The new government would have to rethink its policy on turning around India’s second-largest job provider, as the textile sector continues to gasp for growth. Three years after key regulatory and labour changes were put in place, India’s textile and apparel exports have declined from $38.60 billion in 2014 to $37.12 billion in 2018 while imports have increased from $5.85 billion to $ 7.31. Particularly hit has been the apparel sector, where the time taken by the industry to adjust to the Goods and Services Tax regime, downward revision of export incentives, and a credit squeeze faced by small and medium scale enterprises, has pushed production downwards.
Trade troubles
Estimated at $16.2 billion in FY19, India’s apparel exports fell by 1.2 per cent from FY18, which in turn was 4 per cent lower than the previous year. Even the share of apparel exports in the country’s total textile exports has fallen sharply from 51 per cent in FY17 to 45 per cent in FY19. Even the share of apparel exports in the country’s total textile exports has fallen sharply from 51 per cent in FY17 to 45 per cent in FY19. Industry experts attribute the fall to the ever tightening pressure on the exports markets by higher shipments from low-cost competitors like Bangladesh and Vietnam. However, the recent slowdown in global demand has also increased competition in the markets which has coincided with taxation changes in India. Barring few months, apparel exports are continuously declining since October 2017, mainly due to stiff competition, slowdown and discontinuation of certain export incentives. Analysts say there was a 6-7 per cent impact on costs, which hurt profitability of garment makers too. “A substantial drop in the import duty was observed after implementation of the GST which has encouraged cheaper imports. For imports from Bangladesh, there is a full exemption of basic customs duty and hence Chinese fabric is easily coming to India duty-free through Bangladesh in the form of garments,” said Sanjay Jain, chairman, Confederation of Indian Textile Industries. The Central Board of Indirect Taxes and Customs (CBIC) had slashed duty drawback rates on cotton, man-made and blended garments. “The new drawback rates are effective December 19. The policy support for the industry after GST has significantly declined by around 5.5 per cent,” the Apparel Export Promotion Council (AEPC) informed the Finance Ministry in a letter.
Jobs rise slowly
And despite the ministry nor industry bodies having requisite data, it is widely accepted that the promised 10 million jobs haven't been created, three years after the imaginatively designed Rs 6,000-crore mega-package for textiles was rolled out. Barring few months, apparel exports are continuously declining since October 2017The bulk of the planned capital outlay, about Rs 5,500 crore, was earmarked for an additional 5 per cent duty drawback for garments, that is, a refund of duties on imported inputs used to make export goods. The more radical element was the increased government funding for provident funds of new employees. Those earning less than Rs 15,000 per month would be given additional government funding for the first three years on the job. Against the earlier 8.33 per cent, the employer’s contribution was raised to 12 per cent with the government providing an additional 3.67 per cent. The total bill for this was Rs 1,170 crore. "We are set to create a database of total jobs in the sector, but data collection remains an issue since the majority of the sector remains concentrated in small and micro units,” a senior official at the Handloom Commissioners office said. But textile is the most labour-intensive industry in the country and almost 65 per cent of total transactions were in physical form pre-demonetisation, he added. This has also negated the chances of better salaries for workers and better opportunities for women, two prime focus of the government. Hiring at firms has picked up since September last year but this is yet to make up for the massive demonetisation-induced lay-offs in most sub-sectors, said an AEPC official.
Source: Business Standard
Currently any firm employing more than 100 can only lay off workers after taking govt permission. A hire-and-fire policy on labour is required in textiles to realise its full export potential, an expert panel has suggested. The commerce ministry panel has also proposed a review of the trade pact with Bangladesh that allows duty free access of items from the neighbouring country, which limits the operations of Indian textiles players. The industry needs to adjust its operations to the rise and fall of demand and to scale down or scale up operations as the situation warrants, necessitating a freedom to retrench or hire labour. “Modify labour laws (such as the Industrial Disputes Act, 1947) to remove limitation on firm size and allow manufacturing firms to grow,” according to the high-level panel, headed by economist Surjit S. Bhalla. The textile industry, which is the second highest job generator after agriculture, directly employing about 45 million people, has been demanding the removal of rigid labour laws that hurt its operations. The bone of contention has been the law prescribing that any firm employing 100 or more workers has to seek permission from the labour department before any layoff or retrenchment. “This is a reform which is necessary from the point of view of industrial flexibility as well as employment. Economic cycles are going to be the norm and industry expects to have some degree of flexibility here, according to Madan Sabnavis, chief economist at Care Ratings. “Therefore, it would be necessary to look into this issue and come up with a solution in a time-bound manner,” he said. Rating agency Crisil said “land and labour reforms are tough nuts to crack, but must be done. The government should begin the process of creating census by taking on board all states and stakeholders”. The Bhalla report said free-trade pacts such as the South Asia Free Trade Agreement have led to intense competition from countries such as Bangladesh, which have zero-duty access to India. The expert group recommended that the government should take a re-look at such pacts and try to work out a solution.
Source: The Telegraph
The Commerce Ministry is looking at extending support to the sectors affected most by the US decision to withdraw a special status scheme for India that allowed duty-free exports of more than 3,000 items from the country. “The loss suffered by India due to the withdrawal of the Generalised System of Preferences (GSP) scheme will not be huge, but there are specific sectors which will take a hit. These sectors need some hand-holding,” a government official told BusinessLine. Imitation jewellery, leather articles (other than footwear), pharmaceuticals & surgical instruments, chemical & plastics, and agriculture are among sectors that are likely to be worst affected by the withdrawal, according to the Federation of Indian Export Organisations (FIEO). FIEO has proposed that the sectors worst hit by the GSP withdrawal be extended benefits under the Rebate of State & Central Tax Levies Scheme (RoSCTL) to provide some compensation. “After assuming charge, Commerce and Industry Minister Piyush Goyal has been holding marathon meetings with officials on crucial issues over the weekend. He is also expected to discuss ways in which the export sector could be assisted following the withdrawal of the GSP scheme,” the official said. US President Donald Trump signed a proclamation on May 31 stating that the GSP scheme will be withdrawn for India from June 5. The move is in retaliation to the US government’s belief that India is not providing equitable market access to American products. While GSP withdrawal affects $6.35 billion worth of exports from India, exporters stand to lose net benefits worth $260 million annually.
Late response: Congress
Reacting to the development, Congress spokesperson Randeep Singh Surjewala said that the decision to withdraw the scheme was notified to India on March 4, but the government did nothing to pre-empt it. “The most serious implication would be for sectors like agriculture, auto parts, and pharmaceuticals, which are already facing a serious crisis. In future, we could see many more industries including the services industry, which has more than $28 billion of exports to the US, being affected significantly,” said an official release of the Congress. In its official reaction to the move, the Commerce Ministry said it was “unfortunate” that the resolution offered by New Delhi on the matter was not acceptable to Washington. “We have significant development imperatives and concerns and our people also aspire for better standards of living. This will remain the guiding factor in the government’s approach,” the Commerce Ministry stated, indicating that it is not possible for the country to ignore the interest of its people while working on trade deals.
