Members of both associations will make representations to the Central government about the disadvantages, claiming that China will dump their textile goods into the Indian market at zero per cent duty. The Bhiwandi Textile Manufacturing Association (BTMA) of Maharashtra and the Federation of Gujarat Weavers Association have decided to jointly oppose the Regional Comprehensive Economic Partnership (RCEP) agreement, a mega-regional trade agreement with 16 East Asian countries, including China, to be signed by India in November 2019. Members of both the associations will make representations to the Central government about the disadvantages claiming that China will dump their textile goods into the Indian market at zero per cent duty and its goods will be sold at cheaper rates, spelling trouble for the textile industry here. The three-member delegation of Bhiwandi Textile Manufacturer Association of Maharashtra — Hiren Nagda, Punit Khimsha and Sarosh Fakih — attended a meeting organised in the Southern Gujarat Chamber of Commerce and Industry, in the presence of members of Federation of Gujarat Weavers Association, in Surat, on Saturday. Over 25 members from the textile industry discussed Centre’s decision to sign the RCEP deal. BTMA member Hiren Nagda, said, “If RCEP is signed, Indian textile industry will suffer major losses. China tops the world’s textile industry. The cost of Chinese fabric is less as their government gives subsidy and loans to the textile industry with low-interest rates. With zero per cent duty through RCEP free trade agreement, China will get open space, affecting the small and medium players in the textile industry in India. The textile industry of India is majorly dependent on the domestic market. We are carrying out awareness and we want to send message to the Central government to save the textile industry.” Federation of Gujarat Weavers Association member, Mayur Golwala, said, “We will definitely oppose the RCEP, as the local industry will have to face great losses. Even at present, the textile industry is struggling. The Centre should consult the stakeholders of the industry and take a decision. We will make a representation at the state level and at the central level through our MPs to save the industry.”
Source: Indian Express
Jaishankar said the world was increasingly becoming multipolar and is unlikely to return to bipolarity. India and the US have experienced dramatic changes in their relationship in the last two decades, External Affairs Minister S Jaishankar has said, exuding confidence that the two countries will find a way to "fix" their bilateral trade disputes. Jaishankar said the world was increasingly becoming multipolar and is unlikely to return to bipolarity, predicting that a strategic appreciation of the emerging global landscape would bring India and the US closer. "I can't believe that people today are less ingenious than we were in our time. So I'm reasonably confident that we will find a fix," said the top Indian diplomat who is currently on a three-day official trip to Washington DC. One of the challenges is really how do one define the issue for which they are trying to find a fix, he said. "My understanding of the conversations is that he (Piyush Goyal) has had with his counterpart and (that) his officials, have had team to team - that there's been a very intense engagement. I am hopeful that something would come out of it," Jaishankar said at an event here on Tuesday. The External Affairs Minister said that ahead of the New York meeting between Prime Minister Narendra Modi and President Donald Trump, there were multiple rounds of very positive conversations on the trade issue. "I think they needed more time. Many of their issues were more complex," he said, adding that he has been telling the Indian press that trade deals are much more complicated than they think. "It isn't simple arithmetic. A lot of variables are out there. So we will have to work our way through that," he said. Trade officials from the two countries would naturally want progress on what are considered to be the outstanding issues, Jaishankar said. "But I think there's also some desire to look beyond. So when people speak about what's gonna be the a trade deal, we'll have to see about that goes," he said. "So it's going to be sort of you trade the size of it and the complexity of it for the time and the energy for it. I think that part of it is still a little open, but again, my understanding is that they would be talking with each other continually over the coming days," Jaishankar said. Referring to the historic "Howdy, Modi" event in Houston last month, Jaishankar said "we couldn't have conceived" of such an event 10 years ago. The "Howdy, Modi" event in a sense reflects a phenomenon which is going to be the future of the world, which is a flow of talent from one geography to the other, he said. "You've really seen in the last 20 years a dramatic change in this relationship. And dramatic change between big countries is not that common," he said. "When I say dramatic change, there isn't a sector today you wouldn't say that there has been a very, very high growth rate," he said the top Indian diplomat. Fifteen years ago, the Indian military had virtually no American equipment in its inventory. And today India flies American aircraft, two American helicopters, have American artillery, and have an American ship, Jaishankar said. "That's a huge change. It's not just equipment. It's whole culture and understanding which goes with all of that," he said. "If you look at the politics of the relationship, including security and defense, we have moved to from, actually a very difficult history, sometimes actually a hostile one, to something which today the level of comfort between the Indian and American systems as it were is enormous," he said. Jaishankar said the bilateral relationship was really on a roll, be it in sectors such as education, talent, economy, defence or tourism."The challenge for us is how do you actually keep up that pace, maybe even accelerate it, look at new horizon. Look at the future of the world, where we are going to be in that world, and how do we get the most out of the relationship, in all of this," Jaishankar said. "There was a time I mentioned to someone where actually an Indian entering the Pentagon would be an oddity. Today, if they don't see one every hour, they kind of miss us," he said, amidst laughter from the audience. Emphasising upon the emergence of a multipolar global scenario, Jaishankar said in this world, what are presumed to be intractable challenges will have to be addressed, not ducked, citing recent changes in Jammu and Kashmir as an example to this approach. He said it was difficult to foresee a return to a bipolar world even amid the sharpening contradictions between China and the West, saying the landscape has now changed irreversibly. "Other nations are independently on the move, including India. Half of the twenty largest economies of the world are non-western now. Diffusion of technology and demographic differentials will also contribute to the broader spread of influence. "We see the forces at play that reflect the relative primacy of local equations when the global construct is less overbearing," he said. As the world moved in the direction of greater pluralism, pragmatic result-oriented cooperation has begun looking attractive, Jaishankar said. India today has emerged as a leader among such multilateral groups, because it occupies both the hedging and the emerging space at the same time, he said.
