Expressing concern over decline in export credit, particularly to MSME players, Commerce and Industry Minister Piyush Goyal on Friday said steps will be taken to ensure timely availability of funds to exporters. “Timely and efficient availability of export credit is critical for any trade activity and is one of the key drivers that boosts growth of export,” he said. He was speaking at a meeting called to discuss issues related to export credit. Goyal said in the last few years the share of export credit has come down and this is a “cause of concern”, especially for the MSME sector that suffers due to demand of collateral from lending institutions. “Today’s meeting with stake holders has been called to address this significant challenge and to redress the situation based on the inputs given by participating organisations and institutions,” he added. Goyal said the time has come to move away from subsidies and provide easy availability of cheaper credit to exporters. To ease the burden on exporters and to make exports competitive and at par with global best practices, he said there is a need to first develop a framework with a stable policy that is an internationally acceptable, consistent and robust and then look for solutions within that framework. “Greater transparency has to be brought into the work being done by government organisations, export promotion councils and financial institutions,” the minister added. Goyal hoped that the result of the meeting will lead to export credit tripling in the next five years and allow India to be at par with the rest of the world where credit is cheaper and interest rates are lower. Exporters have time and again raised issues related to credit as it impacts outbound shipments. The meeting was attended by representatives of Ministry of Finance, RBI, State Bank of India, Canara Bank, Punjab National Bank, HDFC Bank, Kotak Mahindra Bank, Axis Bank, Barclays Bank, Citi India, Bank of America, EXIM Bank, ECGC, and Indian Banks’ Association. Exporters, export promotion councils and industry chambers including FICCI also participated.
Source: The Hindu Business Line
Slowdown in global trade and investment is of serious concern as it adversely affects economic growth, development and job creation, Commerce and Industry Minister Piyush Goyal has said. He has called for de-escalating trade tensions and reviving confidence in the rules-based multilateral trading system. These issues were discussed during the Minister’s bilateral meetings with countries including Japan, the US, UK, China, France, Singapore, Korea, Spain, Canada, EU, Mexico, Saudi Arabia, South Africa, Chile and Australia. “The Minister held a series of bilateral talks with a number of countries on the side lines of the two-day G20 Ministerial on Trade and Digital Economy in Tsukuba, Japan, on 8-9 June,” the commerce ministry said in a statement Monday. During the meetings, the Minister has emphasised the need for reciprocal market access for Indian products.
Source: The Hindu Businessline
Genuine difficulties like increased cost of credit, easy availability of liquidity etc. will be resolved expeditiously. The Union Minister of Commerce and Industry & Railways, Piyush Goyal, chaired a joint Meeting of Board of Trade and Council of Trade Development & Promotion and held a day long interaction with the industry and Agriculture Ministers of the States, industrialists, Export Promotion Councils, and representatives of the economic and infrastructure Ministries of the Central Government for boosting exports and domestic manufacturing and reducing trade deficit. Briefing media at the end of the meeting, Piyush Goyal said that ministries/departments can no longer work in isolation for effective outcome of government policy. The Commerce and Industry Minister further said that action on many of the decisions arrived at today's meeting will be taken in next 45 days. He also announced that the next follow up meeting would be held in 45 days. He said, easier availability of credit at cheaper rates to exporters will be resolved expeditiously and customs clearances will be made quicker by installing X Ray scanners at all major Ports. Robust mechanism for Track & Trace in Pharma sector will be implemented in three months, a new scheme to rebate state and central taxes and levies will be rolled out in 3 months and will be implemented in a phased manner for all sectors, the Minister added. During the day-long deliberations, exporters spoke about trade disputes between US and China, ongoing negotiations under Regional Comprehensive Economic Partnership, difficulties in availability of export credit. Specific action points for the implementation of new Agricultural Export Policy, reducing logistics costs, improving ease of doing business in all States, increasing domestic manufacturing and reducing imports were identified. States were urged to finalise their export strategies at the earliest keeping in view their state specific requirements and advantages. Commerce and Industry Minister exhorted the State Governments to adopt GeM, a one stop online procurement portal for better transparency and efficiency. State Government agreed to take steps in strengthening the entrepreneurship and start up ecosystem. A number of decisions were taken during the meeting which includes:
Earlier in his opening remarks the Commerce & Industry Minister recalled the vision of Dr Shyama Prasad Mukherjee, first Minister of Industry of independent India, who laid solid foundation of India's industrialization through the Industrial Policy Resolution of 1948. He highlighted that this time, meeting with Industry has been combined with the meeting with States in order to have holistic discussion in the true spirit of cooperative and competitive federalism. He emphasized that Industry should move away from the mindset of government support and subsidy because there are larger issues which need to be addressed at a structural level. He urged the industry to focus on the root cause of the problem and increase competitiveness in terms of quality and efficiency. He assured the industry that wherever there are genuine difficulties like increased cost of credit, easy availability of liquidity etc, will be resolved expeditiously. He highlighted the achievements of the government in terms of exports crossing half trillion mark for the first time with goods exports at all time high of US$ 331 billion, Ease of doing business rank improving to 77 and logistics rank improving to 44th. Procurement of more than Rs 25000 crore has been undertaken by Governments resulting in huge savings. Hardeep Singh Puri, Minister of State (Independent Charge) Housing and Urban Affairs and Civil Aviation and Minister of State, Commerce & Industry and Som Parkash, Minister of State for Commerce & industry also participated in the deliberations. Amitabh Kant, CEO NITI Ayog, Ramesh Abhishek, Secretary, Department for Promotion of Industry and Internal Trade and Anup Wadhawan, Commerce Secretary were also present during the conference.
Source: Business Standard
Union Budget 2019 India: Amid rising global trade tension and competition, the government needs to provide stimulus to exporters to boost exports, an industry body said. Amid rising global trade tension and competition, the government needs to provide stimulus to exporters to boost exports, an industry body said. Special tax concessions need to be considered for export-oriented manufacturing, the Federation of Indian Chambers of Commerce & Industry (FICCI) said. Even as India was able to fight global headwinds in the last few years, recent fall in consumption and investment growth has raised concerns again. There is a need to designate export-manufacturing zones to attract more foreign and domestic investments, the FICCI also said in its pre-union budget recommendation to the finance ministry. The industry body also recommended creation of an institutional mechanism for Global Market Intelligence to regularly carry out market studies, sector specific studies to understand the dynamics of global trade, barriers to trade, market entry opportunities, among others. An export information portal needs to be put into place which makes available detailed information to the exporters, it added. The export oriented sectors including handlooms, textiles, gems and jewellery, leather products, tourism should be provided additional fiscal support, the FICCI noted in its recommendations. To build brands and promote Make-in-India products, the government needs to take measures for creating massive campaigns in the foreign markets, it said. The Budget 2019 should be leveraged to promote business sentiments and encourage more investments, the FICCI also said. It also talked about bringing down the corporate tax rate for all firms to 25 percent, as had been proposed earlier. The government in its 2015-16 budget had said that the corporate tax rate would be gradually lowered to 25 percent from 30 percent over the next four years. The available exemption limit to companies would also be phased out, it added. The tax rate was reduced to 25 percent for companies with a turnover of up to Rs 250 crore in the subsequent years.
