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MARKET WATCH 06 SEP 2019

National

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National

Centre urged to scrap rule that blacklists apparel units

Tirupur: Apparel exporters have appealed the central government to relax a customs board rule that ‘blacklists’ them for violating export rules and availing government benefits through manipulative ways. Raja M Shanmugham, president of Tirupur exporters’ association, said, “Once we figure in the risky exporters’ list, we can’t avail benefits offered by the government. Customs officials would also verify the goods before allowing them to be shipped in ports and airports.” He said many apparel units were placed in the risky exporters’ list for pricing the garments over and above the average price fixed for a particular model. “For instance, $3 is the average price of T-shirts. If it is priced at $10, it is arbitrary. The price would differ based on the quality and value-addition. The customs think the exporter shot up the price deliberately in the bill to claim more in Integrated Goods and Services Tax (IGST).” Shanmugham said if the exporters were to figure in the risky exporters’ list, the customs would carry out 100% examination of the goods, instead of the normal procedure of checking 2-3% of the goods. “So, the goods may miss the vessel and packing arrangements may go disarray. It would create chaos. If they believe the exporter tried unethically to claim more in IGST, they could summon the exporter and ask him/her for an explanation, before taking action. The rule is not acceptable and should be repealed,” he said.

Source: Times of India

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Uniqlo announces special 'Kurta Collection' for India

Uniqlo, the Japanese global apparel retailer, has announced a special collection for India, the 'Kurta Collection', created by Delhi-based designer Rina Singh. The collection is inspired by everyday wear of women from all over India and is a new realisation of Uniqlo's LifeWear concept of simple and high-quality clothing imbued with sense of daily life. This special collection will be available in India, Japan, Singapore, Malaysia, Thailand, Indonesia and the Philippines, as part of Uniqlo's 2019 Fall/Winter offering, said the company in a press release.

"We are excited to be launching the Kurta Collection along with the opening of the first Uniqlo store in India. The special collection is the result of our dedication to create high-quality daily wear that will meet the daily needs of our customers in India and other markets. LifeWear is the philosophy of what we do. And Uniqlo is committed to create perfect clothing that makes everyday life more comfortable, convenient, and with a practical sense of beauty," said Tomohiko Sei, CEO, Uniqlo India. "Kurta is one such silhouette which is much adorned and worn daily by women in India. We wanted to use our technology and innovation in fabrics with Rina's design sensibilities to create a high-quality and functional version of 'the Kurta'. "The Kurta has been India's daily dress for years now. It is timeless, democratic and functional - aligning it perfectly with the Uniqlo LifeWear philosophy. Through this partnership we have pursued a contemporary version of the Kurta as an elegant essential for women of all backgrounds, regardless of age, culture or belief," said Singh. The Uniqlo Kurta collection consists of four categories- tunics, dresses, pants and stoles. Inspired by the Indian spice route, the colour palette is an earthy combination of charcoal, indigo, mustard and red. Keeping the LifeWear concept as the base, the collection replaces customary details like the side slit for pockets and employed larger yokes without button necklines, to give the wearer added comfort and ease in movement. The newly engineered silhouettes are finished with contrast binding, running stitches along the seams as well as tucks and imaginative hem finishes. The collection also features a distinctive print story of polkas juxtaposed with twill checks, developed indigenously by Rina through hand woven yarn dye and block printing. The designs use premium linen, 100 per cent cotton and a specially-created rayon fabric jointly developed by Uniqlo and Toray Industries to make daily care even easier. These fabrics create highly functional clothing across the entire lineup in the Kurta collection, ideally suited to the climatic conditions and the evolving lifestyles in India. These tunics and tops can be easily layered- worn over trousers or with jackets and can also be worn individually as dresses. Uniqlo is launching in India this fall. Given the size and fast growth of the market, this strategic rollout will for the first time involve three separate stores in the Delhi area. The first of these will be in October at Ambience Mall, Vasant Kunj, one of the most popular shopping districts of the Delhi metropolitan area. The second and third stores will be located at DLF Place Saket, a newly renovated shopping destination set to reopen in the fall, and DLF CyberHub, the heart of the millennial city of Gurugram. A graduate from Wigan and Leigh College UK as a scholarship recipient, Rina Singh established 'Eka' in 2011. Eka creates garments that are versatile, fluid in shape, evolved in textiles and texture, and seen as essential to timeless wardrobes. The designer's label is made in India and draws from indigenous skills whereby natural materials are developed from India's regional craft belts.

