After the portfolios of Union Ministers were announced on Friday and Smriti Irani was retained as Union Minister for Textiles, the textile and clothing industry here is hopeful that many of the pending issues will be resolved. According to the Southern India Mills’ Association, the new team of ministers in the key ministries have understood and know the issues related to the sector. The industry will continue to extend its cooperation to the Central Government. It will focus on the Technology Upgradation Fund Scheme, the need for a textile policy, and to reduce GST on viscose fibre. Tiruppur Exporters’ Association president Raja M. Shanmugham said the association would extend full support to the Union Minister for Textiles. The Government should address issues such as ATUFS pending claims, simplification of ATUFS guidelines, procedural issues in getting ROSCTL benefit, and Free Trade agreement with European Union, the U.K, Comprehensive Economic Cooperation Agreement with Australia and Comprehensive Economic Partnership Agreement with Canada, etc. The Indian Texpreneurs Federation has said the Ministry should focus on fundamental changes needed in some of the policies. Textile exports should grow and for that there should be a fibre neutral policy, cotton technology mission, support for SME apparel makers to diversify and tap opportunities in new overseas markets. The government should come out with a mechanism for scientific data collection of cotton cultivation.
Source: The Hindu
The reforms could include changes in labour laws, privatisation moves, and creation of land Banks. In the first 100 days of PM Narendra Modi's second term, a slew of 'big-bang' economic reforms that should please foreign investors are likely to be pursued, according to a top official at the government's main think tank. The reforms will include changes in labour laws, privatisation moves, and creation of land banks for new industrial development, said Rajiv Kumar, vice chairman of NITI Aayog (National Institute for Transforming India), who reports directly to Modi. "They (foreign investors) will have reasons to be happy. You will see a slew of reforms I can assure you of that. We are going to pretty much hit the ground running," Kumar told Reuters in an interview. Modi is chairman of the think tank. He was sworn into office for his second term on Thursday night. Kumar was speaking before Modi announced members of his new cabinet. Niti Aayog, which now acts as the main centre for policy making and for driving new ideas, was founded four years back when Modi scrapped the 65-year old planning commission, saying that India was stifled with Soviet-style bureaucracy. Kumar said reforms in India's complicated labour laws will see the light of day as early as the next parliamentary session in July, when the government will place a new bill before the lower house for approval. It will aim to combine 44 central laws into four codes – wages, industrial relations, social security and welfare, and the fourth - occupational safety, health and working conditions. This should help companies avoid getting embroiled in a series of complicated disputes with their workers and officials that involve regulations set by authorities at different levels of government and can lead to long, drawn-out adjudication in various parts of the legal system. The government could also offer swathes of land to foreign investors from the land banks it plans to create from unutilised land controlled by public sector enterprises, Kumar said. "What could be attempted is to build an inventory of government land that can then be offered to foreign investors," Kumar said. The land parcels could be designed as clusters catering to a specific set of investors or industrial sectors, Kumar said. Kumar said the government will focus on fully privatising or closing more than 42 statecontrolled companies in the coming months. The government is even mulling lifting the foreign direct investment cap on Air India, the loss-making state-owned flagship carrier, to make it easier to sell. Kumar also said that it could create an autonomous holding company that would control all state-owned firms and wouldn't be answerable to lots of different ministries. This would speed up decision making for asset sales, avoiding much of the central government's bureaucracy. India’s economic growth rate decelerated to a five-year low of 5.8% in the January-March quarter. The economy needs far faster growth if it is to generate enough jobs for the millions of young people entering the labour market each month. Kumar blamed the stressed balance sheet of banks and a crisis in the shadow lending industry for the recent drop in growth. He suggested the government should start with reforming the state-owned banking sector and also create more money for spending on infrastructure and new public housing through more and quicker privatisations and better tax collection. "We should (start with the banks).. There will be big bang, there will be 100 days action. We are all geared for that ... I have maintained that the fiscal policy should be counter cyclical. There is scope for that."
Source: Economic Times
During April 2018, the expansion rate of eight infrastructure sectors - coal, crude oil, natural gas, refinery products, fertilisers, steel, cement and electricity stood at 4.7 per cent. A contraction in output of natural gas, fertilizers and crude oil pulled down the growth of India’s infrastructure sectors to 2.6% in April, official data released on Friday showed. The core sector had grown 4.9% in March 2019 and 4.7% in April last year. The eight infrastructure sectors of coal, crude oil, natural gas, refinery products, fertilisers, steel, cement and electricity, have a 40.27% weight in the index of industrial production. Crude oil output shrank 6.9% while fertiliser production was down 4.4%. Natural gas output contracted 0.8% in the month. Coal production rose 2.8% in the month. The output of electricity and refinery products was 5.8% and 4.3%, respectively.
