Days before first Union Budget of Modi 2.0, former Finance Secretary and former RBI Deputy Governor Dr Rakesh Mohan, who was also an Executive Director with the IMF until recently, presented a report on ‘Moving India to a New Growth Trajectory’ for Brookings India. He spoke on a range of issues in an interview with Bijoy Sankar Saikia. When the entire nation is clamouring for jobs, jobs and jobs, you seem to be suggesting "focus on growth, jobs will follow"? I say, growth, growth, employment and universal basic services. In a very basic sense, I don't know any other way of generating employment unless there is growth. Unless you focus on growth, whether it is in agriculture, industry or services, you can't have employment. You will have to concentrate on stepping up the growth rate in a manner in which there can be greater employment generation; which means employment-oriented growth. We really need to shift our attention on how to generate much higher growth rate in industries that are more labour-intensive. But one of the best growth phases of our economy also saw an estimated 18 million job loss. How does one explain that conundrum? I am not sure where you got this 18 million number. I don't accept that number. But what would have been the job growth, had there been zero growth? Secondly, our focus has not been on growth in manufacturing, which is labour-intensive. In this country of 1.3 billion people, only 14 million are employed in the organised sector. In China, that number is 100 million plus. That's the thrust of the entire debate. You cannot get employment growth in this country unless you really focus on the organised sector labour intensive industries. Your labour-intensive manufacturing growth model obviously is export-focussed, which is also the China model. In a world that is increasingly protectionist, would it work? If the world to you is Europe and the US, then it won’t. But the world in next 5, 10, 15, 20, 50, 100 years is not going to be the US. The world is going to be China, ASEAN, Latin America, Africa and South Asia. The volumes there will be much larger than the west. The import-GDP ratio of China is much higher than the US; the import-GDP ratio of ASEAN is much higher than the US or Europe. So, the expectation of growth in GDP, in terms of incremental GDP in the world, will be higher in the next 15 years than the past 15 years. The growth in demand for goods imports will be much higher. In simpler terms, China is 1.4 billion people, we are at 1.3 billion; that's 2.7 billion. ASEAN combined is about a billion now. Along with rest of South Asia, we are 4 billion plus. Projections by ADB and others suggest 5 per cent GDP growth. So if each of these 4 billion plus people buys one shirt extra a year, one pair of extra shoes a year, one extra chair a year; imagine the numbers. There is no shortage of demand. You better be conscious of this. In your growth model, you visualise a large share for private sector investment in infrastructure, at 50-55 per cent. In the past few years, in almost every infrastructure sector that private sector has invested, they have got into a mess. Everything is not in a mess. If you look at where we were 50 years ago, and where we stand today, it's utterly wrong to say everything is in a mess. First, you have to recognise, huge improvement has taken place in roads -- whether it's national highways or rural roads. Secondly, look at telecom. Again a huge improvement in terms of everyone now having a cell phone. It's all private sector. There has been a huge improvement in airports; again private sector. Much of the expansion of ports has happened from private sector, because there is a steady stream of revenues. A steady stream of revenues is what the private sector has to have to be able to invest. You have to be clear on what the private sector can do and should do, what they cannot and should not. There may be some policy issues. Power sector has issues; in generation there is a lot of private sector, but there are public policy problems, because we still have a lot of subsidised power consumers. So, it's very clear: unless there is a steady stream of revenues, then private sector can't invest. There is a public policy issue, where tariffs have to be changed, connections have to change, policies have to be changed. In other areas like urban infrastructure, water supply, sanitation, roads; these are public services. Largely, the public sector has to invest there. You also say replacing Planning Commission with Niti Aayog was an unfortunate move. You actually, make a case for bringing back a plan panel kind of structure. If you have to focus on a roadmap, there are a lot of public investment functions in terms of coordination and investments; even by the private sector. There are huge interconnections that take place. For instance, roads have to be connected with ports and airports and logistics parks. Similarly, investment in power has to be coordinated with availability of energy sources, be it coal, petroleum pipeline, ports. These things cannot be done without synchronisation. Therefore, you need to have a coordinating body, which has fund allocation powers. When different ministries are drawing up plans, someone has to coordinate them. That function has been taken away from Niti Aayog. To my understanding, no country has grown fast without synchronising these efforts. The coordinating body has to be technically competent. What happened with Planning. This is the opportunity to set up such a competent body which can carry out these functions. It has to be staffed with technically-competent people in every sphere so that it enjoys the respect of all departments. You say RBI is funding govt borrowing, plus it has also been borrowing to manage liquidity in the system. You are also a member of Jalan Panel. Reading between the lines, are you sort of telling the government to look beyond RBI’s so-called ‘excess’ reserve to recapitalise banks? In the last seven-eight years, financial savings in the country has come down. In order to understand the problems we are facing in terms of lack of investment and lack of capital in the country, we need to look at why the financial savings have come down. As a consequence of financial savings coming down, RBI had to do a lot of open market operations for the government borrowing programme in 2018-19,, which came to around 70 per cent. That's a reflection of the lack of financial savings in the country. Given the lack of fund supply, it has also become difficult to ensure official transmission of monetary policy. You also say India’s tax-to-GDP ratio is too low to support the kind of growth we desire. But right now everyone seems to be wanting the FM to cut tax rates to boost demand in the economy and enthuse private sector capex? I have a clear view. Our tax rates, especially personal income-taxes, are lower than the world average. There is absolutely no need for any cut in personal income-tax rates. The threshold has already been raised effectively to Rs 6.5 lakh ($9,300), which is excessively high at about 4.5 times India's annual per capita income. In the US, where the per capita income is around $50,000, around 30 times that of India, the current income-tax threshold is $13,500. We have to make every citizen understand that we have to contribute to revenue so that the government can provide services. You can't have services coming out of nothing. So, there is absolutely no reason to cut income-tax rate. Corporate tax is more complicated. But if you take the actual incidence, which is around 24%, it is pretty low. We have zero tax on dividends in the hands of investors. In the US, dividends are taxed in the hands of investors. There are some reports, including one from OECD, which suggest that tax is very high. What they have done is add the dividend distribution tax, as if all the profits are distributed. I don't understand how a skilled technical body like OECD can make such an error to come out with some 44 per cent number. This is factually wrong. Obviously, the tax regime has to be fair, transparent and easy to administer, but you have to look at the revenue kit of the country before looking at tax rates
Source: Economic Times
Rajesh Subramaniam took the corner office of logistics major FedEx in February. He is one of the many Indians who have successfully climbed the corporate ladder in US. Subramanian discusses global trade, effects of protectionism and what India needs to do to make itself more business friendly with Arindam Majumder. Edited excerpts: The air freight industry is going through a slowdown. Does that concern you? Over the past 50 years, trade has grown faster than GDP. So, air cargo has grown faster than air freight and air express has grown faster than air cargo. This is happening ...