US demands
The Trump regime, which has been miffed with India for running a trade surplus with the country, had made a number of demands including softening of price caps on medical equipment, removal of certain mandatory certifications for dairy product exports, removal of import duties on cellular phones and roll-back of certain changes made in the e-commerce policy that imposed several restrictions on foreign players sourcing goods from vendors.
Source: The Hindu Business Line
India expects US govt to restore benefits under GSP
The US terminated preferential tariffs to Indian exports after determining that it has not committed to provide “equitable and reasonable access to its markets” for the US. The US pulling the plug on duty concessions on $5.6 billion of Indian exports may not mean the end of benefits under the Generalized System of Preferences (GSP), officials said, citing instances when the benefits were reinstated. “This is not the end of GSP (benefits), possibly because the US has restored the benefits in the past to other countries after withdrawing them,” said an official aware of the details. “There have been instances where they have restored the GSP. They withdrew the benefits from Argentina but subsequently restored them.” Argentina, Liberia and Myanmar are the few countries that has the benefits reinstated after they made “sufficient progress” to become eligible for them. The US terminated preferential tariffs to Indian exports on Friday after determining that it has not committed to provide “equitable and reasonable access to its markets” for the US. Continuation of GSP was a key element of India-US negotiations on a trade package, which fell through in March when Washington announced its decision to end the benefits. India has termed the US decision unfortunate and vowed to protect national interest even as it continues to build on its strong ties and resolve “ongoing issues.” It once again extended a deadline to impose retaliatory tariffs on 29 goods originating in the US, this time to June 16. However, India is yet to decide whether to seek restoration of the GSP duty concessions. “We have to see. We know their expectations and there are areas where our national interests need to be balanced, not compromised,” the official said. Another official said the US’ concerns over price caps on medical devices need to be balanced with affordable healthcare for the Indian people. Though the two sides have been interacting regularly through telephones and video conferencing, the possibility of a meeting would be decided after internal consultations. “Restoration looks uncertain at the moment, but India should be careful as it would have to meet strict compliance norms to be able to get GSP benefits again,” said a New Delhi based expert on trade issues.
BENEFIT RESTORATION
As per US norms, a beneficiary country must meet 15 discretionary and mandatory eligibility criteria established by Congress to qualify for GSP. These include providing the US with equitable and reasonable market access, combating child labour, respecting internationally recognised worker rights and providing adequate and effective intellectual property rights protection. However, reinstatement of GSP benefits is conditional. Argentina’s GSP benefits were restored in January last year after the resolution of certain arbitral disputes with US companies, new commitments to improve market access for US agricultural products and improved protection and enforcement of intellectual property rights. In the case of Myanmar, the US suspended GSP benefits in 1989 due to worker rights concerns. After the Asian country requested reinstatement in 2013, the preferential trade status was brought back in 2016 following a review of its compliance with the eligibility criteria, including steps it was taking on internationally recognised worker rights.
Source: Economic Times
Trade analysts and economists think that the impact of the scrapped preferential trade facilities will be temporary. Bangladesh may see increased exports to US markets as the Donald Trump administration terminates preferential trade facilities for India, a close competitor of the country. On May 31, the US government announced its decision to end preferential tariffs for $5.6 billion of Indian exports from June 5 after determining that it has not assured the US that it will provide "equitable and reasonable access to its markets. Bangladesh already has registered double digit growth in the US market due to the US-China trade war, which opened up opportunities for Bangladeshi exporters. According to Export Promotion Bureau (EPB) data, during July-April period of the current fiscal year Bangladesh exports to the US market rose by 16.17% to $5.71 billion, which was $4.92 billion in the same period a year ago. India is the third largest exporters of textile apparel goods to the US marker after Indonesia with an export of $7.67 billion as of 2018, while Bangladesh is the fourth largest exporter of apparel and textile goods worth $5.60 billion. “There were about 2,000 products including textile goods from India, which enjoyed duty-free market access to USA under Generalized System of Preference (GSP). Since the preferential trade facilities are gone, Bangladesh apparel sector may gain,” Bangladesh Garment Manufacturers and Exporters Association (BGMEA) President Rubana Huq has told Dhaka Tribune. "But the Indian side thinks that they are losing less than $200 million dollar worth of apparel opportunity. So we will have to wait and see," she says. Trade analysts and economists think that the impact of the scrapped preferential trade facilities will be temporary. “In any trade tariff conflicts, there remains uncertainty among the business people. As a result, in placing work orders they shift a portion of orders to remain safe though the item is not included in the tariff list,” Centre for Policy Dialogue (CPD) Khondaker Golam Moazzem tells Dhaka Tribune. So, there will be positive impact on Bangladesh exports to US market but it may be temporary, says Moazzem, adding that the US is cutting trade facilities to renegotiate the trade benefits bilaterally. Bangladesh has to think of diversifying its goods and concentrating on connecting the buyers who are currently sourcing from the Indian manufacturers to reap the full benefits, suggests the economist. He also notes that Bangladeshi importers from India can benefit from the cut of trade facilities as there will be scope for price negotiation. Beyond the apparel sector, there is opportunity to grow in the leather and footwear exports, which have already seen sharp rise due to US-China tariff war. “Since India is a close competitor of Bangladesh in leather goods and footwear, it will bring benefits for us,” Md Saiful Islam, managing director of PICARD Bangladesh Limited, an export-oriented leather products manufacturer, tells Dhaka Tribune. Besides, he says, Bangladesh has increased capacity and trade diplomacy is doing better in branding Bangladesh, which is a positive indicator in grabbing more market share in the US market.
Source: Dhaka Tribune
Hit by the triple whammy of delay in GST refunds, unfavourable forex and end of trade privilege to Indian firms, the micro, small and medium enterprises (MSME) sector wants the government to offer incentives in the upcoming Union Budget so that it can cope with the tough times. The industry body has proposed to the Finance Ministry to re-introduce some of the pre-GST era incentives and provide cheaper finance to meet capex and working capital requirements. It has also asked for lowering interest cost to 4-5 per cent to make the industry competitive. "After the roll-out of Goods and Services Tax (GST), all the incentives were withdrawn. The duty draw back was reduced, among other things. So we want some mechanism where the additional cost is offset and which is WTO (World Trade Organisation) compatible too. The government has to come out with some incentives. We also expect lower rate of interest for the SME sector as the cost of finance is quite high this time," said Animesh Saxena, President, Federation of Indian Micro Small & Medium Enterprises (FISME). Asked if the much-publicised 59-minute loan scheme for smaller firms had helped, Saxena said that it had met with very limited success, adding that ease of finance was still a dream for many businesses. Given that the MSME sector provides employment to a large number of youth, the industry is set to be the focus of the Union Budget. A Confederation of Indian Industry (CII) survey earlier this year said that the MSME sector created 13.5 million to 14.9 million new jobs over the past four years. The additional jobs were created in spite of the negative impact of demonetisation and problems in the initial months of GST roll-out. "The government should lower tax rates for firms with annual turnover of up to Rs 25 crore. In fact, it should come out with a special package for the MSME sector," said Chandrakant Salunkhe, founder and President, SME Chamber of India.
