Indian Texpreneurs Federation (ITF) has appealed to all brands and retail chains operating in India to source their requirements from within the country instead of importing. ITF’s appeal comes in the wake of a huge jump in import of readymade garments from Bangladesh. “The 53 per cent increase in Bangladesh’s overall exports to India between July, 2018 and April, 2019 is disheartening. While the government is making best possible efforts to promote ‘Make in India’, ‘Skill India’ and incentivising job creation, western retailers having outlets in India and Indian local brands seem to be sourcing their goods from Bangladesh. Indian textile clusters can serve better, source the needs of both western and Indian brands both in terms of quality and competitive pricing,” said ITF Convenor Prabhu Dhamodharan. He further pointed out that the products sourced from within were far better than those sourced from Bangladesh, Sri Lanka or Indonesia.
EPB data
Export Promotion Bureau (EPB) data has revealed that Bangladesh exports touched a high of $1.07 billion between July and April of 2018-19 fiscal compared to $701.56 million earned during the corresponding period of the previous fiscal. “A major contributor has been readymade apparels,” Dhamodharan said, adding “India lost ₹7,500 crore garmenting business to its neighbour.” That's not all. The resultant impact is far more in terms of job loss across the textile value chain. Retailers and brands should explore possibilities to partner with garmenting hubs in Coimbatore, Tirupur, Karur, Erode, Surat and Ludhiana, among others, and focus on local sourcing, he said.
Source: The Hindu Business Line
The Revenue Department does not think it would be appropriate even in the near future to merge the two standard rates of Goods & Services Tax (GST) into one rate. The existing GST regime has multiple rates: 0, 0.25, 1, 3, 5, 12, 18 and 28 per cent. The 12 per cent and 18 per cent rates are known as ‘Standard Rates.’ There has been talk of merging the two rates and having one standard rate of 15 per cent to simplify the GST structure. Also, it will help blunt the criticism of there being too many rates. (0.25, 1 and 3 are special rates. The 0.25 per cent rate is for uncut diamonds; 1 per cent is for affordable housing and 3 per cent for gold and silver.) “At this juncture clubbing of the two rates into one rate of 15 per cent might cause a revenue loss of approximately ₹1 lakh crore annually,” a senior Revenue Department official told BusinessLine. He further added that such a revenue loss is unwarranted at this moment as it would also affect the overall fiscal deficit. The government aims to restrict the deficit to 3.4 per cent of GDP in the current fiscal year.
Lopsided impact
As of now, out of 1,200 plus goods, nearly 42 per cent attract GST at the rate of 18 per cent, while nearly 15 per cent fall within the 12 per cent bracket. This means the proposed rate change will lead to a higher rate on fewer goods and a lower rate on more goods, leading to a revenue loss. “This exercise can take place once revenue collection stabilises and average monthly collection is more than ₹1 lakh crore,” the official said. Since implementation of GST from July 1, 2017, there have been just four instances when the monthly collection crossed ₹1 lakh crore. For 2018-19, the government aims to get ₹13.38 lakh crore (CGST+SGST+IGST+Compensation loss) but revised this later to ₹11.48 lakh crore. Now, for the current fiscal year (2019-20), the aim is ₹13.71 lakh crore. This means the monthly average collection should be ₹1.14 lakh crore. The collection in April stood at ₹1.13 lakh crore.
What the experts think
MS Mani, Partner at Deloitte India, said that with GST collections showing signs of stabilising in recent months, it may be better to for wait for some time before rationalising rates further. “The initial focus could be on further simplification of procedures on returns, audits and input tax credits,” he said. Rajat Mohan, Partner, AMRG & Associates, felt that consolidating the twin slabs of 18 per cent and 12 per cent to tax services under a single slab of 15 per cent, as suggested by former Chief Economic Advisor Arvind Subramanian, would lead to an immediate downward spiral in tax collections. “The high volume of transactions in the B2C service segment, such as life insurance, health insurance, construction of commercial shops and offices, accommodation services, food and beverages, social care services etc would pull effective tax contributions down by 3 per cent of the erstwhile contribution, which is expected to be colossal in absolute terms,” said Mohan.
Source: The Hindu Business Line
As per the system being worked out by the Revenue Department, the taxpayer will get full refund from his jurisdictional officer once the claim is sanctioned, while at the back-end the Centre and States will apportion the amount to be paid to each other. A single authority for sanctioning and processing GST refunds is in the offing as the Finance Ministry looks to speed up and simplify the process for exporters, an official said. The current mechanism entails a twin refund sanctioning authority of the Central and State tax officers but that could well change by August when the proposed new structure involving a single authority comes in place. As per the system being worked out by the Revenue Department, the taxpayer will get full refund from his jurisdictional officer once the claim is sanctioned, while at the back-end the Centre and States will apportion the amount to be paid to each other. Currently, once a taxpayer files refund claim with the jurisdictional tax authority, say the central tax officer, then he would clear 50% of the claims, and the remaining is cleared by the State tax officers after further scrutiny. A similar system is followed when a taxpayer approaches the State tax officers for Goods and Services Tax (GST) refunds. Thus, the time taken to clear the entire refund amount gets longer, leading to liquidity crunch for exporters -- an issue that the proposed single mechanism for refund clearing intends to fix. Under the proposed ‘single authority mechanism’, once a refund claim is filed with a tax officer, whether Centre or State, the officer will check, assess and sanction full tax refund (both Central GST and State GST portion), thereby removing difficulties faced by the taxpayers. This will later get adjusted/settled amongst the two tax authorities through internal account adjustments. Currently, the two authorities settling the same refund claims adds to unnecessary complexities and inconvenience for the taxpayers. It has been seen that even after sanction/payment of refund by concerned jurisdictional tax officer, the counterpart tax authority at times tends to delay the GST refund. As per the formula for division of GST assessees decided by the GST Council, State tax officials administer and control 90% of the assessees below ₹ 1.5 crore annual turnover, and the remaining 10% is with the Central tax officers. The Centre and States share control of those assessees with annual turnover of over ₹ 1.5 crore in 50:50 ratio. Commenting on the move, AMRG & Associates Partner Rajat Mohan said: “A single window tax refund in a federal, democratic economy would be a massive jump in ease of doing business. Inter government tax adjustments have to be done on month-on-month basis to avert any possibility of temporary revenue deficit to a particular government.”