Source: Financial Express
The MSME sector had received maximum damage on unemployment of consumption fall due to introduction of the Goods and Service Tax (GST) and demonetization. The Finance Ministry is keen on key employment and export boosting steps to be accommodated in the Budget. It may consider fiscal incentives like interest rate subvention, lower tax rates for up to certain turnover threshold for key MSME sectors who do the twin objective of exports and employment. Sources said the PMO is also supportive of any higher budgetary allocations or any other fiscal support to these sectors because of their dual potential of pushing exports and creating more employment. Many sectors identified as having the dual potentials of exports and employment are textiles, leather, food processing, gems and jewellery, handicrafts, footwear and tourism. The interim Budget had not announced any incentives for the MSME sector. The sector had received maximum damage on unemployment of consumption fall due to introduction of the Goods and Service Tax (GST) and demonetization. Last November, Prime Minister Narendra Modi had announced sanctioning loans of up to Rs 1 crore in 59 minutes to GST-registered SME units with 2 per cent interest rebate on fresh or incremental loan of Rs 1 crore. There have been no other incentives for these sectors after this. The incentives could also be considered on the lines of refunds on inputs. Budget could be seen offering a new incentive of refunding of all unrebated central and state taxes and levies on inputs used in exports of these units, say sources. Finance Minister Nirmala Sitharaman in her meeting with industry from Tuesday onwards will be seeking views on export and jobs growth steps among other issues from stakeholders. "Creating employment is very important now. Budget will be favourable to the idea. The identified sectors where the dual objectives are being fulfilled with potential of creating large employment opportunities and also of higher exports are- textiles, leather, food processing, gems and jewellery, handicrafts, footwear and tourism. They will be given fiscal incentives based on what the industry seeks and the nodal departments have suggested in each of these sectors," the source added. The other fiscal boosters like cheaper finance of lower interest rates and interest rate subvention can also form part of the incentives. The government is trying to tackle slow and 17-quarter of lower growth of 5.8 per cent and a high 6.1 per cent unemployment rate. The Budget being round the corner is expected to take steps to bolster consumption and job creation.
Source: Economic Times
The Indo-Nepal Treaty of Trade and Transit will be amended soon to include waterways as a mode of cargo transport to enhance connectivity between the two countries. According to Pravir Pandey, Chairman, Inland Waterways Authority of India, currently the Indo-Nepal treaty of 1991 only allows movement of cargo by road and rail between the two countries.
Need for amendment
“We are working on enhancing the waterway connectivity between India and Nepal. Currently, the cargo that comes to Kolkata or Vizag has to go by road or rail to Nepal. This is because the trade treaty recognises only these two modes of transport. The clause is being amended to include waterways,” Pandey told newspersons on the sidelines of the Inland Waterways Summit organised by the Indian Chamber of Commerce here on Friday. The Commerce ministries of India and Nepal have taken the lead in bringing in the amendment. “A couple of meetings have already been held and they have drafted the amended clause. It will see the light of the day very soon,” Pandey said.
Routes identified
A high-level delegation of officials from Customs, and Commerce and External Affairs ministries visited Nepal in April to discuss the routes that can be taken for transit of cargo using waterways. The routes identified are Kolkata-Sahebganj by waterway and then to Nepal’s Biratnagar by road; Kolkata-Kalughat near Patna by waterway and then to Birgunj by road; and Kolkata-Varanasi by waterway and then to either Nepalganj or Mahendra Nagar by road. “Three water routes have been accepted by both the countries. There is in-principle approval of all these agencies of India and Nepal on the three routes,” he said. These apart, the Nepal government has requested India to explore whether the Gondak river could be used as a waterway right up to the border of these two countries. However, this will call for technical studies to understand if ships of larger size can move through Gondak up to Nepal, Pandey said.
Source: The Hindu
India will hold bilateral meetings with Russia and China on the sidelines of the Shanghai Cooperation Organisation (SCO) summit at Bishkek this week, the Ministry of External Affairs stated during a press briefing on Monday. The bilaterals will take place when Prime Minister Narendra Modi is in the Kyrgyz capital of Bishkek to attend the meeting of Council of Heads of State (CHS) of SCO from June 13 to 14. The MEA also revealed that India would be holding a meeting with host nation Kyrgyzstan on June 14. Responding to a question regarding a probable India-Pakistan meeting, or even a bilateral between India and Iran, the Secretary (West), Gitesh Sarma, said that there is limited time available due to which "requests for other bilaterals will be processed as we go along." However, MEA Spokesperson Raveesh Kumar firmly outlined that no meeting between India and Pakistan is being organised. "Issues of terrorism are likely to be discussed. SCO has a well-oiled mechanism. While all documents reflect consensus, they also talk about serious challenges of terrorism," Kumar said, regarding the probability of India raising the issue of terrorism emanating from Pakistan during the summit. The Ministry officials also highlighted that a business summit between FICCI and its Kyrgyz counterpart may take place on June 14, along with a textile exhibition on the colours and weaves of India. Both India and Kyrgyzstan will be showcasing their textiles at the event which is being organised by the Ministry of Textiles. Questions regarding the agenda during the India-China bilateral were also put forth to the officials. While both the representatives abstained from revealing any part of the agenda, they said that "the current global scenario is uppermost in minds," in response to a question on the ongoing trade dispute between China and the United States being discussed during the bilateral. The SCO summit was described as a "friendly gathering," by Kumar who added that the meeting reflects consensus as the documents are previously negotiated. Prime Minister Modi had also attended the last CHS meeting in Qingdao in China from June 9 to 10 last year. "The leaders participating in the Summit are expected to focus their discussions on the global security situation, multilateral economic cooperation, people-to-people exchanges and also on topical issues of international and regional importance," an MEA statement outlined. Apart from BIMSTEC leaders, the Kyrgyz President, Sooronbay Jeenbekov, attended Modi's swearing-in ceremony in New Delhi on May 30. The two countries also held a bilateral the following day.
Source: Business Standard
‘How to respond to the bullying practices of the United States…its practices of trade protectionism is an important question ‘China on Monday invited India to join a budding international effort to counter headwinds of “trade protectionism and unilateralism” and brainstorm ways to address “bullying practices of the United States”. In response to question ahead of a meeting of Chinese President Xi Jinping and Prime Minister Narendra Modi on the sidelines of a summit of the Shanghai Cooperation Organisation (SCO) that begins in Bishkek on Thursday, Chinese Vice-Foreign Minister Zhang Hanhui said at a press conference that “trade frictions between China and the United States and the spectre of trade frictions between the United States and India” could become an “important topic” for talks. He added: “Trade protectionism and unilateralism are very much on the rise. How to respond to the bullying practices of the United States…its practices of trade protectionism is an important question.” Mr. Zhang hoped that talks between the two leaders would yield “extensive consensus” to counter trade protectionism and uphold “justice”. “Not only on China, it (protectionism and unilateralism) has a direct bearing on the recovery and the growth of the global economy. So, I would say it would be helpful if the two leaders can exchange views, and we hope their communications will lead to extensive consensus on upholding justice and opposing trade protectionism.” Mr. Zhang was upbeat that the upcoming dialogue between Mr. Xi and Mr. Modi, who will also meet later this month at the G-20 summit in Japan, would “not only enhance bilateral trade (but) also play an important role in promoting global economy”. The talks between the two leaders are likely to be part of broader dialogue between China and leaders of other countries present at the SCO summit on “bilateral as well as international issues.” The Chinese official also stressed that at a personal level, the two leaders are “good friends”. He singled out last year’s “very successful informal summit in Wuhan,” which has imparted “strategic guidance for the development of China-India relations, paving the way for stable growth of China-India relations in the long run”. An official source had earlier told The Hindu that China was keen to step up preparations for the next informal summit between Mr. Xi and Mr. Modi as a follow-up to the Wuhan conclave. During official discussions, Varanasi has been proposed as a possible venue for the summit. The rising trade and technology tensions with the U.S. appear have spurred China to seek new allies and attempt forging new rules of international trade and commerce. Last month, Chinese Foreign Minister and State-Councilor Wang Yi identified building blocks, including an early launch of feasibility studies to establish an SCO-free trade zone and trade facilitation talks among member-countries, to withstand protectionist pressures radiating from Washington. During a foreign ministerial meeting of the SCO at Bishkek, Mr. Wang proposed that SCO member-countries should take concrete actions to safeguard free trade and the multilateral trading system, Xinhua reported.
