The Synthetic & Rayon Textiles Export Promotion Council

MARKET WATCH 29 MAY, 2019

NATIONAL

INTERNATIONAL

SIMA asks new government to release ₹9,000-cr pending TUF subsidy

The Southern India Mills’ Association has appealed to the new government at the Centre to resolve the TUF issue, boost job creation and textile exports. P Nataraj, Chairman, SIMA, has in a communication, reiterated the need for resolving issues in the TUF (Technology Upgradation Fund) Scheme by fast-tracking the release of the pending TUF subsidy of ₹9,000 crore. Resolving the TUFS issues would help bring huge investments, create jobs and boost exports as well. “Special export garment package and enhanced RoSTCL benefits would yield the desired results only when the TUFS issues are resolved,” the SIMA Chairman saidThe TUF, a flagship programme of the Textiles ministry, has attracted over ₹3.75-lakh crore investment over the past two decades, created jobs for over 10 million people apart from enabling the textile industry become globally competitive and increase its exports manifold. The scheme was effective and industry-friendly till 2007 when the Scheme was open ended, but as many complications cropped up, ₹9,000-crore in TUF subsidies piled up, and started to severely impact new investors in textiles. This stalled the growth potential, forex earning opportunities besides affected job creation on account of new investment. In its bid at making the sector globally competitive, the NDA government, which launched the TUF scheme in 1999, later extended the scheme up to March 2022 by allocating ₹17,822 crore. This budget allocation included ₹12,671 crore for committed liabilities of Modified Technology Upgradation Fund Scheme (M-TUFS), Revised Technology Upgradation Fund Scheme (R-TUFS) and ₹5,151 crore for Amended Technology Upgradation Fund Scheme (A-TUFS), the SIMA chief said.

Source: The Hindu Business Line

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Bangladesh garment exports, a challenge

According to him, a major contributor to this has been from the readymade apparel sector.

The Indian Texpreneurs Federation (ITF) has appealed to textile brands and retailers to focus on local sourcing to support domestic manufacturers, as this would create enormous job opportunities in the Indian sector. Speaking on the increasing trend of import of textile products, convener of ITF, Prabhu Damodharan said, “Bangladesh's overall exports to India during July-April of the current fiscal, 2018-19, has increased by an astounding 53 per cent to touch US $1.07 billion. Data from the Export Promotion Bureau (EPB) shows, Bangladesh earned $ 701.56 million during the same period of the last financial year.” According to him, a major contributor to this has been from the readymade apparel sector. He said, "India has lost nearly Rs 7500 crore worth of garment business to its neighbour. It would have created an additional 6,000 jobs in the spinning sector, 500 jobs in the processing sector, one lakh jobs in the garment sector and another 40,000 jobs in the printing and embroidery sector of the textile value chain." While the Indian textile industry is already facing sluggish demand in domestic markets, it is also witnessing stagnant exports, and the prospective job losses would be approximately 1.5 lakh. It will make a severe impact on the textile manufacturing sector," he rued. Mr Damodharan said, "as per industry experts, Western retailers with outlets in India, as well as Indian local brands are sourcing their goods from Bangladesh. It is paradoxical because our Central government is making efforts to promote "Make in India", "Skill India" and incentivizing job creations in the textile industry, he pointed out. He noted that considering the situation of the Indian textile industry and India's job creation challenge, the ITF urges all brands and retail chains operating in India to explore possibilities of partnerships with garmenting hubs of the country like Coimbatore, Tirupur, Karur, Erode ,Surat and Ludhiana. "Indian clusters can better serve the sourcing needs of both Western and Indian brands with quality and competitive pricing , than products sourced from either Bangladesh, Sri Lanka or Indonesia," he added.

Source: Deccan Chronicle

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GST Network offers free accounting and billing software to MSMEs

GST Network (GSTN) Tuesday said it has started offering free accounting and billing software to MSMEs with annual turnover of up to Rs 1.5 crore, which would benefit about 80 lakh small businesses. This software would help businesses create invoices and account statements, manage inventory and prepare GST returns. The said software is available under 'Download' tab on the official GST portal www.gst.gov.in, GSTN said in a statement. "GSTN has partnered with eight billing and accounting software vendors for providing software to the micro, small and medium enterprises, with annual turnover under Rs 1.5 crore, in a financial year without any cost to such taxpayers," the statement added. Almost 80 lakh MSMEs with turnover of less than Rs 1.5 crore could benefit, it added. The software providers offer basic features like sale/ purchase/ cash ledger, inventory management, supplier/ customer masters, generation of invoices, preparation of GST returns for free, while for services like additional feature like bank reconciliation, account receivable would be chargeable. GSTN Chief Executive Prakash Kumar said the move will help MSMEs to move towards digital system so that their efficiency can be improved and their compliance burden can be reduced. "Such taxpayers are nearly 80 per cent in number under GST regime and thus this step is going to benefit a large number of taxpayers. GSTN on directions of GST Council has identified eight vendors to provide the accounting and billing software without any cost to such taxpayers," Kumar added. The GST Council had in January approved the proposal of providing free accounting and billing software to small assessees up to Rs 1.5 crore turnover.

Source: Business Standard

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GST Council sets up 2 sub-groups to examine legal, technical aspects of e-invoice for B2B sales

The GST Council has set up two sub-groups to look into the policy and technical aspects, such as turnover threshold and mode of generation, for e-invoice generation by businesses. While one sub-group will examine the business process, policy and legal aspects for generation of e-invoice, the other will recommend technical aspects for its roll-out. (B2C) sales, especially in sectors where the probability of tax evasion is high. A 13-member officers' committee, comprising central and state tax officials as well as the GST Network chief executive officer, has been set up to look into the feasibility of introducing e-invoice system to streamline generation of invoices and easing compliance burden. The two sub-groups have been set up under the committee. (B2C) sales, especially in sectors where the probability of tax evasion is high. A 13-member officers' committee, comprising central and state tax officials as well as the GST Network chief executive officer, has been set up to look into the feasibility of introducing e-invoice system to streamline generation of invoices and easing compliance burden. The two sub-groups have been set up under the committee. The proposed e-invoice is part of the exercise to check GST evasion. With almost two years into the GST implementation, the government is now focussing on anti-evasion measures to shore up revenue and increase compliance. There are over 1.21 crore registered businesses under the GST, of which 20 lakh are under the composition scheme.

