Faces problems due to decline in exports and rising costs
The textile industry, fuelling growth in the State besides providing direct employment to thousands of semi-skilled workers, is now staring at a crisis after the spinning mills have declared a production holiday beginning on July 22. The spinning mills decision to cut down on the number of working days comes in the backdrop of a decline in exports and rising production costs. There are over 120 spinning mills in the State and many are cutting down their production of yarn. Indian yarn is known around the world for its fine quality and is preferred by European and American retailers. The US-China trade war has come in the way of export of Indian yarn and with the USA placing curbs on production in China, domestic spinning mills have started to feel the pinch.
‘MSP hike’
“China has been a major importer of cotton for several years but during the last two years, China has been gradually lowering its exports from India. Domestic demand has also slackened due to stiff competition. Moreover, the cost of production is also going up and we have no other option except to reduce the production,” said chairman of AP Spinning Mills Association, Lanka Raghurami Reddy.
Power subsidies
Yet another factor weighing in the minds of millers is the increase of Minimum Support Price offered to farmers. The Union government has raised the MSP by 25% to bail out cotton farmers and as a result, millers are forced to buy cotton at a much higher rate. Even the prices of candy have gone up by 25% with each candy fetching ₹43,000 and finally, the delay in the release of power subsidies to the tune of ₹1,200 crore has forced the millers to shut down the mills. The millers hope that the new government in the State would bail them out by releasing the power subsidies immediately.
Source: The Hindu
Polyester/cotton yarn mills reported a slump in their overall demand this year, partly owing to the surge in supply caused by previous production shift and partly due to the change in market sentiment owing to the trade war. As the CCF Group notes, after initial smooth sales and low inventory in end-2018, the sales of polyester/cotton yarn stagnated with its inventory averaging at 20 days or above. Based on downstream plants, the sales in major producing areas are moving slowly with both domestic and foreign sales being under unprecedented pressure. For example, Henan, Shandong, Fujian, Jiangsu and Zhejiang are witnessing continuous high inventory pressure with many medium-sized enterprises cutting their productions largely. For example, the largest cotton yarn producing area, Shandong is highly burdened with unsold inventory this year as the demand has not improved even though the prices have been lowered. Other regions face the same issue more or less. In South China, many spinners transfer to produce polyester yarn instead of polyester/cotton yarn, which is also a miniature of spinners’ expectation to later market.
Source: Fashionating World
The Global Innovation Index (GII) 2019 rankings will be announced on Wednesday. India is hopeful of further improving its ranking in an index of the world's most innovative economies, to be released on Wednesday, from the current 57th, a top government official said on Tuesday. "We are definitely hoping an improvement as we have improved in indicators like ease of doing business," Department for Promotion of Industry and Internal Trade (DPIIT) Secretary Ramesh Abhishek told reporters here. The Global Innovation Index (GII) 2019 rankings will be announced here on Wednesday. The GII, which is published annually by Cornell University, INSEAD and the UN World Intellectual Property Organisation (WIPO) and GII Knowledge Partners, ranked India at the 57th spot in 2018, a slight improvement from the 60th position in 2017. It was 66th in 2016 and 81st in 2015. India is aiming to break into the top 25 tally. When asked about ways to improve accessibility to affordable medicines as patented drugs are expensive, he said the government has several mechanisms including National Pharmaceutical Pricing Authority, National List of Essential Medicines, and Jan Aushadhi centres for this purpose. He said TRIPS (Trade Related Aspects of Intellectual Property Rights), an agreement under the World Trade Organization, provides sufficient flexibilities to take steps whenever a specific issue emerges regarding high prices of patented medicines. Under this agreement, India can grant 'compulsory licence' to a company to manufacture generic version of a patented medicine. Industry body CII has been the GII knowledge partner since 2009. Abhishek said although India's position is improving, "we need to do lot more".He added that the department is working on strengthening the intellectual property rights regime. The GII ranks 126 economies based on 80 indicators, ranging from intellectual property filing rates to mobile-application creation, education spending and scientific and technical publications.
