured by power looms in the state to strengthen the local economy and loom owners of the state. However, the officials said, that Handloom Corporation gave the contract to an outside state manufacturer to make uniforms, which is violative of the government order.
Source: Kashmir Walla.com
While Modi’s government’s seized control of the company to contain the crisis, a lingering credit crunch has curbed loans and affected consumer spending. That’s separately triggered concerns about mutual funds that hold debt issued by non-bank finance companies. Going into the elections, both Modi’s Bharatiya Janata Party and the main opposition Indian National Congress were big on pledges to spend billions of dollars to provide income support to the poor and farmers. (PTI Photo)Going into the elections, both Modi’s Bharatiya Janata Party and the main opposition Indian National Congress were big on pledges to spend billions of dollars to provide income support to the poor and farmers. A set of deep-rooted economic challenges awaits India’s new government after election results are announced May 23. Arresting an economic slowdown and nursing the nation’s financial sector back to health will be the immediate priorities for the next administration if Prime Minister Narendra Modi’s coalition wins a second term — as exit polls suggest — or his political opponents wrest power from him. A slowing global economy and a protracted trade war between the U.S. and China add to the urgency to fix things at home. With 7% expansion in the year through March, India has held the crown as the world’s fastest-growing major economy. But that’s quickly changing this year as consumption — which makes up 61% of India’s gross domestic product — weakens sharply, with ripple effects on new investments. GDP data due May 31 will probably show growth cooled in the three months through March from a six-quarter low of 6.6%.Here’s a look at what else the new government should be worried about:
Budget Deficit
Going into the elections, both Modi’s Bharatiya Janata Party and the main opposition Indian National Congress were big on pledges to spend billions of dollars to provide income support to the poor and farmers. Keeping that promise at a time when tax collections have undershot targets may come at the cost of India missing, yet again, its fiscal deficit target of 3.4% of GDP for this year. Global credit rating companies are monitoring the number closely and any downgrade could push the nation’s debt into junk category.
Jobs
The new government needs to find ways to productively employ about 1 million people entering the workforce every month. India hasn’t published official employment data in more than two years, but a leaked statistics office report — which was rejected by the government — puts the unemployment rate at a 45-year high of 6.1%. The Centre for Monitoring Indian Economy Pvt., a private research firm, estimates the jobless rate rose to 7.6% in April.
Shadow Banks
A series of defaults by beleaguered shadow financier Infrastructure Leasing & Financial Services Ltd. last year exposed fault lines among India’s non-bank lenders, which accounted for a third of all new loans over the previous three years. While Modi’s government’s seized control of the company to contain the crisis, a lingering credit crunch has curbed loans and affected consumer spending. That’s separately triggered concerns about mutual funds that hold debt issued by non-bank finance companies.
Trade
India last posted a monthly trade surplus in March 2002. Rapid economic expansion since then has meant the nation’s imports have far outgrown exports, with oil being the nation’s biggest purchase. That’s pushed the current-account deficit to more than 2% of GDP last year, making it a key vulnerability for the economy. While India is trying to narrow the shortfall by reducing its reliance on imports and boosting exports, that will prove difficult in a global environment of slowing growth and rising trade protectionism.
Investment
Fixed investments have been almost stagnant at about 30% of GDP in the past four years, while foreign direct investment has declined recently — partly because of the uncertainty ahead of the election, but also due to politically-inspired protectionism and bureaucratic bottlenecks, which have kept investors away. India has missed out on the flow of FDI into regions like Southeast Asia as companies shift production to avoid rising tariffs in the U.S. and China. A stable government with continuity in policy and progress on reforms could boost the sentiment. “The challenge that we are facing in sluggish private investments needs to be addressed with special attention,” analysts at Elara Capital, led by Ravi Muthukrishnan, wrote in a note. “Sticking to fiscal discipline and avoiding crowding out of financial markets, would be key to increase in private investment activity.”