Source: The Hindu
Tirupur Exporters Association (TEA) appealed to the Union Commerce Ministry to come out with an alternative which was WTO compatible and similar to Merchandise Exports of India Scheme till a free trade agreement was inked with the EU, the UK and EAEU.The request comes after remarks by Union Commerce and Industry Minister Piyush Goyal that the industry and export councils should stop depending on crutches of subsidies and grants from the Central government and strive to make industry more competitive and self-reliant. “Though knitwear garment (was) exporting units, 80 per cent MSMEs in Tirupur were striving hard to be competitive and self-reliant. The major concern was the absence of level playing field in the global market,” president, TEA, Raja M Shanmugham, said in a statement. The subsidy like MEIS was actually introduced for offsetting the infrastructural inefficiencies faced for export of specified goods including ready made garments (RMG) to provide a level playing field, he said. He said the immediate removal of subsidy given to RMG sector at this juncture would straightaway lead to reduction of the country’s competitiveness in the global market. The TEA president said the RMG sector was providing more employment to the downtrodden people, that too 60 per cent women workers and it is required to protect this industry and also cotton farmers, as the fortune of industry is linked with them directly. In this background TEA has sent requisition letter to Union Minister of Commerce and Industry to come out with an alternative WTO compatible scheme with equal benefit of MEIS till inking Free Trade Agreement with EU, UK, EAEU and other promising countries for the sustenance of exports. The copies of letters were also sent to Prime Minister, Union Ministers of Finance, Textiles and MSMEs, he said.
Source: News Today
The government had last month approved the merger of National Sample Survey Office (NSSO) with the Central Statistics Office (CSO) under MoSPI. Amid criticism on official statistics, the government on Monday said that the Ministry of Statistics and Programme Implementation (MoSPI) is giving an increased focus on Data Quality and Assurance. The ministry also said that it is redrafting the National Policy on Official Statistics and proposing to establish a National Data Warehouse on Official Statistics, where technology will be leveraged for using Big Data Analytical tools for further improving the quality of macroeconomic aggregates. Referring to reports on the ministry’s restructuring, the government in a clarification said: “What has been missed out, in particular, is the fact that MoSPI is giving an increased focus on data quality and assurance by repositioning the existing data processing personnel”. This is the second clarification given by the ministry in the last three days, after it announced the restructuring of the statistical system on May 23. The government had last month approved the merger of National Sample Survey Office (NSSO) with the Central Statistics Office (CSO) under MoSPI. “The recent step for the merger of CSO and NSSO was aimed at leveraging the strengths of the two organisations so that it can meet the increasing demands,” MoSPI said. On questions raised at the credibility of India’s official statistics, it said that India has adopted the United Nations Fundamental Principles of Official Statistics (FPOS) in May, 2016 and is committed to ensure and secure the autonomy and independence of the statistical system to produce appropriate and reliable data. “The reforms being undertaken in MoSPI are in consonance with these principles as also the various recommendations of the National Statistical Commission (NSC),” MoSPI said.
GDP revision
The government has faced flak for revising the GDP data under a new series with 2011-12 as the base year. One such case was the sharp revision in GDP growth for FY17, the year of demonetisation, from 7.1% to 8.2%. A group of 108 economists had criticised the government when an estimate of back-series GDP data for the last decade by a committee appointed by the NSC was at variance with that of the Central Statistical Organisation. The CSO’s official data sharply lowered growth estimates for the period from 2005-06 to 2013-14. Former NSC members had blamed the government for its undue influence and delay in the publication of a NSSO report on jobs, which the NSC had cleared. As per the report- the Periodic Labour Force Survey-the unemployment rate in the country was 5.3% in rural India and 7.8% in urban India, resulting in an overall unemployment rate of 6.1% in 2017- 18. The clarification also mentioned media reports, while citing the changes in GDP growth likely to result from adopting the double deflation, realise the varying outcomes obtained by different authors from their own distinct assumptions. “It was because of such views that the Advisory Committee on National Accounts Statistics (ACNAS) had not agreed to the use of the double deflation at present stage,” it said.
Source: Economic Times
More than four years after signing the MoU for a Chinese industrial park in Gujarat, the ambitious project — which is expected to boost Chinese investment in the State — will finally see the light of day, a top government official here said. About 200 acres at Sachana village, 5 km from Sanand in the Ahmedabad district, has been procured by a private entity named the CASME Industrial Park Development Pvt Ltd, which is developing the Chinese industrial park there.
Land acquired
Rajkumar Beniwal, MD, iNDEXTb of the Gujarat government, said: “CASME (China Association of Small and Medium Enterprises) is developing the Chinese industrial park on their own. They have acquired 200 acres, and only non-polluting industries such as automobile and component makers, and steel and electrical manufacturing companies can function in the park.” The State government is not involved in the land acquisition, and is only facilitating the industries that are coming to the park, Beniwal said on the sidelines of a China (Guangdong)-India (Gujarat) Economic and Trade Cooperation Conference in Ahmedabad on Friday. The quantum of investment or the number of units likely to come up in the park were not revealed. The CASME Industrial Park Development has a registered office in Ahmedabad with directors from China and India. An MoU for the project was signed at the Vibrant Gujarat Global Summit of 2015. Sources involved with the project revealed that land acquisition and successive political churning in the State led to a delay in executing the project. Now that there is political stability in the State and the Centre, projects such as this one are moving forward.
Trade meet
In his inaugural address at the conference, Chief Minister Vijay Rupani said: “Offering strategic maritime location, pro-active, stable and transparent governance, business friendly policies, futuristic initiatives, and a firm focus on the goal-oriented development reflects in the State becoming a powerhouse of industrial and financial development.” Leading a 50-member business delegation from China’s south-eastern province of Guangdong to India, Li Xi, Party Secretary of the Guangdong CPC Committee, said the bilateral trade and relationship between the two countries is reflected in the ties between Gujarat and Guangdong. Gujarat has about 25-30 big Chinese companies already operational in various sectors. “We have streamlined six ideas for enhancing the scope of relations between the two provinces that include turning the Greater bay area (Hong Kong-Macau-Guangdong belt) and Gujarat into a hot bed of investments for major sectors, including science and technology, education, electronics, people exchange, tourism, and cultural interaction,” he added. The conference saw over 500 B2B interactions between Indian and Chinese companies.
Source: The Hindu Business Line
The court has given the liberty to the petitioners to move an application for early hearing if there is any coercive action from the DRI during the pendency of the caseSeveral exporters have approached the Delhi High Court (HC) with a plea to quash a 2017 notification of the Directorate of Revenue Intelligence (DRI), through which the agency had taken out some of the services that were counted towards fulfilling of export obligations. The HC has agreed to hear them and has issued notices to the government, the DRI, the GST (goods and services tax) Council, and the Central Board of Indirect Taxes and Customs (CBIC). The case will be next heard on November 4. The court has given the liberty to the petitioners to move an application for early hearing if there is any coercive action from the DRI during the pendency of the case, said Abhishek A Rastogi, partner at law firm Khaitan & Co and advocate for the petitioners. In their plea, the exporters have claimed that through the October 2017 notification, the DRI arbitrarily removed the services that were deemed as exports under annexure 5 (D) of the Foreign Trade Policy. They said these exports were also counted towards discharge of export obligation under the Export Promotion Capital Goods (EPCG) Scheme. The new license norms said that export of only physical goods would be allowed and it was applicable retrospectively. “If the benefits were promised in public interest then curtailment of such benefits midway will have to be justified,” said Rastogi. The exporters had applied for the licenses with an understanding that the services would be allowed to be a part of export obligations, he said. In the pre-GST era, exporters could use the EPCG Scheme to import capital goods without payment of any Customs duty such as Basic Customs Duty (BCD), Special Additional Duty (SAD), and Countervailing Duty (CVD). These exemptions were valid if they exported services that were at least six times of the duty saved. In 2017, however, the government curtailed upfront duty exemption available on import of capital goods against the EPCG Scheme to allow only BCD, SAD and CVD. “The imposed restriction appears to be an afterthought,” the exporters said in their plea.