Source: Business Standard
Despite the aggressive cuts in policy rates by the Monetary Policy Committee, India Inc’s debt woes are getting worse. India Inc’s debt servicing woes, which seemed to be getting better from FY15 to FY19, now seem to be taking a distinct turn for the worse. Data from CRISIL shows that the debt-weighted ratio of its rating upgrades to downgrades deteriorated sharply from 1.65 times in FY19 to just 0.25 times in the first half of FY20, with the value of downgraded debt at four times upgraded debt. This is the first time that this ratio has plummeted below one since FY14. While the number of upgraded firms exceeds downgrades, this is small comfort because the most heavily leveraged members of India Inc are obviously facing renewed challenges to debt servicing. CRISIL attributes this to the slowing economy, a fall in consumption demand, slower government spending and constrained credit access. It is also entirely possible that rating agencies, stung by strident criticism of their belated reactions to corporate distress, are now getting their acts together. Whatever the reasons though, that India Inc should face such difficulties after the Monetary Policy Committee has aggressively cut policy rates by over 200 basis points in the last couple of years is troubling. The highly leveraged members of India Inc seem to have limited wherewithal to survive any renewed pressure on profits from an extended slowdown. Apart from flagging the overall deterioration in credit ratios, the CRISIL study offers three key granular takeaways. One, it notes that export-linked sectors alone held their heads above water as both consumption and investment-linked sectors slumped. But with brewing trade wars posing a potent threat to exports, this may not last. Nor will the recent corporate tax cuts, which mainly benefit non capital-intensive sectors, solve this problem. A pick-up in the private capex cycle, on which the Centre has been pinning its hopes for a growth revival, may therefore be deferred well beyond a quarter or two. Two, while credit ratios are worsening, the de-leveraging of India Inc’s balance sheet at an aggregate level is expected to continue, with the debt/EBIDTA ratio expected to improve from 2.97 times in FY19 to 2.71 times in FY20. Policymakers need to do their bit to help this process along, by addressing irrational risk aversion among bankers and ensuring effective transmission of rate cuts to non-AAA borrowers. Three, India Inc’s debt situation continues to be a tale of two halves, with some sectors sitting on stockpiles of cash while others flounder. Doing away with retrograde taxes on dividends and buybacks that actively impede the free flow of capital between sectors, can help. Overall, India Inc’s debt problems seem set to get worse before they get any better. Should the economic downturn prolong, India’s beleaguered banks, non-bank lenders, bond market participants and retail investors may have to brace for yet another rash of defaults and write-downs, even as they’re struggling to come to terms with the after-effects of the previous NPA cycle.
