The council's Chairman Mohit Singla said India needs to move with optimism and caution on this mega trade agreement. The proposed Regional Comprehensive Economic Partnership (RCEP) agreement may hurt India's export competitiveness as the trade balance is already skewed, TPCI said Tuesday. Trade Promotion Council of India (TPCI) said that the proposed RCEP, which is a mega free trade agreement, could lead to flooding of goods in the Indian market from the member countries; and due to this, Indian negotiators need to move with caution on this. The RCEP bloc comprises 10 Association of South East Asian Nations (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. TPCI said in a statement that it is "apprehensive that the RCEP deal is expected to hurt India's export competitiveness as the trade balance is already skewed and there will be flood of goods imports in the Indian market, with relatively little gains on the export front" The council's Chairman Mohit Singla said India needs to move with optimism and caution on this mega trade agreement. "For India, issues of tariff rate (import duty) are as important as other areas under negotiations, mainly because India does not have trade agreements into effect with all countries involved in RCEP," he said. For instance, he said India does not have a trade agreement with China, and the negotiations with Australia and New Zealand have not come into effect. He added that RCEP could have a "negative impact" on sectors like steel, pharma, ecommerce, and food processing.
India is already facing challenges from Singapore, Australia and New Zealand in agriculture and dairy sector, Singla said. Further he said that on the services front, India should strongly negotiate its proposals such as greater mobility for professionals through measures like visa fee waivers. Citing a report, he said according to the World Integrated Trade Solution (WITS) Simulator, India's imports may increase by USD 29 billion annually during the post-RCEP period, implying a revenue loss by as much as 1.3 per cent of GDP. India has registered trade deficit in 2018-19 with as many as 11 RCEP member countries - including China, South Korea and Australia - out of the grouping of 16 nations that are negotiating the mega trade pact since November 2012. RCEP negotiations, which started in Cambodian capital Phnom Penh, aims to cover goods, services, investments, economic and technical cooperation, competition and intellectual property rights. Pressure is 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 finalized. Domestic steel and other metal industries want these sectors to be kept out of the deal.India already has a free trade pact with 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: Economic Times
This is part of China’s Belt and Road initiative, an ambitious plan announced in 2013 by President Xi Jinping. The governments of Japan, India and Sri Lanka have agreed to develop a container terminal at the Port of Colombo, which has attracted major investment from China under its Belt and Road initiative. According to media reports, the three nations will sign a memorandum of understanding (MoU) in the coming months for the east container terminal. This is located at the newly expanded south part of the Port of Colombo. The MoU will enable the concerned parties to develop a facility to allow large container ships to enter. Japan’s foreign ministry was not immediately available for comment. Japan has also pushed its plans to be a player in the region under its Free and Open Indo-Pacific Strategy. Sri Lanka has been one of the countries drawn to China’s Belt and Road Initiative, an ambitious plan announced in 2013 by President Xi Jinping to build an estimated $1 trillion of infrastructure to support increased trade and economic ties and further Chinas interests around the globe. One project in the country includes Port City Colombo being built by China Communications Construction Co, or CCCC. The plan envisions a financial district -- pitched as a new hub between Singapore and Dubai -- with a marina, a hospital, shopping malls, and 21,000 apartments and homes. State-owned CCCC, one of the world’s largest companies with annual revenue greater than Procter & Gamble Co or FedEx Corp, says its portfolio of 700 projects in more than 100 countries outside China has a value of more than $100 billion. It is also one of the most vexed. CCCC and its subsidiaries have left a trail of controversy in many of the countries where they operate, with many of its projects criticized as debt traps. The nine-year-old Hambantota port in southern Sri Lanka -- with almost no container traffic and trampled fences that elephants traverse with ease -- has become a prime example of what can go wrong for countries involved in Belt and Road. Sri Lanka borrowed heavily to build the port, couldnt repay the loans, and then gave China a 99-year lease for debt relief.
Source: The Hindu Businessline
Eminent Indian experts in the US believe that the next Indian government to be formed after the declaration of the election results on May 23 faces crucial foreign policy decisions.“No matter who forms the next government, India faces crucial foreign policy decisions particularly in the economic realm,” Alyssa Ayres of the Council on Foreign Relations told PTI. Author of the book “Our time has come: How India is making its place in the world”, Ayres, who served in the previous Obama Administration, said although the US-India relationship has made solid strides across governments in defence and security, there are increased tensions on the trade and economic front. “I would also expect to see increased attention in the United States (particularly among members of Congress) to issues of religious freedom in India, especially given the tenor of the elections these past few weeks,” Ayres said.