Source: Business Standard
Arun Luharuka, president, FTCCI, said, the federation is expecting the Government to announce concrete measures to boost the growth across all the sectors and to achieve eight to 10 percent growth rate. Federation of Telangana Chambers of Commerce and Industry (FTCCI) is seeking the government to augment public expenditure in agricultural infrastructure such as irrigation and cold storage to help improve the rural demand and consumption. To encourage higher investment into the equity market by private sector, the tax incidence on equity investors need to be reduced. Companies pay high corporate tax at over 34 per cent now. A simplified and reasonable tax rate regime is required to raise the investment. Arun Luharuka, president, FTCCI, said, the federation is expecting the Government to announce concrete measures to boost the growth across all the sectors and to achieve eight to 10 percent growth rate. To create more jobs, investment has to be focused in the job creating sectors. The organised sector does not create much employment due to rising automation. Large number of jobs are created in education, health, small irrigation, rural infrastructure like telecom and roads. So, the need is to invest in these areas. The major obstacle in increasing labour intensity in manufacturing has been the stringent labour laws. Even if the government cannot immediately change the labour laws, it should workout relaxation in selected labour intensive sectors. Encouragement to agro-processing, textiles (readymade garments) and leather industries are few areas, besides, tourism and hospitality. “From this budget, we are anticipating a strong push to cyber security. The vision of Digital India calls for cyber security and we strongly recommend that the first budget of the new Government should mandate setting aside a certain proportion of fund from the technology budget,” he added. The budget is expected to address the stressed assets problem within banks and NBFCs, as this is acting as a big constraint to revive the investment. To revive the MSME growth and reduce the financial stress, MSMEs may be offered two per cent interest subvention on loans up to Rs 5 crore and direct tax concession. Government should include e-vehicles in priority lending sector for sustainable and environment-friendly transport system. The entire eco-system of trade is needed to be restructured and increase the export incentives in line with WTO guidelines. The budget should focus on providing measures and gain from the US-China trade war, as this has opened avenues for India to become a prominent exporter to both nations. He pointed out, “The State of Telangana is receiving a raw deal in the previous budget, we hope that more funds will be allocated for State for various projects and also setting up of institutions/university (ies) that were promised in the State Reorganization Act are obliged.”
Source: Telangana Today
Power loom weavers in the country’s largest man-made fabric (MMF) sector in Surat are worried over a likely move by the Indian Government to review the present rates of goods and services tax (GST) in the textile sector. The weavers fear any review of the rate may adversely affect manufacturers while possibly benefiting the yarn spinning sector. The Federation of Indian Art Silk Weaving Industry (FIASWI), on behalf of other important associations representing the power loom industry, has written to finance minister Nirmala Sitharaman over the issue, according to a report in a top English-language daily. The government incurred a loss of over ₹3,500 crore after it reviewed GST rate on yarns from 18 per cent to 12 per cent, while MMF fabrics continued to be taxed at a rate of 5 per cent, with no refund of input tax credit.
Source: Fibre2Fashion
Language barriers, weak banking system and poor connectivity are some of the key factors impeding higher level of trade with Central Asian countries, Commerce Minister Piyush Goyal said in Lok Sabha on Wednesday. Goyal said efforts are being made to boost trade by resolving various trade related matters through existing institutional mechanisms between India and Central Asian countries. "Some factors impeding higher level of trade with Central Asian countries include language barriers, stringent process of registration of products, problems in dispute settlement, weak banking and financial system, low accessibility, poor connectivity and visa issues with these countries," he said during Question Hour. Central Asian countries Kazakhstan and Kyrgyzstan are members of the Eurasian Economic Union (EaEU). The minister said a joint feasibility study has been conducted to explore possibility of free trade agreement with EaEU in which Russia, Armenia, Belarus are the other three countries. The Joint Feasibility Study (JFS) has found there is a significant realizable potential to enhance bilateral trade with Kazakhstan and Kyrgyzstan through a trade agreement, he said. Further, Goyal said, a joint statement has been shared with Uzbekistan to commence a joint feasibility study to explore preferential trade agreement between India and Uzbekistan. The likely potential of the bilateral trade would be determined once the joint feasibility study gets completed, he said.
