National
Rajasthan working to combat textile sector water pollution
Viscose yarn imports jump hurting local spinners: ITF
FM Sitharaman assures industry of ‘Quick Action’
GST cuts, economic stimulus, easy credit on India Inc’s wishlist to fight slowdown
Finance Ministry asks commerce ministry to assess revenue impact of proposed RCEP
Rupee snaps 5-day losing streak; settles 20 paise up at 70.69 vs USD
RBI's Usha Thorat panel for easier foreign play in currency market
International
India must resolve differences with America to seize opportunities from US-China trade war
China imports from US fall 19% in July amid trade war
Pakistan rules out possibility of India-Afghan trade through Wagah border
NCTO welcomes new Trump tariffs
Pakistan: ECC constitutes committee to review cotton prices
A delegation of textile entrepreneurs from Rajasthan’s Pali district recently discussed with state chief minister Ashok Gehlot various problems related to water pollution by industrial units and its treatment. Gehlot assured them that the state is working on a permanent solution to combat water pollution in the textile zone in Jodhpur, Pali and Balotra. In compliance with instructions given by the National Green Tribunal from time to time, the state government is upgrading the existing common effluent treatment plants (CETP), a news agency quoted the chief minister as saying. The state is also working with the Rajasthan State Industrial Development and Investment Corporation and the State Pollution Control Board to establish new CETPs.
Source: Fibre2Fashion
There is a huge jump in imports of viscose yarn compared to the previous year, which is hurting domestic yarn manufacturing spinning mills, according to the Indian Texpreneurs Federation (ITF). This can be addressed if the domestic spinning industry is able to buy viscose fibre at international prices and is also protected from low-priced yarn imports. In recent years, the demand and use of viscose products has increased in the Indian textile industry, as the sector is slowly and gradually moving towards making more blended products both for domestic and export markets in line with the changing fashion trends. As a result, viscose products (including fibre, yarn, and fabric) are playing a major role in the growth of overall textile manufacturing sector, within both the MMF and blended product space. Due to this growing momentum in viscose usage, several new capacities have been added in viscose segment with considerable investments, creating lot of job opportunities across India. Even new technologies like airjet spinning have been introduced in the domestic viscose spinning segment, ITF said in a statement. However, these spinning mills are now getting affected due to a big jump in viscose yarn imports in recent months. Compared to imports of $58.85 million during April-March 2018-19, the first quarter of 2019-20 registered imports of $20.30 million, with June 2019 alone witnessing import of $8.64 million. In rupee terms, the June 2019 import of viscose yarn works out to around ₹60 crore. If the trend continues, it would mean import of around ₹700 crore per year. "This amount is very high because viscose use is below one-tenth of cotton consumption or production in India," ITF said. Explaining the reason for increase in viscose yarn imports, ITF said the main reason is the lower material cost for the Chinese and Indonesian spinning mills, from where most of the imported yarn is originating. The Indian government has protected viscose fibre by imposing duties including antidumping duty. There is also 20 per cent customs duty on viscose fabric. This leaves viscose yarn unprotected paving way for higher imports, according to the ITF. Traders are exploiting this situation and are using the opportunity to import more viscose yarn and supply the same to the domestic weaving sector. "This situation calls for a level-playing field for the survival of the domestic spinning sector. We appeal to the government to make viscose fibre available to the spinning industry at international prices, or protect the sector from the current unprecedented low-priced yarn imports," ITF added.
Source: Fibre2Fashion
Sitharaman will be meeting representatives of the capital markets on Friday, and real estate on Sunday.
Assocham, in its observations to the finance minister, said there is need for rationalisation in the category of goods falling under 28% goods and services tax.
The government has assured India Inc of some “quick action” to jumpstart the sluggish economy, as a delegation of industry captains on Thursday met finance minister Nirmala Sitharaman with a charter of demands.
Industry leaders have sought tax rationalisation, a package for non-banking finance companies (NBFCs), faster transmission of policy rate cuts and relief from harsh penal provisions introduced in the Companies Act for noncompliance with corporate social responsibility (CSR).
“It was decided that the government is going to take action very soon to revive the industry. It is a matter of sentiment. We got positive feedback from the finance minister,” said Sajjan Jindal, chairman, JSW Group.