US-India relationship
Associate professor of practice and fellow at Johns Hopkins School of Advanced International Studies Joshua White asserted that though there are many things the new government can and should do to move beyond its election-induced foreign policy “lethargy” of the previous year, economic reforms are arguably the most vital. A former White House and Pentagon official under the previous Obama Administration, White believes that with the partial exception of Vice-President Mike Pence, the new Indian government will find itself lacking — through no fault of its own — effective high-profile champions in the Trump administration, and will be forced to engage an American policy-making apparatus dominated by trade hawks, who see the relationship in narrow transactional terms. “While policy experts in Washington have largely assumed that Prime Minister Modi’s cautious foreign policy turn has been a product of his election imperatives, there is a growing anxiety that President Trump may have, in more fundamental ways, prompted New Delhi to question the assumptions that undergird deeper US-India alignment,” White told PTI. Whoever comes to power will face a multitude of foreign policy challenges that are only growing in number and complexity, noted Anish Goel, a senior fellow at the New America think-tank. “First and foremost is the relationship with the United States. Given President Trump’s relentless focus on trade issues, the new government will need to figure out how to put the trade relationship on a positive footing, and at the very least prevent any disagreements on trade from overwhelming the other more positive aspects of the strategic partnership,” Goel, a former White House official under the Obama and Bush administrations, said. This is complicated by the fact that the relationship will need to be balanced against India’s ongoing interactions with Russia and Iran. Both countries represent strategic threats to the United States, yet remain vital trading partners for India, he said.
Challenges in South Asia
Beyond these global power politics, India will face challenges within its own neighbourhood, Goel said. While tensions with Pakistan are perpetually simmering, they are even more heightened at the moment because the after-effects of the Pulwama-Balakot crisis have not been fully resolved and continue to linger, he added. “As the United States looks for an exit ramp from Afghanistan, India-Pakistan relations will take on even greater importance. In addition, Sri Lanka has flared up as an unexpected regional challenge for India. After nearly a decade of relative peace on the island, the Easter Sunday terrorist bombings highlighted how terrorism can take root in the region,” Goel said.
Taking on China
“And finally, India must reckon with China,” the former White House official said in response to a question. The world’s attention may be focused on US-China relations at the moment, but this doesn’t mean that India-China issues are not serious and prevalent. “China’s increasing assertiveness will continue to cause concern in New Delhi. India has already expressed its displeasure with the Belt Road Initiative, but the reality is that the project is moving forward. The question now becomes what is India going to do in response,” Goel said. According to Tellis, at a time when India’s external environment has grown more precarious because of the weakening liberal international order, China’s continuing ascendancy and assertiveness, and the prevailing capriciousness in Washington, continued stumbles in New Delhi will end up being cumulatively costly and will subvert India’s larger ambitions even more consequentially. “Today, when India’s claims to exceptionalism will not suffice to either protect its security or to increase its influence, its missteps within will have outsized impact abroad,” he warned.
Source: PTI Washington
The United Nations (UN) has lowered its forecast for India’s GDP growth in 2019-20 to 7.1% from its estimate in January of 7.5%, citing an overall slowdown in global growth. The UN World Economic Situation and Prospects as of mid-2019 report said that the global economy is experiencing a broad-based growth slowdown led by slowing industrial production coupled with the weakening of international trade activity due in large part to the unresolved trade disputes between the U.S. and China. “Across both developed and developing countries, growth projections for 2019 have been downgraded,” the report said. “Alongside a slowdown in international trade, business sentiments have deteriorated, casting a cloud on investment prospects. “The Indian economy, which generates two-thirds of the regional output, expanded by 7.2% in 2018,” the report added. “Strong domestic consumption and investment will continue to support growth, which is projected at 7% in 2019 and 7.1% in 2020.” While the slowdown in European Union has meant exports from nations such as Bangladesh have also slowed as the EU is one of its major export destinations, India is on a stronger footing because of the nature of its export destinations. “India’s exports remain more robust, as around half of exports are destined for faster-growing Asian markets,” the report said. Overall, the UN lowered its growth forecast for South Asia marginally to 5.8% in 2020 from the 5.9% estimated for the year in January.
Source: The Hindu
Roughly over two months ago, on March 4, the US President Donald Trump had notified Congress of his intention to terminate the Generalized System of Preferences (GSP) for two nations—India and Turkey. That commenced a 60-day countdown period, granting the US President the liberty to initiate action against the two prominent Asian countries after May 3. Just a year back, in April 2018, the US had started a review process of the Generalized System of Preferences program. This was triggered by the complaints of some US companies who criticised the non-tariff barriers imposed on their exports to India. The companies alleged that India had failed to provide any assurance of unhindered market access to their products in the Indian market. The Trump administration promptly jumped into the bandwagon, perceiving erroneously that Indian action was creating a negative impact on America’s market access. The US considers that it was offering equitable and reasonable access to its market while India perceived US rules as predatory. The American move precipitated extensive discussions between the US and Indian officials to work out ways to enable India’s continuous presence in GSP framework. Modi administration had taken some pro-people initiatives to make medical expenses an affordable proposition for the masses by vastly reducing the market price of some life-saving medical devices. That made profiteering American companies complain. American dissatisfaction extended to dairy sector also. Under GSP, India exported duty-free goods worth $5.7 billion to the US in 2017 including auto