The Synthetic & Rayon Textiles Export Promotion Council

MARKET WATCH 12 SEP 2019

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National

New policy may make technical textiles mandatory in defence, agri

The ministry of textiles estimates the technical textile industry in India will grow to about Rs 2 lakh crore by 2020-21 from over Rs 1.16 lakh crore in 2017-18. The government may make the use of anti-hail nets to protect crops, chemical-protection suits for defence, and drapes, gowns, sanitary napkins and implants for medical use mandatory as it seeks to develop the potential of technical textiles and facilitate their public procurement. A comprehensive policy on technical textiles is being prepared to make their use mandatory in certain sectors, provide financial support to promote domestic manufacturing and set standards to make India a production hub for them. Technical textiles are meant for non-aesthetic purposes, where function is the primary criterion. “Discussions in this regard are being held at the level of the Prime Minister’s Office and a policy note could be moved soon for consideration,” two people aware of the deliberations told ET. According to one official, who spoke on condition of anonymity, the Bureau of Indian Standards has been advised to develop world-class norms across the 12 segments of technical textiles on priority as the government wants to push domestic production. India accounts for about 4% of the global market for technical textiles. The ministry of textiles estimates the technical textile industry in India will grow to about Rs 2 lakh crore by 2020-21 from over Rs 1.16 lakh crore in 2017-18. Technical textiles account for about 12% of India’s textile market, compared with 20% in China. “A policy on technical textiles is in the works and will be finalised soon,” another official said.

Source: The Economic Times

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Tackling the slowdown: Finance Minister meets TN industry captains

Finance Minister Nirmala Sitharaman on Wednesday met with Tamil Nadu’s leading industrialists as the Centre continues with its efforts to tackle the economic slowdown. After meeting various businessmen representing sectors such as textiles, construction, sugar and others on Tuesday, Sitharaman continued her interactions with the industrialists to hear their issues and concerns relating to the slowdown across sectors. She met with at least a dozen industrialists who represented some of the top companies from this region. The businessmen who met the Finance Minister included KM Mammen, Chairman and Managing Director of MRF; N Srinivasan, Vice-Chairman and Managing Director of India Cements; PR Venketrama Raja, Chairman of Ramco Cements; Gopal Mahadevan, Chief Financial Officer of Ashok Leyland; Srivats Ram, Managing Director of Wheels India; TT Srinivasaraghavan, Managing Director of Sundaram Finance; and RG Chandramogan, Chairman and Managing Director of Hatsun Agro Product. Arun Jain of Intellect Design Arena; Sunitha Reddy of Apollo Hospitals; Sanjay Jayavarthanavelu of LMW; T Kannan of Thiagarajar Mills; and Padmaja Chunduru, Indian Bank’s MD and CEO; were among those who attended the meeting. Sitharaman met the industrialists to seek their views on the sector-specific issues impacting at the ground level. The industrialists were given adequate time to voice concerns and the possible measures to tackle the slow down, said sources. Sitharaman’s meeting with the businessmen in Chennai also comes at a time companies such as Ashok Leyland are battling with production cuts on the back of one of the worst demand slowdowns the commercial vehicle sector is facing. The slowdown in the auto sector has also led to several companies laying off their contract workers and temporary staff in the region. A couple of industrialists, with whom BusinessLine spoke, described the meeting as “Great and productive.”

Source: The Hindu Business Line

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Any agreement on RCEP deal to be based on national interests: Piyush Goyal