Sitharaman is meeting industry representatives, having interacted with those from public and private banks, micro, small & medium enterprises (MSMEs) and automobiles sector, so far. She will be meeting representatives of the capital markets on Friday, and real estate on Sunday. “We are getting inputs from various sectors and trying to respond so confidence of those sectors is restored,” the minister had said after her meeting with bankers on Monday.
Core sector growth slumped to its lowest in more than four years in June and auto sales touched new lows, prompting companies to cut production.
Thursday’s meeting was attended by Wipro chairman Rishad Premji, ITC chairman Sanjiv Puri, Sun Pharma managing director Dilip Shanghvi and Apollo Hospitals managing director Suneeta Reddy. Jindal said the industry captains raised issues troubling sectors such as steel, NBFCs and automobiles.
Piramal Enterprises chairman Ajay Piramal said the reluctance of banks to lend to the industry was also brought to the government’s notice. “It is not that there was a lack of liquidity in banks, but lending was not taking place. There is stress on the economy as far as NBFC sector is concerned,” he said after the meeting, adding that the NBFC issue was also impacting sectors such as auto, home loan, and MSMEs. “I am told that there will be action soon. So, we will wait for that.”
Sitharaman also assured that penal provisions concerning noncompliance with CSR spending norms under the companies law would not be pursued. Piramal said the industry demanded that oversight in CSR spending should not result in any imprisonment.
Confederation of Indian Industries vice-president TV Narendran said the government sought views on ways to further stimulate the country’s economic growth. “Across the board, we discussed key issues,” he said adding that the slowdown in the auto industry would have an implication on the steel sector too.
Former president of the Federation of Indian Chambers of Commerce and Industry, Jyotsna Suri, said interest rates cuts should be passed on to borrowers.
Associated Chambers of Commerce and Industry of India president BK Goenka sought a stimulus package to kickstart investment cycle in the economy. With the current slowdown in the global and domestic market, there is a for quick-fix solutions, he said.
Assocham, in its observations to the finance minister, said there is need for rationalisation in the category of goods falling under 28% goods and services tax.
There are still 33 items in the highest slab. “It is recommended that the rate of other goods falling under such categories such as cement, consumer durables, automobiles, including parts thereof, etc should be reduced to 18%,” said Goenka.
Source: The Economic Times
India Inc on Thursday told the government that the economic slowdown was intense, and it must offer a stimulus package — apart from swiftly ensuring greater and smoother flow of credit at reasonable rates — to stir growth that crashed to a five-year low of 5.8% in the March quarter. In their meeting with finance minister Nirmala Sitharaman, the corporate titans also raised concerns about overzealous taxman and the new corporate social responsibility (CSR) rules that provide for a jail term up to three years for violation.
JSW Group chairman Sajjan Jindal said the minister assured that no coercive penal action would be initiated for non-compliance of CSR rules and the government would move judiciously on this move. Assocham president BK Goenka sought a stimulus package of over Rs 1 lakh crore for the investment cycle to pick up.
More steps to get NBFCs back to health and improve their lending ability could be in the offing, with the participants telling the minister that the crisis in the shadow-banking space after the IL&FS default has hit consumption. Purchases in sectors like automobiles that are dependent on NBFC loans to a considerable extent have been adversely affected due to the lingering crisis.
Pitching for affordable credit, the corporate leaders said banks would be willing to transmit the benefit of the RBI’s repo rate cuts to borrowers meaningfully only when the government slashed the interest rates on deposits under small savings schemes.
The finance minister is learnt to have assured that she would look into the matter of greater transmission by banks. While the RBI had pruned the repo rate by 75 basis points since February (before the latest reduction by 35 basis points on Wednesday), state-run banks had cut only 10 basis points in the median marginal cost of lending rate for one-year tenor between February and June, said TV Narendran, vice president of CII and MD of Tata Steel. Most private banks didn’t do even that much. While a five-year National Savings Certificate fetches an interest of 8% and Sukanya Samridhhi scheme 8.5%, SBI is offering 6.8% for deposits above 1-year tenure and can’t possibly trim the rate further for fears depositors would shift.
