MUMBAI: The Budget presented by Union Minister for Finance and Corporate Affairs Ms. Nirmala Sitharaman is focusing to grow the Indian economy to become 3 trillion dollar economy this year and 5 trillion dollar economy in a couple of years. The Budget has also aimed at boosting infrastructure and foreign investment in the country stated Mr. Ronak Rughani, Chairman, Synthetic & Rayon Textiles Export Promotion Council (SRTEPC) here. He termed the Budget 2019-20 as a futuristic budget and congratulated Finance Minister for encouraging the manufacturing sector of the country through the Union Budget presentation. One of the prime focuses of the Budget 2019-20 is to ease out the operational procedures of the MSME segment he pointed out. The SRTEPC Head lauded the initiatives for the MSMEs in the Budget and informed that the various announcements and deliverables such as pension benefits enrollment simplification addition Interest Subvention benefits ready to use payment platform etc are the hand holding support measures which will substantially encourage and uplift the Indian Manmade fibre (MMF) textile segment also as most of the manufacturing units of this segment are MSMEs. The investor-friendly initiatives taken in the Budget is also likely to promote more investment in the MMF segment of the country Mr. Rughani informed. Steps initiated towards boosting infrastructure will suitably address the existing infrastructural gap for export and structural issues in the country. The Budget has also taken steps for encouraging “Make in India” initiatives by protecting domestic manufacturing units. Moreover timely rationalization and simplification of the GST issues will help the entire textile industry Mr. Rughani stated.
Following are the key Highlights of Union Budget 2019-20 listed out by SRTEPC: Measures related to MSMEs:
In the present Budget, the grant for textile and apparel is budgeted at Rs 4,8318 cr The Budget allocation for textile sector and apparel sector has come down by around 30 per cent due to the discontinuation of ROSL scheme. In the present Budget, the grant for textile and apparel is budgeted at Rs 4,831.48 crore, which is about 30.41 per cent lower than the previous year’s revised grant, said CITI Chairman, Sanjay K Jain. “It is mainly because of discontinuation of ROSL scheme from March 7th 2019. The new scheme called Rebate of State and Central Taxes and Levies (RoSCTL) which was announced simultaneously will be issued through free transferable scrips,’ he said. Meanwhile, SIMA found that allocation of Rs.700 crores for Amended Technology Upgradation Fund Scheme was very much on the lower side as the total pending TUF subsidy under various TUF Schemes is amounting to around Rs 10,000 crores. “Once the Ministry of Textiles conducts Joint Inspection and make the claims, adequate funds would be provided to enable the industry to mitigate the financial stress currently being faced. Out of Rs.17,822 crores fund allocated for TUF subsidy for the period 2017-2022, only around Rs 2,400 crore has been utilized and we have appealed to the government to expedite the release of subsidy,” said P Nataraj, Chairman, The Southern India Mills’ Association (SIMA). However, the budget has increased allocation for a few other schemes. Highest grant is for Procurement of Cotton by Cotton Corporation of India (CCI) under Price Support Scheme which is 118 per cent higher than the last year and stands at Rs 2,017.57 crore. It also has maximum share of 42 per cent in overall grant for textiles. Grant for Integrated Wool Development Programme has been increased to Rs 29 crore. There has been a slight increase of about 12.4 per cent in Amended Technology Upgradation Fund Scheme (A-TUFS) which is budgeted at Rs 700 crore.
Source: The Asian Age
Remarkably, the government did not lose the ball on fiscal prudence, a feat which will surely be rewarded by investors. The FY20 budget was the first step in operationalising the Prime Minister’s vision to take India to a $5 trillion economy by 2025. Against the backdrop of the massive mandate, the budget is patently growth oriented and balances the needs for meeting expectations of almost every set of stakeholders. Remarkably, the government did not lose the ball on fiscal prudence, a feat which will surely be rewarded by investors. The Budget has three notable features. First, multiple strategies are proposed to revive growth, the predominant one being infrastructure spending, with spends of Rs 100 lakh crore envisaged over five years. Affordable housing is another, with expansion of the scope of tax benefits on investments in affordable housing which will help both construction and in increasing disposable incomes of beneficiary households. The phased reduction in corporate tax rates continues, with an increase in the cap on companies eligible for the lower 25% rate. Improved compliance is expected to partially offset the resultant lost revenues. Second, in addition to monetising existing assets through Invits, REITs, TOTs, CPSE ETFs, etc, and continuing disinvestment, a couple of path breaking proposals to raise additional resources have been proposed: One, the effective dilution of the 51% floor in government holdings in CPSEs by including the stake of government-controlled institutions. Two, considering India’s low sovereign debt to GDP ratio, part of its borrowing would be in external markets in foreign currencies. With appropriate risk mitigation, this will reduce pressure on domestic markets. In addition, multiple measures have been announced to enhance the flow of foreign currency funds into India. With a large amount of global debt at very low yields, foreign investors are likely to find the existing, cash generating assets quite attractive. Third, availability of credit and finance is an important component for reviving investment. Recapitalisation of public sector banks (PSBs) is an important step in boosting bank credit flows. The partial credit guarantee to PSBs for buying high rated pooled assets on NBFCs will enable liquidity for sound intermediaries. Allowing all NBFCs to participate on TReDS will reduce working capital costs for MSMEs. In addition, keeping the borrowing programme in check will enable a gradual drop of sovereign interest rates. The expected slowdown in the global economy will present its own challenges, but also keep crude and commodities prices moderate, which will help to keep inflation in control and open up room for further monetary policy easing. The fiscal stimulus embedded in the Budget proposals will help in crafting a coordinated response in reviving investment and growth. Execution, as always, will be key to achieving the $5 trillion goal. The budget proposes multiple initiatives to improve Ease of Doing Business environment. This will also have a direct impact not just on investor confidence, but also towards improvements in process and system efficiency.