Source: The Hindu
India had 232 SEZs, of which 25 are multi-product ones and the rest are sector-specific ones, with 5,109 approved units, as of March 31. India is set to revamp the special economic zones (SEZs) framework to house a wider range of companies, allow flexible long-term leases and make exits easy to lure investment. Apart from this, nonprocessing areas in such enclaves can be used to boost exports and employment generation. “We need bold measures to revive investment, promote manufacturing and exports from SEZs, and boost job creation,” said a senior government official aware of the deliberations. “The new SEZ policy needs to be future-ready, investor-friendly and correspond to global market needs.” India had 232 SEZs, of which 25 are multi-product ones and the rest are sector-specific ones, with 5,109 approved units, as of March 31. The sector-specific SEZs are meant for IT and IT-enabled services. Under the proposed policy, these could be opened up to sectors such as tourism and multimedia services. The policy will seek to provide ease of operation and exit, procedural relaxations, and uniformity in administrative and financial matters among all SEZs. It could also provide easier subcontracting for customers outside the zones. The units now need permission to subcontract any part of their production or production process to units in other SEZs. The government is also looking to create an integrated online portal for processing new investment requests. “These proposals have been under consideration. The government is keen to ensure the productivity of SEZs increases,” said another official aware of the details. Exports from SEZs rose 21% to Rs 7 lakh crore in FY19. A committee set up by the commerce and industry ministry under Bharat Forge chairman Baba Kalyani to look into the SEZ policy framework had suggested that the government devise measures to make them focussed on services including information technology, medical tourism and financial services to draw investors. The committee has suggested SEZs be converted into employment and economic enclaves (3Es) with efficient transport infrastructure NSE 5.99 % , uninterrupted water and power supply. “There is a long-felt need to reform the current SEZ system to simplify the procedures,” said Bipin Sapra, partner at EY. “The administrative reforms of SEZ should be coupled with reforming the goods and services tax compliances required for claiming the zero-rated benefits.” The overhaul plan comes as the US has challenged the SEZ scheme at the World Trade organization
Source: Economic Times
The main task before the next government must be to revive the economy. Modi campaigned on the issue of national security, which cannot be ensured without a strong economy Voters have reaffirmed faith in the leadership of Narendra Modi. His Bharatiya Janata Party (BJP) won an absolute majority on its own in the Lok Sabha. So, a stable regime will govern the country through the next few years. The main task before the next government must be to revive the economy. Modi campaigned on the issue of national security, which cannot be ensured without a strong economy. It is now evident that domestic consumption is slowing and farm distress is real. The manufacturing sector is not growing rapidly and export growth has been tepid for five years. Private sector investment, especially in new manufacturing projects, has been uninspiring. Corporate earnings have been rather weak, although the stock markets are booming. The flow of foreign money into equity markets has strengthened the rupee. The global trading environment is not too encouraging. For reviving of export growth, given the context and challenges, the new government must first restore the commerce ministry’s primacy in making the new Foreign Trade Policy (FTP). In the run-up to introduction of the Goods and Services Tax (GST) and during its implementation, this ministry was completely ignored. The finance ministry focused mainly on securing consensus in the GST Council and then on re-working of the laws to address the problems thrown up during implementation. The representations of exporters were initially dismissed summarily and later heard partially. Untold misery was inflicted on a large number of exporters by the finance ministry. An ineffective and voiceless commerce ministry was a spectator. Now, the latter should not hesitate to take responsibility for export promotion. It should look at the opportunities the US-China trade war throws up and strive to make peace with the United States on trade issues. It should take up with the Reserve Bank of India the overall cost to the economy of monitoring realisation of payment against each and every export transaction; also, raise the issue of timely and adequate flow of credit to exporters and transmission of benefit under its interest subvention scheme. It should also review all export promotion schemes in consultation with the finance ministry and treat deemed export at par with physical export. It should ask if it is necessary to subsidise export of services and examine whether it is necessary to deliver export promotion schemes through the regional offices of the Directorate General of Foreign Trade. A study on whether our free and preferential trading agreements are working to our benefit should be commissioned. And, the role of various export promotion councils should be re-assessed. Nor need the commerce ministry wait till next year to announce a new FTP. In 2004 and 2009, the new Policy was announced within a few weeks of presenting the Union Budget. It was in 2014 that the new Policy was deferred till next April, for no good reason. Now, the finance ministry cannot decide anything on GST without approval of the GST Council. The Budget is unlikely to deal with GST rates and might barely tinker with Customs duties. So, the commerce ministry can go ahead and notify the new FTP, letting the finance ministry give effect to it through fresh notifications.
Source: Business Standard
Only through such sustained productivity increase can India aspire to sustainably access the lucrative yet challenging markets that beckon her. It’s the season of trade wars, though instances of such economic warfare are hardly new. Indeed, the history of global trade is rife with several instances of aggressive trade wars: be it the Sino-British Opium Wars of the 19th century, the Chicken Wars between the US and Europe in the 1960s, or the 20-year-old Banana Wars between them that ended only in 2012, nationalist sentiments have led nations to impose ‘penalising’ trade restrictions on unrelenting partners, often themselves bearing the brunt of retaliation or long-term adverse effects of such restrictions.
Is this time different?
A rapidly changing geopolitical scenario, with associated changes in international relations and national trade policies, has put commodity markets on the frontline of US-led trade war. The immediate and continued effect of US-led trade wars has been a spur in commodity price volatility across the spectrum. As the Iran turmoil led to augmented energy price volatility, it added to the existing cocktail of commodity price volatility. Prices of aluminium in global markets have plunged over 30% from their highest levels in April 2018. The industrial metal is often viewed as a proxy for prospects of global growth, and the signal being sent in recent weeks suggests rising pessimism about growth with escalating trade war concerns. Meanwhile, lead prices have sunk 34% between February 2018 and May 2019 on persistent worries of the impact of US-China trade tensions on global economic growth and the sinking Chinese auto demand. The same reasons have made gold shine. Prices of the yellow metal, a favoured safe haven asset in times of uncertainties, rose to $1,307/oz in May 2019 from a low of $1,176/oz in August 2018, and back to $1,275 levels as of now.
