Powerloom weavers are elated after textile secretary, ministry of textiles assured industry stakeholders that pending applications for Technology Upgradation Fund Scheme (TUFS) would be cleared within two months. About 6,000 applications from the city are yet to be cleared under TUFS scheme for the last two years due to technical reasons. About Rs800 crore funds under TUFS thus are stuck since a long time. Industry sources said a stakeholder meeting was recently held in Ahmedabad under the leadership of textile secretary, Government of India, Ravi Kumar where representatives of Southern Gujarat Chamber of Commerce and Industry (SGCCI), Federation of Gujarat Weavers’ Association (FOGWA) and Federation of Indian Art Silk Weaving Industry (FIASWI) participated. SGCCI president Ketan Desai said, “We have been given assurance by the textile secretary that the pending applications under TUFS would be cleared within two months. If the subsidy amount is cleared then it will boost modernization in the textile sector in Surat.” Surat has lead over other clusters in Gujarat when it comes to taking benefits under TUFS scheme. Textile entrepreneurs have taken benefits under TUFs making full payments for upgraded machineries. But for the past one-and-a-half-year, the entrepreneurs are still awaiting subsidy amount to be released under the scheme.
Source: Times of India
Members of the Regional Comprehensive Economic Partnership (RCEP) have asked India to decide if it wants to remain a part of the proposed trade grouping, as pressure mounts to conclude the deal this year. The demand came amid discussions India immediately eliminating tariffs on more than a fourth of traded goods once the agreement comes into force. RCEP includes China, with which India has a burgeoning trade deficit. “Some countries have asked India to make up its mind if it wants to stay in the grouping,” an official aware of the negotiations said. Talks were on for India to immediately eliminate tariffs on 28% of the traded goods and more than 35% of the goods in phases. Another official said, “Nothing is decided on tariff cuts for China as yet. That is still uncertain.” India is likely to extend the steepest tariff cuts to the Asean and most conservative offers to China. India’s trade deficit with China – $53.6 billion in FY19 – is feared to widen if the pact is inked. With other non-free trade agreement (FTA) partners — Australia and New Zealand — there are competing interests in agriculture, horticulture and dairy that are sensitive for India. “These are pressure-building tactics for India to give up its interests and conclude the pact soon,” said a New Delhi-based expert on trade issues. 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. Separately, a round of discussions on investment issues is likely due to lack of convergence on the crucial subject. India’s proposal on investor-state dispute settlement — advocating exhaustion of local remedies before an investor can take the state for a dispute — had found support from ASEAN and New Zealand. India has been opposing it strongly at RCEP, fearing loss of sovereignty due to third-party arbitration in a backlash similar to Cairn and Vodafone. “Attended the plenary session of the 7th RCEP Ministerial Meeting in Bangkok today,” commerce and industry minister Piyush Goyal tweeted on Sunday. Negotiations on the agreement are in the final stages in Bangkok. “India holds a significant place in the global economy and its role in the discussion will provide for stable growth in trade and investments,” he said in the tweet. The Prime Minister’s Office was briefed last week about RCEP, whose negotiations began in November 2012. RCEP has said developments in the global trade environment may affect their individual positions as talks reach a “critical milestone.” “The ministers recognised that negotiations have reached a critical milestone as the deadline for conclusion of negotiations draws near,” members said in a joint statement issued after the ministerial meeting on Sunday. They also noted that “certain developments in the global trade environment may affect” countries’ individual positions in the course of the negotiations.