Source: Economic Times

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National Statistical Commission to get more teeth in 100 days

Changes likely in the institutional and legal framework of the statistics body after govt faced flak over GDP data quality. Facing criticism over the quality of official data on economic growth and employment, the government has decided to review the role of the National Statistical Commission (NSC) and empower it through a legislation to give it more teeth and resources. NSC, the apex advisory body on statistical matters, has been defunct since January, with no new independent members appointed by the government. “We want to strengthen the NSC. This is a priority on our agenda for the next 100 days,” said an official aware of the plans. The Ministry of Statistics and Programme Implementation (MoSPI) has suggested a National Statistical Commission Bill to strengthen its existing institutional and legal framework, which has been found to be inadequate for producing India’s official statistics. This plan is in line with the proposed National Policy on Official Statistics. The government has faced flak for revising the gross domestic product data under a new series with 2011-12 as the base year. One such case was the sharp revision in GDP growth for FY17, the year of demonetisation, 7.1% to 8.2%. A group of 108 economists had criticised the government when an estimate of back-series GDP data for the last decade by a committee appointed by the NSC was at variance with that of the Central Statistical Organisation. The CSO’s official data sharply lowered growth estimates for the period from 2005-06 to 2013-14. Former NSC members had blamed the government for its undue influence and delay in the publication of a National Sample Survey Office (NSSO) report on jobs, which the NSC had cleared. As per a leaked report, unemployment in India was at a 45-year high of over 6.1% in 2017-18 “We need to see if adding more people is the solution or it needs legislative strengthening,” the official added. Another official said the commission could be mandated to regulate and audit core statistics and advise the government on improving other official statistics. The National Policy on Statistics had suggested that the NSC should be constituted by law as a public corporation. Set up in 2006 with the mandate to evolve policies, priorities and standards in statistical matters, the NSC has a part-time chairperson, four part time members and an ex-officio member. The Chief Statistician of India is the secretary of the commission. In January, NSC’s acting chairman PC Mohanan and member JV Meenakshi resigned, saying the government was side-lining the commission.“ NSC was created to be an independent body whose members could be removed by the Supreme Court but now it has become an advisor to the chief statistician. In reality, its role is subservient to MoSPI and sweeping reforms are needed,” said an ex-member of NSC. According to another former member: “A clearly defined act with clear work allocation and accountability is needed.”

Source:  Economic Times

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100-day agenda: Commerce ministry pushes for separate logistics department

Official estimates put the size of the Indian logistics market at $100-125 billion and growing at about 5% annually. In a bid to bring all regulatory powers over the logistics sector under its wing, the commerce and industry ministry has pushed for the creation of a separate department for logistics. Submitted to the Cabinet, the proposal is part of the ministry’s 100-day agenda, and has the support of the Prime Minister’s Office (PMO), sources said. However, the move may find opposition from other ministries such as road transport and shipping, if they feel their marquee schemes are being handed over to another ministry. Case in point, the series of logistics parks envisaged under the broader Bharatmala scheme of the road transport ministry may now be implemented by Udyog Bhavan, which has championed the plan to reduce high logistics costs (estimated 14 per cent of gross domestic product) to less than 10 per cent by 2022, and is also finalising a dedicated policy for the sector. Official estimates put the size of the Indian logistics market at $100-125 billion and growing at about 5 per cent annually. According to the government, logistics services and infrastructure remain highly concentrated in just 15 states and Union Territories, which account for 90 per cent of the total exports by value. To spread services, the National Highways Authority of India (NHAI) has prepared the detailed project reports (DPRs) for these warehousing and storage hubs, to give fillip to the logistics industry, in Guwahati (Assam), Surat (Gujarat), Dabaspet (Karnataka), Indore (Madhya Pradesh), and Mumbai. According to a senior official, “The NHAI is ready with the DPRs, but the states have to come on board in terms of providing land for these projects. Once that is done, the execution agency for these hubs will be decided.” However, it is learnt that the commerce and industry ministry is also in discussion with other government agencies for the implementation of these projects. Last year, the PMO had picked up on the idea to create a single entity for streamlining the logistics sector, reduce wait time at ports and cut costs. Subsequently, a separate division under the commerce department was created in July 2017 under a special secretary-ranked officer. The division is currently putting finishing touches to a logistics portal set to boost logistics infrastructure, optimise processes, and aid in monitoring and tracing. The data tool will combine data from a wide range of sectors, mapping industrial clusters and infrastructure like highways, railway lines, and waterways. It will also collect trade data from major ports and compute the logistics flow of major commodities such as coal, steel, and cement.