Source: Economic Times
Piyush Goyal has assumed leadership at a time when the country is in the midst of crucial negotiations with members of one of the largest proposed trading blocs that includes China and the ASEAN. Over the last few months, the Commerce Ministry has also been trying to reach a trade agreement with the US which is miffed with India for the existing trade imbalance. “The Commerce & Industry Minister has asked senior officials including the two Secretaries to brief him on priority issues,” a government official told BusinessLine. Goyal said that he will take guidance from former Commerce & Industry Minister Suresh Prabhu who has not been given charge of any Ministry or Department in the new government. “I was just discussing with him (Prabhu) the subject and the challenges in the Ministry. I will look to him for guidance and support,” Goyal said. The task immediately ahead of Goyal will be to reach a limited trade pact with the US to try and stop it from withdrawing the GSP scheme which allows duty free access to over 3,000 goods from India into the American market. The US wants India to roll back the 20 per cent import duties imposed on smart phones and also remove price caps on medical devices. It is also unhappy with changes brought about in the e-commerce policy, including a ban on foreign players to hold equity in companies whose products they sell. In the on-going negotiations for the Regional Comprehensive Economic Partnership (RCEP), India has to decide whether it could afford to give zero-duty access to a host of Chinese goods or if it is better to opt out of the pact.
Source: The Hindu Business line
President Donald Trump has terminated India’s designation as a beneficiary developing nation under the key GSP trade programme after determining that it has not assured the US that it will provide “equitable and reasonable access to its markets.” The Generalized System of Preference (GSP) is the largest and oldest US trade preference programme and is designed to promote economic development by allowing duty-free entry for thousands of products from designated beneficiary countries. “I have determined that India has not assured the US that it will provide equitable and reasonable access to its markets. Accordingly, it is appropriate to terminate India’s designation as a beneficiary developing country effective June 5, 2019,” Trump said in a proclamation on Friday ignoring the plea made by several top American lawmakers.On March 4, Trump announced that the US intends to terminate India’s designations as a beneficiary developing country under the GSP programme. The 60-day notice period ended on May 3.The Trump administration has prioritised working with the Government of India to ensure that US companies have a level-playing field, a senior State Department official told reporters on Thursday, hours after Narendra Modi was sworn in as Prime Minister for a second time following his spectacular electoral victory in the general elections. Under the GSP programme, nearly 2,000 products including auto components and textile materials can enter the US duty-free if the beneficiary developing countries meet the eligibility criteria established by Congress. India was the largest beneficiary of the programme in 2017 with USD 5.7 billion in imports to the US given duty-free status and Turkey the fifth largest with USD 1.7 billion in covered imports, according to a Congressional Research Service report issued in January. The GSP criteria includes, among others, respecting arbitral awards in favour of the US citizens or corporations, combating child labour, respecting internationally recognised worker rights, providing adequate and effective intellectual property protection, and providing the US with equitable and reasonable market access. Countries can also be graduated from the GSP programme depending on factors related to economic development. In a statement, Coalition for GSP executive director Dan Anthony said Trump’s decision will cost American businesses over USD 300 million in additional tariffs every year. “Without GSP benefits American small businesses face a new tax that will mean job losses, cancelled investments and cost increases for consumers. Only a year after the Senate and House passed a three year reauthorisation of the GSP by a near unanimous margin, the Trump administration has kicked out the GSP country that saves American companies more money than any other,” he said. Anthony said the Trump administration made the decision in the face of opposition from members of the Congress and hundreds of American businesses that have called for continued GSP eligibility for India. “They also acted despite India’s willingness to negotiate new market access for American exports. Thus, there are no winners from today’s decision. American importers will pay more, while some American exporters will continue to face current market access barriers in India and others, including farmers, are very likely to be subject to new retaliatory tariff, Anthony said. The Trump administration argues that New Delhi has failed to assure America that it will provide equitable and reasonable access to its markets in numerous sectors. Meanwhile, India had said that the US government’s move to withdraw duty concessions on certain products under the GSP programme will not have a significant impact on exports to America as the benefits were only about USD 190 million annually. Commerce Secretary Anup Wadhawan in March said despite the fact that India was working on an “extensive and reasonable” trade package, the US decided to go ahead with its decision to scrap the preferential trade benefit. The package was covering all concerns related to bilateral trade with the US on sectors including medical devices, dairy products and agricultural goods, he said adding that India could not negotiate issues concerning interests of public healthcare. In a statement in March, the US Trade Representative (USTR) said that India has failed to provide the US with assurances that it will provide equitable and reasonable access to its markets in numerous sectors.The Trump administration had launched an eligibility review of India’s compliance with the GSP market access criterion in April 2018. “India has implemented a wide array of trade barriers that create serious negative effects on United States commerce. Despite intensive engagement, India has failed to take the necessary steps to meet the GSP criterion,” the USTR said.
Source: Financial Express
Arancha Gonzalez the Executive Director of International Trade Centre (ITC) since 2013, is also the co-chair of the World Economic Forum’s Council on the Future of Trade and Investment. She served as the Chief of Staff to WTO Director-General Pascal Lamy between 2005 and 2013. Prior to that, she was a spokesperson and trade negotiator for the European Commission. A regular visitor to India, an issue close to her heart is the empowerment of women entrepreneurs in different countries and connecting them to international markets. Excerpts from an interview:
What is the focus of ITC?