Source: Business Standard
Finance minister Nirmala Sitharaman signalled that the government may extend the lower corporate tax rate of 25% to all companies, giving India Inc something to cheer about. Her July 5 budget had lowered the rate for most companies but excluded the biggest. “We brought it down in order that now 99.3% of all industries are covered by the 25% rate,” Sitharaman said in her reply to the discussion on the appropriation and finance bills in the Rajya Sabha. “Therefore, hardly any are left behind. We shall cover them sooner.” She said this was a commitment that had been given in the debut budget of the first Narendra Modi government in 2014 and it had to be honoured. The bills were endorsed by voice vote and returned on Tuesday, marking the passage of the first budget by the second Narendra Modi-helmed administration in Parliament. Sitharaman said the government’s tax proposals are aimed at redistribution of wealth to bring about more equitable development. In her budget speech, she had proposed to cut corporate tax rate to 25% from 30% for companies with annual turnover of up to Rs 400 crore. ‘Fuel Levies won’t Increase Burden’ “So far as corporate tax is concerned, we continue with phased reduction in rates,” she had said. “Currently, the lower rate of 25% is only applicable to companies having annual turnover up to Rs 250 crore. I propose to widen this to include all companies having annual turnover up to Rs 400 crore.” That left 0.7% of companies excluded from the lower. This government has come back to power with a larger mandate and is aiming to put in place a New India where there is greater transparency, less government, more governance and redistribution of resources with greater equity in mind, she said. She said the government has undertaken steps to improve the condition of nonbanking finance companies to address the liquidity stress that has squeezed the sector. Sitharaman justified raising levies on petrol and diesel, saying that inflation was at rock bottom and the move would not add any significant burden in this respect. On the levy of 2% tax deducted at source (TDS) if aggregate cash withdrawal exceeds Rs 1 crore, the finance minister said this will not be over and above the tax liability of the individual or the entity and can be set off when returns are filed. The total TDS paid on cash withdrawal beyond Rs 1crore will be adjusted against the total tax dues of the taxpayer and would not be regarded as income in the hands of the taxpayer. This provision will come into effect from September 1. She highlighted the concessions offered to startups, electrical vehicles, affordable housing and financial service centres. The finance minister also highlighted that the Modi government backed increase in devolution to states from 32% to 42%, which has provided a higher level of funds for them. In her reply to the debate in the Lok Sabha last week, Sitharaman had stuck to her budget proposals and declined to relent on demand by foreign portfolio investors (FPIs) structured as trusts that they be exempted from a higher surcharge.
Source: Economic Times
India’s economy is set to grow at 7% in 2019, picking up to 7.2% in 2020. The IMF on Tuesday projected a slower growth rate for India in 2019 and 2020, a downward revision of 0.3 per cent for both the years, saying its GDP will now grow respectively at the rate of 7 and 7.2 per cent reflecting a weaker-than expected outlook for domestic demand. However, India will still be the fastest growing major economy of the world and much ahead of China, the Washingtonbased global financial institution said. This is a downward revision of 0.3 per cent for both the years as compared to the IMF's previous projections early this year, it said. "India's economy is set to grow at 7.0 per cent in 2019, picking up to 7.2 per cent in 2020. The downward revision of 0.3 percentage point for both years reflects a weaker-than expected outlook for domestic demand," the International Monetary Fund (IMF) said in its World Economic Update. In China, the negative effects of escalating tariffs and weakening external demand have added pressure to an economy already in the midst of a structural slowdown and needed regulatory strengthening to rein in high dependence on debt, it said. With policy stimulus expected to support activity in the face of the adverse external shock, growth is forecast at 6.2 per cent in 2019 and 6.0 per cent in 2020 -- 0.1 percentage point lower each year relative to the April World Economic Outlook (WEO) projection, the IMF said.