Source: Business Standard

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Industry calls for extension of investment allowance to all sectors

In the pre-Budget consultation meeting with Ajay Bhushan Pandey, Revenue Secretary, the Confederation of Indian Industry (CII) called for lowering corporate tax rates, maintaining the peak rate of customs duty, kick-starting Government expenditure, and rationalising TDS as well as dispute resolution provisions. “Employment creation needs a strategic boost, including from the lens of revenue generation. The key sectors to be propelled for more job generation include the tourism ecosystem, the textiles to garments value chain, and farm-to-fork supply in the agriculture and food processing sector. End-to-end supply chains in the auto industry, construction sector and retail sector also require strong policy attention,” stated CII President Vikram Kirloskar. “To fire the four engines of consumption, investment, Government spending and exports, it is essential to reduce income tax burden and expand the scope of investment allowance to all sectors including services sector, mining, electricity generation, infrastructure service providers, agriculture and agro-processing sector. There is need for higher export incentives to help Indian exporters address the cost disadvantage in global markets,” he added. “With fiscal deficit a top priority, a good measure of fiscal health would be to consider revenue and capital expenditure quality, revenue receipts quality, revenue and fiscal deficits to GDP through a composite fiscal deficit index,” suggested Chandrajit Banerjee, Director General, CII. CII requested the Revenue Secretary that the first Union Budget presented by the new Government should announce the direction of taxation policy in the country. CII recommended that the Government ensure consistency, certainty and continuity of taxation policies for the next 5 years. “Government may also consider announcing a roadmap for tax policy over the next 5 years in order to attract investments,” stated Banerjee. India currently has one of the highest corporate tax burdens among comparable economies. In addition to corporate tax and dividend distribution tax, MAT is also levied. A lower tax rate is the need of the hour for growth and investments. CII emphasized that GST data could be leveraged to further widen the direct tax base, using big data. Several suggestions were made on direct tax structure. CII noted that dividend distribution tax should be rationalised to 10% and should be taxed at the hands of the recipientLong Term Capital Gains tax on equities and MAT should be removed, stated CII.

Source: SME Times

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RBI extends RTGS timings for customers, to be effective from June 1

The Reserve Bank of India has extended the timings for customer transactions through Real Time Gross Settlement (RTGS) from 4:30 pm to 6:00 pm. The Reserve Bank of India has extended the timings for customer transactions through Real Time Gross Settlement (RTGS) system. With effect from June 1, the RTGS timings for customer transactions (initial cut-off) will be 6:00 pm, instead of the present 4:30 pm. "It has been decided to extend the timings for customer transactions (initial cut-off) in RTGS from 4:30 pm to 6:00 pm," the RBI said in a notification on Tuesday. The new timings that will come into effect from June 1 are: The RTGS system is meant for large-value transactions and can be used for remitting funds more than Rs 2 lakh. There is no upper ceiling on the value of funds that can be transferred via the RTGS system. The time-varying charges for transactions in RTGS from 1:00 pm to 6:00 pm shall be Rs 5 per outward transaction, RBI said in its statement. After 6:00pm, customers will have to pay Rs 10 per outward transaction for remitting funds via the RTGS system.

Source: Business Today

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Lending to MSME sector to get a fillip

Public sector banks seem to be ceding ground to private sector banks and non-banking finance companies when it comes to lending to the micro, small and medium enterprise (MSME) sector. This is one sector of the economy on which the Modi-led NDA government set great store due to its potential for self-employment/ employment generation and ensuring socio-economic development. However, a host of factors, including rising bad loans given under the government’s flagship Mudra loan scheme, which is aimed at extending affordable credit to micro and small enterprises; the one-time restructuring of existing MSME loans (permitted by the RBI from January 1, 2019 and to be implemented by March-end 2020) that are in default but ‘standard’ as on January 1, 2019; and capital constraints have slowed down credit flow from PSBs to MSMEs. Lending by private banksAccording to a Kotak Securities report, which is based on a MSME study by TransUnion CIBIL, majority of the year-on-year growth in MSME lending in the third quarter (October-December) of FY19 came from private banks and NBFCs with market shares increasing by about 400 basis points (bps) and about 300 bps, respectively, at the expense of PSBs.

PCA framework

“PSBs are still the majority provider of credit to MSMEs (40 per cent share), but this has consistently reduced in the last five years (from 58 per cent in 3QFY14). However, going forward, we expect this trend to moderate as more PSBs come out of the PCA (prompt corrective action) framework and the impact of liquidity issues shows up in the numbers for NBFCs,” the report said. That PSBs have turned conservative vis-a-vis MSME lending is underscored by the fact that State Bank of India reported a 7 per cent year-on-year increase in March 2019, recording the slowest growth among all segments of domestic lending. The share of MSME sector in SBI’s gross domestic credit has declined from 15.45 per cent in March 2018 to 14.50 per cent in March 2019. With the NDA government getting re-elected, banking experts feel that its flagship programmes such as Mudra loan scheme and Start-Up India may be overhauled so that PSBs are encouraged to lend more to MSMEs. Also, these banks are likely to be asked to step up their activity on online platforms such as ‘psbloansin59minutes.com‘ and Trade Receivables Discounting System.

Source: The Hindu Business Line

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India moves up to 43rd place on competitiveness; Singapore takes top slot