Source: Business Standard
Budget 2019-20: Keen to soften the blow for the MSME sector that was hit by the double whammy of demonetisation and the goods and services tax (GST), finance minister Nirmala Sitharaman could also heed industry demand for a 2% interest subsidy on bank loans to SMEs for a year. Budget 2019 India: Seeking to dispel the notion of “jobless growth”, the Narendra Modi government will likely roll out incentives in the coming Budget for some labour-intensive sectors such as textiles & garments, gems & jewellery and leather, particularly targeting exporters and micro, small and medium enterprises (MSME) in these sectors. With an aim to boost exports of garments, the biggest employer after agriculture, the scope of the textile ministry’s “remission of state levies” (ROSL) scheme will be widened to also compensate apparel and made-up exporters for their payment of Central levies on inputs consumed in exports, official and industry sources told FE. So, the allocation under this scheme could be more than tripled for FY20 from February’s Interim Budget level of just Rs 1,000 crore. Keen to soften the blow for the MSME sector that was hit by the double whammy of demonetisation and the goods and services tax (GST), finance minister Nirmala Sitharaman could also heed industry demand for a 2% interest subsidy on bank loans to SMEs for a year. Such a relief is already available but only on fresh loans and for GST-registered SMEs. Facilitating smoother flow of credit to them will be another focus area of the Budget. Indranil Sen Gupta, chief India economist at Bank of America Merrill Lynch, said: “If the ministry of finance offers 2% subvention for a year in the July 5 Budget, it will have to pay out just Rs 100 billion each in December-March of FY20 and June-September quarters of FY21.” Such a step will “defuse the liquidity crunch at a minor fiscal cost of 0.05% of GDP each in FY20-21”, Sen Gupta said in a report. The Budget may also seek to trim customs duty on capital goods that are not produced in India and look at creating an export development fund for MSMEs, with a corpus of 0.5% of export value so that they can aggressively take part in global trade shows, according to industry sources. To draw people to park their idle gold holdings with banks to reduce reliance on imports and cut their damaging impact on trade balance, the Budget will likely offer a fresh push to the gold schemes, laying out plans to tweak existing ones and announce new products. It may introduce a gold savings account under the monetisation scheme that will enable banks to take deposits from customers in rupees but credit grams of gold into their accounts. The monetisation scheme, introduced in late 2015, hasn’t yet succeeded, having mopped up only about 2% of the country’s annual consumption so far. The government may consider hedging against any price risks that are associated with sovereign gold bonds. The tenor of such securities from the current eight years may be reduced, and investors may get more flexibility to exit early. However, a key demand of the gems and jewellery sector to cut the import duty on gold from 10% may not be met. Sharad Kumar Saraf, president of the Federation of Indian Export Organisations, has sought income tax relief to units which provide additional employment in the export sector. “Incentives may be provided based on twin criteria of incremental growth in exports and incremental growth in workers so that while on the one hand exports are increased, on the other, the employment intensive units also get a boost,” he added. If GDP has to grow at 8% or more, exports have to accelerate at over 15% a year, he added. Having grown at 9% in FY19, merchandise export growth collapsed to just 0.6% in April and 3.9% in May. Citing persistent risks from a global trade war, the IMF has trimmed its 2019 trade growth forecast by a sharp 60 basis points to 3.4%, against the actual rise of 3.8% in 2018. This will weigh on the prospects of Indian exports. As for employment, the NSSO’s first annual survey on employment suggested that joblessness rose to a 45-year high in 2017-18, with the unemployment rate at 6.1% (although the government asserted the findings couldn’t be compared with earlier data)
Source: Financial Express
Over the last five years, a series of landmark economic reforms such as Goods and Services Tax, Insolvency and Bankruptcy Code, Ease of Doing Business, and many more have changed the policy environment for industry. However, a fresh set of challenges confronts us now which requires new policy responses. The Budget needs to address the issues of boosting demand, energising investments, and accelerating India’s path to becoming a $5-trillion economy. The foremost consideration for the Budget should be to retain the fiscal deficit discipline. The current level of 3.4 per cent appears prudent at this juncture. Simultaneously, the government’s spending programme will be crucial to overall health of the economy, and the aim should be to maintain expenditure on key infrastructure sectors with high multiplier effect. A key area of concern today is the cost of consumption and investments. According to a CII estimate, India would need an investment of ₹451 lakh crore over the next five years, to take GDP growth rate to the desired 10 per cent by 2023-24. To raise resources, the Budget may consider keeping a strong disinvestment programme going through the year. Recycling of brownfield government assets with sale of financially viable facilities such as airports, power plants, roads, and so on could also add greatly to its funds for new capital investments. High tax rates on capital need to be brought down by lowering corporate tax rates. CII has suggested 25 per cent corporate tax rates for all enterprises with few exemptions and a movement towards a revenue-neutral rate of 18 per cent without exemptions as a desirable future target. The dividend distribution tax may be halved from 20 per cent to 10 per cent. While this is under consideration, an immediate step to attract investments could be to extend investment allowance to all sectors. Similarly, the personal income tax burden also needs to be brought down. It is important to simplify tax administration over the next three years to infuse greater consistency, certainty and continuity into the process. The financial sector has been subdued over the last year. Bank recapitalisation will be a priority area for the upcoming Budget to enable banks to lend more. The CII has suggested that government stake in public sector banks should be brought down to 51 per cent and thereafter to 33 per cent in stages to promote capital inflows and efficiency. With non-banking financial companies (NBFCs) a major source of consumer finance, it is important that their current problems should be addressed. Currently, NBFCs have no recourse to the Debt Recovery Tribunal and should be allowed to exercise the right of recovery of dues under this and under the provisions of the SARFAESI Act for ₹1 lakh and above. Further, a unified regulator for the financial sector could be considered. With employment generation as a high priority, specific labour-intensive sectors may be taken up for promotion by the Budget such as textiles, housing and construction, agriculture, food processing, tourism and so on. Boosting corporate sector participation in agri marketing is critical. A level playing field between private direct purchase centres and mandis would help in this effort. A critical area that the Budget must take up is export promotion. While global supply chains are restructuring and trade is slowing down, India needs to redouble its efforts to access overseas markets. India must phase out direct incentives for exports and replace them with those that conform to WTO norms.