Source: Economic Times
Amid robust economic reforms, especially reforms in the trade policy environment during the last few years, India's presence in world merchandize exports remains intact and an uptick has been observed in India's share in world merchandise exports from 1.60% in 2015 to 1.68% in 2018, said the Industry body, PHD Chamber of Commerce and Industry in a press statement issued here today. Value of India's merchandize exports increased by 22% from USD 264 billion in 2015 to USD 323 billion in 2018 which is the second highest after Netherlands. Merchandise exports of Netherlands registered highest growth at 27%, increased from USD 571 billion in 2015 to USD 723 billion in 2018, said the industry body PHDCCI. Exports from United States increased only 11% from USD 1502 billion in 2015 to USD 1664 billion in 2018 and China's exports grew only 10%, increased from USD 2273 in 2015 to USD 2464 in 2018. Trade tensions between USA and China seems impacted their share of merchandize exports and growth of exports significantly. China's share in world merchandize exports has declined from 13.73% in 2015 to 12.97% in 2018, while USA's share in world merchandize exports has declined from 9.07% in 2015 to 8.65% in 2018. Few of the advanced economies of the top ten World exporters including Germany, Japan, Netherlands and Italy were also able to increase their respective shares in the World exports during the last 3 years from 2015 to 2018. Germany's share in world exports increased from 8.02% to 8.10%, Japan from 3.77% to 3.84% and Netherlands from 3.45% to 3.76% and Italy from 2.76% to 2.84%. However, countries such as Korea, Hong Kong, France and UK faced deceleration in their respective share in the World exports during the same period. Korea's share in world exports has declined from 3.18% to 3.15%, Hong Kong's share from 3.08% to 2.96%, France's share from 2.98% to 2.96% and UK's share from 2.82% to 2.53%.While apprehending about the recent escalation in the trade war between USA and China, the Industry body said that trade wars are not in favour of the world economy; the volume of world exports are likely to shrink if further escalations in trade war between USA and China continue. The further improvement in logistics infrastructure and trade facilitation measures would enhance India's exports growth trajectory and create millions of new employment opportunities, said the Industry body. To harness the export potential of the country, the overall ease of doing exports is needed to be further enhanced in terms of easier access to raw materials, building linkages for strong marketing of products, improving labour productivity, labour flexibility and capital efficiency.
Source : Business Standard
Delhi High Court has directed the GST Commissioner to allow a company which had made an error in filing the TRAN-1 form online to rectify the same immediately. The court has asked the authority to either open the online portal so as to enable the Petitioner to again file the rectified TRAN-I Form electronically or accept the manually filed TRAN-I Form with the correction on or before 31st July, 2019. The Central Government in the exercise of the powers under Section 140(5) read with Section 164 of CGST Act read with Rule 117 of the CGST Rules prescribed the GST TRAN- 1 Form which was required to be filed online as a condition precedent for allowing the Petitioner to carry forward the CENVAT credit on input used for manufacturing of the finished goods. In the present case, the Petitioner had contended that after the due date for filing of the TRAN-1 Form was crossed, the system got locked down at the portal and no taxpayer was able to view/mend their TRAN-1 forms. The portal opened up on 15th March, 2018 for filing the TRAN- 2 Returns. It was at that stage that the Petitioner realised that it had committed an inadvertent error in the TRAN-1 Form. The system, however, did not permit the Petitioner to revise the TRAN-1 Form. The Petitioner made several representations before both the GST Nodal Officer and the GST Commissioner but did not receive any remedy. The amount in question was over 20 lakhs. The court relied on two of its recent judgments, namely, Bhargava Motors v. Union of India, and Kusum Enterprises Pvt. Ltd. v. Union of India where in similar circumstances it had issued directions to the Respondents to either open the portal to enable the Petitioner to rectify the TRAN-1 Form electronically or permit the Petitioner to do it manually. The court noted that although the failure was on the part of the Petitioner to fill up the data concerning its stock in Column 7(d) of Form TRAN-1instead of Column 7(a), the error was inadvertent. The Respondents ought to have provided in the system itself a facility for rectification of such errors which are clearly bona fide. The Respondents had argued that if such a case is allowed it would open the floodgates of complaints moved on the account of negligence on the part of the taxpayers. The Division Bench of Justice S Muralidhar and Justice Talwant Singh rejected this claim by opining that if Respondents provide a robust Grievance Redressal Mechanism to deal with such complaints, the matters would not reach the court. The court also observed that despite Information Technology Grievances Redressal Committee (ITGRC) being in place, Petitioner's grievance never reached the said forum. The court, therefore, directed the error committed by the Petitioner to be rectified and also waived off any penalty or interest thereon for late filing of GSTR-3B
Source: Live Law