Any agreement on the proposed Regional Comprehensive Economic Partnership (RCEP) deal would be based on national interests, Commerce and Industry Minister Piyush Goyal said on Wednesday. He, however, warned that while the government would strive to protect the interests of a majority of industries, the overall discussion could not be hijacked by one or two sectors. “As long as India's domestic industry and our national interests are protected, the faster it (the RCEP) is done, the better for India,” Goyal said. “Any agreement that India finalises will ensure that indiscriminate imports don't come in, while major opportunities for exports and job creation are reserved,” he added. The RCEP is a proposed pact between the 10-nation Association of the Southeast Asian Nations (Asean) bloc and six of their free trade agreement (FTA) partners — New Zealand, Australia, China, India, Japan, and South Korea. Delegates from RCEP nations will be in New Delhi on September 14-15 to discuss ideas to move forward on the deal. Most of the members, led by the Asean bloc, have been pushing hard for finalising the deal by 2019-end. Stressing that most industries were in favour of the deal, Goyal said some of the opponents had not understood the details of the RCEP yet. “Not everybody is opposing the RCEP. We are literally vertically split, with half the industry saying it should be brought quickly," Goyal said. This includes the pharmaceutical sector which has argued for greater access to Chinese markets to give it a much-needed leg-up. China imports about $25 billion worth of medicines, of which India's share is only $200 million. Cotton textile exporters have also requested a speedy conclusion to the negotiations, citing an 8 per cent duty that hinders their chances of exporting to China, Goyal added. Goyal had told leaders from Asean in July that India’s domestic industry was not convinced that the proposed RCEP deal would create a “win-win situation for all” by ensuring balanced outcomes for both goods and services. A report on the RCEP, commissioned by the Confederation of Indian Industry and submitted to the government, has recommended that products — the trade of which is dominated by China — should not be included for tariff reductions under the RCEP. Many ministries, including agriculture, steel, chemicals and MSME, among others, have also opposed the deal.  “Looking at the past examples of other countries which have used FTAs very efficiently and effectively, my own sense is that we can also use these extremely well," Goyal said. He added the government was also looking at domestic measures to ensure the industry was competitive and could take advantage of the concessions allowed to them under the FTAs. These measures include mega sessions with exporters that teach how to use FTAs properly. According to a study by the NITI Aayog, the utilisation rate of trade deals by Indian exporters is very low (between 5 and 25 per cent). Goyal also trained his guns on companies that have not taken advantage of the deals either due to lack of knowledge or effort, or due to the “comfort of a protected domestic market”. The minister squarely blamed the earlier governments for not being able to negotiate better trade deals for India, which has led to a situation where the industry has not been able to benefit from FTAs. The Asean-India FTA did not have an automatic review mechanism built into it, Goyal said. “After almost 10 years of implementation, imports have grown faster than exports. Indian industry also had to suffer from the circumvention of rules of origin, across products,” T V Narendran, CEO & managing director of Tata Steel, said.

Source: Business Standard

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Rupee rises 36 paise against USD in early trade

The Indian rupee appreciated by 36 paise to 71.30 against the US dollar in early trade on Thursday as gains in domestic equity market and fresh foreign fund inflows strengthened investor sentiments. Forex traders said Trump delaying the increase in Chinese tariff by 15 days enthused investors. US President Donald Trump has announced the delay of his proposed massive increase in Chinese import tariffs by 15 days. At the interbank foreign exchange the rupee opened at 71.46, then gained further ground and touched a high of 71.30, registering a rise of 36 paise over its previous close. The domestic unit however could not hold on to the gains and was trading at 71.35 against the dollar at 0949 hrs. On Wednesday, the rupee had settled for the day at 71.66 against the US dollar. Describing this as a goodwill gesture, Trump said on Wednesday night that he had moved the increased tariffs on USD 250 billion worth of goods from October 1 to October 15. “At the request of the Vice Premier of China, Liu He, and due to the fact that the People’s Republic of China will be celebrating their 70th Anniversary on October 1st, we have agreed, as a gesture of good will, to move the increased Tariffs on 250 Billion Dollars worth of goods (25 per cent to 30 per cent), from October 1st to October 15th,” Trump tweeted. Besides, higher opening in domestic equities and weakening of the American currency vis-a-vis other currencies overseas supported the local unit. Domestic bourses opened on a positive note on Thursday with benchmark indices Sensex trading 139.69 points higher at 37,410.51 and Nifty up 41.20 points at 11,076.90.The dollar index, which gauges the greenback’s strength against a basket of six currencies, fell marginally by 0.01 per cent to 98.63. Foreign institutional investors (FIIs) remained net buyers in the capital market, putting in Rs 266.89 crore on Wednesday, according to provisional exchange data. Brent crude futures, the global oil benchmark, rose 0.72 per cent to trade at USD 61.25 per barrel.