The India opportunity?
While volatility in commodity markets is not unusual, the magnitude and impact of the current trade war has added an extra measure of uncertainty. Even as China and the US have been engaged in a trade war involving imposition of and retaliation with tariffs, the brunt (or opportunities) of the economic wars has spilt over to many other countries, including India. As Sino-US skirmishes are leading to reduction of imports from each other and both nations are looking forward to other countries as destinations of their exports and sources of imports erecting the high-tariff wall amongst them, India is emerging as a candidate for such substitutions. China’s share in total US trade dropped to 15.7% in 2018 from 16.4% in 2017. Simultaneously, total trade between India and the US increased to $87.5 billion in 2018 from $74.3 billion in 2017, raising India’s share in total US trade to 2.1% in 2018 from 1.9% in the previous year. The trend continues in 2019, too, as seen in trade data.
Commodity opportunity, too?
For some Asian countries, including India, American tariffs on imports of Chinese metals have given a boost to exports of some commodities, such as aluminium and steel. As the US imposed tariffs on Chinese steel and aluminium, India’s bauxite and aluminium exports saw an increase of 61.1% in 2018 over 2017, while iron and steel exports to the US surged 9.1% during the same period (see table). Interestingly, China, the world’s largest aluminium producer, retaliated with a 25% duty on US aluminium scrap. As the US, the EU and other developed markets have stringent standards for scrap imports, the global aluminium scrap supply is getting diverted towards India and other emerging markets. The diversion is being abetted by the 2.5% duty on scrap imports in India, as against 6% on primary aluminium, Indeed, scrap imports to India from the US alone have grown by 142% during April -November 2018 over the corresponding period of 2017, while the total scrap import shipments increased by 20% during the same period. Likewise, the tariff-hit Chinese steel, it is feared, can be dumped (if not being done already) into a vibrant consumption centre like India, either directly from China or by routing through Vietnam or Cambodia. Meanwhile, China has turned to India for meeting its demand for cotton. In March 2019, Indian traders signed contracts to ship 800,000 cotton bales to China as demand surged from the world’s biggest consumer. Following the US-China trade war, India’s cotton textile exports to China surged to 69% between April 2018 and February 2019, to $1.55 billion, compared to the same period the previous year.
Key for India
From the perspective of the global value chain, the impact of trade wars resulting from retaliatory tariffs depends on whether tariffs are temporary or here to stay. If they are imposed for a prolonged period and deemed permanent, they could be affecting investment decisions and reorientation of supply chains. Hopes are already being raised that some industries or supply chains may relocate to India, especially if the country continues improving ‘ease of doing business’ and focuses on ‘Make in India’. India’s large pool of engineers, a young labour force, wages that are half that of China’s and significant domestic consumption are factors that are attracting global manufacturing giants to make such shifts. Nevertheless, India needs to diversify the trade basket and continue exploring new markets such as Africa and Latin America to expand overseas shipments. One reason India’s external sector could weather the global economic storm of last decade was India’s diversified trade partners and absence of concentration, a policy that needs to be continued even now. Other innovations—activation of the rupee-rial payment mechanism established six years ago (but ended in 2015) to deal with western sanctions on Iran—also holds promise, if politically feasible. Finally, one needs to remember that the space ceded by warring nations that India aspires to occupy is available only to the extent of India’s own capabilities. This includes the ability to ramp up production with high efficiency and lean supply chains, competitive goods produced with well-managed price risks in an efficient market place that can enable Indian industry to sustain the trade momentum. Only through such sustained productivity increase can India aspire to sustainably access the lucrative yet challenging markets that beckon her.
Source: Financial Express
India could be out of the mega trade deal being negotiated between 16 countries, including the ASEAN and China, if a proposal made by Beijing for a free trade pact excluding New Delhi is taken seriously by other members. “China has started pushing for a free trade pact between ASEAN + 3 (which includes the ten-member ASEAN, China, Japan and South Korea) at the East Asia Summit. This would effectively mean that among the 16 countries negotiating the Regional Comprehensive Economic Partnership (RCEP), all except India, Australia and New Zealand would get included in the proposed pact,” an official told BusinessLine. The Ministry of External Affairs, which attends the preparatory meetings for the East Asia Summit, has sought comments from the Commerce Ministry on China’s proposal for an ASEAN+3 FTA. The next East Asia Summit, which is a forum of 18 countries of the Asia-Pacific region formed to fulfil the objectives of regional peace, security and prosperity, is in Turkey next month. Pressure tacticSome officials in the Commerce Ministry feel that the proposal, which had once been floated earlier but rejected by Japan, has been given a fresh life by China to put pressure on India to give it concessions similar to those by other countries at the RCEP negotiations. Since RCEP members, including the ASEAN, are aggressive in their demands, proposing that over 90 per cent traded items should have zero tariffs, New Delhi is hesitant about falling in line. India is especially apprehensive about Chinese goods swamping its market, forcing domestic producers to cut production or shut down. If finalised, the RCEP will result in the largest free trade bloc in the world accounting for 25 per cent of global GDP and 30 per cent of world trade. “China is trying to give a message that it is ready to ignore New Delhi if it plays hardball and switch over to an alternative ASEAN+3 arrangement. The move may also result in Australia and New Zealand putting more pressure on India to be more flexible in the RCEP negotiations, as they wouldn’t want to be excluded,” the official said. China may be trying to push for an ASEAN + 3 arrangement to speedily create a new order in the region with itself at the helm to counter the challenge posed by the US with which it is engaged in a trade war. “Earlier, it was Japan which was insistent on India’s participation in the negotiations for a regional bloc as it believed that the country could act as a balancing factor and block China’s efforts to increase its influence over the region. “However, if China has reached some kind of understanding with Japan on the matter, it could be a rough road ahead for India,” the official said. At present, officials from RCEP countries are holding an inter-sessional meeting in Bangkok, which is to be followed by another round at the end of next month. Most RCEP countries want to conclude the negotiations for the free trade bloc by the year-end, but India so far has refused to be hurried into giving its commitments.