Source: Fibre2Fashion

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India readies list of products for sops as crucial RCEP meet nears

Policymakers will soon take a call on India’s position in the Regional Comprehensive Economic Partnership (RCEP) trade agreement, negotiations for which have entered the final stage. New Delhi has begun drawing up a list of products on which it can offer duty concessions to the 15 other Asia Pacific member countries, including China. Top officials have held several meetings this week in preparation of a crucial meeting of trade ministers of the grouping in Bangkok on September 7-8, said an official. RCEP is a proposed regional economic integration agreement among the 10 Asean countries and their six free-trade agreement (FTA) partners—Australia, New Zealand, Japan, China, South Korea and India. Its member countries account for 47.4% of the global population, 32.2% of the global economy, and 29.1% of global trade. RCEP negotiations began in November 2012. In India, there is apprehension among government departments and industry that a trade deal on the current terms will lead to China dumping goods in India. The ministries of steel, agriculture and chemicals, and executives of industries such as dairy, steel, copper, textiles, aluminium, engineering, pharmaceuticals, leather and food, have expressed their reservations on it. “High-level meetings have taken place and more have been planned till Friday in the runup to the final political call,” the official cited earlier said.

Last month, amid pressure to conclude the deal this year, New Delhi had said that an RCEP agreement will be acceptable only if it addresses the existing level of trade imbalance, especially with China. India’s trade deficit with the 16-member trade grouping is $105.2 billion, of which $53.6 billion is with China. India had then insisted that RCEP negotiations cannot conclude until its demands on duty cuts and cross-border movement of professionals are met, especially removal of restrictions by China for its information technology companies. Sidharto Reza Suryodipuro, Indonesia's Ambassador to India, said, “Indonesia's views has always been consistent, that India is a crucial part of our regional architecture, what we call the Indo-Pacific.” Harinder Sidhu, High Commissioner of Australia to India, said, “Australia sees India as an essential participant in the RCEP. RCEP will help India increase its export competitiveness, integrate into regional production chains and attract investment.All of this contributes to new jobs and economic growth.” Experts say India can benefit from the agreement if it has the requisite safeguards in place to secure its interests. “There should be certain safeguards that India should ensure before concluding the deal. These can be longer staging period, keeping products in which we can’t get competitive out of preferential access, and ensuring that India becomes part of the larger value chain,” said a Delhi-based expert on trade. Bipul Chatterjee, executive director, CUTS International, said, “RCEP is an Asean-led initiative. While the strategic value of RCEP can't be over-stated, it should be balanced with its economic implications.” Chatterjee added that RCEP should be an important pillar of India's Indo-Pacific doctrine.

Source: The Economic Times

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Single authority mechanism for processing GST refunds to exporters soon

Move will help sanction and process refunds faster; may boost exports. The upcoming Goods and Services Tax (GST) Council meeting on September 20 is likely to approve the mechanism to allow a single authority — state or Central — to sanction and process GST refunds for exporters in a faster and simpler manner. Refunds of around Rs 10,000 crore have piled up. The move is expected to give a fillip to the struggling exports sector, which contracted 0.37 per cent to $107.41 billion in April-July 2019-20. Outbound shipments are facing headwinds due to weak global demand and liquidity constraints.