Source: The Hindu Business Line
New Delhi must move forward on FTA with EU. The conventional wisdom that globalisation has gone into reverse and that the world is turning against trade agreements and openness was delivered a major shock last week. The world’s largest trading entity, the European Union, came to an agreement with four of South America’s biggest economies — Brazil, Uruguay, Paraguay, and Argentina — the four surviving full members of the trading bloc Mercosur, which was till recently the world’s fourth-largest of such blocs. (Venezuela, which was also a member, has been suspended for over two years.) Once free trade begins ...
Source: Business Standard
They are the twin engines for growth and job creation. The finance minister will do well to address these sectors comprehensively in the Budget, and provide a roadmap for their recovery. A big revival in manufacturing is critical for the government to achieve both better economic growth as well as create more jobs. The Union Budget presented by finance minister Nirmala Sitharaman will need to have proposals that significantly improves the status of manufacturing in the country. According to Crisil, manufacturing's share in India's GDP crawled up to 18.2 per cent in the year 2018-19, from 17.2 at the end of the UPA government's second term. The meagre one per cent increase in five years shows how much faster the manufacturing sector needs to grow, if its share of GDP has to reach 25 per cent by 2022, a threshold that must be achieved if India has to compete with nations like China, the US, Japan and South Korea in the international arena, as well as generate enough jobs for India's aspiring youth. With the heightened tensions between the US and China on the trade front, there are many who feel India has an opportunity to offer a base to MNCs who may leave China. Moreover, there is also an opportunity to supply value added manufacturing goods to developed markets, a segment China had been catering to so far. However, this is not going to be easy, as India is also under the US radar for allegedly levying high tariffs on imports from the country. Here are some things the government can do to step up manufacturing, some of which are expected to find resonance in the upcoming Budget: Boost investments: One of the biggest dampeners for manufacturing has been the tepid investment climate. "Stepping up investments, both public and private, is critical for boosting our growth potential. The New Industrial Policy has to be made more potent, providing key directions in terms of continuity, consistency and certainty for all policies governing industry", says Vikram Kirloskar, president of the Confederation of Indian Industry (CII). The formation of the Cabinet Committee on Investments, chaired by the prime minister, is expected to look into the matter with urgency. India's best bet to raise growth is by raising the investment cycle. "India's best bet to raise private investment (which makes up 75 per cent of all investment) is by creating a conducive environment, by stepping up public investment in a fiscally responsible way. And that can only happen by adopting 'asset recycling'," says Pranjul Bhandari, Chief India Economist at HSBC. Ease of doing business: The government needs to expedite ease of doing business on the ground, especially in areas related to land acquisition, faster and simpler clearances and also ensure a lead role for the states in reforms. For instance, only eight states have implemented the Land Acquisition, Rehabilitation and Resettlement (LARR) Act 2013. This is despite the Union government allowing states to amend LARR as per their specific requirements. The government should also identify key areas of growth in the global markets, and help set up units that can compete in the global markets on product quality and cost-effectiveness. Reviving the auto sector: India's car sales dipped 16 per cent in April, the worst fall in eight years, and the tenth consecutive month since July 2018 when sales have declined. To revive the sector, the Society of Automobile Industry (SIAM) wants the government to reduce the current tax incidence of 28 per cent for all categories of vehicles and bring it down to 18 per cent to spur demand. Also, in September 2017, the cess was increased to 17 per cent, 20 per cent and 22 per cent from the earlier rate of 15 per cent for mid-sized and large (luxury, SUVs and MUVs) passenger cars. This cess rate can be revised downward to provide the required push to the auto industry. Also, to get polluting old vehicles off the road, SIAM has proposed an incentive-based scrapping scheme. In order to promote 'Make in India' initiatives and support local manufacturing, SIAM asked the ministry for an increase in applied customs duty on fully imported commercial vehicles (CV) to 40 per cent from 25 per cent and reduce the customs duty on semi-knocked down CVs to 20 per cent from 25 per cent. More allocation for textiles: The government proposed Rs 5,832 crore in budgetary allocations for the textile ministry in the 2019-20 interim budget, which is over 16 per cent lower than the last fiscal. The industry, however, expects a higher allocation of over Rs 7,000 crore to meet its obligations under the Amended Technology Upgradation Fund Scheme (ATUFs) and Remission of State Levies (ROSL) scheme. Also, the industry wants the government to include cotton yarn and fabrics as well under the ROSL scheme. Supporting MSMEs: To revive the MSME sector, focus on improving supply chains to save on logistics costs in procuring raw material. World over, MSMEs are the backbone of large manufacturing industries, providing a seamless supply of raw materials, or acting as outsourcing firms to the large manufacturers. Industrial clusters: Promote the establishing of industrial clusters that can lower overall cost of production and provide better logistics - the proposed National Investment & Manufacturing Zones or integrated industrial townships can be a game-changer. Kirloskar says a new model of special economic zones (SEZs) must be developed based on the original concept of having six to seven very large SEZs. Public-private partnerships: Thrust on private - public partnership aimed at skill development in the manufacturing sector, since lack of a skilled workforce is one of the biggest drawbacks of the sector. In modern manufacturing, knowledge of new technology developments is imperative. The government needs to also take a hard look at public sector enterprises in manufacturing. While they need more functional autonomy, these enterprises also have to be made accountable to stakeholders. Many public sector firms are struggling with losses, bloated workforces and a casual attitude to productivity.