Source: Business Standard
India on Sunday said that the World Trade Organization’s (WTO) reform process should not dilute the basic principles of providing special and differential treatment to developing countries as well as consensus-based decision making. Speaking at a meeting of G20 trade ministers in Japan, Commerce and Industry Minister Piyush Goyal said in the reform process of the World Trade Organization (WTO), concerns of all member countries must be accommodated. “India believes that the reform process should not undermine the WTO’s fundamental principles, namely, ‘Special and Differential Treatment’ (S&DT), consensus based decision making and objective of development,” he said. Goyal said the reform process should begin with reviving the dispute settlement mechanism of the Geneva-based body, which frames rules for global trade, by allowing re-nomination of appellate body members at the earliest. The statement assumes significance as the United States (US) has called for reforming WTO. The US wants formulation of some guidelines that countries with high economic growth are prevented from taking benefits of S&DT, which is meant for developing nations.
S&DT benefits
It has submitted its suggestions that self-declaration of member countries as developing economies to avail S&DT benefits puts the 164-member multilateral body on a path to failed negotiations and it is also a path to institutional irrelevance. The S&DT allows developing countries to enjoy certain benefits, including taking longer time periods for implementing agreements and binding commitments, and measures to increase trading opportunities. Further, the US has also put roadblocks in appointment of new members in the appellate body of WTO’s dispute settlement system. The minimum quorum (3) for functioning of this body will end on December 10, after which it will become dysfunctional. “The dispute settlement mechanism, which is the mainstay of the WTO, underscores the principle of sovereign equality of all nations, which we are all committed to uphold,” Goyal said. He said that the current proposals on WTO reform do not take into consideration the challenges and aspirations of developing countries. “Therefore, we need to build confidence among member countries and develop an agenda which encompasses all such concerns,” he said. The minister also said the joint initiatives that have been formed outside WTO with no mandate set an unhealthy trend of influencing rule making within the organisation. “I am suggesting we must collectively look at main-streaming these discussions in the WTO after informal consultations. The G20 should commit to support only WTO consistent rules and avoid creating unsurmountable goals. They should remain consistent with WTO rules and not go beyond till such boundaries are re-negotiated and revised,” he said. Further talking about current trade developments, he said the slowdown in global trade and investment is of “serious concern” as it adversely affects economic growth, development and job creation. “The ongoing trade tensions is adversely affecting confidence of businesses around the world. Developing countries, particularly least developed countries, are vulnerable in this vitiated environment,” he said. India joins other nations in calling for de-escalating trade tensions and reviving confidence in the rules based multilateral trading system, he said. Goyal said the rise in protectionist practices is jeopardising free trade and investment. “The excessive use of non-tariff barriers, both spoken and unspoken, is seriously impeding market access opportunities for developing countries,” he said, adding “we need to remove barriers and facilitate temporary movement of highly skilled professionals to sustain this investment and growth“.On agricultural subsidies, he said there is a need make a clear distinction between WTO compatible and non-compatible trade practices in assessing market distorting measures. “We are concerned about the domestic support provided to agriculture by some developed countries, which cause instability in trade leaving narrow scope for developing countries to access agri-markets,” he said. There is also a need for greater transparency on subsidies, both direct and indirect, given to merchandise exports.
Source: The Hindu Business Line
There are a few large firms, many tiny ones and nothing in between, causing joblessness. Factory clusters can create a balance. The contribution of manufacturing to GDP in 2017 was only about 16 per cent, stagnating since the economic reforms began in 1991. In India, manufacturing has never been the leading sector in the economy other than during the Second and Third Plan periods. But no major country managed to reduce poverty or sustain growth without manufacturing driving economic growth. India needs an Industrial Policy, which it has not had since 1991. India’s manufacturing sector has been characterised by the missing middle: a concentration of small/micro firms at one end of the spectrum, and some large firms in each sector at the other. One purpose of an industrial policy is for the government to encourage scale economies, by encouraging growth of small firms into bigger ones — to fill the missing middle. India has almost 5,000 clusters spread across the country — where most unorganised segment manufacturing employment is concentrated. It accounts for 40 per cent of manufacturing GDP and over 50 per cent of exports. If India is to create manufacturing jobs for the 5-7 million joining the labour force each year, there will be very few in large capital-intensive sectors, and most of them will be in the micro, small and medium enterprises. But for that to happen, India needs a serious policy for modern industry clusters, with a focus on brownfield (not just greenfield) sites.
Policy fragmentation
Also, cluster programmes are administered by several ministries (Textiles, Leather, Food, MSME, Heavy Industry (auto)) under different terms and conditions. This fragmentation of policy must end. Serious planning for clusters requires industrial planning, both at the Central and State levels. There are at least four sets of actions required for cluster programmes by the Centre — technology upgradation, skill development, market information facilitation, and design improvement.
Stimulation cell
For this purpose, the Planning Commission (2013), in the 12th Plan, made an excellent recommendation to set up a Cluster Stimulation Cell at the apex level in the MSME Ministry, that will work to promote cluster associations. But this kind of cell will need replication at the State level, and mechanisms to make them operationally effective at the district level. This requires funds. Effective cluster development has been very important to China’s industrial development (as well as in late-industrialiser Italy). There are as many as 100 clusters in China only producing socks! About 1,234 manufacturing clusters are in urban locations mostly, and as unorganised segment enterprises. In addition, there are others: handicrafts and other manufactures — 3,110; handloom — 573, thus a total of 4,917. They are mostly in small towns (< 0.5 million population) or in small (0.5-1 million) and medium cities (1-4 million). So poor infrastructure in these urban locations has to be addressed. In other words, focus AMRUT funds to towns with manufacturing clusters. This should include digital infrastructure, which can help small firms eliminate intermediaries, thus raising firms’ revenues. Second, India’s Cluster Development programme, which took off only in 2005, will need much more than the ₹1,000 crore per annum, the budget of the Ministry of Micro, Small and Medium Enterprises, for the 5,000 clusters in India. Also notable is the biased nature of the MSME Ministry’s incentives, financial and non-financial — which favour micro and small capital investment enterprises to the detriment of their growth into medium-sized enterprises. Third, the modern industry clusters will need much greater access to institutional sources of credit. The limited resources of the Small Industries Development Bank of India (SIDBI) cannot suffice. The public sector banks are diffident in lending to micro and small establishments (on account of lack of trust, low capacity of firms to prepare bankable projects and the high transaction costs of dealing with a large number of small borrowers). From the mid-2000s onwards, commercial banks in India increased their lending to large-scale industries (especially to the power and telecom sectors). This eventually led to rising non-performing assets; banks were not used to such long-term lending. However, the shares of agriculture and industry in the credit by commercial banks declined from the 1990s onwards. As a share of non-food gross bank credit, lending to SSIs fell from 15.1 per cent in 1990-91 to 6.5 per cent in 2005-06, 5.7 per cent in 2010-11, and only 4.9 per cent in 2017-18. This is over and above the high cost of interest (11 per cent versus 4 per cent in China). But government needs to employ blockchain technology to help SMEs in such clusters in financing. Thus Mahindra Finance, currently uses blockchain in SME financing — by connecting suppliers, OEMs, and financiers — for sharing data securely over the network chain to request and approve transactions.