Source: The Hindu Business Line
Owing to the US-China trade war as well as free trade agreements with ASEAN countries that allow duty-free imports into the country. Imports of cheaper yarn from countries such as China and Indonesia are hurting India’s second largest employer, the textile industry, and a large number of small and medium yarn producing units are on the brink of closure, said experts. Owing to the US-China trade war as well as free trade agreements with ASEAN countries that allow duty-free imports into the country, viscose staple fibre (VSF) yarn imports have surged about 200% year on year in the first five months of this financial year, touching a record 8,029 tonnes in August for an average monthly demand of 50,000 tonnes. China, with its excess capacity, has been at the forefront of exports, followed by Indonesia, driving down the price of VSF yarn to Rs 160-165 per kg from the highs of Rs 190-200 six months ago. At the same time, demand for the yarn has remained steady, growing at a compounded annual growth rate of 14% in the past five years. An industry insider said that excess capacity in China is more than the Indian demand for the fibre and with so much oversupply through cheaper imports, domestic manufacturers are forced to match the low price that is taxing them heavily. There is currently a 5% duty on imports of VSF yarn and the industry is pleading to have government increase this to 10-15%. “These are not easy days. There is at least one month of unsold inventory across spinners, large and small,” said Ramesh Natarajan, secretary of Indian Manmade Yarn Manufacturers Association. “People are contemplating production offs of one-two days a week and our only plea is for the government to step in urgently and increase import duty on VSF yarn from 5% to at least 10% to give a level. In the entire textile value chain, only fibre makers and end-users like brands belong to an organised industry. There are around 600 small, micro and medium enterprises engaged in the spinning of yarn, which is used to make a fabric that finds usage in garment-making
Source: Economic Times
Firms that opt for the new tax rate will lose out on the Minimum Alternate Tax credit lying on their books. Companies looking to switch to the just-lowered 22% corporate tax rate without exemptions, will not be able use accumulated credit of minimum alternate tax. The Central Board of Direct Taxes (CBDT) has issued a detailed circular that MAT credit will not be available to a company that opts for lower corporate tax rate of 22%. However, companies will have the option to go for the new regime after completely utilising MAT credit. ET on Monday reported about CBDT clarifying that MAT credit will not be allowed. “...Tax credit of MAT paid by the domestic company exercising the option under Section 115BAA of the Act shall not be available consequent to exercising of such option,” said Wednesday’s circular. Brought forward loss on account of additional depreciation shall also not be available to companies. Finance minister Nirmala Sitharaman had on September 20 slashed the corporate tax rate to 22% without exemptions or incentives from current 30% offering a 1.45 lakh crore boost to the economy, which grew by its slowest pace in six years in April-June, 2019-20 at 5%.She also cut MAT rate to 15% from 18.5%. Tax experts say companies sitting on large MAT credits will continue in the old rate regime. “This option (switchover to lower rate) can be exercised any time so taxpayers can exhaust these carry forwards and then shift to the beneficial tax regime,” said Vikas Vasal, national leader, tax, Grant Thornton in India. Companies availing various tax exemptions, such as under special economic zones schemes, have large MAT credit. “This could be a huge cost to some companies that will perhaps consider continuing under the old regime for the time being,” said Rohinton Sidhwa, partner, Deloitte India. He said new tax regime is heavily weighed in favour of new companies and investors. “The onetime transition costs, requirement for fresh investments and other hurdles posed for existing taxpayers are significant enough to dent benefits intended in the original. Dilip Lakhani, senior chartered accountant, said, “Corporates with units in SEZs will not opt for reduced rate as without MAT credit, they do not stand to gain in any way. The same will apply for infrastructure and real estate companies.” Experts had a word of caution. MAT credit not available to companies opting for lower corporate tax rate “Denial of carried forward MAT will be subject to litigation. If at all carried forward MAT credit was not intended to have been allowed to be set off under the new lower tax rate regime, it would have been best to have had this matter addressed by an explicit amendment in the ordinance itself,” said Hitesh D Gajaria, co-head of tax, KPMG India.
Source: Economic Times
We believe the reform is more about solving the structural drag on India’s growth rather than solving near-term growth pangs. Since the recent significant cut in corporate tax rates, there has been a significant debate on its efficacy in reviving growth, especially in light of the fiscal cost of the move. We believe the reform is more about solving the structural drag on India’s growth rather than solving near-term growth pangs. The structural drag on India’s growth has been one of a ‘slowing middle’, or slowdown in the creation of highquality jobs driving weaker growth in middle-income households,UBS’ detailed modelling two years back captured this trend. The growth in entry-level car sales, which has lagged overall car sales growth over last few years, was a clear symptom of this. However, in last few years, the fall in household savings and increasing consumer leverage, has helped consumption remain resilient vis-à-vis household incomes and, at the same time, made this structural issue less obvious to the markets. This was compounded by the fact that gains in market share made by listed companies were overlooked by the markets. Of course, the global shift towards automation has also been at play in India. Our detailed study earlier this year suggests that increasing trade tensions between the US and China, apart from rising costs and environmental standards, has prompted international companies which rely on global supply chains, to explore diversifying away from China’s long-settled manufacturing hub. A recent UBS Evidence Lab survey of global corporations pointed towards India being looked at as a potential destination for those looking to move away from China, similar to other countries in ASEAN. This presents India with a golden opportunity. Capitalising on this has the potential to provide India with a fix to the structural issue of ‘slowing middle’. With an effective tax rate of 17% for new manufacturers India now has the lowest tax rate among its peers which has strengthened its competitiveness. A UBS Evidence Lab survey of Indian corporates (skewed more towards small corporates which are already manufacturing/exporting) suggests