It [ITC] is an agency that belongs to the World Trade Organisation and to the United Nations. Embedded in the organisation’s DNA is how to use trade, investments, to get people out of poverty, to provide opportunities, foster development and generate jobs. Our focus today is not just trade per se, but supporting trade aligned with specific development objectives. This means trade that is inclusive, sustainable and responsible, and aims at improving people’s lives. So for us it is about good trade. We know that if we attach specific development objectives to trade, it is going to be more efficient in the long-term and also more acceptable for people. You spoke briefly at Mekelle about the need for trade cooperation in the current scenario. Can you elaborate? What we are witnessing is deterioration in the perception of trade in some parts of the world, but it is not universal. In some places, trade is seen as a lose-lose game and some argue that ‘for me to win you have to lose’, and ‘if you win in trade, I must be losing’. There is also a perception that international cooperation and multilateralism is for the weak. Some argue that ‘if you are strong, you should not engage in international cooperation’ or that you should be either managing your relations in a unilateral manner or, at best, bilaterally; but not through an international cooperation framework. The inauguration of the KPR Garment factory in Mekelle, Ethiopia, is of course the opposite, and rather a demonstration of good, multilateral trade. In fact, it was the result of a triangular cooperation among the U.K., the ITC and India, which led to an Indian company to invest and create more than 1,000 jobs in Ethiopia. Especially during this time of doubt about the value of trade and cooperation, we have to demonstrate trade’s value, it’s effectiveness and efficiency, and that it is not for the weak but for those who want to manage their long-term relations in a peaceful manner, in a win-win manner. How do you see ITC’s role when there are such perceptions about international trade? What we try to do is, demonstrate in our everyday work that trade can be win-win for all parties. At ITC, we see our role as defending the values of multilateralism, the values of openness, the values of predictability and transparency. And we demonstrate this work through concrete examples, which, in my view, is much more forceful than abstract speeches. For example, Ethiopia has for many years been a rather closed economy. Lately, though, it has decided – and nobody has imposed this on Ethiopia – to open up, reform, become competitive, become more attractive for foreigners. It is important to stress that this is something Ethiopia has decided [by] itself, because it has realised that it will benefit the country and will generate jobs. However, it is also true that international trade does not automatically benefit everybody. International trade is not a magic recipe for economic success, but a tool. And you have to use this tool with other ingredients in the tool box. For example, if you are not ensuring the necessary skills for your workforce, good infrastructure or healthcare, and if you do not have fair taxation systems, trade is going to work less. In other words, for trade to be effective you also have to dedicate your resources to ensuring that other parts of your governing system and economy functions well. We see pressure on sectors such as SMEs in every country. How can there be a balance? I think what we have basically seen is an over reliance on closing domestic markets to protect SMEs. In my view, that does not work because essentially what you do is you protect very inefficient companies to work in very inefficient conditions. It does not make the SMEs stronger, it does not allow SMEs to generate better quality jobs or better paid jobs. My view is, it is more intelligent to gradually open, but also put in place mechanisms to support the SMEs domestically. One universal problem facing SMEs is very expensive access to credit and capital. So, instead of closing markets to imports, you would gain more from providing better access to credit for SMEs. You have to make the finance sector also work for SMEs. Rather than relying solely on keeping the market closed, you have to combine intelligently the gradual opening up [of the economy] with mechanisms to facilitate and support the SMEs. The challenge is to boost the competitiveness of SMEs and trade can be a way to boost competitiveness. Do you have specific projects for India? We do not have many projects in India itself, but ITC works with India to support other countries, which again helps Indian companies. India, through the government and its private sector, has become a crucial partner to ITC in supporting other more vulnerable countries. For example, in Ethiopia we combine the technical expertise of ITC with Indian knowledge and business acumen to strengthen the competitiveness of Ethiopian enterprises. You spoke on women empowerment. What is SheTrades? ITC launched the SheTrades Initiative in 2015 with the goal of connecting three million women entrepreneurs to international markets by 2021. When you look at international trade data, you will find that women entrepreneurs are less present than men in international markets despite the fact that across the world, 40% of businesses are women-owned. There are specific reasons for this: women suffer from specific obstacles such as lack of access to finance, discriminatory property and ownership laws, or from non-legal cultural and social norms. In response to such challenges, we decided there was a need to have a stronger spotlight on women entrepreneurs, and help connect more of them to international trade. So far, we have connected 1.7 million women to markets. SheTrades is an umbrella programme through which partners commit themselves to a variety of concrete actions such as purchasing from women-owned business, helping ensure finance, sharing skills, building networks, or providing mentoring. We are now working with a group of ‘patient capital’ investors that help women businesses gain access to capital and credit. These are investors that are willing to forego a quick profit, but instead take a longer-term view. We are talking to financial sector, including impact funds, so that they invest with purpose, with a sense of more patient capital. Our main role is to be a convener and connector between women entrepreneurs and the investors. For women entrepreneurs in India, we are working towards launching SheTrades India in the near future.
Source: The Hindu Business Line
India has a rich tradition of trade and commerce. Our traders continue to make a strong contribution to India’s economic growth. In a decision that will benefit the trading community, the Union Cabinet, chaired by Prime Minister Shri Narendra Modi has approved a new scheme that offers pension coverage to the trading community. This is a part of the Prime Minister’s vision to provide a robust architecture of universal social security.