components, industrial valves and textile materials and $48 billion worth of goods in 2018 with a trade surplus of $21 billion. Perturbed America placed India on a watch list of the treasury department alleging currency manipulation. But India behaved with great restraint, not retaliating even when the US unilaterally increased duty on a range of Indian products. India comforted itself that the withdrawal of GSP will have a minimal effect on India’s exports and worked at addressing the issues the US had raised. America now grapples with a gigantic issue: hammering out a trade deal with China. But the ongoing exercise on GSP has indeed opened a can of worms and a new front in the trade war by acting against India and Turkey. India right now is preoccupied with the general election continuing in seven phases from April 11 to May 19. GSP impact on India amounts to hardly $190 million per year but the announcement would have provided the opposition a handle to torment Modi. India’s economic growth has not created the jobs and exports have not grown as desired. As exports create jobs, opposition would call for a tougher stand on trade negotiations with other countries, including the US. Trump is also making trade negotiations a rallying point for American elections. These could generate a new round of tensions with key trading nations. Is the US considering revoking India’s Most Favoured Nation status? This could be American positioning to pressurize India for more access to US companies. Saddled with its own domestic concerns India can hardly afford to yield to US pressures. By giving notice of its intent to terminate India from its GSP the US has fired the first salvo to put a lot of pressure on poll-bound India. The new Indian government will have to grapple with this problem. Things will roll fast after the election results on May 23 to take the bilateral talks forward for liberalization of economy with the US. The India- US relationship has acquired salience over years but both sides need to work for a fair and equitable trade mechanism. As large countries imbued with strong democratic political systems, both are politically working closely together in many areas, but a lot of common grounds remain to build a future relationship on. The US must understand the political and economic compulsions of India to pursue higher growth rates for a vast populace. After 2017, the US, Japan, India and Australia revived the Quadrilateral Security Dialogue. That makes the close economic relationships between these two important partners of the QUAD group a structural imperative. Countering the imperialistic designs of China in South China Sea is the bigger picture that must not be lost sight of in skirmishes for petty dollars.
Source: New Delhi Times
India’s exports of labour-intensive items, from textiles and handicraft to leather and gems and jewellery, continue to be under pressure, delivering a double-blow to the economy. A drop in outbound shipments from these sectors not only impacts the country’s export earnings but also jobs provided by small and medium scale units in these industries. Labour-intensive exports contracted for the third straight year in FY19 in dollar terms, according to data from the Ministry of Commerce compiled by BloombergQuint. For the analysis, gems and jewellery, textiles, handloom products, leather, handicraft and carpets were classified as labour-intensive industries. In FY19, exports from these six sectors fell to $75.8 billion compared to $77.1 billion in the previous financial year and $78.5 billion in FY17. In comparison, total merchandise exports rose to $331 billion in FY19 from $304.2 billion in FY18 and $274.5 billion in FY17. As a result, the share of exports from labour-intensive industries fell to 22.9 percent in FY19 from 28.6 percent in FY17. Each individual segment is under pressure for different reasons. For instance, gems and jewellery, which is the largest segment among labour-intensive exports, has struggled with financing options. This has reduced their ability to import gem stones for use in export products. Gems and jewellery exports have fallen from $43.2 billion in FY17 to $41.5 billion in FY18 and $40 billion in FY19. Even as costs continue to rise, stagnating exports have brought down profitability, said Colin Shah, vice chairman at the Gem and Jewellery Export Promotion Council. However, the depreciating rupee helped cushion exporters last year, he added. Ready-made garments, which constitute the second-largest subset of labour-intensive exports, has seen outbound shipments decline from $17.4 billion in FY17 to $16.7 billion in FY18 and $16.1 billion in FY19. Countries like Bangladesh and Vietnam have gained share in the textiles and garments segment, putting Indian units at a disadvantage. Both segments together account for three-fourths of all labour-intensive exports. Among the other segments, exports of leather goods, handicraft and carpets remained flat or saw marginal declines. Handloom was the only segment which saw an increase in exports over the three-year period. The weakness persisted in the first month of the new financial year. Exports from labour-intensive industries fell to $5.7 billion in April 2019 from $6.2 billion in the same month the previous year and $7.2 billion in April 2017. Trade data for April 2019 isn’t encouraging as almost all the labour-intensive sectors and various other segments of exports dominated by small and medium enterprises are in negative territory, said Ganesh Kumar Gupta, president of the Federation of Indian Export Organisation. The Structural Challenges Exports in some of these segments suffer from structural challenges such as the relatively higher cost of labour and lack of economies of scale. “India’s effective cost of labour remains inordinately high both because of strict labour laws (on the demand side) and educational/health/skill constraints (on the supply side),” said Sajjid Chinoy, chief India economist at JPMorgan, in a note dated May 3. This meant that India’s growth has been more capital-intensive than labour-intensive. The trend has been reflected in the export sector, where the share of labour-intensive exports has dramatically declined over the last two decades, Chinoy said. Back in 2000, two-thirds of India’s export basket comprised labour-intensive exports (agricultural products, textiles, gems and jewellery, and leather). Today 50 percent comprise capital-intensive auto parts, pharmaceuticals, and capital goods. The NITI Aayog, in its ‘Three Year Action Agenda’ published in August 2017 had highlighted the need to push up labour-intensive exports. It had blamed India’s loss of market share on the lack of economies of scale in these sectors. “Recognising this critical role of exports in the creation of well paying jobs, India needs a focused strategy for creating an environment in which export competitive firms can emerge, especially in labour intensive sectors,” the report said.