Source: The Hindu Business Line
Melat and Rahel, both 24 years of age, completed their studies last year in the east African country of Ethiopia and landed their first job in an Indian textile company. They are among the 700-odd young men and women employed at KPR Export Plc. at Makelle, Ethiopia. They were trained at KPR’s Coimbatore manufacturing plant. Standing outside the work shed at Makelle Industrial Park, where his company is making garments, KPR Group’s executive director C.R. Anandakrishnan says SCM Garments, again from Coimbatore region, has occupied the adjacent shed. The two companies had generated over 1,500 jobs.
Bumpy ride
A drive from Makelle town to the Makelle Industrial park in Tigray region, Ethiopia, is a bumpy ride with the connecting roads under development and not many buildings around. Yet, the park, with its plug-and-play work sheds, is attracting Indian textile companies. Ask Mr. Anandakrishnan why Indian textile units, especially garment manufacturing factories, are expanding to new geographies, mainly Africa, and he says the prime reason is the duty-free access to the U.S. and the EU markets. Apart from Ethiopia, Kenya is attracting investments from garment manufacturers, while Tanzania and Uganda are also opening up. It is not only Indian factories, but also textile companies from China, Sri Lanka, and Bangladesh that are investing in these countries, adds Govind Venuprasad, coordinator of Supporting Indian Trade and Investment for Africa (SITA) project of the International Trade Centre. “For a polycot t-shirt, Indian exporters pay 32% import duty in the U.S. if shipped from India. It is duty-free [if exported] from Africa. For cotton t-shirts, the duty-free access gives 16% advantage to an exporter,” he adds. For an industry that works on thin margins in India, this is a substantial advantage even if the buyer does not pass on the entire benefit. By 2030, India is expected to be a net importer of clothing. The African market is also growing. By setting up capacities in Africa, Indian companies can tap the potential in both these growing markets in the coming years, says Mr. Venuprasad.
Rising costs
Further, with the Indian economy growing, costs are on the rise. Indian textile and garment manufacturers need to be competitive in the international market, he adds. “India has a competitiveness problem. Our garment export growth has remained flat for the last few years. The Indian government and the industry should sit together and discuss the issues,” says Sanjay Jain, chairman, Confederation of Indian Textile Industry. “We did look at Kenya before finalising the investment in Ethiopia. But, the labour cost is high in Kenya. If we pay a worker $200 a month in India, it is less than 50% of the amount in Ethiopia,” says Mr. Anandakrishnan. Indian investments across sectors started coming into Ethiopia after 2008 when the Ethiopian government came up with an attractive investment policy, and Indian industries were looking at frontiers outside India, says Mayur Kothari, convenor of India Business Forum, Ethiopia. But, there are challenges companies face in Ethiopia. It is a land-locked country and hence, transporting goods to and from the ports in neighbouring countries means longer time and higher cost. Infrastructure is an issue, says Mr. Anandakrishnan. Only industries that have scaled up capacities in India can afford long-term planning to invest in Ethiopia. “The duty-free access is offsetting additional costs that we incur. Right now, it is really tough there. In the long run, efficiency will go up, infrastructure will be developed and it will be a worthy investment,” says Ashok, chief marketing officer of SCM Garments. (The correspondent was recently in Ethiopia at the invitation of the International Trade Centre)
Source: The Hindu Business Line
Monthly compliance for start-ups needs to be reduced to one hour per month so that The Commerce and Industry Ministry has proposed cutting down compliance time significantly to just one hour per month for start-ups as part of measures to ease regulatory requirements for budding entrepreneurs, an official said. The proposal is a part of 'Start-up India Vision 2024', prepared by the Department for Promotion of Industry and Internal Trade (DPIIT) for the new government to promote the growth of budding entrepreneurs. At present, start-ups comply with a plethora of requirements such as GST filings, tax returns and other local laws every month, the official said. Compliance to these processes takes a lot of time and cost. "Monthly compliance for start-ups needs to be reduced to one hour per month so that they can concentrate on their core work," the official added. MicroGo LLP founder Rachna Dave said, Reducing the compliance time to 1 hour will be an extremely welcoming step giving startups enough time to focus on their core activity. It will also create a stronger startup support ecosystem in the country".MicroGo LLP is a Tamil Nadu-based startup that has received a patent for 'Tubelet' technology mainly used for water purification, sanitisation and sterilisation. The vision document has suggested a total of 11 measures for easing regulatory burden to provide a business-friendly environment to start-ups. The suggestions include setting up of a regulatory sandbox or innovation hub to help fintech startups; tax incentives for investments in ventures of budding entrepreneurs; reduction in GST rates on alternate investment fund management services; and amendment in income tax laws pertaining to sale of residential properties and carrying forward of losses. Besides the document has proposed taxation on ESOPs as start-ups use ESOPs as an alternate provision instead of cash salary to attract talented employees away from larger corporations. It also said that a specialist team within banks or a separate private agency to assess start-up loan applications are required to improve debt financing ecosystem for them. The vision document aims at facilitating setting up of 50,000 new start-ups in the country by 2024 and creating 20 lakh direct and indirect employment opportunities. The DPIIT, under the commerce and industry ministry, which has prepared the document, has also suggested setting up of 500 new incubators and accelerators by 2024; 100 innovation zones in urban local bodies; deployment of entire corpus of Rs 10,000 crore Fund of Funds; and expanding CSR funding to incubators. The document will be presented to the new government for further action. Startup India is the flagship initiative of the government, launched in January 2016, intends to build a strong ecosystem for the growth of startup businesses, to drive sustainable economic growth and generate employment opportunities. The Startup India action plan provides tax and other incentives. So far, as many as 18,711 startups have been recognised by the department. They can concentrate on their core work,' an official added
Source: Business Standard