that other issues such as land, labour, infrastructure, ease of doing business, etc. may not be as negative and broadbased as widely believed in the markets. Nonetheless, it is likely to take some time for perceptions to change and for these factors to improve the country’s global competitiveness. However, a shift of manufacturing from China may not wait for these changes to take place. The tax cut is possibly an attempt to overcome reticence and provide an immediate boost by making India compelling now. Other recent government measures, like allowing 100% FDI in contract manufacturing, relaxing sourcing norms for single brand retail, and the introduction of a new refund mechanism for exports, also suggest heightened policy focus. This can potentially bring increased FDI into the economy (which is more sticky), more job creation and also inflow of advanced technology leading to productivity gains. Our analysis suggests that the cut in corporate tax rates may not boost near-term demand as only 20% of total corporate tax revenues come from companies sitting in consumptionrelated sectors and, assuming even if 100% of benefits arising out of tax savings are passed on to the end consumer, the benefits to the economy will be equivalent to only 15 bps (0.15%) of GDP. The recent slowdown, especially the slump in auto sales over the last 4-5 months, is more of a negative feedback loop, in our view. There is no new structural drag per se. The cyclical impact of NBFC (non-bank financials) shock from last year on autos/property/MSMEs started to feed through to the rest of the economy. This coincided with government spending being muted year-on-year and the Reserve Bank of India (RBI) running tight-toneutral system liquidity, along with continued high real interest rates. The former is changing and system liquidity has become surplus over last four months. The Indian government has announced a series of measures including up fronting of stateowned bank recapitalisation, expediting goods and services tax (GST) refunds to MSMEs, measures to improve monetary transmission, etc. All of which measures should help break the negative feedback loop, although the pace and scale of any recovery remains contingent on implementation and on the type and scale of future calibrations. Our discussions with investors and market movements suggest that mechanical impact of earnings upgrades due to tax savings has already been priced in. However, what is not yet priced in by the market is the benefit arising in the medium-to-long term from the opportunity. Another topical debate is that tax cut for new manufacturers alone could have boosted FDI and manufacturing; why cut it for all? Possibly, this may be to sustain a level playing field. Earlier, new manufacturing companies were being taxed at a lower 27.8% and there was a gap of 7% between new and old companies. This gap remains largely similar now, at 8%. In summary, although the corporate tax rate cut will not give a material boost to near-term demand it is an effective policy measure to aid India’s medium-term growth. This is unlike, say, temporary GST cuts, which may boost near-term demand but are unlikely to solve the structural drag of a slowing middle.
Source: Economic Times
It has lowered its projection for global trade growth to 2.7% in 2020, down from the previous projection of 3%. The World Trade Organization (WTO) on Tuesday sharply cut global trade growth forecasts for 2019 to 1.2% from the earlier 2.6%, mainly due to trade tensions and sluggish global economy. “Escalating trade tensions and a slowing global economy have led WTO economists to sharply downgrade their forecasts for trade growth in 2019 and 2020,” the organisation said in a statement. World merchandise trade volumes are now expected to rise by only 1.2% in 2019, substantially slower than the 2.6% growth forecast made in April, it said. As per the Geneva-based organisation, downside risks remain high and that the 2020 projection depends on a return to more normal trade relations. It has lowered its projection for global trade growth to 2.7% in 2020, down from the previous projection of 3%. A sharper slowing of the global economy could produce an even bigger downturn in trade, it added. “The darkening outlook for trade is discouraging but not unexpected. Beyond their direct effects, trade conflicts heighten uncertainty, which is leading some businesses to delay the productivity-enhancing investments that are essential to raising living standards," said WTO Director-General Roberto Azevêdo. "Job creation may also be hampered as firms employ fewer workers to produce goods and services for export,” he added.
Source: Economic Times
Govt should ride the wave & unleash more bold reforms that will bear fruit in the coming 3-4 Years. Recent measures to help revive the economy were delivered in three quick doses by GoI on the back of the ‘mini-crisis’ of the GDP growth rate for Q1 FY2019-20 hitting 5%, a decline for five quarters in a row. The first two doses were intended to stabilise the patient and rectify mistakes made in the Budget — tax on rich individuals, lack of clarity on angel tax, restrictions on ecommerce, criminal penalty on corporate social responsibility (CSR), etc — as well as some small measures to boost demand for the automobile industry, encourage exports and complete housing projects. The third dose was a reduction in corporate taxes to 25.2% for existing investments for large corporates from 35%, and 17.2% (including surcharges) for new investments in manufacturing. This was intended to revive investment and boost growth. Data shows that a 10 percentile point reduction in the effective corporate tax has a 2-3 percentile point increase in the investment rate, with a bigger effect in manufacturing than in services. India’s corporate investment rate fell by about 5-6% of GDP after the 2008 global financial crisis, and never recovered since. Lower corporate taxes could also increase formalisation, increase labour productivity and reduce the debt-equity ratio. These cuts will take time to transmit into new investment. Positive investment effects are usually enhanced if other reforms accompany a cut in corporate taxes, such as a more open and competitive trade regime, a less restrictive labour market, reduced cost of credit, better regulation and less red tape, and sufficient infrastructure. Without these accompanying measures, the effects are weaker, and corporates will use the tax reduction for stock buybacks and other expenditures. Estimates of revenue losses of around 0.7% of GDP due to the tax cuts are likely to be much lower, as all exemptions have been removed and new investment will spur growth and revenue intake from a higher base. More aggressive privatisation of State-owned companies would be a good way to make up the revenue shortfall, which will, in any case, pay higher dividend to government. The clarification on angel tax and allowing CSR on research-related expenditures will also help boost badly needed R&D and encourage startups.