Source: The Economic Times
The government is in the process of rolling out a new tariff policy and UDAY 2.0 to address the issue of losses of discoms, which is the "only difficulty" in ensuring round the clock electricity supply for all, Power Minister R K Singh said. According to the PRAAPTI portal, the total outstanding of the discoms to gencos as of July this year stood at Rs 73,425 crore, including the overdue amount of Rs 55,276 crore. The dues to discoms become overdue after 60 days of non-payment of the bill, allowing gencos charge penal interest on that. "There is a capacity to transfer (supply) any quantum (of power). There is no reason why 24X7 power cannot be given. The only difficulty in this (24X7 power for All) is losses to some distribution utilities. They don't have money to pay for power," Singh told PTI. About the steps being taken by the government, the minister said that the central government has already made it mandatory for discoms to open letters of credit for getting supply from gencos, excluding state government power plants from August 1, 2019. He was of the view that the mandatory opening of letter of credit, would take some time to reduce stress on power generation companies. He said that new tariff policy has already gone to the Cabinet for vetting and approval while the power ministry is working on the UDAY 2.0 scheme which would be launched this fiscal only. He said that under the new tariff policy, the discoms would have to pay a surcharge for delayed payment, which would be equal to the commercial rate of interest. Elaborating further he said, "After the rollout of tariff policy and UDAY 2.0 scheme, if a discom would not take steps to reduce losses, then Government of India would not give any grant or loan." About empowering the consumer in the new tariff policy he said, "We have recognised consumer rights in the policy. Earlier those were not recognized. We are saying that it is a service. One thing we are saying that discoms would be penalised if they do load shedding." On the under-recovery of cost of supply of power, he said, "Discoms cannot put the burden of their inefficiencies on consumers. Earlier they used to charge under-recovered power supply cost to other consumers. Around 70 per cent consumers used to pay for 100 per cent consumers. This is injustice." He further said, "Now we have given an option of 15 per cent. Now we would allow recovery of up to 15 per cent under-recovered power supply cost from the tariff of other consumers. If your loss is beyond 15 per cent then discom or state government would pay for that. This is the consumers' right." Under the new tariff policy, a provision for standards of service which would provide timeline for various services like time period for replacing a burnt transformer etc. Singh said that the tariff policy provides that the Central Electricity Authority (CEA) would set standards of service and there would be a penalty for not meeting those standards. On the UDAY 2.0, he said, "We are coming out with a project under which we would reduce losses of discoms. We will be giving funds to discoms to reduce losses by taking steps like opening new police stations for power theft." He also said that UDAY 2.0 provides that the funds from the Centre would only be released if the discom takes steps to reduce losses. He said, "They would not get any grant. They would also not get loans from PFC and REC. These are incentives and disincentives to reduce losses. You may call it UDAY 2.0. It is aimed at reducing losses of discoms and strengthening the distribution system. We want to roll this out this fiscal year." The Centre in November 2015 had launched the Ujwal DISCOM Assurance Yojana (UDAY) to bring about operational and financial turnaround of debt-laden power distribution companies. Finance Minister Nirmala Sitharaman in her budget speech in July had said, “Our government launched UDAY in 2015 aimed at financial and operational turnaround of DISCOMs. The government is examining the performance of the scheme and it will be further improved.” About bringing investments in the power sector he said, "There should be demand. We have provided in tariff policy that discom would tell regulator about power demand in their area every year and we have arranged for that supply. The demand would translate into PPA (power purchase agreement) and it would bring investment into power generation." He also said, "Investors would invest in the power sector only when there would be payment for power supplied. We have fixed that by making the opening letter of credit mandatory for getting power supply by discoms from August 1, 2019. "This would give surety to power gencos about payment of power supply. So there would be demand and payment would be made for power supply. These two issues are fixed now. We are bringing fundamental changes.
Source: The Economic Times
Moving RoSCTL, advance authorisation schemes to revenue dept may help boost slipping exports The government is contemplating a revamp of the Department of Commerce and certain incentive schemes that fall under it, as it aims at administrative easing to boost exports and domestic manufacturing. The commerce and industry ministry and finance ministry are discussing the idea of bringing the new exports incentives scheme — Rebate of State and Central Taxes and Levies (RoSCTL) — as well as the existing Advance Authorisation www.citiindia.com 4 CITI-NEWS LETTER Scheme, within the remit of the drawback committee under the revenue department, said people aware of the matter. At present, the Advance Authorisation Scheme is with the Directorate General of Foreign Trade (DGFT), an arm of the commerce and industry ministry. RoSCTL is a replacement of the DGFT’s Merchandise Exports from India Scheme (MEIS), which was challenged by the US last year for violating global trade rules. It will allow reimbursement of duties on export inputs and indirect taxes through freely transferable scrips. “There is a feeling that making the revenue department solely responsible for these schemes will help in ease of doing business and reduce transaction time for exporters,” said an official, who did not wish to be identified. The restructuring plan comes in the wake of 0.37% decline in outward shipments in April-July to $107.41 billion, while imports contracted 3.63% to $166.8 billion. Separately, the government has also discussed putting the external affairs ministry in charge of India’s trade negotiations, which at present is the core function of the commerce department. However, Biswajit Dhar, professor, Jawaharlal Nehru University, said, “Any such move will only pit ministries against each other because while the finance ministry looks at revenue foregone, export targets and exporters’ concerns are the commerce department’s responsibility.” Restructuring DGFT was on the agenda earlier as well, and the government had engaged private consultants to conduct an in-depth analysis. DGFT, which is involved in regulation and promotion of foreign trade, was known as the Chief Controller of Imports and Exports before 1991.