India has firmly rejected attempts by the United States and several other industrialized countries for introducing “differentiation" to deny policy space through special and differential flexibilities for India and other developing countries in the multilateral trade agreements, say trade ministers. At a closed-door informal meeting of select-trade ministers in Paris on 23 May, India reiterated that it “cannot agree to any approach which undermines the centrality of the development dimension in the WTO". South Africa, and the representative of the biggest coalition of developing and poorest countries called the ACP (Africa, Caribbean, and Pacific) group supported India's position to ensure the "development dimension" in global trade. The US and other industrialized countries seem determined to bring about “graduation and differentiation" among developing countries for availing of special and differential flexibilities in the current and future trade negotiations at the World Trade Organization. The US deputy trade representative Ambassador Dennis Shea told his counterparts at the Paris meeting that Washington will pursue its proposal for differentiating developing countries to ensure that leading developing countries such as India from availing special and differential treatment flexibilities in the current and future trade negotiations, said a participant, who asked not to be quoted. India, which is facing a barrage of trade disputes because of subsidies provided to its farmers and increasing import duties on information and technology products, is being told by the US and its partners that New Delhi cannot avail policy space that is made possible through special and differential treatment (S&DT) flexibilities for developing countries. The Modi government which will retain reigns for the second time in New Delhi faces a grim battle on the trade front as the big boys in the global trading system led by the US are saying that New Delhi cannot avail policy space for industrialization in several sectors. In response to the stand taken by the US and other industrialized countries at the meeting, India maintained “the reality remains that developing countries continue to face formidable challenges in integrating with global trade and in addressing their development goals".India urged the US “to refrain from this divisive debate now and instead focus on strengthening the WTO and reviving the negotiating agenda". The reform proposals by US and its partners lack balance while pushing “for one-sided narrative with disregard for issues of importance and concern to developing countries", Wadhawan maintained. “WTO reform initiatives must keep development at the centre, promote inclusiveness and non-discrimination, build trust and address the inequalities and glaring asymmetries in existing agreements, which are against the interest of developing countries," India argued at the Paris meeting. Moreover, the Indian official maintained, “the first priority for us should be to address the ongoing impasse in the Appellate Body with a sense of urgency to launch the process of filling up the vacancies before December 2019." According to the Indian official, “any new disciplines (for fisheries subsidies) must also consider the capacity constraints of developing countries in conducting regular stock assessment based on the best scientific evidence available to them." He warned against the recent US-Australia proposal for capping fisheries subsidies at the current level, saying “the proposed new approach of capping of subsidies will unfairly impact developing countries and it will reward the big subsidizers by giving them higher caps, and thus create a permanent asymmetry." “Further, the capping proposals do not have an S&DT component, thereby denying much needed policy space to developing countries to develop their livelihood oriented fisheries sector," the Indian official maintained. According to the Indian official, “subsidies, both specific or non-specific, have the same adverse effect on sustainability of fish stock." “The attempt by some members to discipline only specific fuel subsidies will result in a large proportion of operating cost subsidies being left out of the disciplines," he argued.
Source: Live Mint
Press Trust of India NITI-Aayog Vice-Chairman Rajiv Kumar has emphasised the need to revamp and modernise the country’s statistical system to capture real-time data for policy analysis. He said that he is in touch with the World Bank for modernising the country’s statistical system. “One thing that I am clear about is that our statistical system needs to be revamped, modernised and get aligned with the statistical system in the world,” he told PTI in an interview.
Clouded GDP numbers
Recently, several experts including former RBI Governor Raghuram Rajan and former Chief Economic Advisor Arvind Subramanian had expressed doubts over India’s revised economic growth data. Both Rajan and Subramanian had said that the current cloud over the GDP numbers must be cleared by appointing an impartial body to look at the data. “And a World Bank team recently visited me, they are actively looking into what steps are to be taken for modernising our statistical system so that we can move increasingly to real-time data based statistical system and policy analysis,” Kumar added. His comments come at a time when the Statistics and Programme Implementation has decided to merge the Central Statistics Officeand the National Sample Survey Office into National Statistical Office.
Disinvesting PSUs
Asked whether the government would be able to privatise some sick public sector units (PSUs) this fiscal, Kumar said, “Yes, you can expect serious action this fiscal on raising non-tax revenues including disinvestment.” The Prime Minister’s Office (PMO) had asked the think-tank to look into the viability of disinvestment of state-run companies and the Aayog has already recommended strategic divestment of 34 sick PSUs and national carrier Air India. The government has set a disinvestment target of ₹90,000 crore for 2019-20. Responding to critical comments made by former RBI Governor YV Reddy on the NITI-Aayog, Kumar said that he would consult with former central bank chief to get more clarity. Reddy had recently said that the Aayog suffers from a wide mandate and diffused focus and there is a need to reinvent the organisation in the context of fiscal federalism. On Modi government’s goal of doubling farmers income by 2022, Kumar said that doubling of farmers income does not only depend on increasing output. According to him, to double farmers’ income, there is a need to reduce the cost of agriculture production and giving farmers more values for their output through agro-processing industries.
Source: The Hindu Business Line
The NITI Aayog CEO said that spurring private investments and ensuring better credit flow are the two important tasks for the new govt. Amitabh Kant, the chief executive officer of government think tank NITI Aayog, says the biggest task for the new government is to speed up private investments and ensure better credit flow. In an interview to Shantanu Nandan Sharma on Thursday, Kant spells out what all could be rolled out in the days to come. Edited excerpts:
How will Modi 2.0 be?
My view is that Prime Minister Narendra Modi will take India to a high trajectory growth rate by undertaking a series of structural reforms across sectors, which will catalyse private sector investments and job creation. This would necessitate enhanced credit flow. He will strongly focus on ease of living — thereby improving the lives of people — and on nutrition, health and learning outcomes, with special emphasis on aspirational districts.
Will there be any radical reforms?