The skills factor
Fourth, raising cluster productivity requires skills. At local cluster level there are few vocational or training centres available. If new vocational education/training were focussed at cluster level, newly educated youth will get employment at cluster level, close to their homes. This equally applies to girls, as for cultural reasons their parents will not let them live away from home; gender parity at secondary level with GER at 80 per cent now requires a new focus on vocational training at cluster level to make these boys and girls employable. With rising education levels, the government should promote other opportunities.
Online trade
These brownfield clusters could benefit hugely from the spread of internet and online sales to utilise the educated youth in rural/semi-urban areas. Online trade is an example of how technology shapes the geography of jobs. Technology can enable clusters of business to form in under-developed and rural areas. For instance, in China, rural micro e-tailers began to emerge in 2009 on Taobao.com Marketplace, one of the largest online retail platforms in China owned by Alibaba. These clusters — referred to as “Taobao Villages” — spread rapidly, from just three in 2009 to 2,118 across 28 provinces in 2017. India’s 50,500-odd clusters can benefit from similar activities. India’s smartphone users are upwards of 350 million at present, and e-commerce can enable MSMEs to access larger markets and source cheaper inputs. Apart from Central interventions, States with an Industrial Policy (Karnataka, Andhra Pradesh, Kerala, Telangana, Tamil Nadu, Chhattisgarh, Punjab, Madhya Pradesh, Uttar Pradesh) should focus on job creation through cluster development. The writer is a professor of economics at Jawaharlal Nehru University, New Delhi
Source: The Hindu BusinessLine
Union Textiles Minister Smriti Irani has proposed establishing a handloom park for loin loom weaving in the capital region of Arunachal Pradesh, in order to promote the state’s traditional loin looms. She said this to Arunachal Pradesh Governor BD Mishra when the latter called on her here on Monday. During the meeting, Mishra advocated promoting traditional Arunachalee textiles at the national and international levels. “The designs and patterns of the traditional weaving of Arunachal are unique, attractive, exclusive and one-of its-kind in the world. Each and every tribe of Arunachal has a different colour and design, symbolizing their identity,” the governor said, adding that “loin loom weaving is an extension of the traditions and has been a time-tested self-employment avenue for the women.” Reminding the minister of her visit to Itanagar in February, the governor urged her to start cotton and silk banks in Arunachal. He underscored that, in order to preserve the age-old loin loom tradition of the state in its pristine form, “the local weavers must have the facility at hand to collect their thread requirement.” The two also discussed issues concerning the state’s women and children.
Source: Arunachal Times
The rupee surrendered all its early gains and closed 19 paise lower at 69.65 against the US dollar on June 10 amid strengthening of the greenback against Asian currencies and rising crude oil prices. At the interbank foreign exchange (forex), the domestic currency opened at 69.40 a dollar and gained further strength to touch a high of 69.38 during the day. The domestic currency, however, could not hold on to the gains and fell to 69.68. The rupee finally settled at 69.65 a dollar, down 19 paise over its previous close. The Indian unit had settled at 69.46 against the US dollar Friday. "Indian rupee was unable to hold the morning gains amid higher crude oil prices and stronger dollar against Asian currencies," said V K Sharma, Head-PCG & Capital Market Strategy, HDFC securities. The dollar index, which gauges the greenback's strength against a basket of six currencies, rose 0.34 per cent to 96.87. However, gains in domestic equities and foreign fund inflows supported the rupee and capped its losses to some extent, they added. The BSE benchmark Sensex Monday rose 169 points, led by gains in IT stocks amid positive global cues. The NSE barometer Nifty gained 52 points to reclaim the 11,900 level. Brent crude futures, the global oil benchmark, rose 0.14 per cent to USD 63.38 per barrel. Meanwhile, the 10-year government bond yield was at 7.07 per cent on Monday. Foreign institutional investors (FIIs) remained net buyers in the capital markets, putting in Rs 216.20 crore Monday, provisional data showed. Meanwhile, Financial Benchmark India Private Ltd (FBIL) set the reference rate for the rupee/dollar at 69.3019 and for rupee/euro at 78.0691. The reference rate for rupee/British pound was fixed at 88.0217 and for rupee/100 Japanese yen at 63.92.
Source: Money Control
It is heartening to note that one of the first things Prime Minister Narendra Modi did after returning to power is to set up a new cabinet committee for promoting employment and skill development. It has been tasked with overseeing “skill development aimed at increasing the employability of the workforce for effectively meeting the emerging requirements of the rapidly growing economy and mapping the benefits of demographic dividend".This acknowledgement that India needs to create millions of jobs for its youthful population, and the fact that this is one of the government’s top policy priorities, should bring an end to the partisan polemical debate of the past few years on whether or not enough jobs were being created. The government has published the latest Periodic Labour Force Survey (PLFS), whose findings and delay in releasing had added to the controversy over the scale of unemployment in India. Together these measures should, hopefully, steer the public discourse to an honest reckoning of the problem and meaningful ways to meet the challenge. At first glance, the PLFS report confirms the leaked findings that India’s unemployment rate is the highest in three decades. Digging deeper, we find young people in urban areas and women in rural areas have particularly been affected, while fewer women across the board are participating in the workforce. However, as the social scientist Sonalde Desai pointed out in The Hindu last week, a dispassionate analysis of the data reveals that “the roots of India’s present day unemployment challenges lie in its very success". She argues that India does have an unemployment problem, but it’s one that is caused by a more educated population seeking better jobs, and a more prosperous population that can afford to wait until the desired job comes along. This general conclusion masks local variations, but clearly points to the direction in which India is moving. As The Intersection has argued in previous columns, building new cities is among the best ways to create millions of jobs every year across skill levels. From absorbing the surplus rural workforce into the construction sector to providing aspirational jobs in the services sector for the educated, new cities will be veritable dynamos powering employment growth. The new cabinet committee only needs to look at Modi’s 2014 manifesto to make the connection between building new cities and massive job growth. What about manufacturing though? The conventional wisdom, in both the Bharatiya Janata Party and the Congress, is that micro, small and medium enterprises (MSMEs) are the main answer to the manufacturing challenge. For decades, India’s Union and state governments have worshipped at the altar of MSME-led manufacturing growth. Even among most politicians, bureaucrats and policy analysts for whom MSME is not an article of faith, there is either an aversion to large-scale manufacturing or a resignation that it’s just not possible in a country where land acquisition is a headache and labour laws are a chronic migraine. After the post-liberalization boom in the IT sector, it became fashionable to argue that the Indian economy will leapfrog industrialization and jump directly into services. The newest argument that is gaining traction is that even if we attract big manufacturing plants, advances in artificial intelligence and automation will massively reduce the number of people employed, so why bother. In other words, we have told ourselves that India cannot do big manufacturing. Therefore, our public policies do not even seriously try to attract investments in large scale manufacturing. Few states have coherent policies to allocate large plots of land for industrialization. Few states use the constitutional leeway they have to reform their labour laws to permit mass employment. For their part, Union governments have been uninterested in exploiting geopolitical and geoeconomic opportunities to attract big manufacturing investments to India. By 2011, it was clear that China’s productivity growth had raised real wages to levels where