Such a plan, however, is yet to emerge.
So far, according to Shah from GJEPC and Chandrima Chatterjee, director at the Apparel Export Promotion Council, strong domestic demand has offset the impact of lower exports in the gems and jewellery sector and ready made garments. However, any slowdown in the domestic market could hurt the sector further and add to India’s problem of inadequate job creation.
Source: Bloomberg Quint
|
Item |
Price |
Unit |
Fluctuation |
Date |
|
PSF |
1160.98 |
USD/Ton |
-3.49% |
5/21/2019 |
|
VSF |
1708.94 |
USD/Ton |
-0.34% |
5/21/2019 |
|
ASF |
2495.45 |
USD/Ton |
0% |
5/21/2019 |
|
Polyester POY |
1134.95 |
USD/Ton |
-1.13% |
5/21/2019 |
|
Nylon FDY |
2573.52 |
USD/Ton |
0% |
5/21/2019 |
|
40D Spandex |
4496.44 |
USD/Ton |
0% |
5/21/2019 |
|
Nylon POY |
2877.14 |
USD/Ton |
-0.50% |
5/21/2019 |
|
Acrylic Top 3D |
5465.12 |
USD/Ton |
0% |
5/21/2019 |
|
Polyester FDY |
1387.97 |
USD/Ton |
0% |
5/21/2019 |
|
Nylon DTY |
2443.40 |
USD/Ton |
-0.59% |
5/21/2019 |
|
Viscose Long Filament |
2674.73 |
USD/Ton |
0% |
5/21/2019 |
|
Polyester DTY |
1279.53 |
USD/Ton |
0% |
5/21/2019 |
|
30S Spun Rayon Yarn |
2443.40 |
USD/Ton |
0% |
5/21/2019 |
|
32S Polyester Yarn |
1850.62 |
USD/Ton |
-1.54% |
5/21/2019 |
|
45S T/C Yarn |
2775.94 |
USD/Ton |
-1.03% |
5/21/2019 |
|
40S Rayon Yarn |
2038.58 |
USD/Ton |
0% |
5/21/2019 |
|
T/R Yarn 65/35 32S |
2428.94 |
USD/Ton |
-0.59% |
5/21/2019 |
|
45S Polyester Yarn |
2732.56 |
USD/Ton |
0% |
5/21/2019 |
|
T/C Yarn 65/35 32S |
2298.82 |
USD/Ton |
-0.62% |
5/21/2019 |
|
10S Denim Fabric |
1.33 |
USD/Meter |
0% |
5/21/2019 |
|
32S Twill Fabric |
0.79 |
USD/Meter |
-0.37% |
5/21/2019 |
|
40S Combed Poplin |
1.05 |
USD/Meter |
-0.14% |
5/21/2019 |
|
30S Rayon Fabric |
0.61 |
USD/Meter |
-0.23% |
5/21/2019 |
|
45S T/C Fabric |
0.69 |
USD/Meter |
0% |
5/21/2019 |
Source: Global Textiles
Note: The above prices are Chinese Price (1 CNY = 0.14458 USD dtd. 21/05/2019). The prices given above are as quoted from Global Textiles.com. SRTEPC is not responsible for the correctness of the same.
Pakistan’s textile exports displayed yet another stagnant performance during April 2019, registering a 1% YoY decline to close the month at US$1.14 billion, compared to US$1.15 billion in the same month last year. A poor performance by yarn exports has again been a major reason for the lackluster showing by textile exports. Ahmad Lakhani, a reaserch analyst at local brokerage house, said despite the Pak rupee devaluation of 14% YoY during ten months FY19, there has been no improvement in textile exports during the period. It remains to be seen if textile exports can pick up from current levels, considering significant devaluation, he added. On the other hand, the future of (1) gas subsidy for Punjab textile players and (2) sales tax refunds remains uncertain in the wake of the upcoming IMF program. Declining demand from China plus an increase in local demand for yarn amid cotton crop shortage led to a 19% YoY drop in Yarn exports. A poor performance by yarn exports (down 16% YoY in 10MFY19) has again been a major reason for the lacklustre showing by textile exports during the year so far (10MFY19 textile exports were stagnant). On the other hand, the value- added categories displayed a better performance during the month, led by garments (+14.7% YoY) and knitwear (+4.5% YoY), although for the latter, the monthly performance was significantly lower than 8.8% YoY growth. Lakhani said despite the Pak rupee devaluation of 14% YoY during 10MFY19, there has been no improvement in textile exports during the period. In fact, the rupee has devalued by 25% YoY since the beginning of the devaluation spree (Dec-2017) till the end of Apr-2019. One interesting observation is that during 10MFY19, textile exports increased by 23% YoY in rupee terms, whereas as mentioned, there was no change in dollar terms. This indicates that due to the competitive global environment, the exporters had to pass on at least the bulk of the positive impact of devaluation to international customers by reducing prices. This is also obvious when looking at the quantities exported by the major sub-categories of textile exports. Other than yarn and towels, all major categories witnessed a growth in terms of quantity exported during 10MFY19, he added. On a separate (but interesting) note, the central bank expects some improvement in economic activity in FY20 as mentioned in the latest monetary policy statement. They base this view on the upcoming IMF program, a rebound in agriculture sector and government incentives for export-oriented industries. “We hope this turns out to be true, however, we await details regarding what sort of incentives, if any, will be available for the export sector”, said Lakhani.