Reforms is the Key
So, do we need to wait for another crisis to trigger accompanying reforms? Will GoI think it’s done enough? GoI should ride the wave and unleash more bold reforms that will bear fruit in the coming 3-4 years, and will complement the cut in corporate taxes to create greater synergy for more investment and job creation. A round of reforms to boost agriculture would be a great help to boost growth and rural demand. Removing the Essential Commodities Act, and reforming the Agricultural Produce Market Committee (APMC) would be logical reforms. Removing subsidies on fertilisers and electricity, and increasing funds to Pradhan Mantri-Kisan Samman Nidhi (PM-KISAN) and the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) scheme would be the Pareto-optimal and fiscally neutral way forward. Working with willing states for a new labour policy that removes all restrictions would be a huge reform. Such a move should lead to a big increase in foreign direct investment (FDI), especially in labour-intensive industries. India’s restrictive labour laws, in the words of Atal Bihari Vajpayee, are ‘anti-worker’, as they only serve the interests of a tiny minority of largely unproductive workers. GoI has adopted the target of $1trillion in exports to achieve the $5 trillion GDP target by 2024-25, and has recognised that this will require exports to grow by 18-20% every year. With a benign global environment between 2000 and 2013, India’s non-oil exports grew by 18% a year and GDP growth exceeded 8% a year, it’s fastest growth ever. But even in the more difficult environment of slow global growth, if it puts its mind to it, India may be able to achieve similar export growth, being such a small player in global markets.
Expand the Export Basket
Among the world’s top 20 importers, India is among the top 10 exporters in four markets: the UAE, the US, Hong Kong and Turkey. India has more than 5% market share in exports only in the UAE. It has 2-3% market share in Turkey, the US, Hong Kong and Singapore and around 1% share in Britain, South Korea, Italy, Mexico, Belgium and Spain. In all other top 20 markets, India has less than 1% market share, figuring marginally in Chinacentred supply chains, but not much in Europe or US-centred ones. Clearly, there is a huge potential to increase India’s share of exports in these top 20 markets and in new markets, such as Latin America and Africa. It will not be easy, and will require a new strategic trade and industrial policy — not just a few small incentives here and there — as well as liberalisation of agro-based exports. A US India trade deal and India’s signal to join the Regional Comprehensive Economic Partnership (RCEP) will be positive signals as well. A major push to attract tourism will also boost new investment and job creation. The writer is distinguished visiting scholar, Institute of International Economic Policy, George Washington University, US
Source: Economic Times
As the festive season approaches, the order books at Surat’s textile industry, one of the largest in the country, are down by 40 per cent as compared with last year, owing to the overall market slowdown coupled with long-pending input tax credit refunds blocking working capital. For every component of the industry — manufacturing, processing or trading — orders from within and outside the state have been drying up. Usually Diwali is the time things pick up, even if demand has been lacklustre the rest of the year. But this time, that old festive magic isn’t ...