Source: Business Standard
“He was carefully studying and looking at the presentations made by secretaries to the two departments,” said an official. Piyush Goyal, who took charge as commerce and industry minister on Friday, held detailed meetings with the officials of the two departments over Saturday and Sunday. The meetings were aimed at getting familiar with the organisation of the Department of Commerce and the Department for Promotion of Industry and Internal Trade, zeroing in on the likely actionable issues and discussing the roadmap ahead, officials who attended the meetings said. Minister @PiyushGoyal met officials of Ministry of Commerce and Industry and discussed promotion of trade within the country,” Goyal’s office tweeted. “During the meeting, officials gave a detailed presentation of the functioning of the ministry,” his office said in another tweet. The two ministers of state Hardeep Singh Puri and Som Prakash also attended the meetings. “He was carefully studying and looking at the presentations made by secretaries to the two departments,” said an official. Officials from the agencies attached with the ministries were present and certain meetings such as that of the Board of Trade will be called immediately, the official added. “He was trying to find the actionable issues,” said another official. Crucial issues like trade talks with the US, Regional Comprehensive Economic Partnership trade agreement and foreign direct investment (FDI) will be taken up in separate presentations. India faces multiple challenges. Merchandise exports grew 9% to $331billion in 2018-19. But, FDI inflows declined for the first time in the past six years in 2018-19, falling by 1% to $44.37 billion. The US withdrew benefits to Indian exports worth $5.6 billion, shortly after Goyal took charge.
Source: Economic Times
If India becomes a $5 trillion economy by 2024, it will strengthen and transform Indian Diplomacy. The BJP’s election manifesto made certain promises with regard to foreign policy, internal security and defence. In the realm of foreign policy, the manifesto talks about the propagation of ancient Indian wisdom that could become the basis of India’s global cooperation; creation of an institutional mechanism to deepen engagement with the people of Indian origin; intensification of efforts to seek permanent membership of the United Nations Security Council; and setting up of a full-fledged university of foreign policy to strengthen research on foreign policy and geopolitical issues relevant to India. There are many promises in the manifesto under different heads in which diplomacy will be called into play. For instance, zero tolerance to terrorism approach involves taking a firm line with Pakistan and strengthening international cooperation for countering terrorism and extremism. The implementation of the National Register Of Citizens will also concern relations with other countries, especially because some people may have to be deported. Building smart fences and improving border security impacts bilateral relations with neighbouring countries. Abrogating Article 370 and Article 35A of the Indian Constitution concerns Jammu and Kashmir where cross-border terrorism and infiltration from Pakistan are rampant. If India becomes a $5 trillion economy by 2024, it will strengthen and transform Indian diplomacy. On the economic front, the manifesto speaks about improving the competitiveness of the economy, making India a more attractive destination for foreign investments, increasing exports; conducting multilateral negotiations on free trade agreements with various countries; taking advantage of the US-China trade war to attract industry, which is shifting out of China; making India a hub of Industry 4.0 manufacturing, defenceman equipment, new technologies such as artificial intelligence and machine learning. Achieving these laudable objectives will involve active diplomacy one way or the other. The idea of a foreign policy university is new. Other ideas have been around in some form or the other for a long time. On paper, the idea of a foreign policy university is good but the government should learn from the saga of National defence University, which has still not been set up despite the fact that it was conceived 17 years ago. The idea of seeking a permanent seat at the UN Security Council is laudable but looks unachievable at the moment because there is no appetite among the P5 and also many other nations for the expansion of the UN Security Council in the permanent members’ category. India can try but it should not set its hopes too high. The government’s focus on India’s culture through the propagation of themes such as Vasudhaiva Kutumbakam (world is a family) is laudable. It will require a lot of diplomatic effort. India should try and get a UN General Assembly resolution passed on Vasudhaiva Kutumbakam. It should make diplomatic efforts to set up dialogues, discussions and consultations with other countries both at the official and unofficial levels to promote the idea. The foreign policy agenda of the new government should also incorporate defence diplomacy in the overall diplomacy. This requires a fundamental overhaul of the internal mechanisms to improve coordination between the ministries of defence and external affairs and the armed forces. Such coordination so far has been ad hoc and inadequate. The economy and security issues are getting intertwined. President Donald Trump has shown how international trade, duties and sanctions can be used to achieve national security objectives. The US-China trade war presents opportunities as well as dangers. Indian foreign policy, in collaboration with the other ministries concerned, should devise strategies not only to exploit the new opportunities but also to safeguard India against dangers. India’s exports have been flat for many years. Balance of trade has been becoming increasingly adverse. Many of the free trade agreements (FTAs) signed in the past few years have only made the balance of trade worse. There is tremendous pressure on India from other countries to open its economy. India has been cautious considering that several sectors of its economy are not in a position to withstand the competition from cheap imports. India must learn to leverage its vast market and human resources in the negotiations on FTAs. The foreign policy agenda cuts across several ministries and departments of the government. A comprehensive government approach to foreign policy needs to be devised. The ministries of external affairs, finance and commerce need to work together to identify and implement winning strategies. At the same time, other departments like that of industry will have to take steps to improve India’s productivity. International trade negotiations are affairs ministry is a facilitator at best. The government should set up a multi-ministry taskforce, duly empowered, to deal with international negotiations on trade issues. There is a need for creating effective mechanisms within the government to implement the foreign policy agenda.
Source: Economic Times
India will soon reactivate the alternative mechanism that was first put in place by the previous Narendra Modi administration to speed up strategic sales. The mechanism comprises select ministers empowered to decide on the timing, price and amount of shares of a state-run company to be put on the block for outright sale, a senior government official told ET. “The alternative mechanism has to be notified,” said an official. The department already has a pipeline of initial public offers (IPOs) of state-owned enterprises in place. The alternative mechanism allows for quick decisions as every proposal need not be cleared by the cabinet committee on economic affairs (CCEA). In the last government, the mechanism was set up with the approval of the CCEA. It included the finance minister, the road transport and highways minister and the minister of the relevant department as members. This composition could undergo a change with the new government in place.
ASSET SALE TARGET FOR FY20
The CCEA had approved the alternative mechanism in all cases of strategic disinvestment of central public sector enterprises (CPSEs) in which it given ‘inprinciple’ approval for such a sell-off. There is a specific alternative mechanism for Air India.
STRATEGIC PUSH
The new government is expected to push strategic sales and asset monetisation to meet its ambitious funding requirements for capital expenditure. It has targeted to raise Rs 90,000 crore in FY20 from asset sales but the Department of Investment and Public Asset Management or (DIPAM) may be expected to exceed this to meet higher resource needs for not just capex but also new social welfare programmes. The target may be reviewed ahead of the full budget to be presented on July 5. The department’s list of firms that can be taken up for strategic sales includes Air India and was drawn up by the Niti Aayog. The strategic sale of loss-making state entities will help reduce the drag on government finances through periodic infusion of funds. In FY18, 71 out of 257 operational central public sector entities were in the red, notching up combined losses of Rs 31,260 crore. State-run BSNL and MTNL had a combined loss of nearly Rs 11,000 crore. Air India contributed Rs 5,338 crore to the loss.