Source: Economic Times
The vision laid out in the Budget is ambitious. Special attention has been paid to road and railway sectors. Finance minister Nirmala Sitharaman was unequivocal in emphasising the importance of infrastructure for the economy. According to her, GoI is determined to give the required boost to industrial corridors, dedicated freight corridors, Bharatmala network of roads, Sagarmala and UDAN (Ude Desh ka Aam Naagrik) projects to improve connectivity and bridge the rural-urban divide. However, the budgetary provisions for infrastructure were unexpected. Instead, GoI has decided to rely on off-Budget sources and public-private partnership (PPP) for funding and development of infrastructure. This approach can deliver the desired results only if the budgetary announcements are backed by swift policy reforms needed to address the problems besetting private projects and PPPs. Aggregate investment has declined to about 30% of GDP, a rate much lower than the 15- year average of 35%. The consumption growth has also slowed down, as is the case with exports. In this scenario, increase in infrastructure investment is key to revising the virtuous cycle of consumption and investment. The multiplier effect of infrastructure spending on growth is extensive. Besides, a timely completion of infrastructure projects helps reduce logistical costs and increases economic competitiveness. The vision laid out in the Budget is ambitious. Special attention has been paid to road and railway sectors. The investment target for the Pradhan Mantri Gram Sadak Yojana (PMGSY) has been kept at Rs 80,250 crore. This amount is to be used to upgrade 1,25,000 km of village roads. In February’s interim Budget, the finance ministry already made the highest-ever budgetary allocation of Rs 83,016 crore for highways and Rs 64,587 crore for railways. In addition, GoI plans to restructure the national highways programme to create a network of integrated highway grids to augment capacity and improve connectivity. Overall, infrastructure investment is slated to be Rs 20 trillion annually. Where will this money come from? The Budget has increased the special excise duty and raised the road and infrastructure cess on petrol and diesel. However, the growth in the direct budgetary support for FY20 is less than 7%. In an environment of low investment and slowing consumption growth, to support a growth rate of 8%, the infrastructure investment will have to grow at a much higher rate. Monetisation of public assets has potential to supplement the resources needed to fund infrastructure. This can be done through the toll-operate-transfer contracts for national highways, infrastructure investment trusts and real estate investment trusts. Moreover, GoI seeks to tap the overseas bond market to raise required funds. Nonetheless, the infrastructure investment requirement can’t be met only through public funding. So, the Budget correctly emphasises the importance of the private investment as a key driver, which can add to capacity, improve product delivery by employing new technology, which, in turn, can boost economic competitiveness. Both the Budget and Economic Survey have underlined the centrality of PPPs, to be used to tap private funds to unleash faster infrastructure development. Besides, GoI plans to encourage foreign portfolio investment as well as FDI in infrastructure. It also plans to introduce credit default swaps for the infrastructure sector and encourage equity investment by NRIs. In principle, these measures can help boost infra-investment. But private investment depends on the cost of capital, along with the magnitude and certainty of returns. Here, much more remains to be done. Several problems beset PPPs. These projects have been mired in contractual disputes with government departments and various regulatory hurdles. All these factors make infrastructure investment unnecessarily risky, and are the major reason behind non-availability of capital for PPPs and other private projects. The fundamental problem of infrastructure finance is the asset-liability mismatch. This problem can be addressed only by developing a vibrant bond market. A well-developed bond market will also benefit investment funds, such as insurance, pension and mutual funds, which are capable of investing in corporate bonds across different schemes. The increased limit for FDI in insurance sector intermediaries will add to the funds for the bond market. However, for the market to develop to the required depth and width, a compressive regulatory framework has to be put in place for both bonds and grading agencies. To boost private investment, budgetary announcements must be backed by policy reforms. The writer is professor, Delhi School of Economics.
Source: Economic Times
The 2019-2020 Budget has not increased allocations for key schemes expected to encourage investments in the textile and clothing sector — the Amended Technology Upgradation Fund Scheme and textile infrastructure programmes. The Budgetary allocation for the Amended Technology Upgradation Fund Scheme is ₹700 crore as against the revised allocation of ₹622.63 crore for the last financial year. The total allocation for textile infrastructure schemes for 2019-2020 is ₹58.55 crore against ₹3,729.83 crore last fiscal.
The total pending payments for Technology Upgradation Scheme is almost ₹10,000 crore. The government has revised the guidelines and payments are made only after joint inspections. “We were hoping for a higher allocation for the scheme,” said Sanjay K. Jain, chairman of Confederation of Indian Textile Industry. Only about ₹20 crore was disbursed in the last three years under the Amended Technology Upgradation Fund Scheme, according to P. Nataraj, chairman of Southern India Mills’ Association.“We hope there will be more funds made available later in the year.” Mr. Jain added that textile exports were flat and imports on the rise. “There is nothing [in the Budget] to stop imports and boost exports,” said Mr. Jain.
Source: The Hindu
Association of South-East Asian Nations (ASEAN) delegation led by Secretary-General Lim Jock Hoi will visit India next week for finalizing talks on Regional Comprehensive Economic Partnership (RCEP). ASEAN (Association of South-East Asian Nations) member countries – Malaysia, Myanmar, Laos, Brunei, Cambodia, Indonesia, Philippines, Singapore, Thailand, and Vietnam – are looking forward to finalize the procedural legalities for the summit to be held in November. The members are keen on speeding up RCEP (Regional Comprehensive Economic Partnership) negotiations in time so that the summit can happen well in time, scheduled during the month of November. The ASEAN delegation visiting India next week will deliberate upon finalizing the RCEP negotiations with India so that the pact can be signed before the year-end. Projected as the world’s biggest trade deal, the RCEP comprising of 10 ASEAN countries with its 6 Free Trade Agreement (FTA) partners: India, Australia, China, Japan, New Zealand, and South Korea, make upto 45% of the world’s population and account for 33% of its GDP, which is a significantly huge number. Many policy-makers in India are in favour of the deal, in view of the larger markets that RCEP will open up and give access. But some analysts are also sceptical of the fact that India needs to protect its economy from the flooding of cheap good imports from China. As out of all the countries in the RCEP, India is the only country not been involved in any bilateral or multilateral negotiations with China for an FTA. Although the final decision will be made by the Indian government, last year it had asked for the deadline to be moved to 2019 in view of the Lok Sabha elections. Modi government since the time it has come to power has been pressing for its ‘Act East Policy’ and had called the head of state from the 10 ASEAN nations as Chief Guests during India’s Republic Day celebrations in 2018.