Source: The Business Standard

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More stimulus, import curbs in the offing

The country may witness more import curbs, particularly on foreign textiles and yarn that have been invading the country’s markets through Bangladesh route. There could also be a GST cut on synthetic and man-made fiber and yarn. Slowing growth in the manufacturing and services sectors on the back of an overall economic slump has prompted the government to fire on all cylinders. A section in the Commerce Ministry headed by Minister Piyush Goyal is preparing for a Board of Trade meeting next week, only the second since it was set up in the first term of the Prime Minister Narendra Modi government. It will deliberate upon export promoting measures and cut down on the country’s imports so that local manufacturers do not lose business and jobs. Separately Finance Minister Nirmala Sitharaman has sought suggestions from the airport, energy, rail, and road sector representatives on how private investment in infrastructure sector can be jacked up to spur economic growth and employment. The finance minister has been meeting sectoral experts from real estate, automobile, small and medium industries among others to get the first-hand information on their woes. It is on the basis of these meetings that the government would decide on some immediate fiscal policy response to li the economy in the short term, sources said. On August 23, Sitharaman had announced a slew of measures to help the automobile sector shed their 10-month long sales slowdown. Aer manufacturing, the country’s service sector activity has slowed down in August. The Composite Purchasing Managers’ Index —which maps both the manufacturing and services industries— expanded 52.6 in August, lower than its July print of 53.8. A staing firm Teamlease Services said economic slowdown has resulted in a reduction in the hiring of talents in sectors like telecom and automobiles. It said while banking, insurance, e-commerce sectors continue to grow, telecom, automobile, real estate, and construction have been subdued. On the revenue generation side, the PMO has been holding meetings with the finance ministry representatives on ways to shore up disinvestment proceeds at a time when market conditions are not favorable. Sources said the focus will be more on strategic disinvestment and asset monetisation to reach the target of Rs 1.05 lakh crore in fiscal 2019-2020.

Source: Deccan Herald

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Rupee rises 17 paise to 71.67 against $ in early trade

At the interbank foreign exchange, the rupee opened at 71.87, then gained further ground and touched a high of 71.67, registering a rise of 17 paise over its previous close. On Thursday, the rupee had settled for the day with gains of 28 paise at 71.84 against the US dollar. The domestic unit, however, could not hold on to the gains and was trading at 71.73 against the dollar at 0949 hrs. Forex traders said investors were optimistic about US-China trade talks in October. China and the US have agreed to hold the next round of trade negotiations in Washington in early October to end the bruising trade war. Besides, a higher opening in domestic equities supported the local unit. Domestic bourses opened on a positive note on Friday with benchmark indices, the Sensex trading 153.43 points higher at 36,797.85 and the Nifty up 44.20 points at 10,892.10. Moreover, a weakening of the American currency vis-a-vis other currencies overseas also dragged the rupee down. The dollar index, which gauges the greenback’s strength against a basket of six currencies, fell marginally by 0.01 per cent to 98.40. Market participants, however, said sustained foreign fund outflows and rising crude prices weighed on the local currency. Foreign institutional investors (FIIs) remained net sellers in the capital market, pulling out Rs 561.17 crore on Thursday, according to provisional exchange data. Brent crude futures, the global oil benchmark, rose 0.25 per cent to trade at $61.10 per barrel. The 10-year government bond yield was at 6.59 per cent in morning trade.

Source: The Hindu Business Line

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International

Foreign garment-textile investors diversifying in Vietnam

Unlike the past when foreign investors in Vietnam’s garment and textile sectors came for processing only, they are now diversifying through direct and indirect investment via acquisitions and purchases of shares in domestic firms, with a focus on yarn, garment and accessories. This change is apparently the result of the recent free trade agreements (FTAs) signed. Once these projects get operational, they will help to partly solve the shortage in supply of garment and textile accessories and meet rules of the new FTAs, according to Vietnamese newspaper report. The Binh Duong province recently granted permission to South Korea’s Kyung Bang Vietnam to expand its investment by an additional $40 million with the aim to raise its annual cotton yarn production capacity to 9,000 tonnes and blended yarn production capacity to 11,000 tonnes. The project aims to produce woven fabric, knitted fabric and crocheted fabric and complete woven products. With this additional capital, the project now has a total investment of up to more than $219 million. Taiwan’s Far Eastern Group has also spent hundreds of millions of dollars for a project of fabric and chemical yarn in Bau Bang Industrial Park in Binh Duong and continues to hire more land there to expand investment. Singapore’s Herberton Limited Company started construction of the Nam Dinh Ramatex Textile and Garment Factory with a total investment of around $80 million. Once operational, the factory will have an annual capacity of 25,000 tonnes of fabric and 15 million apparel items and offer jobs to around 3,000. Foreign investment in the country’s garment and textile sector was poor earlier, but in the past three years, large enterprises from the United States and Europe have flocked to Vietnam, according to Vu Duc Giang, chairman of the Vietnam Textile and Apparel Association. A German group recently invested in a sheep wool yarn spinning plant project in Da lat. Groups from Israel and the United States invested in textile plants in Binh Dinh province and dyeing in Nam Dinh province.