Source: Economic Times
The Indian economy is not in great shape. What are the options before the new government to kickstart growth? As a new government takes charge, the fastest growing large economy globally seems to be headed for a slowdown. The signs are all there. There is rural and farmer distress; the fiscal noose is tightening; tax collections are well short of target; automobile sales are down to a seven-year low; credit offtake is low; and consumption too is slowing. Trade is also moving is the slow lane. These are some of the challenges that the new government has to handle. To discuss this, Business Today organised a roundtable. The participants included Ajit Ranade, President and Chief Economist, Aditya Birla Group; Shweta Saini, Senior Consultant, ICRIER; Sachidanand Shukla, Chief Economist, Mahindra & Mahindra; D.K. Joshi, Chief Economist, Crisil; Devendra Pant, Chief Economist and Head-Public Finance, India Ratings; and Biswajit Dhar, Professor of Economics, JNU. The discussion was moderated by Prosenjit Datta, Editor, Business Today. Edited excerpts: Prosenjit Datta: The government is going to inherit an economy with problems - a tight fiscal position, severe rural and farmer distress and lower-than-target tax collections. Commentators have said we are heading towards the middle income trap, and the most worrisome thing is that the two things that pushed up economic growth, government spending and consumption, are coming down, if reports are true. Ajit Ranade: The immediate concern is rainfall. We are looking at a situation where at least 42 per cent of the area is under drought, although that will change in the coming months. There is concern about how severe the drought will be. Shweta Saini: Our calculations say that never in the past 100 years have we had five consecutive years of negative long period average deviation of monsoon, as we have had now. This will be the sixth year running. So, we are looking at not just a drought year, but something that has accumulated over years. Another big crisis that we are looking at is on the market side where they had anticipated that increasing MSPs (minimum support prices) and running the PM-AASHA (the Pradhan Mantri Annadata Aay Sanrakshan Abhiyan) would curtail the crisis. Sachidanand Shukla: There are challenges every single year, every single cycle. If you continue to approach problems with the same old mindset, you will run out of policy options and responses. We are geared to thinking of ourselves as a supply constrained economy but are facing what typical developed economies have been facing. Sector after sector, we are witnessing demand challenges. A policy response is needed. Look at production versus demand. We need a paradigm shift in our response function. D.K. Joshi: In terms of global issues, trade is a major factor. We are moving from open to closed economies. The second aspect is the kind of monetary policy responses from advanced countries. Recently, the European Central Bank said that one takes small steps in a dark room. We are in a benign scenario because at least they are not tightening policy and that has led to capital flows back into India. A lot will depend on how lucky or unlucky we are this year, in oil and monsoons. If oil prices shoot up, we are in trouble. If monsoons are bad, we are in trouble. If you get these two things right, then you can easily sail out of this situation because low oil prices have fiscal, inflationary and growth implications. Devendra Pant: We have overlooked the sharp decline in household savings. Households are the only sector that has a positive saving-investment gap. Unfortunately, in 2017/18, household savings were lower than even government demand. Until and unless household savings improve, we are not going to see a decline in interest rates. For interest rates to come down, structurally, or in a medium to long run, the savings rate has to go up. So, we have to look at how household savings are going to behave or if we can give it a boost. Biswajit Dhar: We have some serious challenges and I don't think we can stand up to international competition. In agriculture, we are in a bind. We can't decrease tariffs because inefficiencies are spilling over and because of the demand factor, we are facing in a deflationary situation. There is no incentive because we have been surviving on the domestic economy. We had no ambitions of going into the international arena. For India to be part of the global economy and not withdraw is going to be the major challenge. Datta: What can be the government's agenda in the first 100 days, or in the medium and longer term? Let's start with agriculture... Ranade: If there is a severely deficient monsoon, we will have to consider the scale of MGNREGA. When it was first enacted, it was supposed to focus on 200 most backward districts. Then it got expanded. We should go back to the targeted approach and focus on the financially vulnerable districts. One specific area we can look at in the first 100 days is farmer producer organisations (FPOs). There are multiple tax issues. Saini: Every time we had deficit rains, foodgrain production fell, 2015/16 being a recent case. Even though numbers showed that production went up, we imported 5.6 million tonnes of wheat. We have to look at sustaining that surplus. There are surpluses, but will they continue in the future? There are large grain stocks in FCI godowns and large pulses stocks with NAFED. They have dedicated resources in the budget to offload it through PDS, but these numbers are unprecedented. We need a strategy to ensure grains are offloaded in time. The over-reliance on MSP for ensuring prices has to be subdued. They have to look at FPOs. In the first 100 days, NREGA is important. I see NREGA's role as very important in micro irrigation and water management. We can create water storages at micro levels in fields in anticipation of dry spells. Next, unproductive cattle will be a top concern in the coming few months, as it breaks the economic cycle of a dairy farmer. There is an urgent need for an answer to what they wish to do with unproductive cattle. Can we visualise a situation where there are no cows and everybody only buys buffaloes? Shukla: The best way to not solve agriculture problems is to start with a 100-day agenda. This is a 100-year-old issue. Look at the real GVA or GDP growth in agriculture. Look at food output, horticultural output or non-food output. It has been 4-7 per cent, right? But incomes have not grown. In the past four or five years, the average WPI would be close to 1 per cent. In the past two years, hardly 1 per cent. If agricultural GVA in nominal terms had the same level of inflation that we had three years back, agri GVA would be close to Rs 37 lakh crore. But because inflation has fallen, GVA is about Rs 28.5 lakh crore. This means farmers have lost an equivalent of around Rs 8 lakh crore worth of income. Politicians have been smart at understanding this. They have announced farm loan waivers worth Rs 2 lakh crore. So, against a notional loss of Rs 8-9 lakh crore, you have given or promised Rs 2 lakh crore worth of farm loan waivers. The point is that you need to undo that loss. Shukla: We need a big liberalisation drive in agriculture. We need to free these markets from the clutches of the government. In any market, the basic thing is price. But if you are the person who is going to procure the most through MSP, and you only are going to set prices, that is the surest way of harming that sector. The government has to get out of the sector. We have been talking about APMC for the past 20 years. Some states have done things, but it is time that we focus holistically on agriculture. Joshi: I am not sure whether we are in a complete oversupply situation. Between 2000 and 2006, food inflation was below 2 per cent, and overall inflation was 3.9 per cent - the current target - and farmers were not suffering. Input costs have risen much more sharply while output has remained the same. And, whatever be the output price, the margins of middlemen don't change. It's the farmer who gets a short shrift. Saini: In Maharashtra, fruits and vegetables were outside APMC, but traders wanted to sell in the APMC market yard because intermediaries delivered services. For example, access to credit, which you otherwise don't get from institutional credit. These are the people who assure purchase of the quantity you bring and access to credit. Second, results from the ICRIER-OECD work show that on an average, from 2000 to 2016/17, farmers suffered net losses on output prices also because of lower realisation in recent years. Every time prices go up, they announce MEP (minimum export price), export bans or restrictions. So, farmers are not able to get prices they would have realised from international markets. On an average, in 16 years, farmers received about 14.5 per cent lower gross farm receipts, amounting to a loss of Rs 45 lakh crore, and not just Rs 8 lakh crore. Pant: I would be very afraid to suggest any short-term solution to agriculture. It is like giving Brufen to a patient suffering from cancer for temporary relief. And in the process, we tend to overlook the long-term solutions. We don't need a situation where food prices are growing at 10 per cent and we don't need a situation where food inflation is negative or growing at 0.8 per cent. We need somewhere in between. Unfortunately, the entire monetary policy is so fixated on headline inflation. If headline inflation is coming down because of deflation in food prices, we must take some action. Datta: What is the long-term solution, or at least, what is the solution that can be moved forward for five years? Dhar: Unfortunately, that will get into the problem of Centre and states because most things fall in the state' domain, like the APMC Act. Shukla: There are some pieces - horticulture, for example - where we are doing fine. There are some crops where we need to raise yields, but at the same time, we have