foreign manufacturers, even in the high technology sector, were looking for cheaper options elsewhere. More recently, amid growing trade tensions between the US and China, the world’s manufacturing industry has been looking for risk-mitigation strategies. While some South East Asian economies can take up the slack, India is the only economy that has the potential to match China’s scale. If only we try. If the Cabinet Committee on Employment and Skills Development wants to distinguish itself by doing something new, it should look again at the manufacturing defeatism that we have trapped ourselves in. Despite its name, the committee should avoid overly focussing on skills development. The information Technology industry in India didn’t take off because the government ran successful IT skills development initiatives. The causality is the other way around. Indians acquired increasingly sophisticated IT skills on their own because they were in demand. The new Modi government should not allow itself to be persuaded that doing the same old things more efficiently will be sufficient to create 20 millions jobs per year—10 times the current run rate—on a sustained basis. Now that the BJP controls most state governments, it should be easier to achieve the cooperative federalism required to clear the decks for large scale manufacturing. It would be a shame if we don’t try now. Nitin Pai is co-founder and director of The Takshashila Institution
Source: Live Mint
|
Item |
Price |
Unit |
Fluctuation |
Date |
|
PSF |
1040.39 |
USD/Ton |
-0.83% |
6/10/2019 |
|
VSF |
1656.82 |
USD/Ton |
-0.43% |
6/10/2019 |
|
ASF |
2497.52 |
USD/Ton |
0% |
6/10/2019 |
|
Polyester POY |
1074.40 |
USD/Ton |
1.23% |
6/10/2019 |
|
Nylon FDY |
2358.61 |
USD/Ton |
-0.61% |
6/10/2019 |
|
40D Spandex |
4369.94 |
USD/Ton |
-0.98% |
6/10/2019 |
|
Nylon POY |
1324.01 |
USD/Ton |
0.55% |
6/10/2019 |
|
Acrylic Top 3D |
2213.91 |
USD/Ton |
-1.92% |
6/10/2019 |
|
Polyester FDY |
2676.95 |
USD/Ton |
0% |
6/10/2019 |
|
Nylon DTY |
1237.19 |
USD/Ton |
0.59% |
6/10/2019 |
|
Viscose Long Filament |
2633.54 |
USD/Ton |
-0.55% |
6/10/2019 |
|
Polyester DTY |
5469.66 |
USD/Ton |
0% |
6/10/2019 |
|
30S Spun Rayon Yarn |
2394.79 |
USD/Ton |
-0.30% |
6/10/2019 |
|
32S Polyester Yarn |
1758.11 |
USD/Ton |
-0.41% |
6/10/2019 |
|
45S T/C Yarn |
2691.42 |
USD/Ton |
0% |
6/10/2019 |
|
40S Rayon Yarn |
2705.89 |
USD/Ton |
0% |
6/10/2019 |
|
T/R Yarn 65/35 32S |
2192.21 |
USD/Ton |
-0.33% |
6/10/2019 |
|
45S Polyester Yarn |
1938.98 |
USD/Ton |
0% |
6/10/2019 |
|
T/C Yarn 65/35 32S |
2315.20 |
USD/Ton |
0% |
6/10/2019 |
|
10S Denim Fabric |
1.32 |
USD/Meter |
0% |
6/10/2019 |
|
32S Twill Fabric |
0.77 |
USD/Meter |
0% |
6/10/2019 |
|
40S Combed Poplin |
1.04 |
USD/Meter |
0% |
6/10/2019 |
|
30S Rayon Fabric |
0.61 |
USD/Meter |
0% |
6/10/2019 |
|
45S T/C Fabric |
0.69 |
USD/Meter |
0% |
6/10/2019 |
Source: Global Textiles
Note: The above prices are Chinese Price (1 CNY = 0.14470 USD dtd. 10/06/2019). The prices given above are as quoted from Global Textiles.com. SRTEPC is not responsible for the correctness of the same.
The pre-budget talks between the government and industrialists on contentious issue of withdrawal of tax concessions and energy subsidies have ended, as tax authorities claim to gain some ground due to a rift between exporters and local suppliers. The government of Prime Minister Imran Khan has no option but to slap at least 7.5% General Sales Tax at manufacturing stage to end abuse of zero tax facility for exporters of five sectors and meet a key condition of the International Monetary Fund (IMF). Against the new proposed GST rate of 7.5%, the IMF wants that all concessional taxation rates should end from July and the textile sector should also be charged at 7.5%. The Minister of State for Revenue Hammad Azhar on Saturday told the industrialists about the IMF’s condition to end concessionary taxation regime. Against the new proposed GST rate of 7.5%, the IMF wants that all concessional taxation rates should end from July and the textile sector should also be charged at 7.5%. The Minister of State for Revenue Hammad Azhar on Saturday told the industrialists about the IMF’s condition to end concessionary taxation regime. The government plans to collect minimum Rs80 billion by bringing the domestic sales of five-export oriented sectors into the tax net from July. It faces a gigantic task of collecting Rs5.550 trillion in taxes next year – a goalpost that needs over 42% growth in revenues. At present, the textile, garments, leather, surgical goods and sports goods manufacturers enjoy zero-sales tax facility on their exports, which the Federal Board of Revenue believes is also misused by the industrialists by declaring their domestic sales as exports. The concessionary sales tax regime is protected under Statutory Regulatory Order 1125. A final round was held between the government and the industrialists at FBR Headquarter on Saturday before the presentation of the budget in the National Assembly on Tuesday. The industrialists appeared divided between the ones who largely rely on exports and those whose goods end up in local markets.
Rs600b additional taxes likely in budget
The All Pakistan Textile Mills Association (Aptma) indicated to accept the new taxation regime subject to the condition that the sales tax rate for exports and imports must be same at 7.5% and their refunds be paid by commercial banks the moment they receive export proceeds. However, industrialists like Zubair Motiwalla and Jawed Bilwani plainly refused to accept the government’s new tax regime, threatening to go on strike after the budget. The situation appears to be worsening for Prime Minister Imran who is already facing a threat of judicial movement due to his decision to file a reference against Justice Qazi Faiz Issa – the judge of Supreme Court of Pakistan. The sales tax levy matter will now be discussed with PM Imran on Sunday, according to the government officials. “We apprised them (industrialists) of revenue loss of Rs80 billion annually on local sales of textile products, misuse of Duty and Tax Remission Scheme (DTRE) and the use of sales tax inputs collected on local production to claim export refunds,” Azhar told The Express Tribune. The energy subsidy given to them is also being used to produce goods for local market, said the minister. “We are close to a workable mechanism to address all these concerns,” said Azhar, while vowing to go ahead with the government’s plan to impose the tax at manufacturing stage. The total cost to the exchequer on account of taxes foregone on local sales of textiles due to zero rating, energy subsidies, misuse of DTRE and inputs of local sales being used to claim export refunds collectively amount to more than Rs200 billion annually, according to the finance ministry and FBR’s estimates. The misuse of zero rating for local sales and using their inputs to claim refunds on exports needs to be stopped, they added. The exporters have long been availing concessionary loans, subsidised energy and huge tax reliefs. Yet, the total exports of the country remained slightly negative during first ten months of this fiscal year. “The talks between the government and the value added sector have failed and all the associations will observe strike if the government still goes ahead with its plan to withdraw zero rating facility,” said Bilwani, Chief Coordinator of Five Zero rated Export sectors, while talking to The Express Tribune. He claimed that the representatives of the export-oriented sectors did not budge from their position of ‘No Payment No Refund’. He announced to address a press conference on Monday at Karachi Press Club. The industrialists demanded continuity of energy subsidies on gas and electricity. The government is currently providing the imported RLNG at $6.5 per mmbtu and domestic gas at Rs600 per unit without distinction between local sales and exports. The government is considering withdrawing the energy sector subsidies being availed on production used in the local markets. The Aptma also demanded that there should be a new SRO 1125 defining indirect and direct exports based industry for the purpose of energy package which should cover the entire sector as already agreed in various meetings. According to another demand of Aptma, the imposition of 7.5% GST should cover all imports at standardised rates. Any imports currently attracting more than 7.5% should also be brought to the new rate of 7.5% including all types of fibres, yarn, greige fabrics, all types of made ups and apparels, chemicals, packaging materials, all imports of raw materials imported under DTRE and other schemes. Aptma has demanded that the 7.5% GST refunds should be measured on Freight on Board basis with effect from July 1 of this year. The refunds should be paid by the commercial banks at the time of submission of complete shipping documents.