The real game changer for these companies is the adoption of methods that curtail water usage in the first place. As the water crisis in the key industrial hub of Chennai sends a warning for the future, key players in the water guzzling textile manufacturing business see the conservation initiatives taken in the past paying off. Efforts to progressively reduce freshwater needs through both alternative sourcing avenues and internal reuse and more recently, adopting new printing and dyeing technologies have helped these companies reduce their water footprint. It also makes business sense because of the fast depleting reserves and increasing price of water in some states. Arvind Ltd, Grasim, ...
Source: Business Standard
The Union government rationalised its expectations for tax revenue collection in FY20 while presenting the Budget. Instead of the projected collections in the interim budget of Rs 25.52 trillion, the budget on Friday pegged the government’s gross tax revenues at Rs 24.62 trillion. A large part of this lowered revenue expectation came from reducing Centre’s targeted revenue from Goods and Services Tax (GST). The target for FY20 was brought down from the interim budget figure of Rs 7.61 trillion to Rs 6.63 trillion. Every expert agrees the new target is more reasonable compared to the interim budget numbers. But is it still too ambitious? Yashodhan Pande, senior advisor for indirect taxes at Deloitte says, “This is certainly a more reasonable a target. Is it still ambitious? Compared to the provisional actual numbers there is still a high expectation. It depends on the underlying assumptions the government has made on growth of economy and improvement in compliance levels contributing to rise in GST collections. There are several variables at play currently.” GST, introduced in FY18, has had a turbulent period so far and is yet to stabilise. A well-established tax system would have predictable tax buoyancy – how fast the collections grow as a proportion to the growth of the economy. But that is not the case with GST. It is still undergoing substantial changes as government responds to structural as well as administrative glitches. The underlying assumptions of what would ensure a revenue neutral transition from the previous indirect tax regime and how growth of states’ GST revenues would stabilise over five years are all still up for questioning. Ignoring these complications temporarily, one would first compare the target for FY20 with the collections for FY19. The budget document sticks with the revised estimates to say Rs 5.04 trillion was collected as Central Goods and Services Tax (CGST). But the Economic Survey tells us that the CAG has computed the provisional actuals of overall net tax revenues for FY19 to be much lower. While it doesn’t give the exact numbers for provisional actual GST, if one was to maintain the same ratio between net tax revenues and CGST, the provisional actual collection of CGST would be pegged at Rs 4.06 trillion – a substantial Rs 97,979 crores less than the revised estimates the budget uses. This number reflects CGST after the Interstate Goods and Services Tax for the year has been reconciled for the year into central and state coffers. It means the government even now expects the CGST collections to grow this year by a whopping 29.58%. The other simple parameter is to see how collections have done between March-June so far. The CGST collections for the first quarter of FY20 amounted to Rs 33,257 crore per month on average. This is on the higher side than the actual. It includes the seasonal spike that collections witness in April and does not account for the refunds to be set-off for June. Compared to this the ask now is Rs 47,358 crores per month on average for the rest of the nine months, 42% higher than the existing average for first quarter – plausible but uphill believe experts. Kotak Institutional Equities Research noted, “The government’s estimates for central GST, Interstate GST (IGST) and compensation cess imply about Rs 12.7 trillion of total GST collections. This translates to Rs 1.06 trillion monthly run-rate, which is meaningfully higher than the monthly run-rate of about Rs 89,100 crore based on collections for three months of FY20.” Finance ministry officials told Business Standard that there were specific reasons for low numbers in the first quarter of FY20. “The fact that the 28 per cent slab included more items in Q1 FY19 than in Q1 FY20, we expected some dip in growth this quarter. But growth will improve along the year as it will be on low base, and on the projection that economic activity will revive,” one said. Another official added that Q1FY20 also witnessed general elections, slowing down public investment activityand stalling new tenders. “Rate stabilisation is an imperative. The catalyst is compliance, which has witnessed improvement in April to June quarter,” he added. For a tax system that had stabilised this would still be a predictable exercise. But uncertainty haunts both the compliance mechanism and the GDP growth. With the government projecting a healthy uptick of GDP, experts presume it has hitched the hope on good GST collections to this underlying growth. The budget notes, “Nominal Gross Domestic Product for 2019-20 is expected to be Rs 211 trillion which indicates a nominal growth rate of 12 per cent over previous year.” But on tax buoyancy, the budget is not very optimistic. It notes as part of the Medium Term Fiscal Policy cum Policy Strategy Statement, “For the financial years 2020-21 and 2021-22, GST is expected to have a buoyancy of 1.0 with respect to nominal GSP growth rates of the respective years.” In other words, the government, too, does not see a great leap in compliance soon – tax collections will grow at the same rate as GDP, the government predicts. Budget 2019: Is the rationalised GST target still too ambitious? Officials speaking off the record agreed that collections at this unstable stage of GST depend on compliance improvement beyond just number of returns being filed. “We are seeing a large leakage because of input credit scams. One part of this is structural. We have not activated the reverse charge mechanism for all. It’s a politically fraught decision because it will impact the trading community most. But it could stem the leakages partially and increase revenues,” said one official. He pointed to data on how GST revenue from businesses with turnover below Rs 1 crore was providing below 9% of the total GST revenue. Parande added, “The GST system will take some more time to stabilise. We will only come to know through the year how the new set of returns improve compliance. Then there are questions over the impact that changes in how input credit is accounted for to reduce leakages and then set off does to CGST and SGST collections.” He was referring to the flexibility provided recently to adjust input credit against different streams of GST. This will have some impact on how much cash is collected against CGST as compared to SGST after businesses set off standing input credit on their ledgers. The former has been lagging in terms of cash collections so far. Yet another senior official said, “We are beginning to learn what is the optimum revenue we should be getting from key sector chains at a certain size of activity. The rapid changes in the system do not allow us to make temporal comparisons. Say, what is the optimum levels of input credit that should be standing in a certain chain and how much should be coming in as cash. Answering questions like this through analytics will help improve compliance.”