How the scheme works:
Under this scheme all shopkeepers, retail traders and self-employed persons are assured a minimum monthly pension of Rs. 3,000/- month after attaining the age of 60 years. All small shopkeepers and self-employed persons as well as the retail traders with GST turnover below Rs. 1.5 crore and age between 18-40 years, can enrol for this scheme. The scheme would benefit more than 3 crore small shopkeepers and traders. The scheme is based on self-declaration as no documents are required except Aadhaar and bank account. Interested persons can enrol themselves through more than 3,25,000 Common Service Centres spread across the country. The Government of India will make matching contribution in the subscribers’ account. For example if a person with age of 29 years contributes Rs. 100/- month, then the Central Government also contributes the equal amount as subsidy into subscriber’s pension account every month.
Delivering a major promise on Day 1:
By imitating a pension architecture for the trading community, the Prime Minister and his team have fulfilled a major promise made to the people of India. Shri Modi had spoken about the need of proving pension for traders, that would assure them a life of dignity and financial security especially when during their old age. This decision can also be seen in the light of several other steps taken for the welfare of traders, small and medium business. The GST underwent significant simplification after taking feedback of the trading community. In the same way, Mudra loans gave wings to the entrepreneurial zeal of young India. Loans upto Rs. 1 crore are now easily available. These, and many more efforts would help the trading community.
Source: PIB
The data released by Labour Ministry showed 7.8% of all employable urban youth being jobless, while the percentage for the rural was 5.3%. The unemployment rate in 2017-18 was 6.1 per cent, corroborating the pre-election leaked report that had claimed joblessness at a 45-year high. The leaked report on periodic labour force survey (PLFS) from July 2017 to June 2018 had on comparison with previous surveys concluded that the joblessness was at the highest level in 45 years. However, releasing the survey report after taking into account the expert committee recommendations, Statistics Secretary Pravin Srivastava told reporter, “It is a new design and a new matrix. It would be unfair to compare it with the past. This 45- year high is your interpretation. I don’t want to claim that it is 45-year low or high.” Elaborating further, he said, “The point is that it is different matrix. From 2017-18 onwards, you will be getting regular estimates and this (labour force survey) can be used as a base. When we change the matrix, it is very difficult to measure (compare) because there is no means to do a retrospective analysis in that year based on earlier matrix.” The data released by the government on a day when ministers of the Narendra Modi cabinet took charge showed 7.8% of all employable urban youth being jobless, while the percentage for the rural was 5.3 %.The joblessness among males on all-India basis was 6.2%, while it was 5.7% in case of females. It also showed that the unemployment rate for males was higher at 7.1% in cities compared to 5.8% in rural areas. Similarly, the joblessness for women was also higher in urban areas at 10.8% compared to 3.8% in rural areas. The ministry said the PLFS needs to be seen as a new series for measuring employment and unemployment on an annual basis. It is important to note that with the rise in education levels in the economy and rise in household income levels, the aspiration levels of educated youth have also risen. Thus they may no longer be willing to join the labour force or work force requiring low skills and low remuneration. The PLFS results give the distribution of educated and unemployed persons across the country which can be used as a basis for skilling of youth to make them more employable by industry, it said. About the National Statistical Commission (NSC), Mr. Srivastava said, “The NSC makes its recommendation but the ministry has to consider it. They can only make recommendations. The NSC has the role to see statistical system in entirety in addition to statistics ministry and states. There is no change in the functioning of ministry. The restructuring of ministry was approved by the Cabinet.” He also informed, “The data for PLFS for January to March will be released next month. We have brought two quarterly data on labour survey. We are coming out with consumption expenditure survey for 2017-18. We are expecting it in June. You can then compare unemployment captured by that survey with PLFS.”