Source: Daily Times
Economic and trade relations between Việt Nam and Russia have been growing consistently, according to the Ministry of Industry and Trade. The two countries established a strategic partnership in 2001 and upgraded it to the level of a comprehensive strategic partnership in 2012. Bilateral trade enjoyed a surge after the Eurasian Economic Union (EAEU)-Việt Nam Free Trade Agreement took effect in 2016. The effective implementation of the trade deal is expected to help the two nations achieve their trade target of US$10 billion. Last year it was worth $4.57 billion after rising 28.6 per cent, Tạ Hoàng Linh, director of the ministry’s European-American Market Department. Việt Nam’s exports to Russia topped $2.44 billion, a rise of 12.8, while its imports were worth $2.1 billion, up 53.4 per cent. In the first four months of this year, their trade was worth $1.52 billion, up 5.92 per cent year-on-year. The bilateral trade between the two countries accounts for more than 90 per cent of EAEU-Việt Nam trade revenues. Việt Nam’s major exports to Russia include electronic products, garments and textiles, footwear, aquatic products, and coffee. According to the Việt Nam Textile & Apparel Association, Russia is a promising market for garment and textiles, but Vietnamese firms need to do thorough market research to determine the potential and needs of their Russian partners and remain in regular communication with them. They should also adopt modern business models, work to ensure product quality, and build brands and register trademarks in that market, it said. Russia ranks 24th out of 129 countries and territories investing in Việt Nam with total registered capital of over $932 million, mainly in the oil and gas and energy sectors. Vietnamese companies have invested nearly $3 billion in more than 20 projects in Russia, the most notable being TH Group’s $2.7 billion in dairy farms.
Source: Vietnam News
The US Consumer Product Safety Commission (CPSC) is requesting information about possible changes to the Commission's Standard for the Flammability of Clothing Textiles to expand the list of fabrics that are exempt from testing under the standard. CPSC is also seeking possible ways to update provisions under the standard to reduce testing requirements. "CPSC is particularly interested in receiving information about the possibility of adding spandex to the list of fabrics that are exempt from the testing requirements. CPSC also would like information about the equipment and procedures specified in the standard and possible ways to update those provisions to reduce the burdens associated with the testing requirements," an official notification states. CPSC will accept written comments through June 24, 2019. CPSC said its staff is aware of stakeholder interest in adding spandex fibres to the Specific Exemptions in 16 CFR 1610.1(d). So, it is seeking relevant information and data about spandex fibres that would help CPSC determine whether spandex "consistently yield[s] acceptable results when tested in accordance with the Standard." With reference to burden and cost associated with testing spandex, CPSC is seeking specific information as to how much testing is required for fabrics containing spandex subject to 16 CFR part 1610. It also wants to know the costs associated with the required testing, and the types of fabrics and garments that require testing. On June 16, 2017, CPSC requested input from interested parties about ways to reduce the burdens and costs associated with existing regulations, while still protecting consumers from risks of death or injuries associated with consumer products. The commission followed up on this burden reduction goal in its Fiscal Year 2019 Operating Plan, directing CPSC staff to review possibilities for reducing burdens, including "expanding exemptions for flammability testing"
Source: Fibre2Fashion
ISLAMABAD (APP) – A delegation from Federation of Pakistan Chamber of Commerce and Industry (FPCCI) called on the Prime Minister’s Adviser on Commerce, Textile, Industries and Production and Investment Abdul Razak Dawood. The FPCCI shared the budget proposals to enhance export growth in the country, said a press release issued by Ministry of commerce here on Tuesday. The Adviser shared the economic vision of the current regime and described the initiatives that are being opted as part of economic reform process. He said that the prosperity for the people of Pakistan remains the principal priority of the government. A pro-business investment policy remains a central plank of the strategy, he added. Responding to a proposal by the FPCCI, the Adviser agreed that FPCCI would be given representation in the policy making forums. FPCCI plays important role in including the businesses’ voice in the economic policies. The FPCCI appreciated the role of Ministry of Commerce in correcting the FTA with China. They appreciated the successful arrangement for the Pak China Business Forum that was held during the Prime Minister’s Visit to China. The Business forum brought investment and export opportunities for Pakistani businessmen. The FPCCI appreciated the tariff rationalization process of the Ministry of Commerce and shared their tariff and non tariff proposals. Dawood informed the businessmen that the government was simplifying the DTRE Procedure that would be very helpful for business facilitation. It would be made more simple, transparent to facilitate the beneficiaries, he added. The Adviser informed that Ministry of Commerce in processing the tariff and non-tariff budgetary proposals with the stakeholders from public and private sectors.