Source: Business Standard
United Arab Emirates Foreign Minister Sheikh Abdullah bin Zayed Al Nahyan arrived here Sunday night and will hold talks with his Indian counterpart S Jaishankar to boost cooperation in key sectors such as trade and energy. The UAE minister will also call on Prime Minister Narendra Modi and participate in a business roundtable Monday. The visit would provide the two sides an opportunity to explore new areas of cooperation to further strengthen their comprehensive strategic partnership,Ministry of External Affairs said earlier. Sheikh Abdullah's visit comes at a time the issue of energy security is high on India's agenda due to the situation arising out of US sanctions on importing oil from Iran. The ties between India and the UAE are on an upswing in the last few years. The UAE is India's third-largest trade partner and fourth-largest energy supplier. The country is also home to 3.3 million-strong Indian community, largest in the Gulf region. Modi had visited the UAE in August 2015 during which the two countries decided to elevate their relation to a comprehensive strategic partnership. The prime minister also visited the UAE in February last year. As the chair of Organisation of Islamic Cooperation, UAE invited India as the 'Guest of Honour' at the 46th Council of Foreign Ministers meeting of the grouping in Abu Dhabi in March this year.
Source: Business Standard
Manipur's handloom industry will not flourish until the assured government benefits reach genuine weavers, said Laishram Sidharani, who left her profession as a lawyer to promote the handloom industry in the state. Sidharani, a law graduate from Delhi University, told ANI, "The maximum weavers in the region are women and most of them are illiterates. As a result, they are not aware of the existing schemes and projects introduced by the state government. Unless and until the genuine weavers don't get the assured benefits from the government, Manipuri handloom will not flourish." "The government needs to take some constructive steps or decisions to preserve the handloom sector because the industry's condition is worsening day-by-day despite various government projects are in the pipeline," she added. Without the support of locals, Sidharani claimed that expansion of any business is difficult. "If locals join our hands, we can generate more employment for the jobless and it will help us improve the economy of our state." Sidharani said she earns a profit of Rs 4.5 lakh annually from the industry, adding that her craftsmanship is in designing 'Fige Phanek', a traditional attire mainly worn by women during ceremonies of Meetei community. "I learnt the skills of weaving from my mother. Since 2015, I have been working to promote the craft through various exhibitions and other projects in the state. Under a self-help group called E-Yong Sangbanabi, around 30 women are involved in weaving Fige Phanek Mayek traditional fabrics," she said. "Besides, I have provided working capital to 15 local woman weavers who cannot afford to buy yarn to start their business. The final products will be sold out to the market later," she added. Manipuri traditional fabrics, famous for their finesse and elegance, have earned a distinct place among the textile crafts in the country. The cottage industry provides the highest employment to the womenfolk of the state. The traditional skill of handloom weaving is not only a matter of status symbol to the Manipuris, but also is an indispensable aspect of their socio-economic life.
Source: Business Standard
Cargo movement from Surat airport will get a major boost with the Airports Authority of India (AAI) all set to throw open its state-of-the-art modular cargo terminal in the next two weeks. AAI has stated that the vetting of cargo terminal is under process and it will be completed within the next two weeks. The modular cargo terminal, built at the cost of Rs 8 crore, is a steel-based structure constructed on the land between the Air Traffic Control (ATC) and the terminal building. The ground base of the cargo is 1,000 square metre and the first floor will have the same size. The cargo terminal has the cold storage facility for the export of perishable items, strong room etc. At present, the cargo movement from Surat airport has touched 3,400 metric tonne in the last one year. Thanks to the airlines operating from Surat airport providing cargo facilities to its operational destinations across the country Official sources said that cargo items like textile goods including saris, dress material, courier, chemicals, valuable goods such as diamonds, lab-grown diamonds jewellery articles etc. are transported from Surat airport to various destinations including Delhi, Bengaluru, Kolkata, Hyderabad, Chennai, Mumbai and Jaipur. Majority of the cargo movement to and from Surat airport is handled by Spice Jet followed by Air India. Spice Jet is the only airline providing high value cargo box for the shipment of valuable goods such as jewellery items, diamonds etc. Until last year, Surat airport did not figured in the air cargo list in the country. However, in the last one year, the airport is on the 31st position in the cargo list of the country. South Gujarat has agro and aqua export potential of more than 35,000 metric tonne per annum for mangoes, chikoo, roses, gerbera, shrimp etc. About Rs 40,000 crore worth of polished diamonds are directly exported via the Surat Hira Bourse (SHB) custom house to Mumbai and around the world per annum. Likewise, there is an export potential of polyester fabric, hosiery etc of 2,000 metric tonne per annum.