JSW chief Jindal said: “It was decided that the government is going to take action very soon to revive industry. We got positive feedback from the finance minister.” Piramal Enterprises chairman Ajay Piramal said that industry raised matters such as reluctance of banks to lend. “It is not that there was a lack of liquidity in the banks, but lending was not taking place. There is stress in the NBFC sector as well,” he told reporters after the meeting. The NBFC issue is impacting sectors like auto, home loan and MSME. “I am told that there will be action soon. So, we will wait for that,” he said.
The government has already said that while liquidity is no longer a concern, some NBFCs have been hit by solvency and governance issues. The RBI on Wednesday said it wouldn’t allow any systemically-important NBFC to collapse. The government last week said the National Housing Bank would provide refining worth additional Rs 10,000 crore for affordable housing.
Earlier this week, the finance secretary said norms would be finalised soon to enable public-sector banks to implement the Budget announcement under which the government will offer a one-time six-month partial guarantee of Rs 1 lakh crore to PSBs for purchasing consolidated high-rated pooled assets of financially-sound NBFCs. This will cover their first loss of up to 10%.
The economic expansion already collapsed to a five-year low of 6.8% in FY19. It is forecast to only marginally improve in the current fiscal to around 7% (RBI on Wednesday pruned it to 6.9%), provided private investors return and consumption expenditure rebounds.
Source: The Financial Express
The 16-member RCEP bloc has targeted to conclude the negotiations by November this year.
“The revenue secretary has written a letter to the commerce secretary to calculate the revenue impact of the proposed agreement,” they said. The Regional Comprehensive Economic Partnership (RCEP) is an agreement being negotiated by 16 countries since 2013. So far, 27 rounds of talks at the chief negotiators level have been conducted. Several challenges in both goods and services sectors still persist and need to be resolved before reaching the conclusion of negotiations RCEP.
Also read: Goldman Sachs bets another 25 bps repo rate cut before December
The 16-member RCEP bloc has targeted to conclude the negotiations by November this year. The major challenges in front of India include widening trade deficit with member countries, such as China, and disproportionate loss in customs revenue due to elimination or significant reduction in import duties.
India registered trade deficit in 2018-19 with as many as 11 RCEP member countries, including China, South Korea and Australia, out of the grouping of 16 nations. Further, in a comprehensive stakeholder consultation on the pact, several sectors including dairy, metals, marine products, electronics, chemicals, pharmaceutical, plastics and textiles have registered reservation on the proposed agreement.
RCEP bloc includes the 10 ASEAN members (Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam) and Australia, China, India, Japan, South Korea and New Zealand. The agreement aims to cover issues related to goods, services, investments, economic and technical cooperation, competition and intellectual property rights.
In the merchandise sector, all the countries want India to eliminate customs duties on maximum number of goods as the country’s huge domestic market provides immense opportunity for exports. But, the domestic industry has raised serious concerns over presence of China in the grouping. India trades in over 11,500 products. Certain sensitive sectors such as agriculture are mostly kept out of the purview of such agreements to protect the interest of farmers. Experts have mixed views over the impact of this pact on India.
Biswajit Dhar, professor of economics at Jawaharlal Nehru University, is of the opinion that free trade pacts are not about only giving market access, but also getting that access in other countries. India is looking for a balanced trade agreement, as it would cover 40 per cent of the global gross domestic product and over 42 per cent of the world’s population.
Source: The Financial Express
The rupee snapped its five-day losing streak to close higher by 20 paise at 70.69 against the US dollar on Thursday, tracking sharp gains in domestic equities after reports of rollback of a tax surcharge on foreign portfolio investors. At the interbank foreign exchange, the rupee witnessed high volatility against the US dollar.
The local unit opened strong at 70.80 and during the day touched a high of 70.55 and a low of 70.94 against the American currency. It finally settled up by 20 paise at 70.69 against the American currency. The rupee had settled at 70.89 against the US dollar on Wednesday. Brent crude futures, the global oil benchmark, climbed 1.14 per cent to $56.87 per barrel.
Source: The Hindu Business Line
A Reserve Bank of India (RBI)-appointed task force on offshore rupee markets has recommended that Indian banks be allowed to “freely offer prices to non-residents” and extend local market timings to match that of the offshore derivatives markets to take the sting out of the speculative positions taken there.