Source: Fibre2Fashion

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Vietnam, Russia Seek to Boost Annual Bilateral Trade Turnover to US$10 Billion by 2020

Vietnamese Foreign Minister, Anh Dung, has stated that he wishes to see Vietnam-Russia bilateral trade hit the US$10 billion mark next year, among growing positive results after Vietnam agreed a free trade agreement (FTA) with the Russian-led Eurasian Economic Union (EEU) in 2016. The Eurasian Economic Union is a free trade area that includes Russia in addition to Armenia, Belarus, Kazakhstan and Kyrgyzstan. It effectively sits between the EU and China, and yet has been developing more Asian interest following EU sanctions imposed on Russia. The impact on Vietnam has been a marked increase in investment from Eurasian Economic Union (EAEU) members and especially from Russia, where the agreement has helped spur investments in Vietnam’s auto and other industries. Anh was speaking at the Far Eastern Economic Forum in Vladivostok, at which Dezan Shira & Associates personnel Chris Devonshire-Ellis and Maria Kotova were both representing the firm, which itself has operations guiding foreign, including Russian investors into Vietnam. The firm also maintains offices in Hanoi, Ho Chi Minh City, and Da Nang. Anh stated, “In the field of trade, Vietnam needs to increase traditional products, such as agricultural, seafood, rubber, textiles, wood and wood products and expand the export of computers, electronics, and phones of all kinds. In turn, we are ready to import Russian raw materials, such as iron, steel, coal, fertilizers and so on.” He added that Vietnam also intends to “Attract Russian investment in areas where Russia has advantages, such as energy, mining, engineering, and processing.” Vietnamese Deputy Prime Minister, Trinh Dinh Dung, was also speaking at the event, and noted that EAEU-Vietnamese bilateral trade doubled in 2018, and that vehicle assembly operations involving autos and especially tractors from Belarus had performed well under the FTA. He expressed interest in increasing the scope of the FTA by expanding it to include textiles and agricultural products and expressed satisfaction at a trade relationship that until the FTA was signed, had been in very low, million-dollar trade figures. He said that Vietnam was committed to develop more room for Russian trade expansion into Vietnam and suggested that “Vietnam is Russia’s bridge to ASEAN.” Russian investors have been cautious about investing in Asia, which is still a relatively new territory for the country. However, the Vietnam experience is proving to be a model testing ground for Russian and EAEU investors into the country, where Trinh suggested “There is plenty of room for growth.” The Vietnam-EAEU FTA also provides Russian companies with access to ASEAN markets, which comprise the major Asian economies of Indonesia, Malaysia, Philippines, Singapore, and Thailand along with smaller markets, such as Cambodia, Laos, and Myanmar. Vietnam as a member of ASEAN allows for reduced tariffs with these nations, while ASEAN itself also has an FTA with China and India. Establishing a Vietnamese subsidiary gives Russian owned businesses access to each of these markets – subject to local sourcing content controls. The country also has free trade and economic processing zones, which can allow additional production on imported Russian and ASEAN sourced components to be carried out free of duties and value-added tax (VAT), thus making Vietnam an attractive option for Russian businesses looking to sell products in Asia.

Source: Vietnam Briefing

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