Source: Financial Express
|
Item |
Price |
Unit |
Fluctuation |
Date |
|
PSF |
1206.74 |
USD/Ton |
-0.36% |
5/19/2019 |
|
VSF |
1725.57 |
USD/Ton |
-0.33% |
5/19/2019 |
|
ASF |
2494.42 |
USD/Ton |
0% |
5/19/2019 |
|
Polyester POY |
1147.49 |
USD/Ton |
-1.61% |
5/19/2019 |
|
Nylon FDY |
2572.46 |
USD/Ton |
-1.11% |
5/19/2019 |
|
40D Spandex |
4523.48 |
USD/Ton |
0% |
5/19/2019 |
|
Nylon POY |
5462.86 |
USD/Ton |
0% |
5/19/2019 |
|
Acrylic Top 3D |
1387.39 |
USD/Ton |
-1.54% |
5/19/2019 |
|
Polyester FDY |
2500.20 |
USD/Ton |
0% |
5/19/2019 |
|
Nylon DTY |
2673.62 |
USD/Ton |
0% |
5/19/2019 |
|
Viscose Long Filament |
1286.23 |
USD/Ton |
-1.11% |
5/19/2019 |
|
Polyester DTY |
2904.85 |
USD/Ton |
-0.99% |
5/19/2019 |
|
30S Spun Rayon Yarn |
2449.61 |
USD/Ton |
0% |
5/19/2019 |
|
32S Polyester Yarn |
1929.34 |
USD/Ton |
0% |
5/19/2019 |
|
45S T/C Yarn |
2803.69 |
USD/Ton |
0% |
5/19/2019 |
|
40S Rayon Yarn |
2745.88 |
USD/Ton |
0% |
5/19/2019 |
|
T/R Yarn 65/35 32S |
2312.32 |
USD/Ton |
0% |
5/19/2019 |
|
45S Polyester Yarn |
2081.09 |
USD/Ton |
0% |
5/19/2019 |
|
T/C Yarn 65/35 32S |
2471.29 |
USD/Ton |
0% |
5/19/2019 |
|
10S Denim Fabric |
1.33 |
USD/Meter |
0% |
5/19/2019 |
|
32S Twill Fabric |
0.79 |
USD/Meter |
0% |
5/19/2019 |
|
40S Combed Poplin |
1.05 |
USD/Meter |
0% |
5/19/2019 |
|
30S Rayon Fabric |
0.62 |
USD/Meter |
0% |
5/19/2019 |
|
45S T/C Fabric |
0.69 |
USD/Meter |
0% |
5/19/2019 |
Source: Global Textiles
Note: The above prices are Chinese Price (1 CNY = 0.14452 USD dtd. 19/05/2019). The prices given above are as quoted from Global Textiles.com. SRTEPC is not responsible for the correctness of the same.
Authorities of 20 ready-made garment (RMG) factories have closed their units following unable to pay wages to workers under the new wage structure. 20 BD RMG factory closureFigure: Many factories cannot cope with wage hike, low prices given by buyers, and poor placements. According to the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), about 10,685 workers lost their jobs due to the closure. Workers of eight factories received their lawful benefits, while the process is underway to clear the dues and other benefits before the Eid-ul-Fitr. Moreover, more than 50 garment factories have been found ‘very vulnerable’ to labor unrest over non-payment of wages and other benefits ahead of the Eid, according to the BGMEA and the Department of Inspection for Factories and Establishments (DIFE). “During the last 17 days, some 14 units were closed down. Closures are taking place, as many factories cannot cope with wage hike, low prices given by buyers, and poor placements,” said Dr Rubana Huq, the BGMEA President. The owners are unable to pay wages for the month of April. Besides, wages for the month of May and Eid bonus also need to be paid, she further said. “The industry needs to take into account that we cannot afford to be the cheapest anymore. Our sustainability will depend on careful production planning, immediate reduction of wastage, special focus on efficiency, and price negotiation,” Rubana Huq noted. According to a government agency report, some 118 garment factories, out of its monitored 2,394 units – located in Dhaka city, Savar, Ashulia, Tongi and Narayanganj, failed to pay wages for the month of March. Only 36 RMG units, out of the 118, paid wages to workers in April, and the rest 82 might not be able to pay wages, which can create untoward incident ahead of the Eid, it observed.