Source: Dunya News
A delegation of business executives representing 30 Indian companies led by the chairman of the Indian Silk Export Promotion Council met their Vietnamese counterparts at the Buyer-Seller meet held in HCM City on Tuesday. The visitors were from companies producing silk, fabrics, ready-made garments, silk scarves, stoles, Pareo shawls evening wear, beachwear, fashion accessories, tops, bottoms, trousers, jackets, kaftans, bags, embroidered shawls, silk blended products, natural silk carpets and others. Dr. Bimal Mawandia, chairman of the Indian Silk Export Promotion Council, said: “India is promoting exports of all textiles. We are presenting the silk sector in India and as per the guidance of the Government of India, we want to increase exports and we are exploring different markets worldwide. “We come here to promote export of not only silk but also other fibers in this market.” The trip was the first to Việt Nam for all of the participating companies, he said. Phạm Xuân Hồng, chairman of the HCM City Association of Garment Textile Embroidery-Knitting, said trade relations between Việt Nam and India in the garment and textile sector had increased significantly but was still modest compared to the potential of the two countries. The event is expected to enhance connection between businesses of the two sides in the sector, where there is still a lot of potential, he said. “Vietnamese garment and textile companies want to have stronger co-operation with Indian counterparts. They have high demand for importing raw materials from India.” According to the Việt Nam Textile and Apparel Association, there are 7,000 enterprises in the industry, providing jobs for three million workers in the country. Việt Nam’s garment and textile exports increased by 12 per cent last year to reach over US$36 billion and exports is expected to top $40 billion this year. A similar buyer and seller meet will be held in Hà Nội on May 23.
Source: Vietnam News
Exploring the possibility of developing India as an alternative in the midst of a US-China trade war, the American corporate sector eagerly looks forward to the election results and hopes that the new government adopts a "consultative process" in framing policies, experts say. "US companies are looking for transparency and consistency in policy framework. They would appreciate a consultative process (in) framing policies," Mukesh Aghi, president of the US-India Strategic and Partnership Forum told PTI, ahead of the declaration of the election results on May 23. India, Aghi asserted, has "a fantastic opportunity" to attract US and European companies as China trade relations get strained with its partners. "These companies would consider India if ease of business improves along with predictability, otherwise countries like Vietnam and Cambodia are successfully attracting these companies," Aghi said in response to a question. The new government will need to look closely at what it can do to unleash growth and create jobs because India must tackle its own apparent economic slowdown, Alyssa Ayres, from the Council on Foreign Relations think tank, told PTI. "Economists have long recommended structural reforms as the way to do that which would likely help India address the complaints from the US and others about difficulties of doing business in the country," Ayres said in response to a question. Although the final results are yet to be declared and may hold some surprises, there are several issues that whoever comes to power would need to grapple with, observed Anit Mukherjee, a policy fellow at the Center for Global Development, a think tank in Washington DC. But the broad theme would be on consolidation of the gains of the past five years and ushering in some much-needed reforms to accelerate growth and reduce poverty, he said. Noting that India's economy has gone through a period of consistent, if not spectacular, growth over the last five years -- this in spite of demonetization, GST, and the NPA and farm crises -- Mukherjee said this provides a platform for higher growth in the next five years. "But this will depend largely on how the government can steer the macroeconomy, streamline GST, address non-performing assets and mitigate the farm crisis," he told PTI. There will be headwinds oil prices are increasing, external trade environment is hostile, vested interests have scuttled plans to reform PSU banks, and the government does not seem to have much appetite to reform agricultural markets apart from announcing a cash transfer programme just before the elections, he added. India, he said, is going through a rapid digital transformation. Aadhaar is now almost universal, its use is now pretty well defined following the Supreme Court judgement, Mukherjee said, adding that India's financial inclusion is now among the highest in the world (over 80 per cent), thanks largely to the Jan Dhan program; and mobile phone use is ubiquitous, serving a data hungry population. "So the building blocks of a digital economy is in place and India is poised to take a big leap in the next five years. The government needs to recognise that and bring policy and regulatory clarity, especially data sharing, trade in data services and privacy protection," he said. Observing that India's rise as an economic power comes with responsibilities, Mukherjee said New Delhi would do well to learn the lessons from China, which is facing a backlash over its trade and investment policies, as well its domestic policies favouring large technology firms that are perceived as a threat (eg. blacklisting of Huawei for 5G telecom equipment and Google's decision not to allow future Android OS updates to run on Huawei smartphones). "India has so far refused to engage with the US and the EU on the global E-commerce and data governance architecture but it would do well not to be sidelined in the discussions," he said in response to another question. "It is in everyone's interest that India becomes a hub of digital innovation and commerce, with a level playing field that does not discriminate in favour of any particular special interest group," Mukherjee told PTI.