In the last five years, the PM has been a bold, gusty and courageous reformer. He initiated a series of structural reforms, including the Goods and Services Tax, insolvency and bankruptcy code, direct benefits transfer and the Real Estate (Regulation and Development) Act. When you undertake structural reforms of such a large magnitude, it usually takes two to three years to get the results. The challenge now is to ensure that the momentum continues. The focus needs to be on industry — exports, which in the long run will lead to creation of largescale jobs. I feel the PM may lay emphasis on tourism, construction and textiles — all of which create jobs in a big way.
What about agriculture?
Major reforms in agriculture will be the key to doubling farmers’ incomes. Markets are nonfunctional in agriculture. This requires contract farming, restructuring essential commodities and APMC Acts, inflow of technology, better functioning eNAMs, flow of technology, access to markets and cold storages and warehousing. The PM is also likely to focus a lot on agri-business. The government will also push for reforms in mining, the railways, Bharatnet and the oil and gas sector. All these will boost economic growth in the days to come.
How much of those will come during the 100 day programme of the new government?
That’s for the prime minister to decide. The ministries have already worked on an action plan for 100 days. The NITI Aayog has worked on it. But it is for the PM to take the final call. The 100-day plan is about pushing difficult and big-ticket reforms.
Will privatisation of public sector undertakings (PSUs) materialise in a big way now?
The PM has been very clear that the government should not be in the business of doing business. It should be the private sector that needs to run business. This alone can enhance productive efficiency of the economy. Loss-making and non-strategic PSUs need to be privatised. The NITI Aayog has given a long list of recommendations in this regard.
Do you see major labour reforms taking place during PM Modi’s second innings?
There will an attempt to make labour laws easier and simpler. Work has already been done to bring the vast number of labour laws under four codes.
Source: Economic Times
|
Item |
Price |
Unit |
Fluctuation |
Date |
|
PSF |
1130.14 |
USD/Ton |
-1.89% |
5/26/2019 |
|
VSF |
1709.70 |
USD/Ton |
0% |
5/26/2019 |
|
ASF |
2500.80 |
USD/Ton |
0% |
5/26/2019 |
|
Polyester POY |
1086.68 |
USD/Ton |
-1.32% |
5/26/2019 |
|
Nylon FDY |
2506.60 |
USD/Ton |
-1.70% |
5/26/2019 |
|
40D Spandex |
4506.08 |
USD/Ton |
0% |
5/26/2019 |
|
Nylon POY |
5476.84 |
USD/Ton |
0% |
5/26/2019 |
|
Acrylic Top 3D |
1347.48 |
USD/Ton |
-1.59% |
5/26/2019 |
|
Polyester FDY |
2419.66 |
USD/Ton |
0% |
5/26/2019 |
|
Nylon DTY |
2680.47 |
USD/Ton |
0% |
5/26/2019 |
|
Viscose Long Filament |
1246.05 |
USD/Ton |
-1.15% |
5/26/2019 |
|
Polyester DTY |
2839.84 |
USD/Ton |
-1.51% |
5/26/2019 |
|
30S Spun Rayon Yarn |
2448.64 |
USD/Ton |
0% |
5/26/2019 |
|
32S Polyester Yarn |
1832.86 |
USD/Ton |
-0.39% |
5/26/2019 |
|
45S T/C Yarn |
2781.89 |
USD/Ton |
0% |
5/26/2019 |
|
40S Rayon Yarn |
2738.42 |
USD/Ton |
0% |
5/26/2019 |
|
T/R Yarn 65/35 32S |
2274.77 |
USD/Ton |
-0.32% |
5/26/2019 |
|
45S Polyester Yarn |
2028.46 |
USD/Ton |
0% |
5/26/2019 |
|
T/C Yarn 65/35 32S |
2419.66 |
USD/Ton |
0% |
5/26/2019 |
|
10S Denim Fabric |
1.33 |
USD/Meter |
-0.11% |
5/26/2019 |
|
32S Twill Fabric |
0.78 |
USD/Meter |
-0.18% |
5/26/2019 |
|
40S Combed Poplin |
1.05 |
USD/Meter |
-0.14% |
5/26/2019 |
|
30S Rayon Fabric |
0.62 |
USD/Meter |
0% |
5/26/2019 |
|
45S T/C Fabric |
0.69 |
USD/Meter |
0% |
5/26/2019 |
Source: Global Textiles
Note: The above prices are Chinese Price (1 CNY = 0.14489 USD dtd. 26/05/2019). The prices given above are as quoted from Global Textiles.com. SRTEPC is not responsible for the correctness of the same.
Prime Minister Imran Khan Sunday met a delegation of the business community to get their feedback on the country’s economic condition and government’s policies. The delegation comprised the renowned businessmen and representatives of pharmaceutical, textile, automobiles, footwear and other industries. Advisor to PM on Commerce Abdul Razak Dawood, Finance Advisor Abdul Hafeez Sheikh, Governor State Bank, Chairman Federal Board of Revenue and senior officials also attended the meeting. The prime minister’s interaction with the business community was in continuation of his regular feature to get their input on government’s policies and prevailing economic situation. During the interaction, the prime minister said the government wanted to build a strong partnership with the business sector to enable it play a major role in country’s economic progress. He said the government was specially focusing the construction of special economic zones to provide the business community a conducive environment and all required facilities. The delegation put forward their suggestions for uplift of various economic sectors.
Source: Duniya News
The Pakistan Tehreek-e-Insaf (PTI) government has decided to continue providing incentives to the country’s leading textile sector in a bid to boost value-added textile exports to $30 billion over the next five years. “A road map to grow value-added textile exports to $30 billion, through a comprehensive textile policy (for the next five years – 2019-24), will be rolled out by the task force led by Dr Salman Shah in the next eight weeks,” Pakistan Textile Exporters Association (PTEA) Patron-in-Chief Khurram Mukhtar said, after holding a series of meetings with high government officials from May 8 to 19. The Punjab government has recently appointed Shah as the adviser to the Punjab chief minister on economic affairs and planning. The PTEA patron-in-chief, along with other colleagues and delegates, held a series of meetings with Adviser to PM on Finance Dr Abdul Hafeez Shaikh, Adviser to PM on Commerce and Textile Abdul Razak Dawood, Federal Board of Revenue Chairman Shabbar Zaidi and other key officials at the Ministry of Finance in May. The previous five-year Textile Policy 2014-19 is going to expire by the end of June 2019. The government has, however, failed to achieve the target of doubling value-added textile exports to $26 billion under the policy. “Textile exports in first nine months of the current fiscal year, however, grew 19% in quantity and 3% in value due to the exchange rate adjustment,” said Mukhtar.