Source: Business Standard
U.S.factory activity hit its lowest level in more than a decade, as President Donald Trump's trade wars take a toll on American and global manufacturing. U.S. factory activity hit its lowest level in more than a decade, as President Donald Trump's trade wars take a toll on American and global manufacturing. The Institute for Supply Management, an association of purchasing managers, said Tuesday that its manufacturing index shrank for the second straight month to 47.8% in September, down from 49.1% in August. Any reading below 50 signals that the sector contracting. Investors on Wall Street reacted immediately, as the reported slowdown in manufacturing fanned fears of weakening global growth. The Dow Jones Industrial Average, which was up this morning, plunged more than 200 points to 26,739, after the ISM report was released. The nearly 15-month trade spat with China and tariffs on steel, aluminum and other products may have been intended to help US manufacturers. But it appears to be having the opposite effect, spurring the Federal Reserve cut interest rates by a quarter-point in September for the second time this year. Weakening business confidence and softening global demand have also hit American factories hard, prompting pullbacks in both production and employment. This month's measure reported the lowest level of manufacturing activity since June 2009, the last month of the Great Recession. Fotios Raptis, senior economist at TD Economics, said that the entire U.S. economy could head toward a contraction if the index dropped even lower. He added that coupled with factory declines overseas, the global economy was also at risk next year. "The U.S. economy is at the precipice of an economy-wide contraction in output," Raptis said. President Donald Trump blamed the Federal Reserve for U.S. manufacturing's difficulties, arguing that the Fed's rate hikes last year pushed up the value of the dollar, which makes U.S. goods more expensive overseas. "As I predicted, Jay Powell and the Federal Reserve have allowed the Dollar to get so strong, especially relative to ALL other currencies, that our manufacturers are being negatively affected," Trump said on Twitter. "Fed Rate too high. They are their own worst enemies, they don't have a clue. Pathetic!" But the report suggests that global trade played a bigger role. Timothy Fiore, Chair of the ISM Manufacturing Business Survey Committee, pointed to the 2.3 percentage point drop in a measure of new export orders, its lowest level since March 2009. The ISM survey also includes comments from its members, and three of the 10 manufacturers quoted said that the tariffs are hurting their business. None blamed a strong dollar or the Fed. Most economists also point to the trade fight for manufacturers' problems. "Simmering trade tension is the obvious culprit for the manufacturing weakness," said Eric Winograd, senior U.S. economist at AllianceBernstein". The trade war is wreaking havoc, to the point where the incipient upturn in manufacturing in China is not transmitting, at all, to the U.S.," said Ian Shepherdson, chief economist at Pantheon Macroeconomics. The trade war is also hurting economies around the world, as both trade and manufacturing are slowing at a pace close to the Great Recession. The World Trade Organization said Tuesday it expects volumes of traded goods to rise 1.2% this year, its weakest pace since 2009. Surveys of purchasing firms compiled by the data firm IHS Markit pointed toward declines in manufacturing in South Korea, Japan, Indonesia and Malaysia, all export-reliant countries. The U.K. factory sector has also remained in negative terrain for five consecutive months, its longest stretch since the financial crisis. Weakening production is spilling over to hurt the American workforce. The ISM survey indicates that more factory owners are considering cutting jobs than the prior month. Employment contracted at a faster rate in September, and one of the survey respondents said that lower demand for products ordered had prompted their company to cut 10% of its workforce. Some economists also said that the ongoing union worker strike at General Motors could have played a role in a slower automotive market. "That strike has now begun to affect production at suppliers too," said Paul Ashworth, chief US economist at Capital Economics. When the strike ends, we would expect the manufacturing sector surveys to rebound too." Measures of production and employment slipped by 2.2% and 1.1%. New orders rose a slight 0.1% but remained in negative territory.
Source: Economic Times
The committee will provide clarification on FDI in e-commerce. The much-awaited e-commerce policy that was supposed to clear up regulatory issues for Amazon, Flipkart, Uber, Ola and several web-based service providers might not come out this year, said sources in the government. Sources said discussions were on over the broad contours of the policy, but the final document will be out only after other technology policies are mandated, as the commerce ministry is trying to avoid overlaps and contradictions. “We have had several rounds of discussions and we have in place a broad outlook of how the policy will be,” said a senior ...
Source: Business Standard
Retailers allege violation of FDI rules via deep discounting; DPIIT looking into the matter. The government is keeping a close eye on the festive sales by ecommerce companies following complaints from retailers about predatory pricing and deep discounts offered on those platforms, but would avoid any knee-jerk move, an official said. The Department for Promotion of Industry and Internal Trade (DPIIT) is keeping a watch on the sales after Confederation of All India Traders (CAIT) alleged violation of foreign direct investment rules by Amazon and Flipkart by influencing prices through heavy discounts. “The retail platform has changed and we can’t rush into a decision,” the official told ET. “We are analysing the issue. We will see what action can be taken.” Amazon and Flipkart kicked off the festive season sales last weekend. Offline retailers, led by CAIT, have approached the government complaining that sales can be organised only by the owners of inventory, and not by the marketplaces. As per existing norms, Amazon and Flipkart cannot undertake any sales or influence the prices since these portals are marketplaces and allowed to provide only technology platform. Both the companies have advertised that the discounts are being offered directly by brands. Executives of some top brands have confirmed this, as ET reported in its Wednesday edition. CAIT, however, alleged that the two ecommerce portals have warehouses in large numbers marketplace if more than 25% of the vendor’s purchases are from the marketplace entity, including its wholesale unit. The marketplace entity or its group companies cannot have control over inventory under the FDI rules.