enough success stories within agriculture. Get more involvement from the corporate sector, let them bring in new technology, and let the government focus only on regulation. Crop insurance began to work but failed because questions were raised in Parliament about companies profiteering. Get corporates involved by getting the market at the doorstep of the farmer. As long as you have MSPs, you will continue to distort markets. Datta: Apart from agriculture, private investment and consumption are also down. Ranade: There is a concern on why private investment spending has stagnated or declined as a percentage of total investment for several years now. Overall investment spending and its proportion in GDP have also declined. The problem is more severe if I could aggregate the investment. Datta: This NDA government did not manage to create a new industrial policy. Pant: A draft has been hanging around. Investment and consumption are related to each other. We are looking at a situation where IIP growth is coming down and capacity is going up. This gives an impression that some of the existing capacities have gone out of the system. From FY12 to FY18, contribution of households to investment and gross fixed capital formation was highest, even higher than private corporates. And this is the sector where both savings and investments are falling. The household savings rate has fallen to around 17.5 per cent from 22-23 per cent. This is the sector where investments are falling. Growth of bank credit to MSMEs is falling. In the last few years, it was negative. In terms of GDP, it is two percentage points less than what it used to be in 2014/15. Until issues related to this sector are addressed, it will be difficult to have sustained improvement in investment and consumption. Joshi: There is no doubt capacity utilisation has improved. Corporates don't have to wait for capacity use to hit 80 per cent and then start investing. Many corporates are sitting on cash right now. They are in a position to leverage. So, when there is an opportunity, private investment will go up. According to the latest RBI survey, consumer sentiment is going up sharply and business sentiment is down. Some sectors still have excess capacity, because in 2010/11, they created a lot of capacity expecting 8 per cent growth, but growth actually fell. Bankruptcy proceedings also free up spare capacity. That's happening in steel. Datta: The Business Today-C fore Business Confidence Survey actually showed this to be slightly lower. The last round was lower than what it was before we went for elections in 2014. Shukla: The entire focus in India is on cost of capital but availability of capital is an issue. People who need capital don't readily get it. In private capex, think of the linkage of India's economy with the rest of the world. We are linked to the global cost of capital much more than before. Profitability is squeezed, it is not growing. Look at retail, realty, banking, telecom and IT. These are the poster boys of economic growth in India. Dhar: We have not been able to attract foreign investment. We are fond of comparing ourselves with China. Despite slowing down, China is growing. And Hong Kong is being leveraged even more now. China and Hong Kong are getting about $260 billion foreign investment and the US is getting $275 billion, while we are languishing at $33-38 billion. Something has gone wrong drastically. Indian investors are not interested. Our outflows have increased. The finance minister was happy that India has become an investor abroad. We should be unhappy because our country needs investments. In auto, two-wheeler sales have come down. And jobs are not being created. The problem is that we have a demand constant economy and if we don't do anything about demand, we won't get profits. If we don't have the market, no one is going to get interested. We are saying that manufacturing is not competitive, and every sector is asking for more tariffs. This is a big issue. So how can we stop this finger pointing: the government saying that the industry doesn't tell me what it wants, and industry saying that the government doesn't listen? Shukla: Industry hasn't thought beyond the domestic market. When I analysed three major FTAs (free trade agreements) that we entered into, trade deficits have gone beyond our control. We are not exporting to them but imports have gone up. In IT/ITeS, we have got stuck at the low value-added level. We don't seem to realise that when Industry 4.0 kicks in, many of these call centres will be out of business. We will always be a country with huge potential in everything. We have to find industry-specific solutions and then take it forward. Saini: We are a food insecure country and are concerned about rising domestic prices, but unless policy assures a stable and predictable environment, backward investments don't happen. We need predictability in policy. There is a need to identify areas that can specialise in production and then create a value chain - domestic and international - connecting them to the markets. In Orissa, the entire agriculture export is marine. There is Paradip port, but no marine exports go from Paradip; everything goes from Vizag. Joshi: Manufacturing is a tough nut to crack and its share in GDP doesn't seem to rise. There is opportunity because people want to move production bases out of China. But think of all the problems one faces when setting up a factory, and then compare it with competitors. Labour inflexibility and shortage of power comes into play. Once you produce, you need to ship it to ports. That's where logistics comes in. Split into these components and compare with competitors. How can you export if you don't fix these? In the last decade, Vietnam's share in garment exports has risen from 1.7 per cent to 5.3 per cent and Bangladesh from 2.5 to 6.7 per cent. India's share rose only 0.8 per cent. Datta: Was it because of neglect as industry grew or was it because of regulations? Shukla: The government has been helpful in the auto sector. It's not been excessively regulatory and therefore it's not a constraint. Acquisition of land is a real constraint and labour laws are an issue. Dhar: Pharma has become a sunset industry. Tomorrow even formulations will be imported from China. Twenty years back, we were exporting bulk drugs; today, we are at the threshold of importing formulations. Forget about growth; it's actually retrogression. Pant: I am not going to the 2017/18 data. But if you look at the latest data that is acceptable (2011/12), 51 per cent of the labour force is self-employed. Technology has been a great disrupter in the production process also. Even in construction, which has the highest employment elasticity, gone are the days when people used to make roads using shovels. So employment growth is likely to be lesser and lesser. There are still certain sectors where employment elasticity is higher than in others. For example, the textile sector. People are talking about IIP growth being at a 21-month low on a quarterly basis. Access to credit or credit growth to such sectors is declining. Some 36-odd per cent are casual workers and the remaining are salaried or have fixed kinds of jobs. We are looking at a situation where 81 per cent jobs that were there in 2011/12 are not growing. We have to grow much faster so that we are able to take care of those people who are coming in the job market with 'adverse' conditions. Artificial intelligence and block chain technology are going to be big disruptors for employment generation. Dhar: We've gone horribly wrong because the goalpost is growth. The goalpost has to be employment, and we can work backwards from that and identify the sectors such as industry or agriculture, and what the government can do. The reality is that public investment actually drives private investment. Even in the US, there's a huge amount of federal funding going into basic research. Industry then takes over. Industry will have to point out to the government that these sectors are job creators. I could never understand how textiles and clothing, which have huge employment potential, could be treated as sunset sectors. A number of research reports have been written about Tirupur and Jalandhar. I did two studies for ITC on Brandi and Pochampally. The industry needs to bang at the door and say this is what I want. Shukla: We have enough macroeconomics. We need to pay enough attention to micro ingredients. Can GST be a big driver of job growth? The whole idea was that it is a generational reform to unify markets. If you formalise, there are gains to be made. But execution is important. Smart cities, for example, haven't taken off simply because there is no brief. We are going through a great churn. We are trying to formalise the economy, and by definition, you will be shedding jobs as long as this process is not complete. Be it demonetisation, GST, RERA (Real Estate (Regulation and Development) Act) or IBC (Insolvency and Bankruptcy Code), when you formalise an informal system or an economy, you will be shedding jobs for a period of time. Apart from that, there is confidence or sentiment. We must understand that employment elasticity has gone down. In the 90s or early 2000s, it used to be 0.4 for every percentage point in GDP, now it is roughly 0.2. There's a World Bank report that says that with every percentage point (of GDP growth) you will add about 75 million jobs. So, even at 10 per cent growth, you will not be able to absorb the 10-12 million numbers that they keep talking about. If we are able to get inflation in a narrow band, it will impart stability. Rupee volatility and interest rate volatility will come down dramatically. So the cost of funds will go down over a period of time. If you implement IBC correctly, cost of funds will come down structurally, and you will be able to bring down the rate of interest. Steps like GST and IBC can be big drivers, as they will free up entrepreneurial capital, time and money.