Source: The Hindu
The India-China bilateral trade last year touched a historic high of USD 95.54 billion, according to the official data released by China early this year. India has further liberalised e-visa rules for Chinese businessmen as the bilateral trade is set to cross USD 100 billion this year, a senior Indian diplomat here said on Friday. The India-China bilateral trade last year touched a historic high of USD 95.54 billion, according to the official data released by China early this year. The trade deficit in 2018, according to the data, climbed to USD 57.86 billion from USD 51.72 billion in 2017. "We are glad that our bilateral trade will cross the significant mark of USD 100 billion this year," India's Deputy Ambassador in China Dr Acquino Vimal said while addressing an event on 'India-China business forum, exploring opportunities, enhancing cooperation' specially in the IT sector. A large number of Chinese investors and Indian IT firms based in China attended the gettogether organised by NASSCOM -- a trade association of Indian Information Technology (IT) and Business Process Outsourcing (BPO) industry -- and the Indian embassy. "Closer development partnership between India and China has been growing steadily for the last several years. Since the last 20 years, the scale and profile of bilateral trade and investment between India and China has increased several folds. "This has been further strengthened in April 2018, when Wuhan witnessed the first Informal Summit between our Prime Minister (Narendra) Modi and President Xi Jinping. This Summit has provided a fresh impetus to our growing bilateral engagement," Vimal said. As a result, the number of visits by trade and investment delegations have increased and the comfort and trust levels have improved, he said. "This is demonstrated in the increase in the number of visas we have been issuing in the last few months. In order to ensure that such engagement is promoted and encouraged, I'm happy to inform that we have further liberalised visas for Chinese travellers to visit India by the introduction of 'electronic visa' facility," the Indian diplomat said. Since March 2019, the e-visa facility for Chinese businessmen has also been expanded. "We are now issuing one-year multiple entry e-business-visa, with a provision to stay up to 183 days without any registration with local authorities. This has considerably eased the travel of Chinese businessmen to India. I'm sure that the Chinese companies will benefit from this," he said. Over and above the large IT companies of India, the Indian IT companies in the small, medium size sector have also developed a niche space for themselves by developing expertise in highly-specialised areas of manufacturing, automation and Artificial Intelligence (AI), he said. Their collaboration with companies in China, who are looking at various IT products and solutions to make them more efficient and competitive, is a clear opportunity for a win- win solution, Vimal said. Senior Director at NASSCOM Gagan Sabharwal made a presentation on the three IT corridors -- Dalian, Guiyang and Suzhou to promote India-China collaboration. The corridors connect the Indian IT/IT-enabled companies, specially small and medium sized ones with Chinese companies looking at potential partners from India in this field. The IT corridors have a strong and dynamic AI-enabled online platform called the 'SinoIndian Digital Collaboration Plaza (SIDCOP)," Vimal added.
Source: Economic Times
Nirmala Sitharaman took charge as India’s first woman full-time finance and corporate affairs minister on Friday and her task seems cut out with GDP data released within a few hours of occupying the seat in North Block showing the growth rate for January-March 2019 slipping to 5.8% compared with 8.1% in the corresponding period last year. This is the lowest growth rate in 20 quarters. For the full year 2018-19, the economy is estimated to have slowed down to 6.8%, lower than the original estimate of 7% for this year, and 7.2% recorded in 2017-18. The slowdown is accompanied by weakness on the employment front, with the unemployment rate for 2017-18 at 6.1%, according to the Periodic Labour Force Survey (PLFS), also released on Friday along with GDP data. This report was withheld despite being cleared by the National Statistical Commission in December 2018. Contraction in agricultural growth and sharp slowdown in manufacturing growth weighed on the GDP growth, which had hit the previous low of 5.3% in January-March 2013-14. The latest quarterly growth rate is lower than China, which has also powered down gradually over the last few years. The economic slowdown spells a challenge for the new government, given that it will leave limited fiscal space to boost growth by spending, leaving a bigger expectation from the Reserve Bank of India (RBI) to push growth through rate cuts. Economists expect RBI to cut the policy rate in its upcoming review on June 6. The country’s growth rate has been slowing over the last four quarters, as reflected in other leading indicators such as automobile sales, factory output and core sector growth. ‘Agriculture, forestry and fishing’ sector’s Gross Value Added growth contracted 0.1% in January-March from 6.5% growth in previous financial year, while that for manufacturing sector slowed to 3.1% in January-March against 9.5% in the previous fiscal. Construction sector, however, recorded a pickup with GVA growth of 7.1% in the fourth quarter of 2018-19 against 6.4% in the previous financial year. For 2018-19, the manufacturing sector grew 6.9% against 5.9% in the previous financial year, while agricultural growth faltered to 2.9% from 5% in the previous fiscal. As per the new methodology followed by CSO, the GDP is calculated by adding product taxes to the GVA at basic prices, and removing subsidies. “Clearly the economy is slowing down and these numbers would be a cause of worry for the new central government. Given the budgeted fiscal deficit at 3.4% of GDP, Ind-Ra believes the head room available to provide fiscal stimulus is limited. However, given the current inflation level which is well within the target range RBI may go for a rate cut in the forthcoming second bi-monthly monetary policy review,” said Devendra Kumar Pant, chief economist, India Ratings & Research.