Source: Economic Times
Welspun India, one of the largest suppliers of home textiles to retailers like Walmart, Costco and others, is focussing on the domestic market; even as it eyes ₹10,000 crore of revenue over the next four to five years. While bedsheets and towels continue to be amongst its two most popular offerings, the company is planning to bring premium offerings in flooring solutions like artificial grass and carpet tiles. Welspun India reported net sales of about ₹6,608 crore with a profit before tax and exceptional item of ₹552 crore in FY19. Exports to markets like US, Europe and the Middle East account for over 90 per cent of its turnover. In the home textiles category, offerings will be expanded into flooring solutions and other adjacencies. Welspun operates in India through an eponymous brand (‘Welspun’) in the mass market; while ‘Spaces’ is its premium brand here. The mass market segment is pegged at ₹6,000 crore. Altaf Jiwani, CFO, Welspun India, said that the company will look at “differentiated offerings” here. For instance, it has introduced ‘reversible bed sheets’ and quick-dry towels. It has also roped in actor Amitabh Bachchan as the brand ambassador. The company also sells premium licensed brand products like Wimbeldon, Nickelodeon and Disney. Branded products account for 17 per cent of its revenues. “We are continuously working on innovation and adding new products to our portfolio. Advanced textiles are something that we are looking at in the coming days,” he told BusinessLine. Apart from retail channels, the company is also eyeing hospitality and e-commerce as future growth drivers. “Growth in FY19 was in single-digit but with new products and focus on newer channels, we expect a double-digit growth this fiscal,” he added.
New Segment
The big bet on “advanced textiles” includes making disposable towels out of non-woven textiles and filters for auto and power sector. Advanced textile will broadbase its clientele by adding sectors such as auto, healthcare and FMCG. The second emerging business segment is flooring. Welspun is looking at offering luxury performance tiles, wall-to-wall carpets and artificial grass for offices, cricket fields. Jiwani said that the company is investing nearly ₹1,100 crore in its Hyderabad facility and offerings are expected to hit the market “any time soon”. “Currently, most wall-to-wall carpets, carpet tiles, luxury performance tiles are exported from China, USA, Belgium, Thailand. But, floorings is a huge market that we now want to cater to. Over the next 4-5 years, the advanced textiles and floorings segment has the potential to generate ₹3,000 crore of revenue,” he said.
Source: The Hindu Business Line
|
Item |
Price |
Unit |
Fluctuation |
Date |
|
PSF |
1041.55 |
USD/Ton |
-2.11% |
9/30/2019 |
|
VSF |
1504.77 |
USD/Ton |
0.19% |
9/30/2019 |
|
ASF |
2153.98 |
USD/Ton |
0% |
9/30/2019 |
|
Polyester POY |
1101.90 |
USD/Ton |
-0.38% |
9/30/2019 |
|
Nylon FDY |
2351.20 |
USD/Ton |
0% |
9/30/2019 |
|
40D Spandex |
4070.73 |
USD/Ton |
0% |
9/30/2019 |
|
Nylon POY |
2273.99 |
USD/Ton |
-0.61% |
9/30/2019 |
|
Acrylic Top 3D |
1221.22 |
USD/Ton |
-0.57% |
9/30/2019 |
|
Polyester FDY |
2582.81 |
USD/Ton |
0% |
9/30/2019 |
|
Nylon DTY |
5305.99 |
USD/Ton |
0% |
9/30/2019 |
|
Viscose Long Filament |
1298.42 |
USD/Ton |
0% |
9/30/2019 |
|
Polyester DTY |
2203.81 |
USD/Ton |
0% |
9/30/2019 |
|
30S Spun Rayon Yarn |
2147.66 |
USD/Ton |
0% |
9/30/2019 |
|
32S Polyester Yarn |
1670.40 |
USD/Ton |
-0.42% |
9/30/2019 |
|
45S T/C Yarn |
2414.36 |
USD/Ton |
0% |
9/30/2019 |
|
40S Rayon Yarn |
1810.77 |
USD/Ton |
0% |
9/30/2019 |
|
T/R Yarn 65/35 32S |
2259.96 |
USD/Ton |
0% |
9/30/2019 |
|
45S Polyester Yarn |
2414.36 |
USD/Ton |
0% |
9/30/2019 |
|
T/C Yarn 65/35 32S |
2042.38 |
USD/Ton |
0% |
9/30/2019 |
|
10S Denim Fabric |
1.24 |
USD/Meter |
-0.11% |
9/30/2019 |
|
32S Twill Fabric |
0.69 |
USD/Meter |
0% |
9/30/2019 |
|
40S Combed Poplin |
0.96 |
USD/Meter |
0% |
9/30/2019 |
|
30S Rayon Fabric |
0.57 |
USD/Meter |
0% |
9/30/2019 |
|
45S T/C Fabric |
0.66 |
USD/Meter |
0% |
9/30/2019 |
Source: Global Textiles
Note: The above prices are Chinese Price (1 CNY = 0.14037 USD dtd. 30/09/2019). The prices given above are as quoted from Global Textiles.com. SRTEPC is not responsible for the correctness of the same.