Source: Kritika Suneja
Hopefully, the government will take note and make life easier for exporters Last week, Manmohan Singh, the former prime minister and noted economist, expressed worry on the economic situation. And, asked the government to engage with thinking minds to take it out of a man-made crisis. He mainly blamed demonetisation and hastily implemented Goods and Services Tax (GST) for the current slowdown. Also saying India had not been able to increase its export to take advantage of the opportunities that have arisen in global trade due to geopolitical realignments. Leaving aside the politically oriented parts of his statement and responses from the establishment.
Source: The Business Standard
Chinese exporters also face pressure from weakening global demand at a time when Beijing is telling them to find other markets to replace the U.S. China’s trade with the United States shrank by double digits in August as the two sides prepare for trade talks with no sign of progress toward ending a worsening tariff war that threatens global economic growth. Imports of U.S. goods fell 22.5% from a year earlier to $10.3 billion following Chinese tariff hikes and orders to companies to cancel orders, customs data showed Sunday. Exports to the United States, China’s biggest market, sank 16% to $44.4 billion. Chinese exporters also face pressure from weakening global demand at a time when Beijing is telling them to find other markets to replace the U.S. China’s global exports declined 3% to $214.8 billion, a marked reversed from July’s 12.2% gain. Imports were up 1.7% at $180 billion. U.S. and Chinese negotiators are preparing for talks in October over Beijing’s trade surplus and complaints about its technology development tactics. Neither side has given any sign of offering concessions that might break a deadlock. The decision to go ahead with talks despite the latest tit-for-tat tariff hikes on Sept. 1 encouraged global financial markets. Talks are due to take place in early October, later than initially planned, but the two governments have yet to set a date. Investors were unsettled by a report officials were struggling to agree on a schedule. The latest Chinese figures reflected the possible delayed impact of a U.S. tariff hike on July 6. Forecasters had expected that to depress July sales to the United States.
Source: The Hindu Business Line
Stagnating textiles and clothing (T&C) exports have been a consistent source of concern for the economy. The steep currency devaluation over the last one year and the reduction in the energy (electricity and imported gas) prices for exporters have significantly helped enhance the international competitiveness of the industry. However, the T&C exports are unlikely to make a major headway without fresh investments in capacity expansion across the entire supply chain, particularly in the value-added downstream industry. The industry’s performance since 2000 shows that the growth in textiles and clothing exports has been patchy and volatile. Pakistan’s overseas T&C shipments, for example, rose by an average 9.9 per cent between 2000 and 2008. The growth rate dropped heftily to 0.9pc from 2009 to 2013, and to 0.8pc during the next five years to 2018. The last fiscal year saw the industry’s exports dip by 0.3pc in spite of a cheaper rupee, better energy availability and affordability, and emerging opportunity in the global market. Little wonder Pakistan’s share in the international T&C market has plunged to 1.7pc from 2pc in 2000. The country’s dismal T&C exports in the last decade are characterised by marginal gains in quantity, stagnant value (revenue) and reduced share in the global trade. Yet, in spite of stagnation, the textile industry remains the most export-oriented sector of the economy with its share in the nation’s export revenues fluctuating between 55pc and 60pc for the last several decades. In Bangladesh, textile exporters have their office in the prime minister’s office for quick resolution of issues and their export cargo enjoys the same ‘right of way’ in congested Dhaka as ambulances That means Pakistan’s overall export performance will continue to depend largely on the performance of the T&C sector in the near to medium term (even if the policymakers focus on and somehow succeed in developing some other sectors for global competition). However, the chances of the textile and clothing exporters increasing their share in international trade — both in terms of export value and quantity — despite emerging global opportunities are minimal because of the shrinking size of the industry. The industry’s capacity to produce exportable surplus has contracted substantially because of factory closures on the back of crippling energy shortages that hit the economy in the second half of 2000s, the previous government’s obsession for an overvalued rupee, lack of investment in new more efficient technologies and capacity, the controversial free trade agreement with China and so on. Textile production capacity worth $1.5-2 billion is estimated to have closed down for good in the last five years because of the anti-export bias of policymakers. While much capacity is inoperative owing to a variety of factors, it can still be revived. In comparison, countries like Bangladesh, Vietnam and India have dramatically enhanced their exportable surplus. Bangladesh alone has added 3.75 million spindles and 41,000 shuttleless looms in the last 10 years compared with Pakistan’s 2.45m spindles and 7,600 shuttleless looms. India, on