Source: The Hindu Business Line

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Export incentives: Aligning new policy with WTO norms to benefit MSMEs most

The RoSCTL was introduced in March 2019 with the intent to rebate all embedded State and Central taxes for garments and apparel and is presently available for the textile industry. As a benefit to exporters, the Merchandise Exports from India Scheme (MEIS) was introduced in the Foreign Trade Policy of India for 2015-20. The intention behind MEIS was to offset infrastructural inefficiencies and associated costs, thereby making India’s products more competitive in the global market. The benefits available under MEIS are in the form of transferrable duty credit scrips which the exporter can use for the payment of Customs duties applicable on imports. Given such significant benefits, MEIS has proved to be crucial in reducing the overall cost involved in exports and has especially been popular among the country’s MSME sector which in the previous financial year accounted for almost half of the country’s exports. Nevertheless, the response from the international community was not so overwhelming as the USA considered MEIS to be in direct violation of the World Trade Organisation (WTO) Guidelines (WTO Guidelines). As per the WTO Guidelines, for a country to offer export subsidies, its per capita Gross National Income (GNI) could not exceed $1000 for three consecutive years. The USA argued that India became ineligible to offer subsidies in 2017 when it surpassed the above threshold for three consecutive years. The violation is still debatable, particularly since the Government is confident that the eight-year period of phasing out export subsidies granted to developing countries is applicable to India. However, in the wake of this backlash, the Indian Government may not want to disturb the delicate trade equilibrium. Almost unanimously regarded as the country’s “engine of growth”, the country’s MSME sector is understandably at the centre of economic policymaking. Any policy revision adversely affecting the MSME sector has the potential to cause economic disruption since it puts to risk almost 63 million businesses. A complete withdrawal of the MEIS in response to international pressure would have placed an additional burden on the MSME sector which is already struggling to counter the reduction in demand due to global economic slowdown. Keeping this in mind, the Government has introduced the Rebate of State & Central Taxes and Levies (RoSCTL) Scheme as an interim measure. The RoSCTL was introduced in March 2019 with the intent to rebate all embedded State and Central taxes for garments and apparel and is presently available for the textile industry. Currently, the RoSCTL scheme offers transferable duty credit scrips to the exporters in order to offset levies imposed by the Central Government (such as Excise Duty on transportation fuel, Central Goods and Services Tax) and those imposed by the State Governments (such as Mandi Tax, Electricity Duty, Stamp Duty on export documents, State Goods and Services Tax, etc.), in a bid to make exports ‘truly’ duty free. While the benefits of MEIS were largely at a flat rate, the benefits under the RoSCTL are a function of the quantum of Central/State taxes suffered by a particular class of product and are subject to a monetary upper threshold. Since the benefits are aimed at neutralising the tax incidence on procurement and processing, they are expected to be compliant with the WTO Guidelines. While the jury is still out on the effectiveness of the RoSCTL in the long run, an improved version of this scheme applicable to more sectors based on industry feedback is likely to find a place in India’s Foreign Trade Policy, which is due for revision next year. The reaction of the MSME sector would be tracked closely since they are expected to be the scheme’s largest beneficiaries. Given the current trade stand-off between the USA and China, India is in an ideal position to gain a foothold in the USA and other significant countries. The coming few months are crucial for MSME exporters as the Government will attempt to align the export incentives with the WTO Guidelines while keeping in mind the objective of fueling the country’s engine of growth.

Source: Financial Express

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Decoding Slowdown: India's export needs a paradigm shift