Singapore has moved up to the top, from the third position last year, while the US has slipped to the third place in the 2019 edition of the IMD World Competitiveness Rankings. India has moved up one place to rank as the world's 43rd most competitive economy on the back of its robust economic growth, a large labour force and its huge market size, while Singapore has toppled the US to grab the top position, a global study showed Tuesday. Singapore has moved up to the top, from the third position last year, while the US has slipped to the third place in the 2019 edition of the IMD World Competitiveness Rankings. Hong Kong SAR has held onto its second place, helped by a benign tax and business policy environment and access to business finance. Economists regard competitiveness as vital for the long-term health of a country's economy as it empowers businesses to achieve sustainable growth, generates jobs and, ultimately, enhance the welfare of citizens. The IMD World Competitiveness Rankings, established in 1989, incorporate 235 indicators from each of the 63 ranked economies to evaluate their ability to foster an environment where enterprises can achieve sustainable growth, generate jobs and increase welfare for its citizens. The IMD Business School said it takes into account a wide range of statistics such as unemployment, GDP and government spending on health and education, as well as data from an executive opinion survey covering topics such as social cohesion, globalisation and corruption. The study said the Asia-Pacific region has emerged as a global beacon with 11 out of 14 economies either improving or holding their ground. India's ranking has improved by one place in past one year to 43rd, driven by a robust rate of growth in real GDP, improvements in business legislation and an increase in public expenditure on education. India was ranked 45th in 2017, but higher at 41st in 2016.The IMD study said the challenges before India remain maintaining high growth with employment generation, digital literacy and internet bandwidth in rural areas, managing fiscal discipline, as also issues related to the implementation of Goods and Services Tax and resource mobilisation for infrastructure development. In the 2019 rankings, India has scored well on several economic parameters and tax policies but has lagged in terms of public finance, societal framework, education infrastructure, health and environment. In the top-five, Switzerland has climbed to fourth place from fifth, helped by economic growth, the stability of the Swiss franc and high-quality infrastructure. The Alpine economy ranked top for university and management education, health services and quality of life. The United Arab Emirates ranked 15th as recently as 2016 entered the top five for the first time. The effects of rising fuel prices influenced the ranking, with inflation reducing competitiveness in some countries. Stronger trade revenues helped oil and gas producers such as this year's biggest climber Saudi Arabia, which jumped 13 places to 26th, and Qatar, which entered the top 10 for the first time since 2013. Venezuela remained anchored to the bottom of the ranking, hit by inflation, poor access to credit and a weak economy. "In a year of high uncertainty in global markets due to rapid changes in the international political landscape as well as trade relations, the quality of institutions seem to be the unifying element for increasing prosperity," said Arturo Bris, IMD Professor and Director of IMD World Competitiveness Center, which compiles the ranking. "A strong institutional framework provides the stability for business to invest and innovate, ensuring a higher quality of life for citizens," Bris said. About the US slipping from the top position, the study said the initial boost to confidence from President Donald Trump's first wave of tax policies appears to have faded in the United States. "While still setting the pace globally for levels of infrastructure and economic performance, the competitiveness of the world's biggest economy was hit by higher fuel prices, weaker hi-tech exports and fluctuations in the value of the dollar," it added.

Source: Business Standard

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FDI inflows contract in FY19, first in 6 yrs, on weak economic conditions

Inbound foreign direct equity investments declined for the first time in six years in FY19, in line with the overall weak economic conditions.Latest figures released by the Department for Promotion of Industry and Internal Trade (DPIIT) on Tuesday showed that equity inflows reduced to $44.36 billion, down by 1 per cent from $44.85 billion last year. “Apart from a wait-and-watch policy adopted by global investors before the elections, volatility in the stock market and the overall weak health of the corporate sector may have scared off new inflows,” said Devendra Pant, chief economist at India Ratings. India’s economy is officially projected to grow 7 per cent in FY19 —lowest in the Modi government’s first tenure. Private investments remained subdued and demand, particularly in the rural sector, was muted. However, investors may now rally around the massive mandate given to PM Modi and investments may rise accordingly, he added. In FY19, Singapore turned out to be the largest source of offshore funds with FDI rising nearly 25 per cent to $16.22 billion. This was followed by Mauritius at $6.8 billion and Japan at $2.98 billion. India revised its tax treaty with Mauritius and Singapore, which has fully come into effect from the current financial year. Figures presented by the government in Parliament in 2018 showed that FDI from nations widely regarded as tax havens, such as Cayman Islands and Hong Kong, had jumped in FY18. In the first financial year (2014-15) of the Modi government, FDI surged 25 per cent. The growth rate has fallen to 3 per cent FY18, according to latest statistics. In 2018, India’s position as an attractive FDI destination fell for the first time.

Source: Subhayan Chakraborty

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US calls India a 'great ally', says will work closely with PM Modi

Indian-Americans organised victory celebrations in various parts of the US. Several more are in the pipeline on a large scale in the coming weeks. India is a "great ally" of America and the US will continue to work closely with Prime Minister Narendra Modi, the Trump administration has said, asserting that Secretary of State Mike Pompeo was looking forward to have a "robust discussion" with his Indian counterpart on a wide range of issues. State Department Spokesperson Morgan Ortagus told reporters during an off-camera news conference here on Tuesday that the US was confident in the fairness and integrity of the just-concluded general elections in India. The Trump administration, including President Donald Trump, Vice President Mike Pence and Pompeo, congratulated Modi and his Bharatiya Janata Party on the spectacular electoral victory in the Lok Sabha elections whose results were declared on May 23. "We, of course, will work closely with Modi, as we have many times," Ortagus told reporters in response to a question. "We're confident in the fairness and integrity of the elections, and I think that Secretary Pompeo will have a very robust discussion on a range of issues. India is a great ally and partner of the United States," Ortagus said. The US Lawmakers and senior government officials continue to congratulate Modi on his grand electoral victory. Indian-Americans organised victory celebrations in various parts of the US. Several more are in the pipeline on a large scale in the coming weeks. According to a compilation made by the Indian Embassy here, more than 50 Congressmen, Senators and the senior government officials have sent congratulatory messages to Modi. "India continues to have amazing potential and is a strong US partner. Congratulations to Narendra Modi on your success with the elections and the direction you are taking India. We look forward to seeing our partnership continue to strengthen," tweeted Indian-American politician Nikki Haley. "Congratulations to Modi 'on being re-elected' as Prime Minister of India, said Congressman Al Green. "I wish peace and prosperity for India and its neighbours and look forward to seeing you at India House in my congressional district in Houston, Texas, USA," he said. In the first back-to-back majority for a single party in over three decades, the Modi-led Bharatiya Janata Party won 303 out of the total 542 Lok Sabha seats, handing out a crushing defeat to the Congress Party and many other political opponents. "Prime Minister Modi has led India and has brought lot of credibility in foreign affairs and made India a power to reckon with. He has travelled all the continents and made friends and has a given the prestige to India that was long overdue," said Sampat Shivangi, president of Indian American Forum. "India is a no more a third world country and has stood the test of time and has been recognised as one of the top six economies in the world," Shivangi said. The Indian-Americans will put pressure and use the political clout to impress upon the US the importance of a balanced and fair trade agreement with India. "We do not want another impasse as we see with US-China trade and we do not want India to be another China," he said.