The directive comes in the wake of members of a committee on jobs leaking details of a report after quitting the panel. Amid controversy over official jobs and growth data, the government has barred members of various committees from sharing any confidential data or deliberations. The Ministry of Statistics and Programme Implementation (MoSPI) has formulated a code of ethics for members of the various committees constituted by it or by the agencies funded by it. “The code of ethics... is being notified to define and to set out certain standards of conduct for the members of the committees in order to protect the confidentiality of the data/information acquired by them by virtue of their membership in such committees,” the ministry said in a notification. The ministry said in the notification that no member shall criticise the work of the committee or organisation or its members through any media since “the decisions taken by the committee are done in a collaborative and collective manner”. The directive comes in the wake of members of a committee on jobs leaking details of a report after quitting the panel. The report of the Periodic Labour Force Survey showed India’s unemployment rate in 2017-18 at 6.1%. The code, which is applicable to all members of the committees, including the chairperson or co-chairperson, prohibits them from publishing “any information or data or part of the deliberations available to them by virtue of their membership of the committee, in any media platforms including, but not limited to, print or TV or electronic or online or social media. Former members can only share information and data which are available in the “public domain through official releases”. The former members have also been asked to “respect and maintain the confidentiality of information or data shared with them during the term of the committee as well as the confidentiality of the deliberations in which they participated unless such information or data is otherwise generally available in the public domain through official releases”. MoSPI has also directed the chairperson of the committee to lay down the norms for a quorum for the committee and its sub-committees “in cases where it has not been specified in the terms of reference, for taking key decisions and making reccomendations.
Source: Economic Times
The government on Tuesday extended the deadline for filing income-tax returns for the FY20 assessment year by individuals and certain non-corporate assessees by one month to 31 August. The extension of due date was applicable to all taxpayers liable to file their tax returns by 31 July, the original due date. This applies to assessees other than corporate taxpayers and a few others, including non-corporate entities, the books of which need not be audited, said the Central Board of Direct Taxes (CBDT). Some taxpayers were reportedly facing difficulties in filing their tax returns because of various reasons, including the extension of date for issuing Form 16, the tax deducted at source (TDS) certificate given by employers, said the CBDT order. The tax department had earlier made changes in the format of tax returns and the TDS certificates. It had also made changes in the rules for filing TDS returns by employers. Returns for assessment year 2019-20 relate to income earned in the financial year 2018-19. The tax department usually allows a short extension if the public faces any difficulty in meeting the deadline and a longer extension for assessees in states where exceptional events such as a natural calamity are reported. Experts said the changes to the TDS certificate format notified in April requires employers to give the break-up of all the tax-exempt payments to the employee. Form 24Q that employers have to file with the tax department, too, has been modified to provide the break-up of gross salary in terms of value of perquisites and profits in lieu of salary. Bifurcation of tax-exempt allowances and the various deductions claimed have also to be given. The move is part of an effort to reduce ambiguity in filing returns and to make assessment easier by capturing finer details. The Union budget for FY20 also proposed that return filing will be compulsory for even those who fall below the basic exemption limit of ₹2.5 lakh annual income, if they get into specified high-value transactions such as spending on foreign travel.
Source: Live Mint
The session that was to end on July 26 is now likely to get over on August 9. With no standing committees in place and a weak Opposition, the Narendra Modi government has decided to get nearly two dozen bills passed in the ongoing Parliament session after short debates. The NDA dispensation is set to extend the session by 10 more working days and has directed all its MPs to be present in the House to ensure smooth passage of the bills. Home minister and BJP chief Amit Shah informed party lawmakers at the weekly Parliamentary Party meeting on Tuesday morning that they should gear up for attending the session for another 10 working days. “We have been told not to have any other engagement in or out of Delhi during these days, attend Parliament proceedings and be ready to vote for bills,” a BJP MP said. The session that was to end on July 26 is now likely to get over on August 9. A formal decision in this regard will be taken by the Cabinet Committee on Parliamentary Affairs headed by defence minister Rajnath Singh. This will then be conveyed to the President of India. The Opposition is still in the dark about this move as it has not been informed about the decision formally. Congress had conveyed to the government that it is not in favour of extending the session and said it had only heard about it through media reports.