India's net export, one of the four key components of the GDP, has been in negative zone for decades, proving a big drag on its growth story. The gap between India's export and import has been growing bigger and bigger in the past decade. It crossed the $100 billion mark in 2008-09 and has remained above that since, clocking $184 billion in 2018-19. Higher the negative trade balance, higher the current account deficit (CAD) and higher the drag on foreign exchange reserve . This has been a cause of prolonged anxiety. Declining growth in export of merchandise and services After a sudden spurt in 2010-11 and 2011-12, India's export growth has declined to single digit, both for merchandise and services, in US dollar terms. The share of services in exports has been growing in recent years. From about 32% of the total value of exports a few years ago, it contributed more than 38% in the last two fiscals. Similar is the case when quantum of exports is examined. The RBI's quantum index number of exports of commodities (base year 1999-2000) shows the growth numbers coming down from 15.2% in 2010-11 to 2.9% in 2017-18 - the year for which data is available. When looked from the global perspective, India's export growth does not look as bad. The global statistics provided by the UNCTAD shows growth in India's export of merchandise follows a general trend, indicating a close link with global economy. In 2018 (financial year), India's export growth was 8.8% against the global growth of 9.8% in US dollar terms - changing the position from 2017 when India clocked a 13.3% growth while the global export growth was 10.6%. Prof Biswajit Nag of the Indian Institute of Foreign Trade (IIFT) explains that this is so because India's export is mostly to the developed countries. As the major exporters like China, the US, the EU and Japan are slowing down their export, demands are also slowing down - reflecting a general declining trend.  A comparative analysis of growth in export of merchandise for Asian leaders like China and South Korea and new export hubs like Vietnam and Indonesia also show a similar declining trend. India has been struggling to raise its share of global export of merchandise to 2%, which it last attained in 1948 - when it touched a high of 2.2% in US dollar terms. Its share has remained below 2% ever since and hovered between 1.5% and 1.7% between 2010 and 2018 (financial year). China, whose exports took off in the 1980s, has maintained a healthy lead over India's with a share of 10.3% to 13.8% in global export of merchandise (in US dollar terms) since 2010. For 2017 and 2018, its share stood at 12.8%. Prof Nag says China's export surged because it adopted an export-oriented approach, specialising in industries with higher export potential. It tried to benefit from economies of scale and focussed on SEZs and other trade related infrastructures like ports, logistics and single-window clearing system. Equally importantly, China adopted a long term strategy of skilling its labour force which made technology absorption much easier and allowed it to move up in the global value chain, leaving low end products to low wage countries like Vietnam and Indonesia. On the other hand, he says, India could not achieve the desired level of skilling, leading to export inefficiency. India's high-value export sectors showing worrying signs. Engineering goods, gems and jewellery and ready-made garment (RMG) of textiles are three of the top sectors contributing most to India's export in value and are of great significance because of their labour intensive nature, providing high employment. The RBI's data presents a disturbing trend. Growth in the export of engineering goods, which constituted 25% of commodity export earnings in 2018-19 in US dollar terms, fell to 6.3%, from 17% in 2017-18. The same for the gems and jewellery and RMG of textiles, which constituted 12% and 5% of commodity export in 2018-19 (in US dollar terms) respectively, have registered negative growth for the last two fiscals. Prof Nag explains that the gems and jewellery segment has been negatively impacted by the rising value of import content, which has made India's export uncompetitive. Besides, a global slowdown is impacting consumption of such luxury products. As for the negative growth in RMG of textiles, he points to a number of factors: India's ecosystem is dependent on import of inputs; its "delivery lead time" is much higher than that of China, reflecting supply chain inefficiency; countries like Vietnam, Bangladesh and Sri Lanka provide cheaper labour with which India can't compete; world is moving into the blending of fabrics (cotton and synthetic) for which India is not yet ready in technology terms and lack of new capacity additions in India as a result of which most of its products are consumed domestically, leaving little surplus for export. As for the engineering goods, the chairman of the CII's National Committee on Exim Sanjay Budhia says input costs have gone up in recent years (steel price went up by almost 20% in one year), making it uncompetitive. The Road ahead Budhia says the US-China trade war presents a big opportunity for India to boost its exports significantly to the US and elsewhere. He says India's products have established their quality but are not yet competitive. He says three factors are holding India's export back. One, high cost of credit to Indian exporters - 6-7% interest rate for Indian exporters while it is nil or negligible for Chinese and Vietnams. India provides 3-5% of interest equalisation for the MSMEs which should be available for all exporters to bring down cost. Two, inputs like steel should be provided at competitive/export prices that are offered to international buyers by steel mills to all exporters, not just the MSMEs as is being contemplated by the government now. Steel mills get duty drawbacks and incentives reducing international price of steel but without such facility for the domestic consumers, export of engineering goods - which has a huge potential to increase its market share and provide sizeable employment - becomes uncompetitive. Third, electricity duty, taxes and duties on petroleum products etc. are not yet refunded through the GST mechanism for the exporters. The government should offset the cost disadvantage arising out of these duties and levies. Prof Nag adds three more to the wish list: effective skilling programme, promotion of innovation and value chain efficiency for products and process. The ball is now in the government's court.