Source: Business Standard
The BGMEA president also said a lack of unity between garment factory owners and worker leaders was a barrier to the industry’s development Bangladesh Garment Manufacturers and Exporters Association (BGMEA) President Rubana Huq has urged worker leaders to refrain from complaining about internal problems to foreigners. "Foreign buyers do not increase rates even though our production cost has increased immensely. If you complain to buyers, then they get a chance to bargain and reduce prices," she said during a roundtable discussion on the national budget at the National Press Club on Tuesday. The BGMEA president also said a lack of unity between garment factory owners and worker leaders was a barrier to the industry’s development, reports UNB. “The BGMEA will take all necessary initiatives if workers inform the organization of their demands before lodging complaints with foreigners,” she added. "The welfare of the workers reflects the industry's wellbeing. Do not cause any violence. I am with you," Rubana Huq said. Centre for Policy Dialogue (CPD) Research Director Dr Khondaker Golam Moazzem demanded increases to the budget allocation for garment workers. "It will not require a huge amount. Community based development is needed in the industry," he saidMoazzem further said: “The time has come to raise our voices together in the demand for increased prices of products.” Mahbubur Rahman Ismail, president of the Bangladesh Textile Garments Workers Federation, placed several proposals, including for starting a ration system for workers. "We have submitted our demands to the Finance Ministry. We will submit these to Prime Minister Sheikh Hasina as soon as possible," he said. ZM Kamrul Anam, president of Bangladesh Textile and Garments Workers League, also urged the government to increase the budget allocation for garment workers.
Source: Fibre2Fashion
Should we expect any Chinese industry to relocate to Pakistan under the China-Pakistan Economic Corridor (CPEC)? And if it happens, which industries are likely to benefit from such relocation? Before we answer this question, it is important to understand why companies relocate. An industry would relocate to another city or country if such relocation entails a significant regulatory, locational or cost advantage. The locational advantages include reduced transportation time due to proximity to raw materials or market, market size or even better living conditions at the destination. The cost advantages, on the other hand, include lower input costs, better employees or overall lower cost of doing business, whereas the regulatory advantages may cover tax breaks, policy incentives, less stringent controls, etc. Let’s first discuss the location advantages. While CPEC will greatly reduce the travel time from western China to the Indian Ocean, the shorter distances are mostly relevant for only those Chinese enterprises which are located in the three western provinces of Xinjiang, Tibet and Qinghai and are exporting to the Middle East and North Africa. For others, using the sea route through eastern ports or the overland route to Europe would make more sense. Moreover, except Xinjiang with exports of more than $13 billion, exports from other two provinces are almost negligible. But Pakistan itself is a very lucrative market with a growing middle class. The huge potential of the local market has generated significant Chinese interest in household appliances and automotive sectors. In fact, this interest predates CPEC and included investments by Haier, Gree and Changhong. It is, therefore, likely that this sector is going to see much more Chinese investment in the next few years. Early interest and pipeline of potential investments by Changan Automobile Limited to assemble and sell its cars in Pakistan, Jinbei Auto to build a completely knocked down assembly and joint ventures by LIFAN and Beijing Automobile Works further validate this notion. Similarly, the locational advantages also support the case for agri business and food processing industry which can form another potential candidate for Chinese investment to serve the local industry as well to target the massive Chinese food market. Coming to the cost advantages, the garments and textile industry seems to be a good choice for relocation. China is already facing a surge in production costs, owing to appreciation of its currency, inflation, higher cost of raw materials, etc. Moreover, as Chinese labour is graduating from low-paying to high-paying jobs, along with introduction of improved labour laws, the labour costs are also rising sharply. The average labour cost of an operational hour in the coastal and inland regions of China is thrice the cost in Vietnam and Pakistan and six times that of Bangladesh. These pressures are compelling Chinese manufacturers to look elsewhere to relocate. For now the Chinese focus seems to be on Vietnam, Myanmar, Cambodia, Indonesia and Bangladesh. But there is room for Pakistan to join the race as well. Lastly come the regulatory factors. The sunset industries in China are being pushed out due to overcapacity, rising production costs and environmental factors. These include copper and aluminum smelting, cement, papermaking, textiles, iron and steel, light engineering and low-end motors and machines. While smelting would need abundant availability of inexpensive energy, some of the other sunset industries can very well be relocated to Pakistan. No wonder that the initial parleys with China and the earlier version of the long-term plan mentioned textiles and garments, agri businesses, food processing, mining, cement, light industrial products and transportation machinery and household appliances as sectors that could potentially benefit from CPEC. The focus for Chinese industry relocation is, therefore, quite clear and makes much commercial sense. Now it’s for our policymakers and industry to make it happen.
Source: The Tribune
When the PTI government took office, it inherited a huge current account deficit, and it was assumed that it would take strong measures to enhance exports to curtail this gap primarily between yawning imports and dwindling levels of exports, especially when it outrightly exhibited dissent towards seeking an IMF program. Unfortunately, the latest exports data show virtually no growth in exports. This is indeed a big policy lapse from the government; severe carelessness to say the least. While not much effort was placed on developing new sources of exports, the traditional ones were not also provided with a supportive policy. While some relaxation on energy tariffs were brought for industry in general, not else in terms of broad policy, especially the subsidy component, was announced, in particular for those sectors like the textile industry, which still could not become competitive and value-adding enough to compete with even the regional giants, and contribute to the foreign exchange reserves, and in creating employment opportunities. The latest exports data show virtually no growth in exports. This is indeed a big policy lapse from the government; severe carelessness to say the least. It is therefore, high time that the government announces an active textile policy, in terms of a complete package from the macroeconomic initiatives of providing necessary tax cuts, loan subsidization, and coming with skills training programs and social welfare programs for improving the quality of life and output of labor involved in this important sector for the economy.