Key incentives
“The special energy package will continue for the five zero-rated sectors; electricity at 7.5 cents per kilowatt-hour and gas at $6.50 per MMBtu,” he said. The government has decided to increase financing under the subsidised export finance scheme (EFS) and long-term financing facility (LTFF). “Currently, the total textile sector exposure stands at Rs1,009 billion. The share of subsidised loans stands at 41% of the total exposure,” he said. “The EFS ceiling will be increased by Rs100 billion and that of LTFF by Rs200 billion,” he added. “The drawback of local taxes and levies (DLTL) scheme will continue for the five zero-rated sectors,” the patron-in-chief said. DLTL was announced in the outgoing textile policy for the exporters of textile products on the free-on-board value of their enhanced exports on an incremental basis if exports increased more than 10% over the previous year’s exports. In the meetings, it was noted that the zero-ratings of export sectors is a sensitive issue. The FBR chairman will take a final decision in this regard in consultation with all stakeholders. The Ministry of Finance has released Rs12 billion in refunds under the Duty Drawback of Taxes (DDT) scheme for the textile and non-textile sectors, which was received by all exporters recently.
Road map for remaining refunds of Rs115b
The Federal Board of Revenue (FBR) would issue promissory notes for sales tax refunds of Rs40 billion by the end of May if all exporters opened an account with the Central Depository Company (CDC). Sales tax refunds stand cleared till November 30, 2018, he said. Another Rs25 billion would be released for the DLTL/DDT schemes till June 20, 2019. The FBR will also issue promissory notes of Rs50 billion having sales tax refunds and income tax by the end of July 2019. The promissory notes will be of three-year tenure with an interest rate of 10%.The meeting decided on a 5% customs duty to be applied to raw cotton imports from July 1, 2019. Support price will also be announced for the raw cotton based on export parity.
Source: The Tribune
The draft bill titled; “Liability for Defective Products Bill, 2019” emphasizes the compensation of consumers who are affected by defective products. With the increasing substandard goods on the market, the Uganda Law Reform Commission (ULRC) has developed a new bill to hold manufacturers liable for defective products. The draft bill titled; “Liability for Defective Products Bill, 2019” emphasizes the compensation of consumers who are affected by defective products. The chairperson ULRC, Vastina Rukimirana Nsanze said the new proposed law imposes liability on manufacturers, sellers or distributors of the unsafe products that may cause injury, damage or death to consumers. Under the proposed legislation, the manufacturers, distributors, and sellers will have to compensate consumers for injuries and damages suffered as a result of defective goods. “Our economy has been opened up to foreign investors and distributors. There is an increase in processed consumables such as foods, tobacco, textiles, chemicals, drugs, print products, soap, foam products, and metal fabric products,” she noted. She added; “As the industry grows, the possibility of defective products getting on the market has become a reality, thus calling for a need to regulate the quality of manufactured products.” Nsanze made the remarks while speaking at the ULRC workshop to discuss proposals for the new legislation. The meeting was mainly attended by manufacturers, traders, distributors, and officials from various ministries. The bill is to impose strict liability for defective products, provide a right of action for consumers who are injured by such products, provide producers with defences to claims, and offer protection to consumers. She said the media has been reporting on adulterated products circulating the market including; drugs and cosmetics, but more continue to flood the market. She noted that despite efforts by enforcement agencies such as the Uganda National Bureau of Standards (UNBS) and the National Drug Authority (NDA), nothing has changed. “Uganda’s market heavily relies on imported products, the bulk of these are usually of very low quality. It is, therefore, no surprise that some products on the market are manufactured using hazardous substances that expose consumers to risks,” she noted.
Weak laws
Nsanze attributed this to lack of a stringent law that holds manufacturers liable, stressing that the current system of tort and contract law is prohibitive, restrictive and burdensome on claimants/consumers. While presenting the bill, Kenneth Rutaremwa from ULRC said the chain starts from the retailer where the consumer buys the product to the manufacturer or distributor. Under section 2 (1) of the bill; “The act shall apply to all moveable products except primary agricultural products which have not undergone initial processing”. The bill will also cater for damage from electricity, resulting from a failure in the process of generation. Those liable for defective products include; producer of the product, importer, and user of a trademark or other distinguishing mark in relation to the product. The bill stipulates that the onus of proof of damage and defect shall be on the injured person. It also stresses that a complainant shall file for action within less than three years before expiration from the date of manufacture. Rutaremwa (ULRC) said through their study, they realised UNBS has no capacity to handle the problem, stressing that at times UNBS officers get compromised. “Consumers had very low bargaining power. It is going to force manufacturers and other players to be more responsible to control harm,” he added. The chairperson, Parliamentary committee on tourism, trade, and industry, Robert Kasule Sebunya said the bill is key towards addressing the problem. “Because of new technologies we see new products on market but we do not know where they come from. Because many consumers are illiterate; they just go by the brand,” he added. Stephen Kamukama from the ministry of trade said there is a need to establish an agency for the complaint procedure to easily help affected consumers. Hope Atwiine, from Kampala City Traders Association, blamed the problem on UNBS which delays to inspect and certify goods. “Many people do not take their products to UNBS because they delay and traders cannot wait for their goods to expire,” she added.