Source: Business Today

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International

Govt, stakeholders in textile industry agree on road map

The government and stakeholders in the textile industry have agreed on a road map for the implementation of policy interventions against the importation of fake textile products and other unfair practices that have stifled the growth of local companies in the sector. The road map starts with the signing of a document on Friday that will allow for the implementation of a textile tax stamp policy. The road map was arrived at when the Minister of Trade and Industry, Mr Alan Kyerematen, held a meeting with key stakeholders in the sector in Accra last Friday. They comprised the Ministry of Trade and Industry (MoTI), the Ministry of Finance, the Ghana Revenue Authority (GRA) and the Coalition of Textile Workers (CTW). The General Secretary of the CTW, Mr John Abeka, said the parties agreed on the September 13 timeline to sign a contract for the production of tax stamps to be affixed on all textile prints in the country. The textile tax stamp policy requires textile manufacturers, importers and traders to ensure that approved stamps bearing key security features by the Ministry of Finance are affixed on their textile prints before they are traded. It is meant to prevent tax evasion at the ports and also check against the dumping of fake and pirated products on the local market. When the policy comes into force, it will be illegal for any manufacturer or importer to send textile prints to the market without the approved tax stamps. As part of the road map, the Tema Port will be the single window for the importation of textile products into the country. Mr Abeka, who disclosed this to the Daily Graphic in an interview last Saturday, said the parties also agreed that the private company that had been contracted to produce the tax stamps should do so within two weeks. He explained that as soon as the tax stamps were affixed on the products, other policy interventions, such as the use of the Tema Port as the single corridor for the importation of textile products, a vetting committee for textile products and a taskforce on anti-textile piracy, would also begin. The meeting was convened by Mr Kyerematen to address the nagging challenges facing textile companies. It came on the heels of a one-week ultimatum that the CTW gave the government to implement those policy interventions. At a press conference held in Accra on September 2, the coalition threatened to take to the streets if the government failed to implement the interventions to save their companies. The CTW, made up of workers of the Akosombo Textiles Limited, the Tex Styles Ghaan Limited (Ghana Textiles Printing) Printex and the Volta Star, had stressed that the delay in implementing those interventions had caused their businesses to suffocate in the hands of unfair trade practices. Mr Abeka said Mr Kyerematen’s demeanour at the meeting showed that he was ready go all out to implement the tax stamp policy. "The minister showed us a policy document on the tax stamp that had approval from Parliament and was now left with the four parties to sign for the tax stamps to be produced. In fact, he was even ready to sign his portion of the agreement the day we held the meeting. "We agreed that all parties will sign the document latest by Friday, after which local companies and importers will make requests for the private company to know the quantity of tax stamps to print," he added. For his part, the Director of Communications for the CTW, Mr Michael Anglaman, said although the minister had given the strongest indication at the meeting to ensure that the tax stamp policy came into force, the coalition would be measured in its expectations.“There have been many occasions on which we were given assurances which did not materialise, so we will wait for Friday to see what will happen. If the timelines are not followed, we will definitely take other actions,” he said. Efforts made by the Daily Graphic to speak to Mr Kyerematen were not successful, as he did not answer phone calls placed to him. When the Head of Public Relations at the MoTI was contacted, he confirmed that the meeting had taken place but did not disclose the details.

Source: Business Ghana

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Spanish textile giant Inditex reports impressive growth in profits

Spain-based textile giant Inditex, which is the parent company of fashion retailer "Zara", on Wednesday announced a profit of 1.549 billion euros (1.708 billion U.S. dollars) for the six month period between February and July. The company confirmed that profits were up by 10 percent from a year ago with a 7 percent increase in sales to 12,820 million euros (14.136 million dollars), highlighting that sales have been "positive in every concept: both in terms of geographic regions and in shops and online." Online sales have been an important motor for Inditex's continued growth and the company reported that sales via the Internet have increased by 8 percent between Aug. 1 and Sept. 8, with the "autumn collection" being "well received" by clients. Meanwhile, sales are expected to grow 4-6 percent for 2019 as a whole. Europe is still Inditex's main market with 44.4 percent of the sales from February to July coming from the continent, compared with 44.2 percent in 2018, while at the end of July the group had a total of 7,420 shops open worldwide. Inditex said it will invest "around 1.400 billion euros (1.540 billion dollars), mainly in opening new commercial space in key residential areas," in the coming year, as well as continuing with "the global launch of online sales".