Source: The Tribune
China's major textile companies saw their combined value-added industrial output rose 4.1 percent year on year in the first four months of the year, new data showed. The growth rate was 0.4 percentage points faster than the same period of last year, the National Development and Reform Commission said in a statement. In the first four months, the export of textile and garment products dropped 3.7 percent to 75.8 billion U.S. dollars, with the export of textiles edging up 0.8 percent. Fixed-asset investment of major textile companies rose 0.8 percent in the same period, their combined revenues were up 4.9 percent, and profits rose 0.7 percent year on year, the statement said.
Source: Xinhua
July-May export earnings see 11.92% growth Bangladesh’s exports shipments picked up by 14.78% to $3.81 billion in May, the eleventh month of the current fiscal year. According to the Export Promotion Bureau (EPB) data released yesterday, Bangladesh in May earned $3.81 billion, up by 14.78%, by exporting goods, which was $3.32 billion in the same period a year ago. However, the export earnings during July-May of the current fiscal year registered an 11.92% growth to $37.75 billion, which was $33.72 billion a year ago. The export earnings are 6.64% higher than the target of $35.40 billion set for the period. The apparel sector, the largest contributor to the national exports, earned $31.73 billion, up by 12.82%, which was $28.12 billion in the same period of FY18. Of the total export earnings by the apparel sector, knitwear products earned $15.68 billion, which is 12.50%% higher than the $13.94 billion earned during the same period of FY2017-18. Woven products earned $16.05 billion, up by 13.13% from $14.18 billion during the same period of the previous fiscal year. The specialized textile sector saw a 33.79% growth to $137.74 million from $103, while home textile products saw a negative growth of 2.70% to $800 million, down from $825 million. “It is positive that the export earnings from the apparel sector is registering double digit growth. And it will continue as Bangladesh offers quality products at lower prices compared to other countries,” Bangladesh Garment Manufacturers and Exporters Association (BGMEA) Vice President Md Moshiul Azam Shajal told Dhaka Tribune. Shajal, also managing director of Fame Sweaters Ltd, however, said that although export earnings were growing, the profit margin was squeezing. "We are doing our regular business but we should come out of this and move for new products and sector within the textile and clothing industry. "To do so, the sector needs policy and fiscal support. If the government gives us a flat 5% incentives against exports to all destinations for at least two years, the country will be able to earn additional $15 to 18% billion within these two years," he added.
Export performance of other major sectors
Among other major sectors, agricultural products posted a sharp rise of 40.3% growth to $854.46 million in the first eleven months of FY2018-19 from $609 million in the previous fiscal year. Additionally, export earnings from the pharmaceuticals sector rose by 28.14% to $123 million, up from $96 million, and plastic goods by 25.27% to $113 million, up from $90 million during the July-May period of FY2018-19. However, earnings from leather and leather goods witnessed a 5.53% negative growth to $944 million during the period, down from $999 million during the same period of FY2017-18. Jute and jute goods, the third export earning sector, also registered a 20% negative growth to $773.57 million, which was $967 million during the same period in the previous fiscal year. Exports earnings of frozen and live fish saw a positive growth of 21.87% to $474 million, up from $465 million in FY2017-18.
Source: Dhaka Tribune
The IMF director added that global economy is showing tentative signs of stabilising and growth is projected to strengthen. International Monetary Fund Managing Director Christine Lagarde on Sunday called on the Group of 20 major economies to prioritise resolving trade tensions to mitigate risks to global growth. “We met at a time when the global economy is showing tentative signs of stabilising and growth is projected to strengthen. While this is good news, the road ahead remains precarious and subject to several downside risks,” Lagarde said in a statement after a meeting of G20 finance ministers and central bank governors. “To mitigate these risks, I emphasised that the first priority should be to resolve the current trade tensions, including eliminating existing tariffs and avoiding new ones,” she said, adding that work is also needed to modernise the international trade system. “This would be the best way for policymakers to give more certainty and confidence to their economies and to help, not hinder, global growth,” said Lagarde, who took part in the G20 finance leaders’ gathering in Fukuoka, southern Japan.
Source: Reuters
The intensifying US-China trade war has battered Hong Kong, prompting it to look to new markets and trade mechanisms such as those presented by the upcoming free-trade deal with Asean, the city’s commerce minister has told the Post.Edward Yau Tang-wah, secretary for commerce and economic development, said in an exclusive interview that the pact with the 10-member Association of Southeast Asian Nations would be a crucial alternative for Hong Kong companies that rely on traditional markets, such as the United States and European Union. Yau also said the government had provided billions of dollars in funding to subsidise ventures by local small and medium-sized enterprises (SMEs) into new markets, including mainland China and countries with which Hong Kong has a free-trade agreement. “The free-trade agreements have material and virtual impact that, for example, give Hong Kong companies business links and new business positioning,” he said. “We have seen SMEs dip into the funds to expand into the Asean markets, which are preparing for the stormy weather.” Five Asean countries – Singapore, Thailand, Vietnam, Laos and Myanmar – have their free-trade deals with Hong Kong take effect on Tuesday. Bilateral investment agreements with the five nations come into force on June 17. Similar agreements with the rest of the bloc’s members – Brunei, Cambodia, Indonesia, the Philippines and Malaysia – will take effect on dates to be announced later. The Asean free-trade arrangement, signed in September 2017, will allow Hong Kong firms access to 10 markets for goods, services, investments, economic and technical cooperation and dispute settlement. The regional bloc was Hong Kong’s second-largest trading partner in 2018, after mainland China. In the latest wrangling from the US-China trade war, President Donald Trump on Thursday threatened to slap 25 per cent tariffs on US$300 billion (HK$2.3 trillion) worth of untaxed Chinese imports after he meets with his Chinese counterpart, President Xi Jinping, at the G20 Summit at the end of this month. Trump said he would make a decision “over the next two weeks, probably right after the G20”. If the new tariffs become reality, all consumer goods made in China would be taxed as they enter the US. The effect would be to further hammer Hong Kong’s exports, which shrank 2.5 per cent in the first four months of 2019 from the same period last year. Chinese exports to the US via Hong Kong accounted for 7 per cent of the city’s total exports in 2018. Eva Leung Fung-wah is a director for Winsonic Electric, a Hong Kong company that makes charging cables and power banks in Dongguan, Guangdong. She said her company’s orders were cut in half in the first quarter of this year, year on year, after Trump’s tariffs convinced some American clients to source products outside China. “Our customers stocked up heavily before the Lunar New Year and will not order again until they run out of stock,” she said. “Even when customers place orders, they tend to procure only one-tenth of the quantity they used to procure.” Leung conceded that it was difficult for the company to make an abrupt switch to a new market after dealing with the US market for years. “The specifications of products and price ranges are different between the US and Asean markets,” she said. “We have no idea how to start in a totally new market.” Jimmy Ng Wing-ga, an industrial lawmaker affiliated with the Chinese Manufacturers’ Association, said SMEs should not try to break into new markets alone. “It is more viable to go in a group and take part in trade shows to reach out to buyers,” he said. “As far as the free-trade deals are concerned, it is better than nothing.” But Felix Chung Kwok-pan, a lawmaker for the textile and garment industries, said the more free-trade deals, the better. “The Asean markets are mostly developing countries, except Singapore,” he said. “It appears Vietnam, Myanmar and Indonesia are more [suitable] for manufacturing and these consumer markets are not yet ready.” The Legislative Council recently approved the government’s 2019-2020 budget, which pumped HK$1 billion into a dedicated fund for local companies to use for branding, upgrading and domestic sales. The BUD Fund, as it is known, came on top of a HK$1.5 billion injection last year. The fund will allow a company to apply for up to HK$2 million in funding to explore markets with which Hong Kong has a free-trade deal. It provides HK$1 million for ventures in the mainland market. As of February, the Hong Kong Productivity Council, which manages the fund, had received about 177 applications for Asean markets – about 24 per cent of the total applications. The rest were for the mainland market.