the other hand, added 20.4m spindles and 89,000 shuttleless looms during the same period. In 2018, according to the World Trade Organisation (WTO), Bangladesh ranked third after China and the European Union (EU) on the list of 10 largest global exporters of garments with shipments valuing at $32.5bn and Vietnam occupied fourth place with $31.3bn. Pakistan with garment exports of $5.5 billion couldn’t find a place on the list. Vietnam with sales of $8.3bn pushed down Pakistan with exports $8.0bn to the ninth position on the list of the top 10 textiles exporting countries the same year. If anything, the poor export performance of the textile industry over the last decade is indicative of policy inconsistency and lack of institutional support to the industry. The government has given two textile policies in 2009 and 2014 and one special incentives package in 2017 to boost the country’s T&C exports. But all three incentive packages were executed only fractionally. More recently, the energy price package announced last October has not been implemented in letter and spirit and exporters are still forced to take the matter to the courts every month to get relief on their inflated bills. Further, the measures taken for enhancement of T&C exports have lacked coherence. The export enhancement measures, which never get implemented fully, have mostly focused on rebates, subsidies and cash incentives. No policy action has ever been taken to develop a skilled, more productive labour force, product development or market diversification and so on. For countries like Vietnam and Bangladesh, export promotion is a national strategy to lift overall economic growth. In Pakistan, it is quite the reverse. In Bangladesh, the textile exporters have their office in the prime minister’s office for quick resolution of their issues and problems, and their export cargo enjoys the same ‘right of way’ in congested Dhaka as ambulances. In Pakistan, the textile ministry did not have a minister for years and is currently clubbed together with four other ministries under Abdul Razzak Dawood. Even in its heydays the ministry never had much power to influence government policies that directly or indirectly affected new investments in textile capacity expansion or development of valueadded sectors. Similarly, the research institutes, the textile commissioner office and the Trade Development Authority Pakistan have miserably failed to perform their jobs and become white elephants while similar institutions in other regional countries have played a major role in T&C export enhancement. The textile exports will continue to suffer and fresh investment will remain elusive unless the government realizes the need for a powerful textile ministry to offer institutional support to the industry, and liaise between exporters and other ministries as well as agencies for export policy coherence and consistency. Incentives to help the textile industry cut its cost of doing business are important. But more important is institutional support to restore business confidence and ensure policy consistency to woo fresh investments to enhance capacity and international competitiveness of T&C exports for sustainable, faster growth.
Source: The Dawn
A Chinese expert has suggested that a free trade agreement (FTA) between Beijing and Dhaka will benefit Bangladesh more by cut the trade deficit that heavily favours the Asian economic giant. China-Bangladesh FTA agreement can bring more Bangladeshi products into the scope of tax exemption, effectively alleviate the bilateral trade deficit between Bangladesh and China,” Prof Cheng Min of the Institute for Bangladesh Studies of the Yunnan Academy of Social Science, Kunming, says. “On the other hand, it also lays a good foundation for promoting the construction of "Bangladesh, China, India and Myanmar" economic corridor,” she said, speaking at an international conference on the belt and road initiative (BRI) in Dhaka on Sunday. She tried to give an overview of the feasibility and countermeasure analysis of the signing of the China-Bangladesh FTA and allay possible concerns. “At present, China's competitive advantages in steel, non-ferrous metals, building materials, railways, electricity, chemical industry, automobiles, communications, construction machinery, aerospace ships and marine engineering will hardly impact Bangladesh, because Bangladesh's industries are just starting. “According to Liszt's theory of infant industry, a lot of imports and foreign investment are needed at this time. Due to the rising labour costs, it is also difficult for China's homogeneous ready-made clothing products to impact Bangladesh,” Prod Min said. Bangladesh does not have free trade agreement with any country. In October 2016, during Chinese President Xi Jinping visit to Bangladesh, the two sides agreed to launch a feasibility study on bilateral free trade area. Bangladesh also joined his flagship BRI during that visit. Prof Min said Bangladesh is an “important partner” of China in South Asia, and the establishment of the FTA will not only benefit the two countries to carry out economic cooperation, but also will have a “positive impact” on the BRI construction. The bilateral trade of $16.4 billion in 2017 grew with an average annual growth of 20 percent since 1975 when China established diplomatic ties with Bangladesh. It is heavily in favour of China. In 2018, China's direct investment in Bangladesh was $228 million. “Since the establishment of diplomatic ties, bilateral