Source: Business Standard

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Sri Lanka signs port deal with India, Japan to develop container terminal

The three countries will jointly build the East Container Terminal at the Port of Colombo Sri Lanka on Tuesday signed a deal with India and Japan to develop a deep-sea container terminal in the country that has seen increasing forays by China which has taken a strategic port on a 99-year lease that has worried New Delhi. The three countries will jointly build the East Container Terminal at the Port of Colombo. Sri Lanka's Port Authority (SLPA) said that around 70 per cent of Colombo Port's transshipment business is India related while Japan had cooperated since the 1980s to develop the port's container terminals. SLPA retains 100 per cent ownership of the East Container Terminal. The Terminal Operations Company (TOC) conducting all East Container Terminal operations is jointly owned; Sri Lanka retains a 51 per cent stake, and the joint venture partners purchase a 49 per cent stake. "As a hub of the Indian ocean, the development of Sri Lanka and openness of its ports are of great importance. Colombo port is the leading port in region. This joint project reflects the long standing goodwill and cooperation among the three countries," the SLPA said. The three countries are to work out details of the deal at joint working group meetings to be held inn the future. The involvement of India and Japan is the project is being seen as a big development aimed at neutralising the growing influence of China, which has poured money into the South Asian island nation under its mammoth Belt and Road Initiative (BRI) infrastructure plan. Sri Lanka has been one of the countries which became part of the China's Belt and Road Initiative, an ambitious plan announced in 2013 by President Xi Jinping to build an estimated USD 1 trillion of infrastructure to support increased trade and economic ties and further China's interests around the globe. However, China's politically controversial investments in Sri Lanka became an election issue in 2015 and fuelled infighting between politicians in the capital. India, the US and several other countries have been highlighting the concerns over the BRI projects which may leave a number of smaller countries in debt traps. The concerns grew louder after China took over Sri Lanka's Hambantota port on a 99-year lease. India's involvement in the latest project also became a reason for political infighting in the country. In September last year, Sri Lankan President Maithripala Sirisena's reported opposition to India being given a stake in the East Container Terminal had created a political uproar. During a heated argument with Prime Minister Ranil Wickremesinghe in the Cabinet, Sirisena had argued against partnering India on the basis that it would be lucrative for Sri Lanka to do it themselves. Sirisena was backing his Freedom Party accusations against his coalition partner Wickremesinghe's government of selling state assets. The dispute was one of the reasons which led to Sirisena's sacking of Wickremesinghe late October. Wickremesinghe was reinstated in December.

Source: Business Standard

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Rupee slips 18 paise to 69.69 vs USD on high dollar demand

"Month end dollar demand from oil importers, weaker Asian currencies and probable foreign funds outflows by MSCI re-balancing dragged the rupee lower in Tuesday's trade," said V K Sharma, Head PCG & Capital Markets Strategy, HDFC Securities. Going forward, the focus will be on RBI monetary policy outcome scheduled on June 6, on GDP data and manufacturing activity numbers scheduled on Friday this week. Brent crude futures, the global oil benchmark, climbed 0.53 per cent to USD 70.48 per barrel. The dollar index, which gauges the greenback's strength against a basket of six currencies, rose 0.16 per cent to 97.77. Meanwhile, government bonds rose, leading to 0.39 per cent drop in the yield to 7.14 per cent. Foreign institutional investors (FIIs) remained net buyers in the capital markets, putting in Rs 1,215.36 crore Monday, as per provisional data. Continuing their record-setting spree for a third day in a row, domestic equity benchmarks Sensex and Nifty Tuesday hit fresh closing highs on sustained foreign fund inflows coupled with positive domestic cues. After swinging over 300 points in a highly volatile session, the 30-share index ended 66.44 points, or 0.17 per cent, higher at 39,749.73 -- its all-time closing high. Likewise, the broader NSE Nifty inched 4 points, or 0.03 per cent, higher to 11,928.75 -- another closing peak for the index. Meanwhile, Financial Benchmark India Private Ltd (FBIL) set the reference rate for the rupee/dollar at 69.4327 and for rupee/euro at 77.8220. The reference rate for rupee/British pound was fixed at 88.4795 and for rupee/100 Japanese yen at 63.38.

Source: Money Control

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Global Textile Raw Material Price 28-05-2019