Source: South China Morning Post
Finance ministers and central bank governors meeting in Japan this weekend will try to make headway on longstanding issues such as how much global giants like Facebook and Amazon should pay in taxes. They're likely to end up focusing a large share of their attention on how to keep global growth on track when the world's two biggest economies are entrenched in an escalating trade war. US Treasury Secretary Steven Mnuchin, who has headed trade talks with Beijing along with US Trade Representative Robert Lighthizer, was due to meet with Yi Gang, governor of China's central bank, on the sidelines of the G-20's annual financial gathering in Fukuoka in southern Japan.But it was unclear if their meeting, a possible prelude to talks at the G-20 summit later this month between President Donald Trump and Chinese President Xi Jinping, might lead to a restart of those talks after weeks of stalemate. As the Trump administration prepares to expand retaliatory tariff hikes of up to 25 per cent to another USD 300 billion of Chinese products, Beijing has sought to highlight China's capacity to endure and overcome hardship. Yi told Bloomberg Television in an interview broadcast Friday that he expected the meeting with Mnuchin to be "difficult." But he said China's central bank, the People's Bank of China, had plenty of room to maneuver to help keep the economy growing despite the pounding the country's export manufacturers are taking as the toll from higher tariffs mounts. Speaking Thursday in France, Trump said he plans to make a decision about ramping up tariffs on China after speaking with Xi at the summit in Osaka at the month's end. "I will make that decision I would say over the next two weeks probably right after the G-20," he said. The Trump administration began slapping tariffs on imports of Chinese goods nearly a year ago, accusing China of resorting to predatory tactics to give Chinese companies an edge in advanced technologies such as artificial intelligence, robotics and electric vehicles. These tactics, the US contends, include hacking into US companies' computers to steal trade secrets, forcing foreign companies to hand over sensitive technology in exchange for access to the Chinese market and unfairly subsidising Chinese tech firms. Trump has also complained repeatedly about America's huge trade deficit with China a record USD 379 billion last year which he blames on weak and naive negotiating by previous US administrations. The United States now is imposing 25 per cent taxes on USD 250 billion in Chinese goods. Beijing has counterpunched by targeting USD 110 billion worth of American products, focusing on farm goods such as soybeans in a deliberate effort to inflict pain on Trump supporters in the US heartland. Unease over trade tensions and their potential impact on other economies has deepened since Trump announced he would impose a 5 per cent tax on Mexican products starting Monday a tax that would reach 25 per cent by October 1 if the Mexican government fails to stop the flow of Central American migrants into the United States. While the tariffs have taken a minor toll on the US economy, the uncertainty and slowing demand are rippling across the globe. Earlier this week, the World Bank downgraded its forecast for the global economy in light of trade conflicts, financial strains and unexpectedly sharp slowdowns in wealthier countries. The weakness has prompted central banks, most recently in Australia and India, to slash interest rates to fend off recession. Japan, hosting the G-20 for the first time since it was founded in 1999, has plumbed the limits of that strategy. The Bank of Japan's policy interest rate has been at minus 0.1 pe for years, to keep credit cheap and support a modest pace of expansion. As the trade conflicts percolate, the officials gathering in Fukuoka, a bustling port city on the southern main island of Kyushu, will carry on chipping away at financial reforms and other perennial issues. Some European members of the G-20, especially, want to see minimum corporate tax rates for big multinationals. Japan's Kyodo News service reported Friday, citing a draft communique, that the finance leaders are also discussing the issue of how developing countries are handling debts incurred through major construction projects, efforts to combat money laundering and to prevent terrorist groups from using cybercurrencies as a source of funding.
Source: Business Standard
Officials from North Korea and Russia met on Friday and discussed ways to bolster bilateral cooperation in the fields of economy and trade, according to North Korean media. A delegation headed by North Korea's Minister for External Economic Affairs Kim Yong-jae met his Russian counterpart, Alexander Kozlov, in Pyongyang, Yonhap News Agency reported citing a report carried by Korean Central News Agency (KCNA). "The talks discussed matters of further revitalising the work of DPRK (Democratic People's Republic of Korea)-Russia Intergovernmental Committee for Cooperation in Trade, Economy, Science and Technology and putting the equally-beneficial economic and trade relations between the two countries on a higher stage," the KCNA said while referring to North Korea's official name. The meeting comes at a time when the two countries are looking to strengthen cooperation in economy and trade. North Korean leader Kim Jong-un had visited Vladivostok for a summit with Russian President Vladimir Putin in April. It was Kim's first trip to Russia after he assumed power in 2011. Meanwhile, North Korea has been undertaking various steps to expand its diplomatic outreach with its neighbouring countries, including China and Russia amid the global sanctions imposed on its economy. The sanctions placed on the reclusive state are expected to remain in place due to little progress in denuclearisation talks with the United States. Talks between the two countries hit a roadblock after the second summit in Vietnam ended abruptly with no joint statement being released. The two sides reportedly failed to resolve their differences on sanction waivers. North Korea has since launched multiple projectiles as a sign of their apparent frustration regarding the stalled talks and continuing sanctions. Pyongyang has repeatedly insisted that the removal of penalties will help spur economic growth, whereas Washington has reaffirmed that sanctions will not be removed till the communist country completely stopped its nuclear weapons programme. Earlier this week, the Russian Embassy in Pyongyang had said that around 3,900 tons of wheat was sent to North Korea through an international agency as humanitarian aid to help the country to overcome its food shortages aggravated by this year's drought.
Source: Business Standard
Adviser to Prime Minister on Commerce, Textiles, Industry and Industries Abdul Razak Dawood on Monday said that due to economic reforms’ measures, the government has stopped the de-industrialization from country that started from last decade. The government has given huge incentives to the local industries for industrial growth, including to textiles and manufacturing sectors to boost the country’s exports for earning more revenue, he said this while speaking at the launching ceremony of Pakistan Economic Survey, 2018-19 along with Adviser on Finance Dr. Abdul Hafeez Sheikh here. The adviser said that because of prudent economic policies of the current government the industrial units in all big cities including Karachi, Lahore and Faisalabad received more orders in last few months as compare to the previous years. He said that local industries had received more demands order from foreign countries in current government which indicates that our exports would increase more in coming fiscal year. While pointing on the performance of PTI government, Razak Dawood said Sino Pakistan, Free Trade Agreement (FTA) Phase II was recently signed between the two countries and in FTA Phase II, both sides removed all drawbacks from the previous FTA that was signed in 2007. He added that in negotiation of FTA Phase II, the government managed to get market access on 313 tariff lines in potential Chinese market. The adviser said that priority of the government was to get market access in potential international markets including Association of South East Asian Nations (ASEAN), Pacific and North American countries. He said that Indonesia has granted duty free access in 20 items through Preferential Trade Agreement (PTA). He said that Pakistan’s trade deficit had declined by $ 4.5 billion in past few months and expected that by end of current fiscal year the country’s trade deficit would further shrunk to $ 5 billion. He said that “We are facing huge trade deficit since the era of previous government and he expects that trade deficit would be decreased in coming months.
Source: Business Recorder