Source: Xinhua

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Morocco’s textile industry seeks new strategy

Morocco’s textile and clothes industry represents 15% of the country’s GDP but has been facing fierce competition of Turkish manufacturers that caused many layouts and put several factories out of business, pushing Moroccan professionals to seek a new strategy to boost competitiveness. They mostly blame the free trade agreement signed with Turkey, which has dumped the Moroccan market. The federation of Moroccan textile operators AMITH have come together to address this challenge by renewing their representatives and adopting a plan of action aimed at boosting the industry. For AMITH, the sector with 1200 enterprises is the first employer in Morocco offering 190,000 jobs. The country produces about 1 billion piece of clothes annually most of them are exported mainly to Europe. The sector represented a quarter of Morocco’s exports last year, equal to 38 billion dirhams. AMITH also recommends that more attention be paid to the industry’s upstream to bolster the competitiveness of the output. Beams of light are already appearing at the end of the tunnel with a 5.1% increase in Morocco’s textile exports to the EU where the Kingdom is the seventh supplier. By end of April 2019, 5 billion dirhams of investments has been pledged through 200 agreements that would create an additional 51 jobs.

Source: North Africa Post

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Trade war: Trump delays increase in tariff on Chinese products by 15 days

US President Donald Trump said he was postponing the imposition of 5 per cent extra tariffs on Chinese goods by two weeks, a move that delays the next escalation of the trade war and brightens the backdrop for upcoming negotiations. “At the request of the Vice Premier of China, Liu He, and due to the fact that the People’s Republic of China will be celebrating their 70th Anniversary on October 1st, we have agreed, as a gesture of good will, to move the increased tariffs on 250 Billion Dollars worth of goods (25 per cent to 30 per cent), from October 1st to October 15th,” Trump wrote Wednesday on Twitter. S&P 500 futures climbed 0.5 per cent and the offshore yuan strengthened 0.3 per cent against the dollar. The yen fell. Negotiators are due to meet in Washington in coming weeks to push forward talks to end the trade war, which is causing increasing economic damage as it stretches into its second year. There is little sign that substantive progress is being made on the two countries differences, while Trump still has further tariff increases lined up.“The negotiators have had a year to come to an agreement, and they remain structurally at odds on key issues,” said Andrew Polk, co-founder of research firm Trivium China in Beijing. “Another two-week reprieve doesn’t change those fundamentals.” On Wednesday, China announced a range of US goods to be exempted from 25 per cent extra tariffs enacted last year. While that may create some good will in Washington, China is keeping the pressure on US agricultural exports like soy beans produced in key Trump-supporting states. An editorial on Wednesday in the Communist Party-controlled Global Times newspaper said the exemptions were a goodwill gesture that would benefit some Chinese and US companies. The paper’s editor tweeted that he saw Trump’s decision to postpone extra tariffs as creating good vibes for the early-October talks. “Trump’s goodwill gesture suggests that the trade war is starting to bite and the US may be more eager to close a deal,” said Chua Hak Bin, an economist at Maybank Kim Eng Research Pte in Singapore. “The clock is ticking and Trump’s approval ratings are sliding, with manufacturing now in recession.” Trump escalated the US-China trade war in August when he announced an increase in the levy on $250 billion of Chinese goods to 30 per cent, from 25 per cent, starting October 1. Further increases are planned for December. “The delay shows Trump does not want to increase tariffs before the trade talks in early October, and it creates good conditions,” said Tommy Xie, an economist at Oversea-Chinese Banking Corp in Singapore. “It adds to the hope that there’ll be good news from the October meeting, and markets will wait and see.”

Source: The Hindu Business Line

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