Non-residents can also be allowed wide access to the FX-Retail trading platform as a “major incentive to use the onshore market,” the task force, headed by Usha Thorat, former RBI deputy governor, said. The committee submitted its report to the RBI
Source: The Business Standard
Earlier this week, the United States and China escalated their trade war with Beijing letting its currency, Renminbi, fall by 1.4 per cent and Washington accusing the communist nation of being a currency manipulator.
Earlier this week, the United States and China escalated their trade war with Beijing letting its currency, Renminbi, fall by 1.4 per cent and Washington accusing the communist nation of being a currency manipulator. The latest round of tit-for-tat moves came after the United States signalled its intention to impose 10 per cent tariffs on Chinese products worth $300 billion, beginning next month. In response, China announced that it will stop buying US agricultural products and would increase tariffs on products it has already purchased. With the markets reacting predictably — Dow had the biggest plunge of the year on Monday — the fear is that the fallout from the year-long conflict could affect other global economies, including India, Japan and the European economies.
However, in the short run, India and other emerging economies of Asia have benefitted from the trade between the world’s two largest economies. India has seen an increase in its exports to China, owing to higher tariffs on US products, as well as the United States, though not by as much. India’s overall exports to the US grew by just 9.46 per cent to $52.4 billion in Fiscal Year 2019, whereas China saw a growth of 25.6 per cent to $16.7 billion, indicating a paradigm shift in the future.
“Looking at the products on which China and USA have imposed tariffs on each other, India has made modest gains in capturing such market,” said Soumya Kanti Ghosh, Group Chief Economic Adviser, State Bank of India, in a recent report. As expected, India has widened its market share in both countries, which is reflecting in textile exports to the US. American textile imports from China have declined, shifting their focus to Vietnam, India and Bangladesh. Meanwhile, the Indian commerce ministry has identified 203 products where exports could be increased to the US, replacing Chinese goods, and 151 items where exports to China could rise, due to the trade war.
In the case of exports to China, India is looking at replacing the US in 47 lines of products from the US, which are facing a steep 25 per cent tariff, including some chemicals, granite, inverters, copper ore and concentrates. Ever since the US-China trade war began, there have been talks of India reaping benefits from it. However, India’s gains so far have been significant but not substantial. At the moment, India is nowhere near positioning itself as an alternative industrial hub. In order to get there, the country has to urgently expand its struggling manufacturing sector and open up for more investments in diverse fields.
There is also the issue of India’s own trade war with China. Tensions have been simmering on the India-US bilateral trade front since Trump became President, even though strategically the two countries have remained closer than ever. It began with the US announcing higher duties on Indian steel and aluminium in 2018, citing national interest. Earlier this year, Washington terminated the Generalized System of Preferences (GSP) program benefits to New Delhi, amounting to a withdrawal of $5.6 billion trade concessions given.
India responded by imposing higher trade tariffs on 28 American products, provoking Trump’s ire. He tweeted: “India, for years having put very high Tariffs against the US, just recently increased the Tariffs even further. This is unacceptable and the Tariffs must be withdrawn!” Trump airing his views on Twitter may not go well with Prime Minister Modi, who never likes to be seen kowtowing US diktats. In fact, Washington has long been complaining to New Delhi for more market access, lower tariffs, and strengthening protection for intellectual property rights. New reports suggest that the US is planning to launch a comprehensive and intensive investigation into Indian trade practices ahead of raising them at the World Trade Organization (WTO), with potential to make it a full-blown trade war.
India has imposed price caps on medical devices, such as stents and knee implants, owing to an unreasonable extraction of money by corporate hospitals, but it has not gone down well in the US. The United States is also unhappy with India’s new regulatory move that compels US credit card companies such as Visa and MasterCard to localize data storage for better compliance with government requirements in the future. Another Indian regulatory measure that irked the US is the changes it made to e-commerce rules, which affects US giants Amazon and Wal-Mart.
India’s decision to purchase antimissile systems from Russia also has the potential to become another irritant in bilateral trade relations. India’s relations with Iran were another issue that Washington did not appreciate. However, under threat of sanctions, India has halted imports of Iranian oil. Recently, India made one concession to the US, reducing tariffs on Harley-Davidson motorcycles by half from 100 per cent to 50 per cent. However, it was not enough to please Trump, as reports indicate. With all these issues in the background, the upcoming meeting between the Indian Commerce Minister and the US Trade Representative is crucial. India, which has set its sight on emerging as a $5 trillion economy in the next five years, cannot afford to ignore the new wave of opportunities due to the developments on the US-Chinese trade front.