Source: Economic Times
The rupee pared most of its initial losses and closed with a marginal 2 paise drop at 68.94 against the US dollar on Tuesday amid strengthening of the greenback against major currencies and sustained foreign fund outflows. A weak trend in domestic equity markets also weighed on investor sentiment. At the interbank foreign exchange (forex) market, the domestic currency opened at 68.98 a dollar and touched a high of 68.90 and low of 69.05 during the day. The local unit finally closed at 68.94 against the American currency, down 2 paise over its previous close. On Monday, the rupee had settled at 68.92 against the US dollar.
Source: The Hindu
The Confederation of Indian Industry (CII) has identified 31 items, including women’s apparel and furniture, with high potential for exports in a new study on boosting merchandise exports. The identification comes in the light of moderating export growth in the first quarter of 2019-20 as a result of global trade developments, the research paper said. Others items in the list include pharmaceuticals and cyclic hydrocarbons. “A targeted export strategy that identifies and boosts the right products is imperative for achieving double digit export growth. An export strategy assumes greater significance given a rapidly changing global trade landscape, shifting of global value chains and new free trade agreements, including mega trade agreements. CII has analyzed and identified select export items where India can become a leading exporter and offers recommendations for boosting such products,” a CII press release quoted CII director general Chandrajit Banerjee as saying. In the research paper titled ‘Indian Exports: The Next Trajectory—Mapping Products and Destinations’, CII suggested a double-pronged approach of expanding domestic production and undertaking targeted promotion in top importing nations to build exports in these items. To encourage domestic manufacturing, CII calls for strengthening industrial clusters with related infrastructure and port connectivity. Adopting an integrated value-chain approach for establishing global linkages is another important recommendation that would require interventions like logistics and infrastructure support and skill development initiatives. Trade and investment agreements and an infrastructure for promoting standards and certifications are needed, said CII. Incentives to encourage greater adoption of technology and innovation and boosting high-tech exports are also suggested. A key recommendation is the need for developing an export strategy at the state level, based on states’ comparative advantages. For enhancing market promotion of the select products, CII recommends that non-tariff barriers must be taken up with the respective governments of destination countries. Other suggestions include facilitating effective marketing strategies by setting up centres in top international markets, product promotion and integration of brand building initiatives with India’s commercial missions. Given the uncertain global trade climate, India’s merchandise exports fell by 1.7 per cent in the first quarter of 2019-20 to $81 billion. In 2018-19, exports expanded by 8.8 per cent to cross $330 billion. (DS)
Source: Fibre2fashion
|
Item |
Price |
Unit |
Fluctuation |
Date |
|
PSF |
1150.93 |
USD/Ton |
-0.63% |
7/23/2019 |
|
VSF |
1726.40 |
USD/Ton |
0% |
7/23/2019 |
|
ASF |
2261.91 |
USD/Ton |
0% |
7/23/2019 |
|
Polyester POY |
1155.29 |
USD/Ton |
-2.09% |
7/23/2019 |
|
Nylon FDY |
2448.64 |
USD/Ton |
0% |
7/23/2019 |
|
40D Spandex |
4272.41 |
USD/Ton |
0% |
7/23/2019 |
|
Nylon POY |
5493.10 |
USD/Ton |
0% |
7/23/2019 |
|
Acrylic Top 3D |
1351.48 |
USD/Ton |
-1.59% |
7/23/2019 |
|
Polyester FDY |
2310.59 |
USD/Ton |
0% |
7/23/2019 |
|
Nylon DTY |
2412.31 |
USD/Ton |
0% |
7/23/2019 |
|
Viscose Long Filament |
1293.35 |
USD/Ton |
-1.66% |
7/23/2019 |
|
Polyester DTY |
2688.42 |
USD/Ton |
0% |
7/23/2019 |
|
30S Spun Rayon Yarn |
2383.25 |
USD/Ton |
0% |
7/23/2019 |
|
32S Polyester Yarn |
1831.03 |
USD/Ton |
-1.56% |
7/23/2019 |
|
45S T/C Yarn |
2586.70 |
USD/Ton |
-0.56% |
7/23/2019 |
|
40S Rayon Yarn |
2673.89 |
USD/Ton |
0% |
7/23/2019 |
|
T/R Yarn 65/35 32S |
2237.93 |
USD/Ton |
-0.65% |
7/23/2019 |
|
45S Polyester Yarn |
2019.95 |
USD/Ton |
-0.71% |
7/23/2019 |
|
T/C Yarn 65/35 32S |
2397.78 |
USD/Ton |
0% |
7/23/2019 |
|
10S Denim Fabric |