Source: New Vision
Vietnam and Sweden should cooperate in the environmental protection and sustainable development in the context of the current Fourth Industrial Revolution, Minister of Industry and Trade Tran Tuan Anh has said. Also, the two sides should intensify the cooperation between their enterprises in investment, technology renovation, the minister stressed in an interview granted to the Vietnam News Agency ahead of the coming official visit to the North European country of Prime Minister Nguyen Xuan Phuc. Minister Anh affirmed that the Vietnam – Sweden trade relations has been established for long and developing unceasingly. However, bilateral economic and trade relations have yet to match potential. By April, Sweden ranked 33rd among the 131 countries and territories investing in Vietnam, with 68 valid protects totaling over 365 million USD in capital. In the first four months of this year, bilateral trade amounted to over 500 million USD, in which Vietnam’s exports topped 400 million USD, mostly footwear, textiles, sea food, wooden furniture, handicraft products, computers and accessories; and main imports from Sweden included telecommunication equipment, machinery and pharmaceutical products. In order to boost exports to the North European market, Minister Anh suggested Vietnamese enterprises pay attention to their quality, origin traceability, social responsibility, environment protection and business ethics. He also pointed out that the scale of orders from Sweden is not large, that is why Vietnamese enterprises should accelerate the approach to distribution chains to ensure sustainable business. The official pointed to the EU – Vietnam Free Trade Agreement as a factor that can bring about a positive impact for both Vietnam and Sweden. He also called on enterprises to join the Vietnamese Government in pushing up other governments to sign the deal at an early date, thus creating a more favourable economic – trade framework for the two countries.
Source: Vietnam News Association
The Central Bank of Nigeria (CBN) has revealed that the manufacturing sector in Nigeria continued its faster growth rate in the month of May 2019. The performance of the critical sector of the economy was measured by the apex bank via the Purchasing Managers’ Index (PMI), which stood at 57.8 index points in the month under consideration, indicating expansion for the 26th consecutive month. According to the CBN, the index grew at a faster rate when compared to the index in the previous month. Business Post learned that 13 of the 14 subsectors surveyed reported growth in the review month in the following order: transportation equipment; electrical equipment; petroleum & coal products; paper products; cement; food, beverage & tobacco products; plastics & rubber products; chemical & pharmaceutical products; fabricated metal products; furniture & related products; non-metallicmineral products; textile, apparel, leather & footwear and printing & related support activities. The primary metal subsector recorded decline in the review period. At 59.1 points, the production level index for the manufacturing sector grew for the twenty-seventh consecutive month in May 2019. The index indicated a faster growth in the current month, when compared to its level in the month of April 2019. Eleven of the 14 manufacturing subsectors recorded increased production level, while 3 recorded decline. The employment level index for May 2019 stood at 57.3 points, indicating growth in employment level for the twenty-fifth consecutive month. Of the 14 subsectors, 11 reported increased employment level, one reported unchanged employment level while 2 reported decreased employment in the review month. In the report, the central bank said the composite PMI for the nonmanufacturing sector stood at 58.9 points in May 2019, indicating expansion in the non-manufacturing PMI for the 25th consecutive month, growing at a faster rate when compared to its level in April 2019. Sixteen of the 17 surveyed subsectors recorded growth in the following order: management of companies; arts, entertainment & recreation; repair, maintenance/washing of motor vehicles; information & communication; agriculture; construction; educational services; real estate rental & leasing; electricity, gas, steam & air conditioning supply; health care & social assistance; wholesale/retail trade; accommodation & food services; finance & insurance; utilities; water supply, sewage & waste management and professional, scientific, & technical services. The transportation & warehousing recorded decline in the review period.
Source: Business Post
Climate risks and demand by Cambodia’s garment customers for international standard waste compliance are inevitably pushing the Kingdom towards a circular economy. Global temperatures are expected to rise at a minimum of 1.5C beginning 2018, according to United Nations’ Intergovernmental Panel on Climate Change (IPCC) last year. The report states that the depletion of natural resources will affect people, especially the poor, who depend on resources for their survival. To avoid a climate catastrophe, the IPCC argued for the necessity of urgent action across the globe. United Nations Development Program in Cambodia resident representative Nick Beresford says there ought to be ways to transform the way the economy operates and consumes resources. The current economic model is linear, moving from extraction to production, consumption and disposal. “By improving resource efficiency, promoting the use of renewable and clean energy, and the 4Rs (refuse, reuse, recycle and reduce), we can transfer to a non-waste based circular economy,” the Capital Cambodia quoted Beresford as saying. A circular economy defines solid waste management where plastic pollution is reduced, renewable energy increased, and management of protected areas are improved. “This is a revolutionary change in mindset. Wide adoption of circular economy models can significantly reduce the use of natural resources and energy, waste, greenhouse gas emission, and pollution,” he says. Cambodia is at the beginning, exploring options to move towards a circular economy, first with waste management based on a project launched last March. “It is a great effort for a small country like Cambodia to take the lead in promoting high-end organic products,” he adds. Three years ago, a report by UN Conference for Trade and Development showed that if India adopted circular principles, it could save about US$218 billion in economic value by 2030 and up to $624 billion by 2050. By 2040, if China practices a circular economy, pollution of fine particulate matter could drop by 50%, greenhouse gases by 23% and traffic congestion by 47%.To date, there has been no studies on the benefits relating to Cambodia’s adoption of circular economy. “However, Cambodia aspires to move towards it. Waste can become the source or raw material,” says E Vuthy, deputy secretary of the Secretariat of the National Council for Sustainable Development. Environment Ministry data shows that waste generated daily in Phnom Penh amounts to 1,800 tonnes to 2,000 tonnes. Of that, 55% is organic waste, 21% plastic, 13% textile, leather, diapers, and 5% paper. Stone and ceramic waste make up three percent, and glass is two percent. Vuthy says although there is no target date for Cambodia to have a circular economy, it can start by charting a roadmap or framework, and raise public awareness. Garment Manufacturers Association of Cambodia deputy secretary-general Kaing Monika says that abiding by environmental regulations is no longer an option. It is a demand by the market and consumers to comply with international standards. “Some of our buyers and member factories have joint sustainability programs to ensure solid waste management and energy efficiency. Global brands like Adidas and H&M take this matter seriously,” Monika says. In relation to that, GMAC is currently discussing with the ministry and Chip Mong Insee Cement Corp over the possibility of using waste fabric to produce energy for cement production. He states while there are environment-related laws, more regulations are expected in the future. “But the push to change will come from consumer behaviour and calls for international standards to be practiced,” Monika adds.
Source: Bangkok Post