Source: The Financial Express
China's global trade surplus widened by 60 per cent over a year ago to USD 45.1 billion.
Chinese imports of American goods plunged in July as a tariff war with Washington intensified. Imports of US goods fell 19 per cent from a year earlier to USD 10.9 billion, customs data showed Thursday, though that was an improvement over June’s 31.4 per cent fall. Exports to the United States declined 6.5 per cent to USD 38.8 billion. Beijing has retaliated for US tariff hikes in a dispute over trade and technology by imposing its own punitive duties and suspending purchases of American soybeans and other goods.
The latest data follow President Donald Trump’s threat last week to extend punitive duties to an additional USD 300 billion of Chinese imports. China’s total exports rose 3.3 per cent over a year earlier to USD 221.5 billion, rebounding from June’s 1.3 per cent contraction amid weakening global consumer demand.
Imports shrank 5.6 per cent to USD 176.4 billion, an improvement over the previous month’s 7.3 per cent decline. “Shipments in and out of China held up better than expected last month, but a sustained turnaround still looks unlikely in the near-term,” said Julian Evans-Pritchard of Capital Economics in a report.
China’s central bank rattled global financial markets this week by allowing its yuan to weaken to an 11-year low against the US dollar. That would make Chinese goods less expensive abroad but the currency’s 5 per cent decline this year against the dollar is too small to completely offset US tariffs of 25 per cent. China’s global trade surplus widened by 60 per cent over a year ago to USD 45.1 billion.
The surplus with the United States was little changed but stood at USD 28 billion, a level that might fuel American pressure for Chinese concessions in trade talks. Imports of US goods were down 28.3 per cent in the first seven months of 2019 compared with a year earlier, according to the General Administration of Customs of China.
Washington and Beijing are locked in an increasingly costly tariff war over US complaints China steals or pressures companies to hand over technology. The United States and other Chinese trading partners complain Beijing’s plans for government-led development of global competitors in robotics and other fields violates its market-opening commitments.
Trade has weakened since Trump started hiking tariffs on Chinese goods last June. Beijing retaliated with its own penalties and ordered importers to find non-US suppliers. The fight has battered exporters on both sides and disrupted trade in goods from soybeans to medical equipment. Trump and President Xi Jinping agreed in June to resume negotiations but talks last week in Shanghai ended with no sign of agreement.
Envoys are due to meet again next month. Economists warn the truce is fragile because the two sides still are separated by the disagreements that caused talks to break down in May. Trade weakness has added to pressure on Xi’s government to shore up economic growth and avoid politically dangerous job losses. Beijing agreed last year to narrow its trade surplus with the United States by buying more American natural gas and other exports but scrapped that plan after one of Trump’s tariff hikes.
The Chinese government said in June that any purchases must be at a reasonable level, suggested Beijing was becoming more cautious about making big commitments before it sees what Washington offers in exchange.
Chinese leaders express confidence their economy can survive the tariff fight. Importers of American soybeans and other goods are trying to switch to Brazilian, Russian and other sources, but supplies are limited and costs are higher. Farmers who use soybeans as animal feed have been told to switch to other grains.
While American exporters have been hit hardest, Chinese industries including electronics that Beijing sees as its economic future have suffered double-digit declines in sales to the United States, their biggest market. Economists say even if a settlement with the US is reached, China’s exports this year will be lackluster due to weak global demand, putting pressure on manufacturers that support millions of jobs.
Source: The Financial Express
On suspension of trade with India, Dawood replied he would respond after considering all aspects.
Pakistan will not allow Afghanistan to import goods from India via the Wagah border, saying that the transit trade was a bilateral and not a trilateral issue, according to a media report. Pakistan Prime Minister’s Adviser to Commerce Abdul Razak Dawood said this during a press conference on Wednesday. “We have asked Afghanistan for not linking trade access through Wagah border and they agreed to it because the transit trade was bilateral issue and it was not trilateral thing to bring any other into it,” Dawood was quoted as saying by The News.