BGMEA report BD RMG factory closure
The report also identified some factors for probable labor unrest that include absence of fixed festival allowance in garment factories, and not paying wages and allowances (including festival) seven to eight days before the Eid vacation starts. Besides, not getting Eid holiday timely and as demanded, sudden lay-off or closure of factories in Ramadan or ahead of the Eid, workers’ termination, excessive work at night during Ramadan, and no provision of fixed working hours in the holy month are also among the factors. The BGMEA chief said more than 100 factories have been kept under close monitoring, in which problems might occur over wage and other payment issues. “To our understanding, 60 factories have serious issues,” she noted.
Source: Textile Today
HO CHI MINH CITY — Vietnam and Europe could be swapping more pomelo fruit and Portuguese cheese soon if a new trade deal comes into effect, linking two regions that have been looking for an alternative to the trade tensions brought on by the United States. The European Parliament is scheduled to discuss the trade deal on May 28, after years of negotiations between Vietnam and the European Union. The deal is significant not only because it facilitates exports, like tropical fruit, but also as it lays out commitments on human rights, labor unions, and protection of the environment. Critics, though, say the EU-Vietnam Free Trade Agreement would not really enforce human rights standards and would continue the offshoring of jobs that has left workers vulnerable. For the EU, the deal is one more way to access Asia’s fast-growing economies, set a model for trading with developing countries, and hold Vietnam’s one-party state accountable on its promise to level the business playing field. For Vietnam, it is a chance to call itself a country open for business, with many trade deals, as well as raise quality standards to those expected by European customers. “It includes a lot of commitments to improve the business environment in Vietnam,” Le Thanh Liem, standing vice chair of the Ho Chi Minh City People's Committee, said at a European Chamber of Commerce in Vietnam event. Vietnamese officials often say that it helps to have an external factor to get difficult internal reforms over the finish line. For example it might be hard to convince conservatives to allow workers to form their own labor unions. But if there is an outside incentive, such as greater trade with the EU, that could bring conservatives on board. Labor unions were one concern for Europeans. Another is the loss of blue-collar jobs to Asia, including to Vietnam. European workers worry that as they take gig jobs, like food delivery, in place of their old stable jobs, there is less of a safety net through long-term employers or through tax-funded government programs. And there is one more concern raised through the trade deal:“We have some concerns about human rights in Vietnam, but that has been discussed,” Eurocham chair Nicolas Audier said at the chamber event. European wine could appear on Vietnamese shelves, like at this store in Ho Chi Minh City, if the two sides finalize a trade deal. More European wine could appear on Vietnamese shelves, like at this store in Ho Chi Minh City, if the two sides finalize a trade deal. Amnesty International reported this month that the number of Vietnam’s political prisoners jumped to 128 from 97 last year, despite the fact that Hanoi says it does not jail people for political reasons. Some question if the EU is applying consistent standards as it moves toward the trade deal with Vietnam, even while punishing nearby Myanmar and Cambodia for human rights abuses. Brussels is pulling back its Everything But Arms scheme of preferential trade access for the two other countries, based in part on Cambodia’s crackdown on opposition politicians in the 2018 election and on Buddhist-majority Myanmar’s mass killing of the mostly Muslim Rohingya. But both Vietnam and the EU want more trade options because a major trading partner, the United States, is turning away from the world economy. Washington pulled out of the Trans-Pacific Partnership trade deal in 2017, removing a key reason that Hanoi signed the deal, which was to get Vietnamese textile and garment companies more access to U.S. customers. Europe was also hit when Washington slapped tariffs on foreign steel and aluminum in 2018, and now it is threatening more import duties on European cars. So the EU and Vietnam are still working on their trade deal, and it is reflected in Prime Minister Nguyen Xuan Phuc’s schedule. He paid a visit to EU member states Romania and the Czech Republic in April, then hosted a state visit from Romania in May. Lobbying for the deal continued as he welcomed the Swedish crown princess this month, and he will return the courtesy, with the next trip on his calendar planned for Stockholm.