1.33 |
USD/Meter |
0% |
7/23/2019 |
|
32S Twill Fabric |
0.76 |
USD/Meter |
0% |
7/23/2019 |
|
40S Combed Poplin |
1.03 |
USD/Meter |
0% |
7/23/2019 |
|
30S Rayon Fabric |
0.61 |
USD/Meter |
-0.24% |
7/23/2019 |
|
45S T/C Fabric |
0.68 |
USD/Meter |
0% |
7/23/2019 |
Source: Global Textiles
Note: The above prices are Chinese Price (1 CNY = 0.14532 USD dtd. 23/07/2019). The prices given above are as quoted from Global Textiles.com. SRTEPC is not responsible for the correctness of the same.
The European Union (EU)–Vietnam Free Trade Agreement (EVFTA) signed late last month includes commitments to implement International Labour Organisation (ILO) core standards. Vietnam is now revising its Labour Code, which, if adopted, will represent major progress towards alignment with the ILO 1988 Declaration on Fundamental Principles and Rights at Work. The country also ratified one of the three remaining ILO core conventions—Convention 98 on collective bargaining—earlier this year. It is working towards the ratification of Convention 105 on forced labour in 2020, and Convention 87 on freedom of association by 2023, according to a Vietnamese newspaper report. The draft revised Labour Code has three provisions on the establishment of workers’ associations. In particular, workers have the right to join or form a representative organisation of their choosing, and the law also introduces clearer processes and encouragement for collective bargaining. According to a recently-published Oxfam study on Vietnamese garment workers' wages and living conditions, 99 per cent of Vietnamese garment workers surveyed earn below Asia's living wage proposed by the Asian Floor Wage and 74 per cent of them earn below the global living wage proposed by the Global Living Wage Coalition. According to the study, Vietnam’s statutory minimum wage is far below what a person needs to cover the essentials. Even the wages most garment workers earn on top of the minimum wage fall short of what is considered a living wage. The national average minimum wage in Vietnam is VNÐ3.34 million, which is around 37 per cent of the Asia Floor Wage and 64 per cent of the Global Living Wage Coalition benchmark. Workers’ wages are being kept low, so manufacturers can reduce prices for international buyers, who always seek the cheapest option. The priority of profit over workers’ livelihoods causes many factories to cut costs by not conducting enough health checks and reducing the cost of their employees' meals, the Oxfam report said. Trade unions’ lack of bargaining skills and power, as well as exhaustion and potential loss of jobs, are the hindrances for the workers to raise their voices and fight for their rights. Currently in Viet Nam, there is only one legally recognised system of trade unions. The organisation of trade unions is prescribed by the Charter of Vietnamese Trade Unions adopted by the Viet Nam General Confederation of Labour (VGCL). ILO international labour standards require that trade unions must be independent of authorities in both organisational operation and financial issues; and trade unions must also be independent of employers in carrying out their activities. In Viet Nam, trade unions are defined in the Constitution 2013 as socio-political organisations of the working class, and in reality are strongly reliant on the state in terms of both financial support and personnel management. That explains the shortcomings of trade unions in protecting workers’ rights. (DS)
Source: Fibre2fashion
The European Union Vietnam Free Trade Agreement (EVFTA) was signed on June 30 in Hanoi paving the way for its conclusion and increased trade with the EU and Vietnam. The EVFTA is an ambitious pact providing almost 99 percent of elimination of custom duties between the EU and Vietnam. 65 percent of duties on EU exports to Vietnam will be eliminated while the remaining will be gradually phased out over a period of 10 years. 