Boosting exports
Just when it was picking up, the US challenged India's export promotion schemes and ended preferential trade treatment for $5.6 billion worth of exports that were being given duty-free status. The continued global growth slowdown and increasing share of services in GDP means that growth in merchandise exports from India has been steadily slowing. However, it has fallen to an anaemic 1.7 per cent per year in the past five years, impacting the performance of export-oriented firms and even job creation. A major problem export units face is finance, especially the small and medium industry ones. Simplify GST: The government should ease pressure on liquidity from GST payments. For this, the GST Council has to implement the e-wallet (electronic wallet) scheme, which would be credited with notional or virtual currency by the Directorate General of Foreign Trade (DGFT). Exporters can use this virtual currency to pay off GST on the goods they import or procure so that their funds are not blocked. Identify key markets: Identify key areas of growth in the global markets, and help set up units that can compete in the global markets on product quality and cost-effectiveness. Competing on a global scale will require a thorough evaluation of the opportunities and manufacturing products tailor-made for specific markets. The industry wants a big overhaul of the entire system of Export Incentives and Exports Credit to make all incentives WTO (World Trade Organisation) compatible. A relook at export schemes: A number of India's export promotion schemes have been challenged by the US government, putting pressure on our exports. India needs to work on alternative schemes to counter the US challenge on the country's existing ones. As an impetus to the 'Make in India' initiative, a majority of the respondents to a pre-budget survey conducted by KPMG India wanted the tax holiday for exports available to SEZ units extended beyond March 31, 2020. Better market access: Several small and medium companies have the best of products, but are unable to market them as they lack the necessary resources. India should increase the fund for market access initiatives from Rs 300 crore at present to, ideally, Rs 4,000 crore. These funds should be utilised only for small and medium scale companies, as they need such resources the most. Boosting R&D: India is one of the lowest spenders on R&D for exporters in the world, making us lag behind in innovative products in export markets. Exporting firms should be encouraged to invest more in R&D activities through tax concessions. As of now, other than pharma companies, those investing in R&D are very few. This would help companies to come up with innovative products that will do better in the export markets. Improve liquidity: There is a serious liquidity crisis among exporters, especially those in the small scale segment. Since banks are reluctant to lend to small exporters, they end up borrowing from money lending institutions, raising their cost of borrowing. Banks should be encouraged to lend to the small and medium scale industry, especially the gems and jewellery segment where liquidity has almost dried up. One of the ways is to bring the exports segment under the priority lending segment. Implement the e-wallet scheme: There's a liquidity crunch in the export segment as Goods and Services Tax (GST) entails payment of taxes upfront with returns coming only later. Many small manufacturers have their payments blocked for three to four months in this manner. To solve the pressure on liquidity from GST payments, the GST Council has to implement an e-wallet (electronic wallet) scheme, in which e-wallets would be credited with notional or virtual currency by the Directorate General of Foreign Trade (DGFT). This virtual currency would be used by the exporters to make the payment of GST on the goods imported or procured by them so their funds are not blocked.
Source: India Today
Mumbai: The Indian rupee on Wednesday saw a marginal 6 paise gain at 68.89 against the US dollarNSE -0.75 % in line with a steady trend in domestic equities in the run-up to the Union Budget due on Friday. At the interbank foreign exchange, the domestic unit opened stronger at 68.83 and went on to touch the day's high of 68.79 to the US dollar. The local currency, however, failed to sustain the gain and slipped to a low of 68.96 in intra-day deals. The domestic currency finally closed at 68.89 against the US dollar. The rupee had settled at 68.95 against the US dollar Tuesday. Market participants are keenly awaiting the Union Budget, to be unveiled on Friday, which will give further cues in terms of policy measures, analysts said. Meanwhile, weaker American currency against its key rivals also helped the rupee trade higher. However, rising crude oil prices and foreign fund outflows weighed on the domestic currency and restricted its rise. The dollar index, which gauges the greenback's strength against a basket of six currencies, fell marginally by 0.03 per cent to 96.70. Brent crude futures, the global oil benchmark, rose 1.04 per cent to trade at USD 63.05 per barrel. Foreign institutional investors (FIIs) remained net sellers in the capital markets, pulling out Rs 390.18 crore on Wednesday, as per provisional data. Meanwhile, the 10-year government bond yield was at 6.83 per cent on Wednesday. Equity benchmarks Sensex and Nifty ended modestly higher Wednesday. The 30-share BSE Sensex settled 22.77 points, or 0.06 per cent, higher at 39,839.25. Similarly, the broader NSE Nifty edged up 6.45 points, or 0.05 per cent, to 11,916.75. The Financial Benchmark India Private Ltd (FBIL) set the reference rate for the rupee/dollar at 68.9924 and for rupee/euro at 77.9177. The reference rate for rupee/British pound was fixed at 87.2262 and for rupee/100 Japanese yen at 63.66.