Source: Business Today
Cotton On, Australia’s largest fashion retailer, has made its entry into the Indian market through online shopping platform Myntra. The brand plans to compete with the likes of H&M and Forever 21 in India, by opening its flagship store — either in Delhi or Mumbai — in the third or fourth quarter of 2020. AVS Global Network, a retailer of global fashion brands that focuses on retail through digital platforms, is responsible for launching Cotton On in the country. AVS Global Network has managed to secure an exclusive contract with online retail platforms Flipkart, Myntra and Jabong to sell Cotton On products in India for the next year and a half. “About 77 per cent of online fashion brand consumers use either Flipkart, Myntra or Jabong to shop, as they have a high brand-recall value. This is why we thought it would be wise to introduce Cotton On to India through these platforms.” said Sumanto Das, co-founder of AVS. Cotton On Group was established in 1991 and is present in 19 countries including New Zealand, South Africa and Singapore, with about 1,500 stores across the globe. The Australian giant has eight brands in its kitty, namely — Cotton On, Cotton Kids, Cotton on Body, Factorie, Ruby, Typo, Supre and Lost. Each one of them caters to a different market segment. For instance, while Cotton On has garments for both men and women, Ruby is the group’s footwear and accessories brand. Similarly, Typo specialises in selling quirky gifting items, which have recently become quite popular. As of now, only products from brands Cotton On and Ruby are available for sale. Within the next 12 months, Factorie, the group’s streetwear fashion brand, along with Typo, will be introduced to the Indian market. Cotton On is testing the Indian waters by selling its products online before investing in stores. Das believes this strategy is better for a rapidly-growing community of online shoppers. “India, China and other South-East Asian countries are increasingly buying apparel online, compared to other Western markets,” adds Das. The group has been on an expansion spree for the past four to five years, especially in the US, where it operates about 121 stores and is currently vying for the support of the Indian market to help achieve its goals.
Source: Business Standard
|
Item |
Price |
Unit |
Fluctuation |
Date |
|
PSF |
1100.48 |
USD/Ton |
0% |
6/2/2019 |
|
VSF |
1672.44 |
USD/Ton |
-0.09% |
6/2/2019 |
|
ASF |
2499.248 |
USD/Ton |
0% |
6/2/2019 |
|
Polyester POY |
1088.896 |
USD/Ton |
-0.40% |
6/2/2019 |
|
Nylon FDY |
2432.64 |
USD/Ton |
0% |
6/2/2019 |
|
40D Spandex |
4416.4 |
USD/Ton |
0% |
6/2/2019 |
|
Nylon POY |
5473.44 |
USD/Ton |
0% |
6/2/2019 |
|
Acrylic Top 3D |
1332.16 |
USD/Ton |
-0.54% |
6/2/2019 |
|
Polyester FDY |
2302.32 |
USD/Ton |
-1.85% |
6/2/2019 |
|
Nylon DTY |
2678.8 |
USD/Ton |
0% |
6/2/2019 |
|
Viscose Long Filament |
1230.8 |
USD/Ton |
0% |
6/2/2019 |
|
Polyester DTY |
2751.2 |
USD/Ton |
0% |
6/2/2019 |
|
30S Spun Rayon Yarn |
2439.88 |
USD/Ton |
0% |
6/2/2019 |
|
32S Polyester Yarn |
1795.52 |
USD/Ton |
0% |
6/2/2019 |
|
45S T/C Yarn |
2707.76 |
USD/Ton |
-2.09% |
6/2/2019 |
|
40S Rayon Yarn |
2722.24 |
USD/Ton |
0% |
6/2/2019 |
|
T/R Yarn 65/35 32S |
2215.44 |
USD/Ton |
-0.33% |
6/2/2019 |
|
45S Polyester Yarn |
1954.8 |
USD/Ton |
-0.74% |
6/2/2019 |
|
T/C Yarn 65/35 32S |
2331.28 |
USD/Ton |
-1.83% |
6/2/2019 |
|
10S Denim Fabric |
1.327816 |
USD/Meter |
0% |
6/2/2019 |
|
32S Twill Fabric |
0.777576 |
USD/Meter |
0% |
6/2/2019 |
|
40S Combed Poplin |
1.04256 |
USD/Meter |
0% |
6/2/2019 |
|
30S Rayon Fabric |
0.613952 |
USD/Meter |
0% |
6/2/2019 |
|
45S T/C Fabric |
0.686352 |
USD/Meter |
0% |
6/2/2019 |
Source: Global Textiles
Note: The above prices are Chinese Price (1 CNY = 0.14480 USD dtd. 02/06/2019). The prices given above are as quoted from Global Textiles.com. SRTEPC is not responsible for the correctness of the same.