Item

Price

Unit

Fluctuation

Date

PSF

1100.09

USD/Ton

-1.30%

5/28/2019

VSF

1695.80

USD/Ton

0%

5/28/2019

ASF

2501.66

USD/Ton

0%

5/28/2019

Polyester    POY

1094.30

USD/Ton

0.67%

5/28/2019

Nylon    FDY

2507.46

USD/Ton

0%

5/28/2019

40D    Spandex

4464.15

USD/Ton

-0.96%

5/28/2019

Nylon    POY

1340.70

USD/Ton

0%

5/28/2019

Acrylic    Top 3D

2377.02

USD/Ton

0%

5/28/2019

Polyester    FDY

2681.39

USD/Ton

0%

5/28/2019

Nylon    DTY

1231.99

USD/Ton

0%

5/28/2019

Viscose    Long Filament

2797.34

USD/Ton

-1.03%

5/28/2019

Polyester    DTY

5478.73

USD/Ton

0%

5/28/2019

30S    Spun Rayon Yarn

2449.49

USD/Ton

0%

5/28/2019

32S    Polyester Yarn

1819.00

USD/Ton

0%

5/28/2019

45S    T/C Yarn

2768.35

USD/Ton

0%

5/28/2019

40S    Rayon Yarn

2739.37

USD/Ton

0%

5/28/2019

T/R    Yarn 65/35 32S

2261.06

USD/Ton

0%

5/28/2019

45S    Polyester Yarn

1971.18

USD/Ton

-0.73%

5/28/2019

T/C    Yarn 65/35 32S

2391.51

USD/Ton

-0.60%

5/28/2019

10S    Denim Fabric

1.33

USD/Meter

0%

5/28/2019

32S    Twill Fabric

0.78

USD/Meter

0%

5/28/2019

40S    Combed Poplin

1.05

USD/Meter

0%

5/28/2019

30S    Rayon Fabric

0.62

USD/Meter

0%

5/28/2019

45S    T/C Fabric

0.69

USD/Meter

0%

5/28/2019

Source: Global Textiles

Note: The above prices are Chinese Price (1 CNY = 0.14494 USD dtd. 28/05/2019). The prices given above are as quoted from Global Textiles.com.  SRTEPC is not responsible for the correctness of the same.

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Pakistan: Govt pays Rs62bn to textile sector under PM exports enhance package

The government has so far paid Rs 62.5 billion to the local textile industry under Prime Minister’s Exports Enhancement Package since July 2017, to help boost exports from the country, senior official in the ministry of textiles and industry told APP here on Tuesday. During the last 10 months, the ministry paid Rs 20.5 billion to the textiles industry while it intends to pay more incentive in the coming month, the official said. During the upcoming year, the government would pay further Rs 40 billion to the textile sector for value addition, which the official said would boost country’s external trade. The Exports Enhancement Package was aimed at bridging gap between exports and imports by encouraging the export oriented industry and incentivizing the industrial sector for introducing the innovative, modern and cost cutting technologies, particularly in the textile industry. Replying to a question, he said that so far State Bank of Pakistan (SBP) has received the Rs 27 billion refund claims under the package, which he said would be processed accordingly. He said in last seven months, the government had paid Rs 62 billion in terms of outstanding claims, adding that pending liabilities of Rs 20 billion would be paid off in coming months. “The government is committed for the execution of PM export enhancement package for development and growth of the textiles sector for increasing country’s export,” the official added. He further said that increasing the country’s exports and creating job opportunities for the people were the topmost priorities of the government.

Source: The Nation

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Textile industry calls for EU action towards a circular economy

Textiles and apparel industry association Euratex has launched a manifesto, aimed at urging EU policy makers to act to establish a "true" circular fashion system. The call comes hot on the heels of a European Commission announcement that it plans to check existing EU policies to see how they can contribute to the circular economy. A Commission staff working document, released in March, recognised the "large potential" of the textiles sector in this area but where "no instrument exists setting design and durability criteria for textiles".Now, in a joint manifesto launched in early May, Euratex and four apparel organisations say the systems in place "are currently inadequate". Their document makes recommendations for future EU actions, and paves the way for a new industry collaboration, which includes discussions on the presence of hazardous chemicals.

Among recommendations, the manifesto calls for:

  • a new toolbox to bring together public and private initiatives, in order to remove barriers, increase awareness, invest in technological innovation, stimulate demand and develop new business models;
  • coordination across all institutions at the EU level to be able to cover the "full complexity" of circular fashion and textiles;
  • smart regulation to "identify and alleviate" areas that industry cannot address alone, and encourage future innovation; and
  • clearly defined roles and responsibilities for each actor in the value chain.

Along with Euratex, the Federation of the European Sporting Goods Industry (Fesi), the International Apparel Federation (Iaf), the Sustainable Apparel Coalition (SAC) and Global Fashion Agenda (GFA) signed the manifesto. Mauro Scalia, Euratex director of sustainable businesses, said: "The manifesto shows that finding new ways for unprecedented coordination is possible." And Eva Kruse, CEO and president of GFA, said the document is "extremely significant" because it is the first time so many organisations in the fashion industry have come "together to work with policy makers on a unified approach to circularity". "Through this European collaboration we can support legislation that promotes lasting industry improvements globally,'' said Baptiste Carrière-Pradal, vice president of the SAC. The manifesto, announced during the Techtextil and Texprocess fair in Frankfurt, is the first step of a new strategy that aims to bring industry together to find ways forward on circularity. The strategy will be developed in the course of the year and is likely to be presented in 2020. Speaking at the Helsinki Chemicals Forum on 23 May Daniel Calleja Crespo, director general of the European Commission’s DG Environment, urged greater efforts to ensure consumer trust in chemicals used and reused in products.

Source: Chemical Watch

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Textile Industry Moves Toward Industry 4.0 Despite Challenges