Importance textile sector holds for Pakistan
The importance of the textile sector has traditionally been immense but since the overall quantum of export earnings is quite small, therefore, even when it contributes to 50-60 percent of the total earnings, the amount is far less than if it were producing higher value adding products; given Pakistan is one of the leading producers of cotton. The low quality of labor also means that while the textile sector employs 40 percent of the total labor force, the productivity of labor, especially towards producing high-end products, is quite modest when compared to workers from Thailand and Bangladesh, for instance. The lack of potential reaching situation of this sector could be highlighted from the fact that in overall world textile exports, Pakistan’s share is a paltry five percent; with annual growth of the textile industry hovering around only three percent on average since 1990. In the very first, at the back of employment of inefficient and redundant picking, cleaning, and ginning techniques, the quality of cotton produced in the country is not only well below international standards, but there is a lot of variation between high and low varieties produced. The efforts of the government set in the ‘Cotton Vision 2015’ could not be met in a broad way– where, for example, a) the cotton production target of 21 million bales, b) 1,060 kg per acre cotton yield, c) improvement in cotton yarn recovery to 92 per cent– could not be met, and it was being hoped that the PTI government would come with a plan to fix these issues. Sadly, this has still to materialize. The textile sub-sector would involve moving the processes involved to modern techniques and training, imparted both at the stage of managers and master trainers.
Steps to improve Textile sector
Other broad issues that the PTI government needs to target resolving in its textile policy should include, firstly, improving the process of ginning by, for example, (i) upgrading the non-operational installed ginning units, (ii) bringing in an efficient ginning control and monitoring process to shift away hand-picking of cotton, (iii) upgrading obsolete ginning technology, which in some instances dates from the time of 1940s and 50s, and (iv) introducing proper standardisation. Secondly, improving the dyeing, printing, and finishing sectors, so that the currently poor quality of garments/home textiles produced could be enhanced. Lack of supportive policy over the years has meant that the share of finished Pakistani cloth in world production has remained around three percent, which is indeed very low, on account of a) inefficient processes involved, b) lack of controls and monitoring to ensure that a lower proportion of orders from international buyers– from the current high level– faces either re-work or rejection, and c) low capacity utilization, and also around half of the installed capacity is around 40 years old! Water provision in terms of both quality and quantity is also inadequate here, which negatively impacts the highly water-dependent processes involved. Thirdly, the spinning phase, that is instrumental in determining the textile quality, needs to be improved, including enhancing the capacity, which is currently only five percent of the world capacity. This important phase of the textile value-chain has little product diversification and low proportion of high value-adding yarns among the total yarns produced. Among other initiatives, enhancement of this textile sub-sector would involve moving the processes involved in modern techniques and training, imparted both at the stage of managers and master trainers. Pakistan has a very small apparel textile sub-sector when, as it stands at a paltry level of 5,000 garments units, and is only one per cent of the global apparel market. Fourthly, these initiatives are also important for the weaving section, along with shifting to computer-aided manufacturing here in particular. This sub-sector, in the past enjoyed economies of scale at the back of integrated units, which over time due to lack of supportive taxation and labor market policies have fragmented, and therefore need restoration.
Export value to the country
This sector is important for exports, given its potential for supporting the production of high value-adding textile products, chances of which in a significant way could be improved by shifting from the traditionally produced and exported low value-adding fabric to exporting high value-adding blended fabric. For this to materialize, among other things, the textile policy should envision a way forward to move to artificial staple and synthetic fibers. Fifthly, textile made-ups require betterment in both processing and marketing, whereby a) towel exports should shift to higher tiers, b) bed-linen quality needs to improve to meet international standards more successfully and to get into high-end bed-linen market, at the back of improving technology and enhancing the skills of labor, and c) better knowledge base of global trends/fashion needs to be collected and analyzed. These initiatives are also important for the weaving section, along with shifting to computer-aided manufacturing here in particular. Sixthly, Pakistan has a very small apparel textile sub-sector when, as it stands at a paltry level of 5,000 garments units, and is only one percent of the global apparel market. The textile policy needs to make an effort to increase both the number of units, but more importantly to gear the garments units to produce modern lines for enhancing the value-addition of this sub-sector. Overall, it is also important that the Textile Ministry provides technical and legal assistance to help the textile sector gain its rightful place in the global market, and also is cognizant of all the international standards/laws it needs to meet under the World Trade Organisation regime. In addition to the above, the Ministry should also ensure, among other initiatives, that a) proper provision of electricity is made available to the textile sector and at rates that keep it regionally and globally competitive, and b) significant increases are made in the subsidy with regard to both supporting research and development in the sector, along with enhancing both the amount of mark-up subsidy on loans, and extending the scope of this subsidy beyond the spinning sub-sector to the whole sector. Lastly, proper implementation of a taxation regime needs to be adopted for the sector, both reducing the number and level of indirect taxes involved, and in applying a well-thought-out value-added tax and income tax regime across the entire textile value chain.
Source: Global Village Space