Source: Voanews
Trade between Pakistan and Sri Lanka has come to a screeching halt. The reason behind the stoppage is said to be the rising violence against the Muslim community in Sri Lanka in the wake of recent terrorism and suicide attacks over there, which resulted in heavy casualties. “Rice and textile exports to Sri Lanka from Pakistan have stopped. Potato export has also reduced drastically,” said Pakistan-Sri Lanka Business Forum Chairman Aslam Pakhali. “It is the Muslim community in Sri Lanka that imports Pakistani products and sells them there. They are partners of Pakistani exporters,” said Pakhali, adding that the properties of Muslims were damaged during the recent wave of violence over there. “Their shops, super stores and godowns are being targeted. The goods exported from Pakistan have been unloaded at the Sri Lankan port, but the importers are not getting them cleared because of the deteriorating law and order situation there,” he added. “The goods, especially fruits and vegetables, in godowns are perishing. Sri Lanka is a major importer of Pakistani rice and textile products, but the exports have come to a halt,” he added. Pakhali said a delegation of the forum held a meeting with the Sri Lankan ambassador in Pakistan and emphasised that the Muslim community over there be protected. The delegation condemned the terrorist activities in Sri Lanka and condoled the loss of precious lives over there. They demanded of the Sri Lankan government to compensate for the losses inflicted upon the Muslim community and provide them with protection. Pakhali said, “The loss to the Muslim community by now is estimated at $500 million and payments to the Pakistani exporters amounting of $30 million have been withheld.” He said the exports would not resume till the law and order situation in Sri Lanka improved. “Pakistan will face difficulties in achieving the export target in the final months of this fiscal year,” he added. A Sri Lankan businessman Zainul Abideen told The Express through WhatsApp that the Muslim community in Sri Lanka was facing a ton of problems and was under siege. “The law enforcement agencies are searching properties of Muslims. They are being attacked by mobs,” said Abideen. “Most of the losses to Muslims occurred in Negombo, Kurunegala and Puttalam districts. Violent mobs are attacking Muslims in the presence of security personnel.” He said mobs were attacking Muslim neighbourhoods while the authorities were silent. “The national media of Sri Lanka is keeping its citizens in the dark about such injustice,” he added.
Source: The Tribune
Italy's government minister advised the divided European Union to adapt its trade policies to allow its member states to easily conduct business with China. Some members of the bloc, especially the allies of the United States, are concerned with the entrance of China to the European market. Undersecretary of state at Italy's Ministry of Economic Development, Michele Geraci, said that the European Commission needs to consider the individual trading interests of member countries in crafting the common policy of the block. The undersecretary said that they will make sure that the European trade policy, not just with China but with the rest of their partners, is more analyzed on a country-by-country level. Recently, President Xi Jinping visited Italy in its aim to improve the economic and trade ties of China and the European bloc. Italy confirmed its membership to China's One Belt One Road policy despite the criticisms and warnings of the United States. However, the United States and some Italians rejected the deals with China as they claim that the country is a threat to the national security of Italy. Garret Marquis, a White House official wrote in his Twitter that Rome, one of the allies of the United States, has no need to join the new Silk Road proposed by China. Luigi Di Maio, the deputy prime minister of Italy, said before taking part to the Italian-Chinese economic forum in Rome that China and Rome's relationship will not go beyond trade as he pledged that they will remain an ally to the western nation. He also assured Rome's continuous relationship with NATO and the European Union. Geraci, however, believes that the European bloc's policy is to maximize the benefit of Europe as a whole when they discuss trade policy with China because Europe is a single market. The undersecretary added that they want to add analysis on a country by country level because only then will the citizens of Europe see clearly the potential for trade with China. Italy is considered the Trojan horse of China to the European market since it is the first European Union member to sign up for China's Belt and Road Initiative during the visit of President Xi to Europe in March. Italy's support for the trade and investment plan of the Asian economic giant cemented the positive relationship between them. According to President Xi, China's relationship with Italy is excellent and the China-Italian common interests are the basis for a fruitful future.