Source: Economic Times
Looking to transform itself into an innovation hub, Dubai is wooing entrepreneurs from India, the third biggest startup base in the world, to set up shops in the emirate. The focus is on technology-driven startups, wherein the authorities are offering easier business licences, office spaces and access to funding. Dubai grew to prominence first as a trading hub, and then as a construction, tourism and manufacturing centre. However, it grew at 1.9 per cent in 2018, the slowest growth since the post-crisis time in 2010. "When we decided to launch the programme of attracting overseas startups here, naturally the first choice was India, as 30 per cent co-founders of our Dubai Startup Hub have Indian origin," Natalia Sycheva, manager, entrepreneurship department of Dubai Chamber of Commerce told PTI here. "We have a strong focus on India and we realise how our incubators will benefit from Indian talent," she said, adding that the chamber has launched Dubai Startup Hub to attract startups here. "We would like to have around a couple of hundreds of startups, to bring their businesses to Dubai," she added. They are looking at companies in emerging technologies like blockchain, artificial intelligence and digital transformations, with a focus on how their solutions can be applied to help the local economy, she said. These startups should bring changes in e-commerce, construction, logistics and retail sectors, she said. The hub organised roadshows at the Indian startup capital of Bengaluru and Delhi last month to identify and attract high-potential startups from India. Selected startups will get business licences and office set up in Dubai and assistance in getting access to various government or private sector funding, she said, adding that efforts are also on to get startups from different African countries. The chamber feels that there is a lot of potential for the growth of trade between India and the UAE. "India is Dubai's second-largest trading partner with USD 31.4 billion worth of bilateral non-oil trade in 2018, a 17 per cent increase compared to the previous year. But we see a lot of opportunity in the increase of this figure in coming future," she said. The local government is expecting approximately 1.5 per cent of the UAE's annual forecast of GDP during the six months of the Dubai Expo 2020 to be held next year, Jon Bramley, vice president, communication of the Dubai Expo 2020 said. He said India is participating in a big way at the Expo, which will feature 192 individual country pavilions in 4.38 square km area. The World Expo is one of the world's oldest and largest international events, taking place every five years and lasting for six months, which serve as a bridge between governments, companies, international organisations and citizens.
Source: Business Standard
Aggregate settlement cap at $36 mn. Welspun India Ltd. has received preliminary U.S. court approval for a settlement agreement to resolve all pending legal claims made against the company in the United States. These claims concern the past marketing and labelling of its premium cotton home textile products, the company said in a statement. In 2016, U.S. retail major Target Corporation terminated the product sourcing contract with the company following allegations of supply of products made of inferior cotton as against Egyptian cotton which was promised in the contract. After that, several class action suits were filed in U.S. courts, claiming damages. “The plaintiffs in other pending litigations involving these issues have also agreed to withdraw their objection to the global settlement and suspended litigation pending the settlement agreement’s final approval,” it said. The firm has also, inter alia, agreed to increase payouts to individual settlement class members without increasing the aggregate settlement cap of $36 million. “Based on expert advice, the provision already made by the company during the quarter ended March 31 remains unchanged and adequate. As per statutory procedure, the settlement agreement is subject to final approval and review by the appropriate courts in USA,” the company said in the statement. It said over the last three years, the company had addressed the issue by aggressively undertaking various steps to enhance traceability, including the introduction of Wel-Trak, a patented and industry-defining solution, ‘which had helped it us earn stronger trust among customers.’ It also and reiterated the firm’s its commitment towards prioritising customer interest above all. “We have also increased additional third party assurances, such as vendor audits, and deployed a dedicated resource in Egypt to source Egyptian cotton,” it said. “With this, Welspun is well equipped to further consolidate its leadership position in the industry and leverage global opportunities in flooring and advanced textiles, as well as the growth of its domestic home textiles business,” it added.
Source: The Hindu
|
Item |
Price |
Unit |
Fluctuation |
Date |
|
PSF |
1260.38 |
USD/Ton |
0.70% |
7/3/2019 |
|
VSF |
1688.26 |
USD/Ton |
2.11% |
7/3/2019 |
|
ASF |
2265.33 |
USD/Ton |
-1.39% |
7/3/2019 |
|
Polyester POY |
1317.14 |
USD/Ton |
0% |
7/3/2019 |
|
Nylon FDY |
2408.69 |
USD/Ton |
0.91% |
7/3/2019 |
|
40D Spandex |
4307.98 |
USD/Ton |
0% |
7/3/2019 |
|
Nylon POY |
5501.41 |
USD/Ton |
0% |
7/3/2019 |
|
Acrylic Top 3D |
1499.06 |
USD/Ton |
0% |
7/3/2019 |
|
Polyester FDY |
2270.42 |
USD/Ton |
1.30% |
7/3/2019 |
|
Nylon DTY |
2415.96 |
USD/Ton |
0% |
7/3/2019 |
|
Viscose Long Filament |
1433.57 |
USD/Ton |
0% |
7/3/2019 |
|
Polyester DTY |
2627.00 |
USD/Ton |
0.28% |
7/3/2019 |
|
30S Spun Rayon Yarn |
2394.13 |
USD/Ton |
0.61% |
7/3/2019 |
|
32S Polyester Yarn |
1972.07 |
USD/Ton |
1.88% |
7/3/2019 |
|
45S T/C Yarn |
2634.27 |
USD/Ton |
0.56% |
7/3/2019 |
|
40S Rayon Yarn |
2677.94 |
USD/Ton |
0% |
7/3/2019 |
|
T/R Yarn 65/35 32S |
2241.32 |
USD/Ton |
0.65% |
7/3/2019 |
|
45S Polyester Yarn |
2052.11 |
USD/Ton |
0% |
7/3/2019 |
|
T/C Yarn 65/35 32S |
2386.86 |
USD/Ton |
0% |
7/3/2019 |
|
10S Denim Fabric |
1.33 |
USD/Meter |
-0.11% |
7/3/2019 |
|
32S Twill Fabric |
0.76 |
USD/Meter |
-0.38% |
7/3/2019 |
|
40S Combed Poplin |
1.04 |
USD/Meter |
-0.14% |
7/3/2019 |
|
30S Rayon Fabric |
0.62 |
USD/Meter |
0.24% |
7/3/2019 |
|
45S T/C Fabric |
0.69 |
USD/Meter |
0% |
7/3/2019 |
Source: Global Textiles
Note: The above prices are Chinese Price (1 CNY = 0.14554 USD dtd. 03/07/2019). The prices given above are as quoted from Global Textiles.com. SRTEPC is not responsible for the correctness of the same.