Source: Financial Express
At a parameter level, the share of positive respondents in manufacturing remained steady while the services sector reported a small increase in order-book size. There was a moderation in sentiment among micro and small enterprises (MSEs) during the quarter ended March 31, 2019, the 6th CriSidEx survey shows. At 122, the CriSidEx score for JanuaryMarch 2019 was lower than the 128 seen in October-December 2018, but marginally up from 121 a year back. At a parameter level, the share of positive respondents in manufacturing remained steady while the services sector reported a small increase in order-book size. Both sectors reported a decrease in the share of positive respondents in employee base compared with the previous quarter. Mohammad Mustafa, Chairman and Managing Director, SIDBI said, “On a year-on-year basis, MSEs operating in the leather & leather goods, chemicals, pharmaceuticals, IT/ITeS, and human resources segments reported a noticeable increase in positive sentiment, while those into gems & jewellery, textiles, auto components and health care had a relatively subdued outing.” Among manufacturing MSEs, 42% reported a good survey quarter, which is on a par with the quarter immediately preceding. And 39% of services providers reported a good quarter compared with 41% in the previous quarter. The number, however, was better than the 29% in the same period a year ago. “Sentiment in the March quarter was shaped by a host of factors such as slowdown in auto sales leading to inventory pile-up and production cuts by the automobile industry; slower tendering/awarding ahead of elections affecting the engineering goods sector; and, regulations impacting logistics," Amish Mehta, Chief Operating Officer, CRISIL Ltd said. In the April-June 2019 quarter, sentiment about the business situation is expected to remain positive but the share of respondents expecting a good next quarter is the lowest in all six CriSidEx surveys so far. Larger MSEs had a better survey quarter – as many as 47% of them with more than 25 employees compared, with 30% with less than 10 employees. Export-oriented MSEs fared better than their domestic peers, with 45% reporting an increase in order book compared with 43% of domestic peers. In the past two quarters, exporters have been consistently faring better than domestic market-focused MSEs. Among importers, the share of respondents that saw higher procurement in January-March 2019 declined to 17% from 25% in the preceding quarter. In terms of production volume, 43% of manufacturing MSEs reported an increase, which is a continuation of the trend seen in the previous quarter. A similar share of manufacturing MSEs expect an increase in production in April-June, while only 8% expect it to be lower. MSEs said they expected to hire more in April-June with 18% respondents planning to add employees compared with 11% that did in January-March. As for lenders, they remain cautious on the evolving business situation.
Source: Economic Times
A recent report by the European Union Chamber of Commerce in China (EUCCC) and Roland Berger raised major concerns, saying issues like the Chinese economic slowdown and the US-China trade war pose tough challenges, making the removal of remaining market access barriers, regulatory burdens, unequal enforcement and the remnants of China’s planned economy essential. In the ‘European Business in China Business Confidence Survey 2019’ conducted with Germany-based global consultancy firm Roland Berger, optimism on growth was found to drop from 62 per cent in 2018 to 45 per cent in 2019, according to a press release from the chamber. While 47 per cent of respondents expect the number of regulatory obstacles to increase in the next five years, 25 per cent expect the number to remain the same. About half of respondents expect it will take five years to see competitive neutrality realised, while a third never expect it to be realised. One-fifth of respondents felt compelled to transfer technology as a condition for market access, nearly two thirds of which occurred over the last two years, and a quarter of which were taking place at the time the survey was being conducted. As the Chinese economy settles into more mature and stable development, and supply-side reforms continue to be pursued, China needs more than ever to create a business environment with mechanisms to deal with the consequences of slower growth and bolster a functioning market economy. This implies deploying stronger tools like better bankruptcy rules alongside predictable legislative processes, while providing sufficient lead-times for regulatory change, according to the report. Creating the open and fair market that European companies expect of China would also remove any justification for the ongoing US-China trade war. European companies share many of the US’ concerns, but strongly oppose the blunt use of tariffs, which have impacted US-bound exports of 25 per cent of survey respondents. While few companies are yet making significant changes to their China strategy, concerns that tensions will escalate saw the trade war ranked fourth on the list of concerns over future business, outranked only by the Chinese and global economic slowdowns and rising labour costs. Despite the mounting pressure of such challenges, European companies continue to see solid revenue growth and 62 per cent of respondents view China as a top three destination for present and future investment. They are increasingly in China, for China, both to access local customers and for exposure to pioneering private Chinese firms that for a second year in a row were viewed by a majority of respondents as equally or more innovative than their European counterparts.
Source: Fibre2Fashion
Bangladesh's economy is expanding beyond apparel production to sectors such as information technology as the country's rapid economic growth stimulates investment, Prime Minister Sheikh Hasina told Nikkei's Future of Asia conference in Tokyo on Thursday. Hasina has been in office since 2009 as head of the ruling Awami League party. In that period, Bangladesh has experienced high economic growth through the success of its ready-made garment sector. The economy grew 7.86% in the fiscal year ended last June, making it one of the fastest growing economies in Asia. This year's growth will reach 8.13%, Hasina said. "This [growth] encouraged entrepreneurs to plan and start new ventures to support expansion of the industrial base of the country," Hasina said. One of the rising industries is digital services. "The rapid expansion of ICT [Information and communications technology] services has contributed to reducing income inequality, decreasing rural-urban disparity, and most notably gender gap in employment and access to opportunities," she said. According to Hasina, Bangladesh has established 5,286 "digital centers" across the country where people in remote areas can access internet services. Another emerging sector is medicine, she said, noting that Bangladesh now exports pharmaceuticals to more than 100 countries. Some economists say Bangladesh is benefiting from the ongoing U.S.-China trade tensions as apparel exports from China fall. But Hasina warned that a rise in tariffs will cause a decline in growth and called for an open trade system. "Infrastructure, free trade and liberal investment give foundation to Asian development," she said. "We need to pledge to strengthen the world with greater openness, jointly address global challenges, safeguard fairness and justice and inject new impetus to cooperate using innovative ideas and measures" Bangladesh has accepted over 1 million Rohingya Muslims who fled neighboring Myanmar's Rakhine state for Bangladesh due to ethnic unrest in 2017. Her country has sought dialogue and consensus over discord, even in the face of extreme provocation and crisis, Hasina said. "We are not only responding to a humanitarian call," she said, "but we are conscious about not allowing that crisis to escalate into chaos and regional instability." She said Bangladesh's approach to the Rohingya issue can serve as "a lesson for other situations of crises in our region and globally to overcome chaos and discord with the power of peace, humanity and development." "The future of the world lies in the convergence of interests common to humanity," she said.