President Donald Trump recently vowed to impose tariffs on all goods from Mexico, starting at 5 per cent and going up until the surge of illegal immigrants from there stops. The decision, announced unexpectedly on Twitter followed by an official statement, is being reportedly perceived as a direct challenge to Mexican President Andres Manuel Lopez Obrador. Higher tariffs will start at 5 per cent on June 10 and increase monthly till those reach 25 per cent on October 1, unless Mexico takes immediate action, global newswires quoted Trump as saying. 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. The decision is also being seen as a factor that may deteriorate economic ties between two neighbours heavily dependent on cross-border flow of goods. “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 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.US officials said 80,000 people are being held in custody with an average of 4,500 arriving daily across the southern border, overwhelming the ability of border patrol officials to handle them. White House acting chief of staff Mick Mulvaney told reporters the United States wants to see the Mexican Government act at the soonest possible. Meanwhile, president of the National Council of Textile Organisations (NCTO) Kim Glas expressed concern over the decision and said in a statement that adding tariffs to Mexican apparel imports, which largely contain US textile inputs, would significantly disrupt this industry and jeopardize jobs on both sides of the border. It will rather accelerate substantially the immigration issues the administration is seeking to address, said Glas. The magnitude of the trading relationship with Mexico is significant for the US textile industry, representing $12.2 billion in two-way textile and apparel trade in 2018. The U.S. textile industry alone exported $4.7 billion in yarn and fabrics to Mexico last year and had a net export surplus of $3.8 billion. As a result, Mexico is the single largest market for US-made textile exports, according to NCTO. The step would also give a significant competitive advantage to China, which already accounts for about 38 per cent of apparel and textile imports to the United States, Glas added. (DS)
Source: Fibre2fashion
With the ongoing US-China trade war and because the Chinese economy is also currently undergoing some structural changes, a number of Chinese garment makers are looking to set up factories in Bangladesh under joint ventures. Because of rising production costs in China, Chinese textile and garment industry owners have for the last two decades invested heavily in Vietnam and Cambodia. And this apparently has led to overinvestment in both countries. As Bangladesh is still relatively new ground, Chinese entrepreneurs are looking to relocate their “sunset industries”—old and less successful in terms of profitmaking—to Bangladesh in order to take advantage of its low labour costs. However, Bangladesh isn’t the only country these investors are looking at, as Myanmar, too, is on their radar. This means that Bangladesh, despite having the advantage of cheap labour, will have its work cut out if it wants to be the main beneficiary of Chinese investments. So far, Bangladesh has not allowed foreign investment in basic apparels, limiting their presence in high-end and value-added textile and garment items. But given that investment—other than public—has remained stagnant for years, the possibility of the Chinese investing in the sector should not be dismissed without carefully analysing the opportunities that it may present us. What also needs to be thought out is how we can make the best of this opportunity. Simply having a comparative advantage through cheap labour is not a prudent long-term strategy. And as the Chinese have said, they are worried about the high lead time in Bangladesh’s garment sector—much of it being the result of weak infrastructure and poor transportation facilities. These are things that the government must take into account and actively work to overcome.
Source: The Daily Star
Stepping up the rhetoric against the US, China on Sunday released a detailed White Paper titled ‘China’s Position on the China-US Economic and Trade Consultation’ outlining the long drawn out process of 11 rounds of negotiations held since last year to end the tariff war. China on Sunday accused the US of using “extreme pressure” to force Beijing to reach a deal to end the trade war and asserted that while it wants resolution through talks there will be no compromise on its principles. Stepping up the rhetoric against the US, China on Sunday released a detailed White Paper titled ‘China’s Position on the China-US Economic and Trade Consultation’ outlining the long drawn out process of 11 rounds of negotiations held since last year to end the tariff war. The Chinese government in the paper said the US tariff measures have not boosted American economic growth. Instead, they have done “serious harm” to the US economy. Rebutting Mr. Trump’s accusations that China went back on agreements reached during the talks, Wang Shouwen, vice-minister of commerce who released the White Paper, said the US is putting some compulsory requirements impinging on China’s sovereignty with a rider that some tariff will remain even after the deal. The US is making compulsory requirements impinging on China sovereignty to be included in the agreement, he said in apparent reference to Washington demanding access to verify the implementation of the deal, especially on Beijing’s assurance to protect the IPR and technology transfers. Without directly naming President Donald Trump, Mr. Wang said they also increased tariffs in order to exhort pressure on China leading to severe setback of the negotiations.” If one doesn’t respect other side’s sovereignty and core interests and tries to force the other side to compromise by pressuring to yield lopsided results, such negotiations cannot succeed,” he said. If the US wants to use extreme pressure and all kinds of ways to escalate trade frictions to force China to capitulate, this is impossible,” he said. The White Paper was released a day after China hit $ 60 billion worth of US goods with new punitive tariffs ranging from five to 25 %, in retaliation to the US raising punitive tariffs on $200 billion worth of Chinese goods. In May, after the Sino-US trade talks in Washington ended without a deal, the Trump administration imposed additional tariffs on $200 billion in Chinese goods to 25 % from 10 %. Mr. Trump launched the trade war last year demanding that China reduce the massive trade deficit, which in 2018 increased to over $ 539 billion. He is also pressing for verifiable measures for protection of intellectual property rights, technology transfer and more access to American goods into Chinese markets. Mr. Wang declined to specify whether there would be a meeting between Mr. Trump and his Chinese counterpart Xi Jinping on the sidelines of the G20 meeting later this month in Japan or when the 12th round of trade talks would take place. He also hinted at China blocking rare earth metals exports to US. China has the biggest deposits of rare earth metals, he said. The metals are key component for host of advanced technologies like iPhones and hi-tech missile guidance systems. If some countries use the metals produce products to contain China’s development this is unacceptable to both minds and hearts,” he said. “As for China-US talks, economic trade should be based on mutual respect and [both parties] should pull on the same direction,” he said. The White Paper accused the US of backtracking three times over the course of the talks by introducing new tariffs and other conditions beyond what was agreed on. It said China and the US agreed on most parts of the deal. But the consultations have not been free of setbacks, each of them being the result of a US breach of consensus and commitments, and backtracking,” it said. Resorting to intimidation and coercion, it (US) persisted with exorbitant demands, maintained the additional tariffs imposed since the friction began, and insisted on including mandatory requirements concerning China’s sovereign affairs in the deal, which only served to delay the resolution of remaining differences,” the White Paper said. Despite the tensions, it said China is willing to work together with the US to find solutions and to reach a mutually beneficial and win-win agreement. “However, cooperation has to be based on principles. There are bottom lines in consultations. China will not compromise on major issues of principle. China does not want a trade war, but it is not afraid of one and it will fight one if necessary. China’s position on this has never changed,” the white paper said. On the bilateral trade front, it said last year trade in goods and services exceeded $750 billion, and two-way direct investment approached $160 billion. “China is the key export market for US airplanes, soybeans, automobiles, integrated circuits and cotton. During the ten years from 2009 to 2018, China was one of the fastest growing export markets for American goods, with an annual average increase of 6.3 % and an aggregate growth of 73.2 %, higher than the average growth of 56.9 % represented by other regions in the world,” the paper said. Trade friction between world’s two largest economies are provoked by the US are damaging the interests of both countries and of the wider world, it said. “Trumpeting ‘America First’, the current US administration has adopted a series of unilateral and protectionist measures, regularly wielded tariffs as a “big stick” and coerced other countries into accepting its demands,” it said apparently referring to US trade measures against various countries including India.