China will support the pilot free trade zones in undertaking more experiments with reform and opening up, and refine policy incentives for cross-border e-commerce to facilitate more innovative models in foreign trade, a State Council executive meeting chaired by Premier Li Keqiang decided Wednesday. "These pilot free trade zones have accumulated much good experience in the past six years since their launch. In particular, they have set an example in deepening the reform of government functions and expanding opening up," Li said. "There must be a stronger unity of purpose, supported by intensified efforts in this respect." At the Wednesday meeting, attendees called for speedy launch of new measures to support the pilot zones in achieving wider opening up and innovation-driven development in line with high-standard international economic and trade rules. Relevant provincial and municipal governments will be urged to delegate more provincial administrative authority to the pilot free trade zones, especially in investment approval and market access. The reform of decoupling business licenses and operation permits will be fully implemented in all pilot zones. The meeting called for efforts to support local governments and competent departments in proposing deeper reforms under their portfolio of responsibilities, trying the reforms out in the pilot zones, and working to see that all reforms and innovations be part of a systematic whole. The 2019 edition of negative list for foreign investment applicable to the pilot free trade zones must be fully implemented, and related laws and regulations should be speedily adjusted accordingly. Concrete measures were proposed at the meeting for innovation in trade facilitation. Pilot programs in competition policy will be launched in the zones as part of efforts to level the playing field. The government will step up exploration of measures in widening market access, especially in opening the services sector, in the zones, with a view to gaining experience for businesses to participate in-depth in global competition and for realizing opening up at a higher level. At the same time, reform and innovation in pilot zones will be better leveraged to facilitate the development of their host cities and the surrounding regions. "Nowadays, globalization, free trade and multilateralism have experienced some disruptions. Yet China's commitment to opening up as the general direction remains unchanged, and steps for wider opening will be better delivered," Li said. "We have made arduous efforts to this end in the past 40 years, and going forward, we will be as steadfast in pursuing opening up. What has happened shows that China's opening up has benefited the world, and boosted its own development." The Wednesday meeting also studied supportive measures for cross-border e-commerce. The past few years have seen robust growth of cross-border e-commerce, which has become a prominent highlight in foreign trade. "Cross-border e-commerce is an innovation responding to the new industrial revolution. As our economy transforms and upgrades, innovations in business model become an imperative. Cross-border e-commerce may take up a very small share in our overall foreign trade now, yet with its fast growth, it has catalyzed domestic industrial upgrading, spurred consumer spending, boosted domestic logistics such as express delivery, encouraged innovation and business start-ups, and created massive jobs." It was decided Wednesday that on top of the 35 existing zones, such zones will be launched in more cities in light of local needs. Retail goods that exported from these pilot zones will see their value-added tax exempted in the absence of a valid purchase certificate. Simpler methods for verifying and collecting corporate income tax will be introduced. The meeting urged on building more service platforms for developing cross-border e-commerce. The development of overseas warehouses in more places will be encouraged. Relevant e-commerce platforms will be guided in stepping up services for intellectual property protection. Educational institutions will be supported in launching majors of cross-border e-commerce to promote both industrial and academic development, and produce more professionals for cross-border e-commerce. The meeting also urged efforts to improve the prudent yet accommodative regulatory approach and boost international cooperation, including active participation in the making of international rules on cross-border e-commerce.
Source: Xinhua
South Korea’s trade, industry and energy ministry recently said it will boost the competitiveness of its textile and fashion industries by helping local firms adopt smart manufacturing solutions and supporting research projects on next-generation fabrics. The government will allocate $33.7 million over the 2018-2022 period to implement the plan. The project will help local sewing, dyeing and shoe factories adopt smart solutions to produce on-demand products for clients, according to a news agency. The move is in line with the global trend of making customised products for individual clients instead of mass producing pre-designed goods, the ministry said. The plan also calls for 52.4 billion won to be earmarked up to 2023 for the development of next-generation fabrics that can be used in firefighters’ suits and other specialised areas. The government early this month announced a vision to turn the country into one of the world’s top four manufacturing powers by 2030 by promoting the adoption of smart factories and applying information and communications technology to new growth engines such as textiles and clothing. (DS)
Source: Fibre2fashion
A Chinese delegation of National Textile and Apparel Council (CNTAC) called on Advisor to PM on Commerce, Textiles, Industries & Production and Investment Abdul Razak Dawood to deliberate upon bilateral trade and investment opportunities. The CNTAC is the national federation of all textile-related industries, as it includes the textile industrial associations and other economic entities as registered members. The advisor underlined the significance of investment opportunities in textile sector for industrial development through mutual cooperation. He appreciated the role of Chinese companies in textile sector of Pakistan and urged the Chinese delegation to have more extended cooperation in the textile sector. Head of CNTAC delegation appreciated the Pakistan's business friendly environment for better cooperation in industrial development, especially textile industry. He apprised the participant that China has already cooperated in manufacturing of polyester yarn in Pakistan and eyeing for extended mutual cooperation in finished/value added products of textile sector. The visit of CNTAC aims to observe the existing business environment for future investment in industrial sector in Pakistan. The advisor emphasised to enhance know-how regarding Chinese technological advancement in textile sector and urged the delegation to cooperate in the development of textile sector to avail investment opportunities for developing better partnership. Members of the delegation showed interest in technology up-gradation in Pakistan by investing in textile research centres and stitching labs. The advisor informed the delegation that-China Pakistan Economic Corridor (CPEC) has opened enormous investment and business opportunities in Pakistan. In the first phase of the project, investment was only attracted to power sector and infrastructure development. "Now we are entering the second phase of CPEC ie. industrial cooperation, which provides enormous opportunities for investment in textile and agriculture," he said. Moreover, in the wake of China-Pakistan FTA Phase-II, bilateral cooperation between the two countries is widening by providing extended market access to Pakistani products in Chinese market which has increased industrial base of Pakistan, the advisor highlighted. The Chinese companies should invest in whole value chain of textile, from cotton to garment, for the development of sector and both countries should work for win-win position, he said.