The official, who would be visiting Afghanistan later this month, said that the Afghan side is about to raise the issue of access through the Wagah border but he made it clear that they should not link the bilateral issue at a forum that was not trilateral and they agreed to it. On suspension of trade with India, Dawood replied he would respond after considering all aspects.
Pakistan on Wednesday expelled Indian High Commissioner Ajay Bisaria, after it decided to downgrade the diplomatic ties with India over what it called New Delhi’s “unilateral and illegal” move to revoke the special status of Jammu and Kashmir. “We will call back our ambassador from Delhi and send back their” envoy, foreign minister Shah Mehmood Qureshi announced in televised comments, while a government statement declared that Pakistan will also suspend bilateral trade.
Source: The Financial Express
The Washington-based National Council of Textile Organizations (NCTO) – representing the full spectrum of US textiles from fibres through to finished sewn products – has welcomed President Trump’s announcement that he will impose a 10% tariff on the remaining US$ 300 billion of imports from China on 1 September. The US textiles industry has long supported the administration’s efforts to crack down on China’s abuse of intellectual property rights while also calling on the administration to include finished apparel and home furnishings in any retaliatory tariffs against China. Chinese imports of finished goods into the US market, which have had the most significant impact and disruption on domestic textiles and apparel production, investment and jobs, will finally be included in the administration’s retaliatory tariffs. “China’s rampant abuse of intellectual property rights and IP theft has gone on far too long at the direct expense of the US textile industry and its supply chain, resulting in the loss of US manufacturing jobs in this critical sector,” said Kim Glas, NCTO President and CEO. “We have long encouraged the administration to include finished products on the tariff list, given China’s rampant intellectual property abuses and the significant impact it has had on our sector.” Underscoring the penetration by China into the US market, finished apparel, home furnishings and other made-up textile goods equate to 93.5% of US imports from China www.citiindia.com 15 CITI-NEWS LETTER in the textiles sector, while fibre, yarn and fabric imports from China only represent 6.5%. “We believe this move will lead to more re-shoring of production to the United States and the Western Hemisphere production platform and will also address and mitigate China’s rampant trade distortions,” said Ms Glas. “While we support the inclusion of finished products in the latest retaliatory tariffs, our industry has very serious concerns that certain inputs already vetted by the administration and removed from previous retaliatory tariff lists are on this list. These inputs include but machinery, dyes and chemicals and textile components not available domestically, like rayon staple fibre.” The US textiles supply chain employed 594,147 people in 2018 according to NCTO figures, and the value of shipments for US textiles and apparel was $76.8 billion last year. US exports of fibres, textiles and apparel in 2018 were US$ 30,1 billion, while capital expenditures for textiles and apparel production in 2017 totalled US$ 2 billion.
Source: Innovation in Textiles
Economic Committee of the Cabinet has decided to constitute a Price Review Committee, under the chair of Advisor Ministry of Commerce and Textile, to review and suggest the indicative price and other measures to be taken in case of abnormal fluctuations in the prices of cotton. Advisor to the Prime Minister on Finance and Revenue, Dr. Abdul Hafeez Shaikh chaired the meeting in Islamabad. Ministry of National Food Security and Research briefed the ECC on the wheat situation in the country . The Committee instructed the Ministry of National Food Security and Research to regularly monitor the wheat prices, availability of wheat stocks in the country and ensure release of wheat stocks to the local market throughout the year. The Ministry of Energy also submitted a summary to the ECC for extension of gas network and rehabilitation of existing network in oil and gas producing districts of Khyber Pakhtunkhwa at a cost of 9.039 billion rupees. ECC approved a proposal for allowing SNGPL to raise verified subsidy bill/claim of preceding month by 8th day of every month and Finance Division to release the subsidy within seven days of receipt of claim from Petroleum Division. The ECC also approved the proposal for the export-oriented sector to pay the invoices at ECC approved tariff of 6.5 dollar per MMBTU along with applicable taxes. It further approved that waiver of interest Late Payment Surcharge (LPS) charged by SNGPL on the amounts over and above the tariff of 6.5 dollars per MMBTU during the FY-2018-19 which was due to delayed subsidy release by the Government.
Source: Radio Pakistan