Source: The Hindu
U.S. retailers have voiced concern that the latest round of tariff hikes on Chinese goods and possible future increases of tariffs on more Chinese imports will force them to raise prices. Warehouse club operator Costco was among the retailers to acknowledge the tariffs' impact on its business operations. The company's chief financial officer (CFO) Richard Galanti said on a post-earnings call Thursday that the company is looking to accelerate shipments before certain tariffs go into effect, despite the fact that the company has limited ability to do that. He said the company has reached out to suppliers to look for ways to reduce costs. "At the end of the day, prices will go up on things," Galanti said, adding that it was not immediately clear how the tariffs would affect prices on imports from China, such as luggage, furniture, bicycles and vacuums. Half a month ago, Walmart also indicated a possible price hike for the products it sells in order to offset the impact of the additional tariffs Washington has imposed on Chinese goods. "We have mitigation strategies that have been in place for months. But increased tariffs will increase prices for customers," Walmart CFO Brett Biggs said Thursday when the company reported its quarterly earnings. Jeff Gennette, chief executive of department store chain Macy's, had similar remarks. He said it would be hard for the company to get to a place "where you don't have a customer impact" if the additional tariffs go into effect. U.S. retailers depend heavily on China in their supply chains, as China accounted for about 41 percent of all apparel, 72 percent of footwear, and 84 percent of travel goods imported into the United States in 2017, according to a recent letter sent by several retail trade groups to U.S. President Donald Trump's administration. The letter said duties on U.S. imports of these consumer products from China already represent more than 22 percent of all tariffs the United States collects from all countries on all products. "To be clear, such duties are paid by U.S. workers, U.S. consumers, and U.S. companies -- not China," said the letter jointly submitted by 17 groups. In an escalation of trade tensions, Washington on May 10 increased additional tariffs on 200 billion U.S. dollars' worth of Chinese imports from 10 percent to 25 percent, and has threatened to raise tariffs on more Chinese imports. In response, China raised additional tariffs on a range of U.S. imports on June 1, and has vowed to "fight to the end" to safeguard not only its own rightful interests, but also the norms of international relations and the free trade system. The latest round of U.S. tariffs on Chinese goods will impose a total annual cost of 831 dollars for a typical U.S. household, according to research posted Thursday on the Federal Reserve Bank of New York's website. Imposing further tariffs in the escalating trade disputes between the United States and China would lead to widespread closures of soft-line stores and substantial disruption across the industry, according to a report by Swiss investment bank UBS. The report warned that over 12,000 U.S. stores of apparel and textiles, which have about 40 billion dollars of annual revenue, would be at risk because of the possible new tariffs. Statistics show that the U.S. retail industry has already lost more than 3,000 stores, or more than 5 percent in the first quarter of 2019.
Source: Xinhua
Manufacturing activity still edged up in May but an industry survey suggests momentum eased from the previous month, while wage rises for workers in the sector appear increasingly elusive. "While Australia's manufacturing sector continued to grow in May, performance was mixed across the range of manufacturing industries and there are signs of further softening in the months ahead," Ai Group chief executive Innes Willox said after the release of the Australian Performance of Manufacturing Index on Monday. The food and beverages sector - which employs 27 per cent of manufacturing workers - expanded at its fastest rate on record in May, the Ai Group said in its summary of the monthly poll of businesses. "Manufacturers in the 'food and beverages' sector continue to report buoyant conditions, with the index for this sector reaching a record high," the report said. The index also pointed to expansion for manufacturers of building-related products that include glass, bricks and furniture. "Respondents selling products into non-residential construction, commercial buildings and defence industry suppliers reported winning new contracts," the Ai Group said. The report said a further contraction in the metal products sector and the machinery and equipment segment reflected slowing economic conditions more generally. The sector encompassing textiles, clothing, footwear, printed products and recorded media also shrank during the month as demand reportedly reduced. "Respondents reported fairly negative conditions this month, with some noting weak consumer spending as a hindrance to new orders," the Ai Group said, adding that it was the weakest result for the sector since October 2018. The PMI's average wages index fell 2.2 points to 55.5 points in May which, while above the 50-point mark separating growth and contraction, was its lowest monthly result since March 2017."It indicates that fewer manufacturing businesses are now implementing wage rises compared to the recent peak in Q3 of 2018," the report said.
Source: 7 News.com
The next edition of Yarn Expo Autumn 2019 will be organised during September 25-27 in Shanghai, building on the success of the Yarn Expo Spring 2019 which reported positive feedback from exhibitors about the quality of trade buyers, while buyers expressed satisfaction about the diverse variety of products that met their sourcing needs and trends. At Yarn Expo Spring 2019, three exhibitors - Birla Cellulose (China), Cotton Council International (USA) and Safilin (France) - were selected for in-depth case studies. Each exhibitor gave opinion on shifting sourcing trends, what needs to be done to achieve sustainability in the textile industry, and how it found entry points into new markets at Yarn Expo. A common theme across each case study conducted in March was the rise in consumer demand for sustainability and transparency, and the consequent ripples all the way through the industry. Manohar Samuel, senior president of Marketing and Business Development at Grasim Industries (of the Aditya Birla Group), observed, “A spinner cannot be sustainable by themselves. We see it as B2B2C. All of us face the common consumer, because the entire textile supply chain is now visible to the consumer. Creating an environmentally-friendly product begins with the fibre, and brands are increasingly recognising this.” Cotton Council International (CCI) gave a similar viewpoint, noting why trade buyers from further along the supply chain are sourcing directly from yarn and fibre suppliers. CCI represents US cotton farmers overseas and describes the US cotton industry as “one entity” with reliable quality, due to strict national standards. Karin Malmström, director of CCI China and Northeast Asia, said, “Our partners are hearing clear messages from their customers. They are demanding traceability. So the beautiful advantage of using traceable cotton is that it’s easier for the brands and retailers to do their due diligence, by starting right from the origin.” By exhibiting at Yarn Expo, the companies position themselves in the ideal place to attract a wider variety of trade buyers looking to improve their traceability. Herve Denoyelle, business development manager of Safilin, noted, “Usually, when you are a spinner, your customers are weavers. Today that is changing. We are getting enquiries directly from brands who want to learn more about improving their carbon footprint. It’s very interesting. We are meeting a variety of trade buyers at Yarn Expo, it’s very diverse here.” The exhibitors noted the other benefits that come from sourcing directly from yarn and fibre companies. These include access to innovative yarns and fibres that ultimately offer product differentiation. Sourcing higher quality yarns and fibres reduces the risk of costly production problems such as breakage, while creating a product that commands higher premiums at retail. Malmström explained, “We are exhibiting at Yarn Expo because it’s the beginning of the supply chain. If you don’t get it right at the beginning, you’ll never get it right at the end. Your finished product is as good as the material you put into it. It’s that simple!”
Source: Fibre2Fashion