Source: Business Recorder
Nigeria’s presidency on Tuesday said the West African nation will sign the Africa free trade agreement at the coming African union summit. According to a statement posted on the presidency’s Twitter feed, Nigeria would sign onto the deal at the upcoming African Union extraordinary summit in Niamey, Niger. The Summit is taking place to celebrate the Entry into Force of the AfCFTA Agreement and to launch the Operational Phase of AfCFTA Market, which also includes launching the AfCFTA Consultative Dialogue Framework. “Our position is very simple, we support free trade as long as it is fair and conducted on an equitable basis,” the Twitter feed quoted President Muhammadu Buhari as saying. The architects of the AfCFTA hope that the deal will encourage inter-African trade, currently at 17 percent of all African exports, by eliminating complex and disjointed trade agreements across the region. In addition to creating a massive market of 1.2 billion people with a combined GDP of more than $2.2 trillion, the AfCFTA also eliminates 90 percent of tariffs which proponents say will encourage foreign direct investment by creating and easing entry into a larger, single, seamless market for goods and services. Nigeria, the largest economy on the continent, was one of the last countries that had not committed to signing the deal. President Muhammadu Buhari had expressed concern it could allow neighboring countries to inundate Nigeria with low-priced goods that could affect local businesses. In a more integrated African market, textiles and apparel, leather, wood and paper, vehicles, and transportation equipment are some of the industrial goods expected to benefit the most, as are vegetables, fruits, nuts, beverages, and meat products.
Source: North Africa Post
Makers of garment accessories and packaging have made an enormous investment of about Tk. 1,200 crore to push up export earnings and meet the demand of the apparel sector. Accessibility of the workforce at reasonable wages, duty-free market access in major export destinations, and preferential location at the heart of the Asia-Pacific region have lured foreign investment to the textile and apparel industry, said Abdul Kader Khan, president of the Bangladesh Garments Accessories and Packaging Manufacturers’ and Exporters’ Association (BGAPMEA). Around 100 newly built factories are coming up each year to manufacture accessory products. Last year, investments worth Tk. 1,000–1,200 crore were made in this sector. Even more projects are now waiting in the pipeline, Abdul Kader Khan said. Talking about the reason behind the huge investment, Khan said since Bangladesh is the world’s second largest exporter of apparel products after China, there is a huge investment opportunity in the textile and garments industry. So far, Tk. 40,000 crore has been invested since the inception of this sector, he added. “We have urged the government to reduce corporate tax to 10–12 per cent from 35 per cent to ensure more growth in the garment accessories sector. We have seen how the government's decision to reduce corporate tax rate from 15 per cent to 12 per cent in the readymade garments (RMG) sector eventually inspired local investors to make investment decisions,” said Khan. Since the demand for accessory products is growing at a faster rate at both home and abroad, around 100 new factories have started their operations this year. Presently, around 1,200 factories are producing accessory items in the country. Most of them are compliant factories. Talking about fully compliant accessories factories, the BGAPMEA president said: "Dekko Accessories Ltd, Babylon Group, Montrims Ltd, KDS Accessories, Mastex Accessories are some of the fully compliant factories in the accessories industry." “We have to put more emphasis on producing high-quality accessory items. We must establish this sector separately and not as the backward integration of the readymade garments (RMG) industry,” he also said. “However, the new investment will focus on direct export of accessory items because we can meet approximately 95 per cent of the local demand,” he added. He said Bangladesh produces and exports accessories like woven labels, leather badges, stone and metal motifs, rubber patches, gum tapes, satin and cotton ribbon hangers, price tags, buttons and zippers. Indirect contributions have always made up 15–20 per cent of the net export earnings of the RMG sector. Export earnings from the RMG sector in FY2017–18 totalled USD 30.61 billion. This includes approximately USD 7.10 billion from accessory items used in the RMG, leather, pharmaceutical and other export-oriented sectors. Currently, the export contribution of accessory items is USD 7.10 billion, among which USD 1.42 billion comes from direct exports to the Middle-East, South Africa, Sri Lanka, Malaysia, Europe, Vietnam, Cambodia, and Laos. Some factories are already exporting accessory items directly, Khan said. “Bangladesh yearly exports basic polo shirts, which are worth USD 6 billion, among which our contribution stands at USD 1.2 billion,” he added. Export Promotion Bureau stats show that exports of yarn and fabrics rose by 20.16 per cent to USD 141.12 million between July and May of FY2018-19 compared to the same period in FY2017-18. This scenario clearly depicts that Bangladesh could be a major source of garments raw materials, said Khan.
Source: The Independent