A great automation and digital transformation awaits the textile and apparel industry. Changes in traditional production markets show us that the industry is looking for more efficient production methods. China still maintains its traditional power, investments in the African market are reviving and the US shifts its supply chain to nearby regions says the ITMF General Manager, Dr. Christian Schindler. According to market researches, the global textile market is expected to reach 1.23 trillion dollars by 2025. The shift in production locations and models that have been dominant for a long time, the increasing impact of digitalization, the increase in demand for sustainability-oriented solutions and more textile innovations for technical applications stand out as important developments in this process. We talked the today and tomorrow of the textile industry with the International Textile Manufacturers Federation’s (ITMF) General Manager, Dr. Christian Schindler. Saying that the global economy is now in a difficult period, Schindler pointed out to the weakening of the long economic growth cycle since the 2008/2009 financial crisis. In addition, he noted that the trade dispute between the United States and China, the two largest economies, and the yet unresolved Brexit aggravated the economic growth. Schindler argued that the entire textile value chain, from the fiber to the fashion industry, is facing two main challenges. “First, the accelerated digitalization of the entire industry is forcing all players to adapt” said Schindler and continued saying that the fast fashion is becoming the new normal and the industry should adapt by developing new business models. Second, Schindler stated that more and more textile apparel manufacturers should adapt to the growing demand for sustainability. Christian Schindler; “China still dominates textile investments” Indicating that the textile and apparel industry adapt to the Industry 4.0 and digitization very quickly; Christian Schindler, noted that particularly due to rising labour costs, the need for automation; and its implementation became more urgent in major textile manufacturing countries such as China, India and Turkey. Schindler said that the need to invest more in eco-friendly technology continues today; and provided the following information about the investment trends in the global market; “In the last 15 years approx. 90% of all new investments in new textile machinery was going to Asia. Within Asia, China has been during this period the dominant investor absorbing by far the bulk of this investment (around 30- 70% of global investment depending of the textile machinery segment). Apart from Egypt and lately Ethiopia; hardly any country in Africa has attracted any significant investments in the past 15 years. Nevertheless, it can be observed that brands and retailers are looking increasingly at Africa as a sourcing destination. They are mainly looking at sourcing apparel from Africa. The reasons are multi-fold. Relative low labour costs play a certain role, though productivity in many African countries is lagging the Asian levels. In addition to relative low labour costs, preferential market access to Europe and the USA plays an important role as does the geographical proximity to European and the US markets”. Turkey remains competitive through textile investments Highlighting Turkey as a major global player in textile and apparels industry; Christian Schindler said that Turkey has stayed a competitive manufacturer by investing in new textile machinery. “Currently, the industry is undergoing a difficult period with relative high capital costs and difficult access to capital,” said Schindler and continued; “The Turkish textile and apparel industry is well known for producing high quality products for the medium and upper segments. Its geographical proximity to the European, Central Asian and Middle Eastern markets allows quick delivery times; that certainly prove to be a big advantage when it comes to fast fashion”. Key points in new textile investments in the US are costs. Christian Schindler said that the new textile machinery investments in the US are relatively low compared to the investments in Asia; but that the US textile industry has advantages such as low energy and capital costs. Pointing out that US can produce all kinds of fiber such as cotton, synthetic and cellulosic fibers; Schindler advocated that due to the high labour costs, significant part of traditional textile and apparel production cannot be brought back to the country. Schindler stated that investments in high value-added production and technical textiles in the US will continue; and that more textile and apparel investments could be made in Mexico and Central America due to geographical proximity and lower labour costs. Christian Schindler said the ITMA 2019 exhibition will most likely focus on sustainability-oriented and environmentally friendly technologies; such as reducing energy and water consumption. Schindler noted that investments in new technologies within the framework of Industry 4.0 will increase in the industry; and added that with the help of new technologies, the industry can become better, faster, more productive and environmental friendly.

Source: Textile Gence

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Sri Lanka: Imports dip 19.3% in 1Q