Source: Business Times
U.S. President Donald Trump said his tariffs on Chinese goods are causing companies to move production out of China to Vietnam and other countries in Asia, and added that any agreement with China cannot be a "50-50" deal. No further trade talks between top Chinese and U.S. trade negotiators have been scheduled since the last round ended on May 10 ? the same day Trump raised the tariff rate on 0 billion worth of Chinese products from 10 percent. U.S. President Donald Trump said his tariffs on Chinese goods are causing companies to move production out of China to Vietnam and other countries in Asia, and added that any agreement with China cannot be a “50-50” deal. In an interview with Fox News Channel recorded last week and aired on Sunday night, Trump said that the United States and China “had a very strong deal, we had a good deal, and they changed it. And I said that’s OK, we’re going to tariff their products.” No further trade talks between top Chinese and U.S. trade negotiators have been scheduled since the last round ended on May 10 – the same day Trump raised the tariff rate on $200 billion worth of Chinese products from 10 percent. Trump took the step after China soured the negotiations by seeking major changes to a deal that U.S. officials said had been largely agreed. Since then, China has struck a sterner tone in its rhetoric, suggesting that a resumption of talks aimed at ending the 10-month trade war between the world’s two largest economies was unlikely to happen soon. Trump, who said the interview with Fox News host Steve Hilton had taken place two days after he raised the tariffs, said he would be happy to simply keep tariffs on Chinese products, because the United States would be taking in $100 billion or more in tariffs. But he added that he believed that China would eventually make a deal with the United States “because they’re getting killed with the tariffs, China’ getting totally killed.” But he said that he had told Chinese President Xi Jinping before the most recent rounds of talks that any deal could not be “50-50” between the two countries and had to be more in favor of the United States because of past trade practices by China. Trump also said that Democratic presidential candidate and former U.S. vice president Joe Biden should be investigated over a conservative author’s allegation that Biden’s son Hunter Biden took advantage of his father’s position to sign a lucrative business deal with state-controlled Bank of China. The allegation was made in Peter Schweizer’s 2018 book “Secret Empires.” Asked if this should be investigated, Trump said: “100 percent. It’s a disgrace and then (Joe Biden) says China’s not a competitor of ours. China is a massive competitor of ours. They want to take over the world.”
Source: Financial Express
Researchers have developed a shrinkable sensor that can be interlaced into clothes, a development which may pave the path for smart clothing, capable of monitoring human movement. The embedded microscopic sensor is able to recognize local motion through the stretching of the woven yarns that are treated with graphene nanoplatelets, which can read the body's activity, according to the study published in the Journal of Small. "Microscopic sensors are changing the way we monitor machines and humans. Combining the shrinking of technology along with improved accuracy, the future is very bright in this area," said, lead researcher of the study, Mina Hoorfar. This 'shrinking technology' used a phenomenon called piezo-resistivity, an electromechanical response of a material when it is under strain. These tiny sensors have shown a great promise in detecting human movements and can be used for heart rate monitoring or temperature control, explained Hoorfar. The study showed the potential of a low-cost, sensitive and stretchable yarn sensor. The sensor can be woven into spandex material and then wrapped into a stretchable silicone sheath. This sheath protects the conductive layer against harsh conditions and allows for the creation of washable wearable sensors. With the idea of smart clothing, fabrics can tell the user when to hydrate, or when to rest. It may change the athletics industry. It can also monitor deformations in fibre-reinforced composite fabrics currently used in advanced industries such as automotive, aerospace and marine manufacturing. The low-cost stretchable composite sensor has also shown a high sensitivity and can detect small deformations such as yarn stretching as well as out-of-plane deformations at inaccessible places within composite laminates. The testing indicates that further improvements in its accuracy could be achieved by fine-tuning the sensor's material blend and improving its electrical conductivity and sensitivity. Eventually, this can make it able to capture major flaws like 'fibre wrinkling' during the manufacturing of advanced composite structures such as those currently used in aeroplanes or car bodies. "Advanced textile composite materials make the most of combining the strengths of different reinforcement materials and patterns with different resin options. Integrating sensor technologies like piezo-resistive sensors made of flexible materials compatible with the host textile reinforcement is becoming a real game-changer in the emerging era of smart manufacturing and current automated industry trends," explained one of the researchers, Professor Abbas Milani.