Source: Nikkei Asia Review
“Starting June 10, higher tariffs will increase monthly until reaching 25 per cent on October 1, unless Mexico takes immediate action against illegal immigrants”. President Donald Trump, incensed by a surge of illegal immigrants across the southern border, vowed on Thursday to impose a tariff on all goods coming from Mexico, starting at 5 per cent and ratcheting higher until the flow of people ceases. Trump's move dramatically ramped up his battle to control a tide of immigrants that has swelled despite his efforts to build a border wall and halt the thousands crossing from Central America through Mexico to the US border. The president's decision, abruptly announced on Twitter and in a subsequent statement, was a direct challenge to Mexican President Andres Manuel Lopez Obrador and appeared to take the Mexican government by surprise. It raised the risk of deteriorating economic relations between two neighbours heavily dependent on the cross-border flow of goods. It also opened up a new front on trade as the Trump administration struggles to conclude a trade deal with China. Higher tariffs will start at 5 per cent on June 10 and increase monthly until reaching 25 per cent on October 1, unless Mexico takes immediate action, he said. “If the illegal migration crisis is alleviated through effective actions taken by Mexico, to be determined in our sole discretion and judgement, the tariffs will be removed,” Trump said. The announcement rattled investors who feared that worsening trade frictions could hurt the global economy. The Mexican peso, US stock index futures and Asian stock markets tumbled on the news, including the shares of Japanese automakers who ship cars from Mexico to the United States. “We're in a good moment building a good relationship (with the United States) and this comes like a cold shower,” said Mexico's deputy foreign minister for North America, Jesus Seade. US officials said 80,000 people are being held in custody with an average of 4,500 arriving daily, overwhelming the ability of border patrol officials to handle them. A senior White House official said Trump was particularly concerned that US border agents apprehended a group of 1,036 migrants as they illegally crossed the border from Mexico on Wednesday. Officials said it was the largest single group since October. A source close to Trump said there had been an internal debate inside the White House over whether to go forward with the new policy, with immigration hawks fighting for it and others urging a more diplomatic approach. Trump sided with the hawks. “The last thing he wants is to look weak,” said the source, who spoke on condition of anonymity. Trump’s directive also spelled the potential for chaos for his efforts to get the US Congress to approve his USMCA trade deal, which he sees as a replacement to the North American Free Trade Agreement between the United States, Mexico and Canada. Doug Ducey, the governor of Arizona, which shares a 370-mile (595-km) border with Mexico, said on Twitter that he spoke to the White House and it was time for Congress to act on border security and the United States-Mexico-Canada Agreement. “Everyone knows I am opposed to tariffs and deeply value Arizonas relationship with Mexico. I prioritize national security and a solution to our humanitarian crisis at the border above commerce,” he said in a Tweet. Mexico's Seade said it would be disastrous if Trump goes through with his threat to impose the tariffs. Calling Trump's move “extreme,” Seade said a normal response would be for Mexico to “mirror” the US tariffs but that would lead to a trade war. Trump said he was acting under the powers granted to him by the International Emergency Economic Powers Act. He campaigned for election in 2016 on a vow to crack down on illegal immigration. “Mexicos passive cooperation in allowing this mass incursion constitutes an emergency and extraordinary threat to the national security and economy of the United States,” Trump said in the statement. “Mexico has very strong immigration laws and could easily halt the illegal flow of migrants, including by returning them to their home countries,” he said.
White House wants action ‘tonight’
White House acting chief of staff Mick Mulvaney, asked in a conference call with reporters which products from Mexico could be affected by the tariffs, said: “All of them.” Mulvaney added, “This is an urgent problem. We are interested in seeing the Mexican government act tonight, tomorrow.” Shares in Toyota Motor Corp, Nissan Motor Co and Honda Motor Co all fell around 3 per cent or more, while Mazda Motor Co fell nearly 7 per cent. All four automakers operate vehicle assembly plants in Mexico. “The threat of US tariffs on Mexico to take effect inside two weeks is a sharp blow to investor sentiment,” said Sean Callow, a senior currency analyst at Westpac. “Mexico is the US' largest trading partner and a flare-up in trade tensions was definitely not on the market radar.” The benchmark S&P 500 e-mini futures dropped 0.82 per cent to the lowest the contract has traded since early March. Investors scooped up safe assets, driving the yield on the 10-year US Treasury note to 2.18 per cent, the lowest since September 2017. The dollar surged against the Mexican peso. US officials say the immigration system is being overwhelmed by thousands of migrants, many of whom turn themselves into border officials to claim asylum in the United States. Border facilities are straining to handle large numbers of people and many children. At least six migrant children have died in US custody or shortly after being released. Apprehensions of migrants on the southwest border hit another record high last month, with 98,977 people arrested.