trade investment between China and Bangladesh has been growing rapidly, but Bangladesh has been running a large deficit in goods trade with China. “The Trade Integration Index between the two countries also shows that Bangladesh has a great dependence on Chinese goods and a huge export potential to China,” she said, adding that the trade expansion effect between China and Bangladesh is “obvious”. “The BRI has provided good conditions for the establishment of the Sino Bangladesh free trade area. On this basis, China and Bangladesh still need to make continuous efforts to take positive measures.” For that, she suggested establishing a list of early harvesting projects. The first is cooperation in the field of garment manufacturing. “The two countries can sign the Framework Agreement on Cooperation in Textile and Garment Industry,” she said, as clothing sector is crucial for Bangladesh's economy. “At present, it is facing problems such as industrial upgrading, heavy dependence on imports of raw materials and intermediate products. “After many years of development, China's textile industry already has a complete industrial chain and a relatively high level of processing, but it also faces problems of rising labour costs and overcapacity. “China's Ministry of Commerce encourages textile and garment enterprises to take the opportunity of the "one belt and one road" to carry out industrial transfer. “If the specific rules of cooperation between China and Bangladesh on textile and apparel can be formulated as soon as possible, it will not only meet the practical needs of Bangladesh, but also provide a path for the development of China's textile and apparel industry in the context of supply-side reform,” she said. The second, Prof Min said, is cooperation in steel, smelting, power, road infrastructure and communication networks. “After the list of early harvested projects has been reached, detailed implementation rules should be promulgated, including simplifying the examination and approval procedures, clarifying the channels of appeal; establishing a cooperation fund for the list of projects to provide financing support for its smooth implementation; and the government should do a good job of service and publicise the cooperative projects. “It will introduce the cooperation procedures, relevant laws and regulations, and other issues of concern to enterprises, so as to clear the barriers for enterprises to go out.” She said China should give Bangladesh tax-free preferential policies for more products, including polymer products, gloves, silk, cleaning cloth, leathers, lead-acid batteries and synthetic fibres. “The proportion of clothing with zero-tariff policy should increase from 90 percent to 100 percent in order to alleviate Bangladesh's expanding bilateral trade deficit with China.”
Source: BD News
Cambodia will be the venue next month of one of the biggest and most important gatherings of stakeholders in the garment sector in Southeast Asia. According to the official website of the event, the Textile and Apparel SEA Summit 2019 will be held in Phnom Penh on Oct 28 and 29. The venue for the event has yet to be disclosed. The event comes after the Kingdom hosted the 8th Cambodia International Textile & Garment Industry Exhibition last month, which also drew foreign attendees and exhibitors. Bruce Zhang, a member of the organising committee, said there is much to learn and gain from the event. The event is being organized by SZ&W Group, a leading event organiser in Asia. “The summit aims to provide the opportunity for industry chain stakeholders to win textile and apparel business and ensure growth in the SEA region. It will seek the latest opportunities and trends as well as good practice sharing to accelerate the growth and development of the industry,” he said. The organisers have invited industry leaders and experts from all over the world to speak at the event, including representatives of the International Apparel Federation, USASEAN Business Council, Cambodia’s Ministry of Commerce, Vietnam Textile and Apparel Associations, Garment Manufacturers Association of Cambodia, Myanmar Garment Manufacturers Association, China Textile Information Center, and the Textile Association of India. The event website says the major topics that will be discussed are: The influence of the Regional Comprehensive Economic Partnership (RCEP) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) on the region’s textile and apparel industry; apparel procurement; different trends in the region’s labour markets; and the latest government policy on investment in the industry. The organisers are expecting 100 to 500 attendees, including government officials and representatives from companies in India, Myanmar, Vietnam, China, and other countries. Ten to 50 exhibitors are also expected to display their products and services at the event. Southeast Asia is among the leaders and plays an important role in the global textile and apparel industry. The region is said to have a strong comparative advantage for manufacturers, including market access, low labour costs, investment incentives, and existing industrial basis. In the region, Vietnam, Cambodia, and Myanmar have the fastest-growing textile and apparel industry. In Cambodia, the textile and apparel industry is among the most important sectors of economic activity. The industry accounts for more than 40 percent of the country’s gross domestic product (GDP) and it employs more than 800,000 people.
Source: The Khmer Times