Source: Business Standard
The Nigerian Export Promotion Council (NEPC) has re-introduced the African Growth and Opportunity Act (AGOA) Visa Stamp to exporters to ensure that they participate and benefit more from the Act before it expires in 2025. AGOA is an act of parliament passed by the United States Congress in 2000. Also referred to as Trade and Development Act, it was meant to assist the economies of sub-Saharan Africa and improve economic relations between the U.S and the region. Speaking at the NEPC workshop on AGOA Visa Stamp utilisation in Lagos, the agency’s Executive Director, Mr. Olusegun Awolowo, said AGOA was also meant to forge stronger commercial ties between Nigeria as well as other qualified African countries and the United States. Represented by the Deputy Director, National Office on Trade, Mr. Saave Nanakaan, Awolowo said AGOA was meant to help integrate Nigeria and other African counties into the global economy. He said the extension of the scheme to 2025 was because many African economies such as Rwanda and Uganda performed better than Nigeria under the scheme. Visa Stamp, which was introduced on January 18, 2016, took effect from February 8 of the same year. It was another step to further simplify U.S market access of textiles and garments from AGOA-eligible countries. Under the process, the Office of the U.S. Trade Representative has directed U.S. Customs and Border Protection to permit importers to submit electronic images of appropriate export visas when claiming preferential treatment for textile and apparel products under the Act. Textile and apparel goods from an AGOA beneficiary country will only receive preferential duty treatment once a visa arrangement is established. Visas are issued by the government of beneficiary sub-Saharan African countries.
Source: The Nation
Industrial police has identified 674 industrial units, including 435 apparel and textile units across the country as vulnerable to labour unrest over non-payment of wages and festival allowances to workers before the upcoming Eid-ul-Fitr festival. Industrial police on Sunday placed the list of the vulnerable factories at a meeting on law and order situation held at the home ministry at Bangladesh secretariat. According to a source present in the meeting, industrial police found 416 readymade garment factories across the country that are in volatile state, of which 327 are the members of Bangladesh Garment Manufacturers and Exporters Association while 89 are the members of Bangladesh Knitwear Manufacturers and Exporters Association. It also identified 19 factories under Bangladesh Textile mills Association as vulnerable to labour unrest over payment of salaries and allowances before Eid. Other than the RMG and textile sector, industrial police also listed 239 units in other sectors where labour unrest might break out over non-payment of wages and festival allowances before Eid, said the sources who attended the meeting. The sources also said that the director general of industrial police Abdus Salam tabled the list factories in the meeting and informed that they were working intensively with the factory authorities to avert any untoward situation over non-payment of wages and allowances before Eid. The home minister Asaduzzaman Khan, who chaired the meeting, discussed the list of the factories with the inspector general of police Mohammad Javed Patwary and representatives from factory owners including Bangladesh Garment Manufacturers and Exporters Association president Rubana Huq. Earlier, BGMEA vice president SM Mannan Kochi said that they have prepared a list of some 250 RMG factories as vulnerable based on the reports of several government agencies and the evaluation of the trade body. He said that the trade body carried out region-wise monitoring of the factories to avert labour trouble often sparked over non-payment of wages and festival allowances. According to the industry people and law enforcement agencies, garment workers’ unrests centring on wages in different places have continued since April this year. The trade body and related organisations regularly failed to address the ground realities across the RMG industrial belts. After missing repeated deadlines for the payment of wages, the authorities of Intraco Sweaters Ltd in Gazipur shut all units on April 28 with four months dues. Once of the RMG factories under Zara Group in Gazipur has been shut without paying the workers’ dues for the last two months, the units nearby were affected by such an arbitrary measure. Workers of MTM Garments Ltd at Uttarkhan in Dhaka continued their demonstration for the last few days demanding arrears. Law enforcement agencies are also apprehensive of an imminent labour unrest at the factory of Paradise Cables Ltd in Narayanganj as the workers of the units remained unpaid for the last four months. Meanwhile, Crisis Management Core Committee under the labour ministry on Monday failed to set a time frame for the factory owners for paying wages and festival allowances to the workers before Eid-ul-Fitr to be celebrated in the first week of June.
Source: New Age Bangladesh
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, 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-fueled 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: Financial Express