Source: Times of India
On a mission to popularise an ancient form of hand block-printed textiles, Alka Sharma is not only reviving traditional crafts from southern Rajasthan but is also empowering the craftsmen and women behind this in the Mewar region. From collections that flaunt traditional crafts like ‘gold khadi’ and ‘pittan’ embroidery to Ayurvastra clothing that is made from organic cotton fabric treated with herbs and oils to promote health, Alka is well on her way to wow textile lovers, and bring these crafts to the South. “The exquisite art of pittan is dying slowly, and we are working to restore its former glory by training women from the Mewar region in the techniques of this craft,” says Alka, who promotes this ancient craft works through an outlet called Aavaran, overlooking the scenic Ulsoor Lake in Bengaluru. Alka, 41, has built a reputation for promoting intricate Dabu printing, and indigo and natural dyeing technique-based collections. She has held numerous workshops for training as also design and development in leather, bamboo, etc. for tribal and other communities in an attempt to revitalise and upgrade skills of selected crafts. “I wanted to ensure the economic empowerment of indigenous craftspersons,” says Alka, an alumna of Indian Institute of Crafts and Design, who also holds a diploma in textile designing and a Master’s degree in Sociology. After her graduation, she was keen to work towards carrying forward the tradition of indigo dyeing as practised in Akola near Udaipur, and reviving and sustaining the traditional craft of Dabu printing, an ancient mud-resist hand block-printing technique that almost died in the last century. But today it has been revived and is a flourishing art in many villages of Rajasthan. The labour-intensive exercise involves several stages of printing and dyeing, resulting in a product that is unique. Although specialising in indigo dyeing, Alka also uses other natural dyes to get more colour options. “We hope to carry forward the tradition of indigo dyeing as practised earlier. We have retained the quality of indigo as well as improved it by focusing on the rubbing fastness of the indigo dye and experimenting to achieve multiple tonal indigo qualities. Only natural dyes obtained from plants, roots, berries, bark, leaves, wood are used,” she says. Today, Alka employs over 100 people in her design and production departments and supports more than 200 women across four independently run training centres in four villages. Her organisation also supports designers and craftspeople through in-house production.
In 2009, Alka Sharma formed a self-help group to support the artisans and train women, and took up a five-year project under Baba Ambedkar Hasth Shilpa Yojna of Ministry of Textiles. She conceptualised Aavaran in 2011, and it was set up in Udaipur by Centre of the Study of Values, an NGO, for development of rural communities and focussing on women and children.“We took part in several exhibitions across the country with a limited collection of apparel and home furnishings. The response was good,” she says.
Aavaran has a range of contemporized Dabu mud-resist, hand-dyed and hand block-printed garments and accessories, all made from natural fabrics. You have a series of printed and embroidered apparel inspired from neem and explored as Persian expressions.
Source: Indian Express
The government has lowered the fiscal deficit target to 3.3 per cent of the GDP as it is expecting net additional revenue of Rs 6,000 crore over the interim Budget estimates. Finance Minister Nirmala Sitharaman is scheduled to address the post-budget meeting of the RBI's central board on Monday and highlight the key points of the Budget, including the fiscal consolidation roadmap. The government has lowered the fiscal deficit target to 3.3 per cent of the GDP as it is expecting net additional revenue of Rs 6,000 crore over the interim Budget estimates. The government in the interim Budget in February had projected a fiscal deficit of 3.4 per cent of the GDP for the current fiscal. The Centre also came out with a roadmap to reduce the fiscal deficit -- the gap between total expenditure and revenue -- to 3 per cent of the gross domestic product (GDP) by 2020-21, and eliminate the primary deficit. Primary deficit refers to the deficit left after subtracting interest payments from the fiscal deficit. The Finance Minister would also apprise the board of various other announcements made in the Budget to spur growth by touching almost all sectors of the economy with the objective of achieving a USD 5 trillion economy by 2024-25, said an official. The Budget announced further opening up of aviation, insurance and media sectors to foreign investment while throwing a lifeline to the struggling shadow banks (NBFCs) to boost investment and lending in the economy. It has also proposed measures to improve NBFCs access to funding by providing a limited backstop for the purchase of their assets. The government will provide a partial guarantee to state banks for the acquisition of up to Rs 1 lakh crore of highly-rated assets from non-bank finance companies. The Reserve Bank of India has been made regulator of housing finance firms as well, replacing the National Housing Bank. With regard to surplus transfer from the RBI, the Budget envisages Rs 90,000 crore as dividend from the central bank in the current fiscal. This will be 32 per cent higher from the previous fiscal, when the central bank paid Rs 68,000 crore to the government, including Rs 28,000 crore as interim dividend. This was the highest receipt from the Reserve Bank in a single financial year, exceeding the Rs 65,896 crore received in 2015-16 and Rs 40,659 crore in 2017-18. The Reserve Bank follows July-June financial year and usually distributes the dividend in August after annual accounts are finalised.