71 percent of duties will be eliminated on Vietnam exports to the EU, with the remaining being eliminated over a period of seven years. The EVFTA is considered a new generation bilateral agreement – it contains important provisions for intellectual property (IP) rights, investment liberalization and sustainable development. This includes commitment to implement International Labor Organization (ILO) standards and the UN Convention on Climate Change. Talks between the EU and Vietnam began in June 2012 and ended December 2015, However the ratification process was delayed due to specific details on tariffs as well as the EU-Singapore FTA which came into effect recently. Vietnam and the EU are long-standing trading partners. At the end of 2018, EU investors had invested more than US$23.9 billion in 2,133 projects in Vietnam. In 2018, European investors added almost US$1.1 billion in Vietnam. EU investors are active in 18 economic sectors and in 52 out of the 63 provinces in Vietnam. Investment has been the most prominent in manufacturing, electricity and real estate. Bulk of the EU investment has been concentrated in areas with good infrastructure, such as Hanoi, Quang Ninh, Ho Chi Minh City, Ba Ria-Vung Tau and Dong Nai. 24 EU member states are invested in Vietnam, with the Netherlands taking the top spot followed by France and the UK. At the regional level, Vietnam is now the EU’s second most important trading partner among all ASEAN members – surpassing regional rivals Indonesia and Thailand, in recent years. The growing trade between the EU and Vietnam also helps to solidify ASEAN’s position as the EU’s third largest trading partner.
Industries primed for continued expansion
The EVFTA, at its core, aims to liberalize both tariff and non-tariff barriers for key imports on both sides over a period of 10 years. For Vietnam, the tariff elimination will benefit key export industries, including the manufacturing of smartphones and electronic products, textiles, footwear and agricultural products, such as coffee. These industries are also very labor-intensive. Increasing Vietnam’s export volume to the EU, the FTA will facilitate the expansion of these industries, both in terms of capital and increasing employment.
Textiles
Both Vietnam and the EU have articulated a timeframe by which they have committed to liberalize all tariffs. Key among these commitments is a seven year timeline for Vietnam’s textile and footwear products. Exports of the sector reached around US$9 billion in 2018. As a large proportion of Vietnam’s exports to the EU are consumer goods such as clothing, textile, and footwear, the FTA could significantly increase their trade volume.
Electronics
As Vietnam continues to grow, it will shift its manufacturing sector towards more technologically advanced products, such as smartphones and other electronics. The EVFTA will provide more export revenue from clothing and footwear products but may not impact the expansion of these industries. Although Vietnam is yet to have an extensive developed electronic manufacturing industry at present, the FTA provides Vietnam with an unprecedented chance to take a lead in electronic products, and hence expansion of this budding industry could be a smart move for local businesses.
Pharmaceuticals
Vietnam’s pharmaceutical market remains attractive to EU investors. With the FTA in effect, approximately half of EU pharmaceutical imports will be duty free immediately with the rest exempted from duty after seven years. Foreign pharmaceutical companies will be allowed to establish a company to import pharmaceuticals that have been authorized to be sold in the Vietnamese market. Such entities can sell pharmaceuticals imported by them to Vietnamese distributors or wholesalers. The entities can also build their own warehouses. While Vietnam’s pharmaceutical market has significantly developed, it still only meets 52 percent of market demand contributed mostly by generic drugs. The new FTA will bring a fair and equal access to the market enabling EU investors to further expand their business and thus allowing foreign investors to meet the strong growth of the pharmaceutical sector
Key highlights of the EVFTA
Remanufactured goods
Previously, remanufactured goods were considered ‘used’ by Vietnam and typically not allowed for import. However, the text of the agreement allows remanufactured goods to be imported and will open up trade for high-value products such as medical devices and car parts to serve the after sales market. Vietnam can still continue to restrict specific used goods under the most favored nation (MFN) conditions.
Repaired goods
The temporary import and export of repaired goods will be duty free. This will ensure fair and competition conditions particularly for specialized maintenance services such as aircraft.