Imports dropped a steep 19.3% in the first quarter of 2019, even though export earnings increased by 5.6% year-on-year as the trade deficit contracted to $ 1,661 million from $ 2,982 million recorded in the first quarter of 2018, the Central Bank said yesterday. Releasing the latest External Sector Performance Report, the Central Bank said imports had declined for five straight months, with March seeing a 12.6% drop, on a year-on-year basis, to $ 1,729 million. The Central Bank attributed the drop to policies aimed at discouraging imports and said that an import pick-up may take place in the second quarter as these policies were reversed. All imports other than fuel saw a decline as economic activity slowed. In March 2019, the deficit in the trade account narrowed to $ 592 million, compared to $ 871 million in March 2018. The considerable reduction in the trade deficit in March 2019 was due to a notable decline in import expenditure by 12.6% (year-on-year) which was further supported by the increase of export earnings by 2.6% (year-on-year), the report said. The financial account was further strengthened in March with the proceeds of the International Sovereign Bonds (ISBs) amounting to $ 2.4 billion and net inflows of foreign investments to the Government securities market during the month, although some net outflows were observed from the Colombo Stock Exchange (CSE). Along with the significant reduction in the trade deficit and significant inflows to the financial account, the Sri Lankan Rupee appreciated against the US Dollar by 3.8% by end March 2019 compared to end 2018. Despite the marginal depreciation of the rupee in the aftermath of the Easter Sunday bomb attacks, it recorded an appreciation of 3.8% during the year up to Tuesday. On 13 May, the Executive Board of the International Monetary Fund (IMF) completed the Fifth Review under Sri Lanka’s Extended Fund Facility (EFF) approving the disbursement of the sixth tranche amounting to SDR 118.5 million (approximately $ 164.1 million). The Executive Board also approved an extension of the arrangement by one year, until June 2020, and rephased the remaining disbursements. The country’s gross official reserves stood at $ 7.6 billion, which was equivalent to 4.3 months of imports at end March 2019. The deficit in the trade account narrowed significantly in March this year in comparison to March 2018 due to record high export earnings and considerable reduction in imports. Expenditure on imports continued to decline due to the policy measures adopted by the Central Bank and the Government. On a cumulative basis, the deficit in the trade account contracted significantly during the first three months of 2019 in comparison to the corresponding period of 2018. Terms of trade, which represent the relative price of imports in terms of exports, deteriorated by 3.3% (year-on-year) in March due to the decline in export prices at a higher rate than the decline in import prices. Meanwhile, on a cumulative basis, terms of trade deteriorated marginally during the first three months of 2019 in comparison to the corresponding period of 2018. “Merchandise exports recorded the highest-ever monthly earnings of $ 1,137 million in March 2019 registering a moderate growth of 2.6%, due to the higher base in March 2018. The growth in exports was driven by the improved performance in industrial and mineral exports while agricultural exports declined,” the report said. Under industrial exports, earnings from textiles and garment exports increased notably in March 2019, recording the highest-ever monthly earnings which surpassed $ 500 million for the first time. This growth was mainly due to higher demand for garment exports from traditional markets, namely the USA and the EU, as well as non-traditional markets such as Canada, Australia and China. Export earnings from textiles and other textile articles also increased in March. Earnings from petroleum exports increased in March, reversing the declining trend observed during the past three months, led by an increase in both volume and prices of bunker and aviation fuel. Export earnings from base metals and articles increased driven by iron and steel articles and aluminium articles. Export earnings from food, beverages and tobacco increased during the month owing to the improved performance in all sub categories except vegetables, fruit and nuts preparations. Printing industry products, and chemical products also contributed towards the increase in industrial exports in March. However, earnings from machinery and mechanical appliances, gems, diamonds and jewellery, rubber products, leather, travel goods and footwear, and transport equipment exports declined in the period concerned. Earnings from agricultural exports declined in March, mainly driven by subdued performance in tea, minor agricultural products, natural rubber and unmanufactured tobacco exports. Although the volumes of tea export increased in March, export earnings from tea declined due to lower average export prices. However, earnings from coconut exports increased due to the increase in export of both coconut kernel and non-kernel products. Earnings from spices, seafood and vegetable exports also rose marginally during the month. Export earnings from mineral exports, which account for about 0.4% of total exports, rose mainly driven by export of titanium ores. The export volume index in March 2019 increased by 10.6% while the export unit value index decreased by 7.2%, implying that the growth in export earnings was solely driven by the increase in volumes. Expenditure on merchandise imports declined considerably in March 2019 by 12.6%, on a year-on-year basis, to $1,729 million, recording a decline for the fifth consecutive month. This reduction was mainly due to the effect of the policy measures implemented by the Central Bank and the Government to discourage certain non-essential imports and the significant depreciation of the currency. However, considering the favourable developments in the external sector and measures introduced in Budget 2019, such policy measures were withdrawn in March 2019. Low expenditure on intermediate and consumer goods contributed to the decline in imports during March 2019, while expenditure on investment goods increased. Total imports, excluding fuel, also declined significantly. Import expenditure on intermediate goods declined in March 2019 mainly driven by gold imports which continued to be stagnant following the imposition of customs duty on gold in April 2018. Expenditure on wheat and maize declined owing to the lower import volume of wheat. Plastic and articles, food preparations and vehicle and machinery parts imports also contributed to the decline in intermediate goods. In contrast, expenditure on fuel imports increased in March owing to higher import volume and prices of crude oil despite a reduction recorded in refined petroleum and coal imports. In addition, expenditure on fertiliser imports increased in March 2019 mainly driven by higher import volumes when compared with March 2018. Further, import expenditure on textiles and textile articles led by fabrics, base metals led by iron and steel and mineral products led by cement clinkers increased during the period concerned. Reflecting lower imports of most items in both food and beverages and non-food consumer goods, import expenditure on consumer goods declined significantly in March. Expenditure on personal motor vehicle imports declined significantly in March, continuing its year-on-year declining trend observed since December 2018. However, imports of personal motor vehicles recorded an increase in comparison to the previous month. Policy measures on motor vehicle imports were changed with the withdrawal of margin requirements against letter of credits (LCs) and upward revision of excise duties on motor vehicles. In addition, import of rice declined with lower import volumes as there was sufficient domestic production of rice in the market while sugar and confectionery imports reduced due to lower import volumes and prices. In addition, expenditure on most non-food consumer goods such as clothing and accessories, telecommunication devices, home appliances and household and furniture items declined during the month. However, expenditure on dairy products, cosmetics and toiletries, printed materials and stationery imports increased in March. Import expenditure on investment goods increased in March, driven by higher imports of building material and machinery and equipment. Reflecting higher imports of cement and articles of iron and steel, import expenditure on building material increased. Import expenditure on machinery and equipment increased during the month, mainly due to imports of cranes. In contrast, expenditure on transport equipment declined in March due to lower expenditure incurred on the importation of tankers and bowsers and buses compared with the corresponding period of 2018. Import volume and unit value indices decreased by 8.9% and 4.1%, respectively, in March, indicating the decline in import expenditure during the month was driven by the reduction in both volumes imported and price, in comparison to the corresponding period of 2018. Along with the proceeds of the ISBs, as at end March, gross official reserves were estimated at $7.6 billion, equivalent to 4.3 months of imports. Total foreign assets, which consist of gross official reserves and foreign assets of the banking sector, amounted to $ 10.5 billion as at end March, equivalent to six months of imports.

Source : Financial Express

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Bloomberg: Vietnam’s goods exports to US surge

Vietnam was one of the fastest-growing import sources of the US in Asia in the first quarter of 2019, according to Bloomberg. The Southeast Asian country could leapfrog Italy, France, the UK and India to rank seventh in the top exporters to the US if its pace of growth can be sustained for a full year, Bloomberg said, forecasting Vietnam’s exports to the US could hit nearly 69 billion USD this year. It cited data from the US Census Bureau which showed that imports from Vietnam jumped 40.2 percent year-on-year in the first three months of 2019. Vietnam has become a standout in a region where the world’s export engines are heavily hurting amid the trade-war tensions between China and the US, and a slowing electronics cycle, according to Bloomberg. Exports of Japan, the Republic of Korea, Singapore, and Taiwan all saw declines in April, while in the same month Vietnam’s exports gained 7.5 percent from a year earlier. Bloomberg said Vietnam offers low-cost labor and an improving business climate alongside boasting one of the fastest growth rates in the world. According to the General Department of Vietnam Customs, in the first four months of this year, the US continued to be the biggest importer of Vietnamese goods, buying 4.42 billion USD worth of garment-textile, up 9.1 percent year-on-year; 2 billion USD worth of footwear, up 13.5 percent; 1.3 billion USD worth of machinery, equipment, and spare parts, up 54 percent; and 1.42 billion USD worth of wood and timber products, up 34.7 percent.

Source: Vietnam News Association

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