Source: Economic Times
Production cost of per kilogram yarn and fabrics will go up by Tk6.66 and Tk7.61 respectively as new gas tariff takes effect, ultimately hitting the $34 billion apparel industry. The rise in production cost, caused by sharp increase in gas prices, may prompt apparel manufacturers to import yarn and fabrics from where it will cost less, the sector people have said. As of now, Bangladeshi fabric producers are meeting 95% of the demand of knitwear sector while 40% of woven sector. According to a rough estimation of Bangladesh Textile Mills Association (BTMA), new gas price will increase production cost of per kg yarn by Tk6.66. At the current tariff rate, it takes Tk21.81 to produce a kg of yarn, which was Tk15.15 at the previous rate. On the other hand, the production cost of per kg fabrics also would increase by Tk7.61 to Tk24.93, which was Tk17.32 at previous rate. On June 30, the Bangladesh Energy Regulatory Commission (BERC) issued a circular increasing gas prices at different rates effective from July 1. For industrial use, gas price has been increased by 37.88% from Tk7.76 to Tk10.70 per cubic metre, while for captive power it has been increased by 43.97% from Tk9.62 to Tk13.85. Gas price for the power sector has been increased from Tk3.16 to Tk4.45 per cubic metre with a 40.82% rise. Talking to Dhaka Tribune on the recent sharp hike of gas prices, especially for the captive power and industrial consumption, the primary textile sector people have expressed deep concerns. They fear that it will encourage import of fabrics and yarn from other countries offering lower prices and the ultimate loser will be the apparel sector. “From the current fiscal year, the government is implementing VAT. In this context, a sharp rise in gas prices will put a huge burden on the textile and apparel sector, pushing up the production cost,” Bangladesh Textile Mills Association President Mohammad Ali Khokon has told Dhaka Tribune. "In addition, in the apparel sector compliance has already cost huge but prices of finished goods did not increase. So the rise in gas prices would leave the textile sector, highly dependent on captive power, in tougher competition," Khokon points out. In the given situation, the government should have increased the prices of gas gradually, which would not put pressures on the manufacturers at a time, he added. Meanwhile, fabrics manufacturers have observed that supply chain of apparel raw materials may be hit by the gas price hike. “Supply of yarn and fabrics from local sources is a blessing for the country’s apparel exporters as it reduces lead time and ensures low cost,” Abdus Salam Murshedy, managing director of Envoy Textile, has told Dhaka Tribune. The sharp rise in gas prices will hit the country’s textile industry hard and it will ultimately deal a blow to the apparel sector, Salam warns. Currently, local fabrics manufacturers are providing almost 100% supply for the knitwear sector, while about 40% for the woven industry, which is growing very fast. "In the present context, the sharp rise in gas prices will hurt the growth of the sector especially the woven fabrics manufacturers. So the government should rethink the gas prices considering the contribution of textile industry," says the former BGMEA president. The apparel makers have already projected that that the production cost of apparel sector will go up by 1%, which will hit the competitiveness in global market and make it difficult to sustain the present export growth. “In the just concluded fiscal year, Bangladesh apparel export has registered a double digit growth. The new gas price will make it difficult for the sector to sustain its growth,” Mohammad Hatem, a former vice president of Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), has said. As per the BTMA, there are 430 yarn manufacturing mills, 802 fabrics manufacturing mills, and 244 dyeing-printing finishing mills in Bangladesh, along with 32 denim fabrics manufacturing mills and 22 home textile manufacturing mills.
Source: Dhaka Tribune
Advisor to the Pakistani prime minister on commerce Abdul Razak Dawood recently urged a visiting delegation from the China National Textile & Apparel Council (CNTAC) to cooperate in the textile sector. The delegation examined the business environment in Pakistan for future investment and expressed interest to invest in textile research centres and stitching labs. The China–Pakistan Economic Corridor (CPEC) had opened huge investment opportunities in Pakistan and in the wake of the China-Pakistan free trade agreement phase-II, cooperation between the two countries is growing due to the grant of extended access for Pakistani products to the Chinese market, Pakistani media repowers quoted Dawood as saying.
The summit will see heads of state and trade delegations trying to iron out the details of the trade pact. A landmark free-trade agreement removing most tariffs and other commercial barriers in the African continent expanded to encompass 54 signatories, after Benin and Nigeria joined the accord on Sunday. Albert Muchanga, the African Union’s commissioner for trade and industry, announced Benin’s intention to join at the bloc’s summit officially launching the pact, in Niger’s capital Niamey. Nigeria said it would ratify the deal during the two-day summit that’s also set to discuss migration and security -- issues affecting the host country Niger. “Nigeria is Africa’s biggest economy and most populous country,” Niger’s President Mahamadou Issoufou said in an interview from Niamey. “Without Nigeria, the free trade zone would’ve been handicapped.” Ghana was selected to host the secretariat -- or permanent office -- for the trade zone, amid competition from Egypt, Ethiopia, Swaziland, Kenya, Senegal and Madagascar, the West African nation’s presidency said in an emailed statement. President Nana Addo Dankwa Akufo-Addo said Ghana is ready to give $10 million to help set up the pact’s office. The summit will see heads of state and trade delegations trying to iron out the details of the trade pact. Key issues include the removal of non-tariff barriers and regulations controlling trade liberalization, rules of origin and the development of a digital payment system. The African Free Trade Agreement commits governments to greater economic integration, as the signatory states move toward removing trade barriers including tariffs on 90% of commodities. The duty-free movement of goods is expected to boost intra-regional trade, while also helping countries move away from mainly exporting raw materials and build manufacturing capacity to attract foreign investment. Trading will start in July 2020 to give member states time to adopt the framework and prepare their business communities for the “emerging market,” Muchanga said. “We haven’t yet agreed on rules of origin and tariff confessions, but the framework we have is enough to start trading on July 1, 2020,” he said. Rules of origin and mechanisms for monitoring, reporting and the elimination of non-trade barriers should also be agreed upon during the summit.
Source: Business Standard
The government of Pakistan's Punjab province has formed 102 special teams to monitor the possibility of a locust attack on cotton crops in the southern region of the province. The decision has been taken following a recent directive by Punjab Chief Secretary Yousaf Naseem Khokhar to evolve a plan to deal with the looming threat of locust attack. According to a report by The Express Tribune, around 23 teams will work in Dera Ghazi Khan, 36 in Bahawalpur and 43 in Multan districts of the province. Additionally, the Agricultural Department in the province would also be provided with airplanes of the Federal Plant Protection Department in a bid to control locust movement, said Provincial Secretary Agriculture, Wasif Khursheed. Commissioner Dera Ghazi Khan Division Asadullah Faiz said that the divisional and district administration is monitoring the movement of locusts continuously and no locust has been found anywhere in the division so far. Cotton runs Pakistan's textile industry, generating scores of jobs. The country cannot afford to lose its cotton, especially at a time when it has secured a bailout package from the International Monetary Fund. The government has deployed pesticide-mounted vehicles and aircraft to control the situation. Locusts first emerged from Sudan and Eritrea in January this year. By February, they had hit Saudi Arabia and Iran before heading to Pakistan's Balochistan in March. The last major locust attack in Pakistan happened back in 1993 and 1997.