Made in EU
Vietnam will accept ‘Made in EU’ products for non-agricultural items for the first time reflecting the integration of the EU market. With the exception of pharmaceuticals which are subject to national approvals, this will allow manufacturers to use the EU’s broader internal market.
Fees and formalities
Consular transactions are no longer needed under the FTA while consular authentication will not be required three years the FTA is in effect.
Upcoming challenges
Recent changes in the EU, in particular Brexit, could impact the outcome and importance of the EVFTA. Considering that the UK is one of the biggest markets for Vietnam’s exports, and also one of Vietnam’s biggest investors, trade and investment from the UK is likely to remain in limbo as long the markets are processing the post Brexit fallout. However, Vietnam sees opportunities if Brexit comes into play. The impact of Brexit on EU trade and investment is, however, another story. While the turmoil of Brexit amplifies an existential crisis that has been manifesting in Europe for some time, there are strong reasons to believe that Vietnam will continue to reap the benefits of European trade in the years to come. Much of this boils down to the EU’s increasingly stringent standards and quality controls applied to goods coming into the EU. Unlike many of its ASEAN neighbors, Vietnam has been successful in concluding a trade agreement with the EU. Included within this agreement are numerous provisions that help to converge Vietnamese standards with those of the EU. The importance of the Vietnamese market will only grow as elements of the EVFTA are implemented and corresponding non-tariff barriers are removed. The EVFTA is subject to ratification by the EU parliament sometime in 2019 or early 2020.
Source: Vietnam Briefing
Industrial production grew 6.3% in June from a year earlier, picking up from May's 17-year low of 5.0%. China's industry ministry said on Tuesday that "arduous efforts" will be needed to achieve this year's industrial output growth target due to economic uncertainty in the second half. Favourable and unfavourable factors will come into play in the latter half of 2019, with both upward momentum and downward pressures co-existing, the Ministry of Industry and Information Technology said in a statement given out at a press conference. China has set a 2019 industrial output target of 5.5%-6.0%.Industrial production grew 6.3% in June from a year earlier, picking up from May's 17-year low of 5.0%, in a volatile first half knocked by a prolonged trade war between China and the United States and softer domestic demand.
Source: Business Standard
The 2019 China International Garment and Textile Fair (CIGF) will be organised in Dalian, a main port city in the Liaoning province from September 7 to 9. Under the theme of ‘Quality Fashion’, it will bring together more than 1,000 clothing businesses from around the world, attracting international apparel executives, fashion designers, textile industry experts. In terms of domestic business promotion, some 2,500 professional buyers, brokers and dealers from 300 shopping centers in 80 Chinese cities will attend the promotional events and seek to build business connections during the fair, according to official news media. The role of digitalisation in enabling the Chinese textile industry to go global should be reinforced in this year's fair, according to Ren Weida, director of the CIGF office of Dalian Municipal Bureau of Industry and Information Technology. Apart from the business promotion activities, three research results will be unveiled during the fair. These are research on the development and future of China's apparel industry, a white paper about the development of business attire in China, as well as China National Garment Association (CNGA)'s protocols for smart manufacturing of clothing. Besides, a summit on integration of information technology and industrialization for China's textile industry will also be held during the fair. Sponsored by the ministry of commerce and the government of Dalian city, the fair is organised by the CIGF office of Dalian municipal bureau of industry and information technology.
Source: Fibre2fashion
An All Party Parliamentary Group (APPG) has been formed by British parliament members from all sides of the political spectrum to inquire into the sustainability of the apparel and textiles industry, including supply chains, materials used and consumer behaviour. This follows the government's response to a recent report by the Environmental Audit Committee. The committee’s report was titled 'Fixing fashion: clothing consumption and sustainability'. The APPG, supported and promoted by Hubbub, the sustainability charity, held its inaugural meeting this week with dozens of major retailers, industry bodies and recycling experts in attendance. MP Anne Main, the newly elected APPG chairperson, urged all stakeholders of the industry—from farmers to retailers to industry bodies—to engage with the APPG as we look to bring sustainability to this important issue, according to an APPG press release. Over the coming months, APPG will be seeking evidence from a wide base and recommend the government for action in the sector. (DS)
Source: Fibre2fashion