Source: The Hindu Business Line
Adjusted by inflation, turnover in Germany's retail sector grew by 4 percent year on year in April 2019, according to provisional results of the Federal Statistical Office (Destatis) published on Friday. Although turnover in April fell by 2 percent compared to last month, German retail turnover between January and April 2019 was still up 3 percent, on the same period of the previous year. The clothing, shoes and leather business was the only sector in Germany where turnover decreased both year on year as well as compared to last month, according to Destatis. Turnover in the textiles, clothing, footwear and leather goods business in Germany fell by 6.1 percent compared to last month and 1.9 percent year on year. Part of this negative trend is caused by growing online business with fashion. In Germany, "around one quarter of all online turnover is generated by fashion products," a spokesperson of the umbrella organization of German retail (HDE) told Xinhua on Friday. According to the Confederation of the German Textile and Fashion Industry, the clothing industry can "partially compensate for the slight decline in domestic retail sales through strong exports." Across all sectors, the timing of Easter had a "positive effect" on the development of the retail sector's turnover in Germany in April. In 2018, the busy Easter business had largely fallen into in March which increased the numbers for March but saw less retail business in April. Profiting from the Easter business, retail sales of food, beverages and tobacco products showcased the highest growth numbers and went up 8.2 percent in real terms. Sales at German supermarkets even increased by 9.0 percent in real terms. Compared to April 2018, the German retail sector specialized on food and beverages achieved a real increase in sales of 1.7 percent.
Source: Xinhua
Federal Reserve officials speaking at a policy conference may get a lot more attention than usual in the week ahead after President Donald Trump’s latest tariff threat against Mexico ramped up expectations for interest rate cuts. Markets will also start the month of June, which is often flat for markets, coming off a painful 6.6% monthly loss in the S&P 500. Stocks lost ground in May on worries that the U.S. trade war with China would hurt the global economy and bite into earnings growth. They will begin trading in June with new worries that tariffs on Mexico could hurt the economy and threaten a new trade deal between the U.S., Mexico and Canada. The coming week has a full calendar of economic data, with the highlight being Friday’s May employment report. There are also monthly auto sales and Institute for Supply Management manufacturing data due Monday, and international trade data expected Thursday. But it is the Fed that should get the most attention, with central bank officials gathering at a much-anticipated conference hosted by the Chicago Fed Tuesday and Wednesday. Fed Chair Jerome Powell will make the opening remarks at the conference, which is about monetary policy strategy, tools and communications. For months, strategists have been hoping the conference will provide insight into how the Fed intends to address sluggish inflation. Interest in the event is even higher after the market and Fed watchers are increasingly convinced the central bank will now cut rates this year, and maybe more than once. The futures market priced in increasing expectations for two rate cuts after Trump’s threat to put tariffs on all Mexican goods if the Mexican government does not stop immigration into the U.S. After the last Fed meeting, Powell said low inflation appears to be transitory, suggesting the Fed would not have to cut rates, but markets still anticipate a rate cut, and inflation continues to run below the Fed’s 2% target. Michael Gapen, Barclays chief U.S. economists, said investors hoping to hear Fed officials discuss their thinking on current policy could be disappointed. Gapen said the Fed is also about nine months away from its decision on how it will frame inflation, and the conference will be more about academic views on it. Gapen was one of several Wall Street economists Friday who changed his view on the Fed’s rate policy. He said he now sees the Fed cutting the fed funds target rate by 75 basis points in two cuts this year, with the Fed starting at 50 basis points in September. The Fed has said does not foresee any rate cuts this year, nor hikes, and has stressed it is on hold. Gapen does not expect to hear much from Fed officials at the conference on rates, though investors will be combing through every word looking for policy clues. “I don’t think that’s the type of setting where anyone would make a monetary policy comment in advance of an FOMC meeting,” he said. The Fed next meets on June 18 and 19. Gapen said he went from expecting no Fed move to two rate cuts because the trade war with China has become more extended than expected; manufacturing and business spending are weakening, and because of Trump’s threat to put tariffs on Mexico if it doesn’t control immigrants heading into the U.S. over the southern border. “It does suggest the administration is willing to pursue multiple fronts. It lowers the bar for tariffs on Europe,” he said. Interest rates continued to slide Friday, to multi-year lows. The 2-year yield, which most reflects Fed policy, fell sharply and was at 1.93% in late trading. The 10-year yield, at 2.55% in early May, was at 2.13% Friday afternoon. The S&P 500 was down 2.6% for the week, ending its worst week of the year at 2,752. Sam Stovall, CFRA chief market strategist, said a “May mauling usually leads to a boom in June.” Going back to World War II, whenever there was a strong start to the year, the market traditionally fell in May but rose in June. Plus, this year was the third best start through April. John Augustine, chief investment officer at Huntington Private Bank, said beyond the trade headlines, there are quite a few market catalysts in June. “June is going to be very event-driven. It’s going to be the Fed on June 19. It’s going to be OPEC on June 25; it’s going be the G-20 on June 29,” he said. He added, “We’re going to stay balanced and diversified because we don’t know how things are going to come out.”
Source: CNBC