Source: Business Standard
SMEs will be counseled on how to benefit the most from the newly-signed EU-Vietnam Free Trade Agreement. Small and medium-sized enterprises (SMEs) are a priority target under the EVFTA, said Vu Tien Loc, president of Vietnam Chamber of Commerce and Industry (VCCI). He was speaking at a conference titled "The EVFTA: What happens next", which was organized by VCCI and the European Chamber of Commerce (EuroCham). The conference gathered enterprises from textile, coffee, communication, pharmacy and other industries to discuss EVFTA regulations and ways to benefit from tax and investment incentives. Loc said EVFTA carried the highest-level of freedom and fairness in which EU and Vietnam businesses shared the vision of sustainable development. However, in discussions, experts pointed out limitations like the lack of information access among Vietnamese SMEs. Many enterprises in key manufacturing sectors did not know when the tax rate of products exported to the EU will return to zero percent or what that rate is for upcoming years, they said. "After the signing of EVFTA, Vietnamese enterprises, especially SMEs, need to be fully-equipped to benefit from tax and investment incentives, which would enhance their competitiveness in the domestic market and enable exports to the EU," Loc said. He said that the VCCI, in association with EuroCham, will carry out counseling and support programs for Vietnamese enterprises, including training courses and establishment of business associations with emphasis on governance capacity. Activities and seminars regarding EVFTA will be organized, aiming at introducing opportunities and guidelines for Vietnamese businesses, especially in the most affected areas, he said. "Enterprises themselves need to improve the quality of human resources and corporate governance. The most important thing is that enterprises must study the agreement, then restructure products, technology, partners and markets." Nicolas Audier, EuroCham chairman, said Vietnamese businesses need to learn European standards and find ways to apply these, and look for EU partners to easily access markets. EuroCham suggested that guidelines are provided for companies to come and invest in Vietnam. It also suggested that specific industry committees are formed, for paper, medicine, automotive, food, etc., so the most appropriate support can be provided. VCCI and EuroCham will jointly establish the EU-Vietnam Business Council, and hold an annual event called the "Vietnam-EU Economic Summit" to promote economic, trade and investment cooperation between the two sides. The EVFTA was signed in Hanoi on June 30 after nine years of negotiations. The EU will eliminate 99.7 percent of tariff lines for Vietnam's exports in seven years after the deal comes into force. Up to 70.3 percent of Vietnamese products exported to the EU will be free of tariffs immediately, said Minister of Industry and Trade Tran Tuan Anh. Only 42 percent now enjoys zero tariffs. In response, Vietnam will eliminate tariffs on 64.5 percent of imports from the EU, rising to 97.1 percent in seven years.
Source: Vietnam Express
I know this will sound un-American, especially around Independence Day. But I have enjoyed following the Cricket World Cup. Think baseball, but with only two bases, no foul territory and no seventh-inning stretch. (There are, however, drink breaks.) The pitcher is allowed a running start, and hits that travel farther are worth additional runs. The cricket lexicon includes a number of colorful terms, including yorkers, beamers, sillies and cow corners. Americans exposed to cricket often complain about the slow pace of the game. Matches in the one-day format used for the World Cup can take more than eight hours to complete. Yet the periods of relative calm are punctuated by moments of drama; those watching can be held in considerable suspense. The leaders of the G-20 countries met last week in Japan, and the gathering provided a moment of drama. Presidents Xi and Trump agreed to send delegates back to the bargaining table to seek a resolution of the long-running trade dispute between China and the United States. The negotiations should provide a period of relative calm, which is preferable to the series of shots the two nations have been exchanging. But there remains considerable suspense over the ultimate outcome of the trade conflict, which might be enough to tip the global economy into a recession. It has certainly been a whirlwind couple of months on the trade front. As April gave way to May, expectations for an accord between China and the United States were rising. Plans for a midyear summit meeting to celebrate the achievement were being formulated. Major equity markets had regained all of the ground lost in the fourth quarter of 2018, and new records were within reach. In early May, talks broke down. Washington alleged that Chinese negotiators had retreated on their commitments, and reacted by imposing tariffs on $200 billion of U.S. imports from China and threatening to extend to the full range of products purchased from China. Specific sanctions on Chinese providers were implemented, broadening the conflict. Six weeks of provocation followed. And then, almost as suddenly as the drama had arisen, it seemed to recede. Twitter was once again employed to share important communication: the prospect of a meeting between the two leaders was previewed in mid-June, and the announcement almost immediately brought cheer from equity investors. Upon completion of the G-20 meeting, stock markets touched new record levels. Order, to some, has been restored. But while talks are back on, success is far from assured. Outwardly, the two sides are still far apart, and they have limited room for retreat. If agreement is reached in the coming months, it will most likely be less than comprehensive, and will require strict verification as a prerequisite for tariff reduction. (This latter point was the flash point that ignited a bad reaction from Washington in early May.) Ratification of any agreement in the U.S. Congress will be difficult to secure. The constant throughout the recent trade news cycle has been uncertainty. Twists and turns in the trade tests have been frequent, with their impact exacerbated by the mode of expression. When businesses can’t see their operating environment clearly, they often turn cautious. They become more reluctant to expand, invest and hire. In markets around the world, we currently see falling business sentiment and much slower rates of business investment. This combination has been particularly acute in Europe, whose economy is struggling as we begin the second half of the year. Uncertainty isn’t just a byproduct of the discussions between the U.S. and China. Washington has aimed tariffs at a number of different countries. The future of commerce between the United Kingdom and the rest of the European Union is potentially less clear today than it was after the Brexit referendum three years ago. Spats among other nations are crowding the caseload of the World Trade Organization. Even when tensions abate, concern remains. Threats that recede have shown the capacity to re-emerge; auto tariffs against European manufacturers are a case in point. To prepare for the worst, firms have to pursue contingencies, which often involving the expensive and time-consuming process of locating alternative suppliers or altering deeply established supply chains. Business expansion has been pushed to the back burner. “Trade frictions have planted seeds of doubt that will be difficult to unearth.” The global trade contraction has planted seeds of doubt that will be difficult to unearth. Agreements, if and when they come, may reduce the number of variables firms face. But in a world in which populism is in the ascendance, the end of one trade battle may simply be the prelude to another. I have always been impressed that cricket fielders (with one exception) are not allowed to wear gloves, requiring them to catch a very hard ball with their bare hands. This leaves players vulnerable to bruising, which can cause them to hesitate before going after the next opportunity. Overcoming this reluctance is critical to success on the cricket oval—and in the trade arena. Let’s hope actions to restrict global trade are caught out more often in the months ahead.
Those who fall in love with lush tropical locales are said to have “gone bamboo.” Some global businesses are falling prey to this affliction as a result of the trade battle between China and the United States. While several trade-dependent economies have experienced collateral damage from the conflict, Vietnam has generally been the exception. With its heavy reliance on trade—exports account for 102% of its gross domestic product (GDP)—the Vietnamese economy should have suffered due to rising protectionist sentiment. However, it has emerged as an improbable beneficiary. Despite external uncertainties, Vietnam has experienced a surge of inbound direct investment over the past several years. Chinese investment into Vietnam has doubled from around $1.2 billion in 2016 to $2.5 billion in 2018, making it the fourth-largest foreign investor. Newly registered investments in the country during the first five months of 2019 were up by 69% compared to the same period of 2018. The facilities funded by these investments have positioned Vietnam as a major assembly point in the Asian electronics supply chain. Vietnam has become a leading producer of mobile phones, semiconductors and flat screens. A number of South Korean, Japanese and Taiwanese firms have increased their presence in Vietnam for manufacturing or engineering purposes. As a result of all of this, Vietnam has become one of the fastest-growing sources of American imports from Asia. Imports from Vietnam to the U.S. increased 40% on a year-over-year basis in the first quarter of 2019. With businesses operating in China facing tariffs on exports to the U.S., more manufacturers, including multinationals, have started moving production to Vietnam. Its business-friendly policies and geographical proximity to China have made the choice to move easier. Strategically, although Vietnam and the U.S. share concerns about China’s regional ambitions, American investments into Vietnam have been quite low. The U.S. was Vietnam’s 11th largest foreign investor, with only $550 million invested in 2018. Tariffs may have accelerated the trend of supply chain realignment, but they are not the sole reason behind this shift. Rising Chinese labor costs, a need for diversification and the transition from labor-intensive sectors to high-tech industries are also important factors. Yet Vietnam lacks China’s size and scale, and recent business inflows have pushed Vietnam’s infrastructure, labor market and suppliers to their limits. While Vietnam’s economy has benefitted from the trade diversion, the foundation that made these gains possible was laid in 1986 by an economic renewal policy that favored a market-oriented system. The approach embraced trade liberalization, deregulation and reducing the cost of doing business. The state also invested heavily in building human and physical capital. The current government has also focused on attracting foreign investment by reducing enterprise taxes and removing investment restrictions. “Reforms initiated over three decades ago have helped Vietnam reap the benefits of trade diversion.” As a result, Vietnam has achieved uninterrupted growth over the past three decades, cultivating a niche in both high value-added sectors like semiconductors, and labor-intensive goods like textiles. It has also been among the fastest growing economies in the world, with average real GDP growth of 6.9% since 1991 rivaling major emerging markets such as China and India. With a GDP of $241 billion, Vietnam’s economy is smaller than some of its regional counterparts, including Indonesia, Thailand and the Philippines. While Vietnam carries the largest fiscal deficit and government debt among its peers, the share of debt denominated in foreign currency is declining). It is viewed as a star among emerging markets. Nonetheless, Vietnam is becoming a victim of its own success. Its trade surplus with the U.S. has increased by over $25 billion since 2014 to $45 billion in 2018. The Trump administration often conflates the presence of a trade deficit and unfair trade practices, and the American president consequently referred to Vietnam as “the single worst abuser of everybody” in a recent tweet. The beneficiary of the trade war is now the target. As this commentary was going to press, the U.S. Commerce Department imposed duties of up to 456% on steel from Vietnam. Increasing instances of Chinese goods being fraudulently relabeled as “Made in Vietnam” will attract further scrutiny. “Transshipment” is also a concern. A recent surge in computers and electronics imports from China suggests companies might be dodging tariffs by diverting goods to Vietnam before re-exporting them to the U.S. Although Vietnamese authorities have sought to crack down on these practices, mere commitment won’t be sufficient for the U.S. administration to change its tone. The situation is also colored by the Vietnam government’s participation in the country’s economy and its practice of managing its currency to sustain the attraction of its exports. These are two elements that western nations have found objectionable in China. “Vietnam risks becoming a victim of its own success.” The exchange rate for the Vietnamese dong has elements of both a crawling peg and a managed float. Intervention has generally been aimed allowing the currency to depreciate. With a new focus on Vietnam’s trade position, the U.S. Treasury Department added the dong to its currency practices watch list, a warning signal to Vietnamese leadership but not yet a designation of currency manipulation. Unfortunately, the country’s ability to enchant foreign businesses may diminish. The United States has brandished the tariff stick against Vietnam; in this case, made of bamboo.
Source: FX Street