Provincial Trade and Industry Minister Mian Aslam Iqbal on Wednesday chaired a meeting to discuss setting up new industrial clusters, special economic zones (SEZs) and establishment of necessary infrastructure in industrial zones here at the Punjab Board of Investment and Trade. Provincial Trade and Industry Minister Mian Aslam Iqbal on Wednesday chaired a meeting to discuss setting up new industrial clusters, special economic zones (SEZs) and establishment of necessary infrastructure in industrial zones here at the Punjab board of Investment and Trade. The meeting decided to set up a coordination committee to deal with provision of electricity and gas in industrial estates and matters pertaining to the Federal government. The meeting also approved funds for construction of link road of Quaid-e-Azam Apparel Park. On this occasion, Mian Aslam Iqbal said that Punjab was a best destination for investment, that was why it had so far attracted more than one billion Dollars investment, while more investors were also ready to invest their money in this province in future. He said that world-class infrastructure was being provided in industrial zones and a number of foreign companies had invested in Faisalabad Industrial Estate. He said that provision of necessary facilities were being ensured on priority basis in industrial estates and meeting would also be held within days with relevant federal departments to proceed further in this regard. Mian Aslam Iqbal said that Quaid-e-Azam Apparel Park project was being completed speedily on the Motorway-II near Sheikhupura to strengthen the textile sector. While the country's largest industrial estates were being established in Muzaffargarh and Layyah over an area of 20,000 acres and this would gear up development process in southern Punjab. The minister said the government was committed to providing facilities to investors and industrialists.
Source: Urdu Point
As the US-China trade war grinds on, an Indonesian garment maker has begun cashing in on the seismic shift in global supply chains. And the pay off could be a billion dollars or more. Sri Rejeki Isman PT, which makes apparel for J.C. Penney Co, Guess? Inc, Walmart Inc and other major brands such as H&M, is increasingly fielding calls from some of the biggest names in fashion looking to diversify their suppliers away from China. “One of the biggest players in the US wants to shift in a big way. It’s close to US$1 billion,” its chief executive Iwan Setiawan Lukminto said in an interview. He declined to share details as the discussions are confidential. Indonesia, and specifically its textile sector, hopes to be a beneficiary as heightened trade tensions between the two superpowers force global firms to pivot production out of China, which for decades was the world’s workshop. Companies are now scrambling to secure supply lines from other locations like Taiwan, Vietnam, and Bangladesh to skirt the tariffs on US-bound goods, but Indonesia has thus far fallen behind due to its red tape and other barriers, like rigid labor laws. Lukminto said the number of supply inquiries has jumped since last year, after US President Donald Trump slapped higher tariffs on goods produced in China. “It then exploded,” he said. “The customers are looking for who is ready for that business and who can replace China.” The US market now accounts for 13.6% of Sri Rejeki’s exports, up from about 3% a year ago. Lukminto plans to increase the firm’s production capacity by a fifth next year to meet surging demand. This is good news for textile makers who are emerging as a bright spot in the biggest Southeast Asian economy currently battling slowing global demand for commodities. Indonesia saw exports slump for the 10th straight month in August, while the government has pared this year’s growth projection to 5.1% from 5.3%.The Indonesian Textile Association has been lobbying President Joko Widodo to speed up reforms to enable it to meet its export target of US$14.6 billion next year, from US$12.5 billion in 2017. As Widodo prepares to be sworn in for a second five-year term later this month, he’s looking to revive the manufacturing sector. The president, known as Jokowi, also received a World Bank briefing in September that showed Indonesia has struggled in comparison to regional rivals in attracting companies wanting to shift out of China.
‘Wake-Up Call’
Between June and August this year, 33 Chinese-listed companies announced plans to set up or expand production abroad, with 23 moving to Vietnam alone, according to figures presented by the World Bank to Jokowi and senior cabinet members. The others shifted to Cambodia, India, Malaysia, Mexico, Serbia and Thailand. None moved to Indonesia. “Indonesia seems to be lagging in terms of gains from trade diversion and from investments in the new supply chains” despite its large labor force, competitive wages and ample land, said Maybank senior economist Chua Hak Bin. “Bureaucratic regulations, protective labor laws and high trade barriers are handicapping its draw,” Chua said. Jokowi has demanded ministers do more to lure business from China. While the trade war had been a “wake-up call for US players” that now want to increasingly relocate out of China, Lukminto said it had also been a wake-up call for the local industry and the Indonesian government. “If they don’t listen, then we would be worried. But now they are listening,” he said. Indonesian business groups have been asking the government to overhaul labor laws, which include some of the world’s most generous severance provisions. They also want the nation’s dense regulatory environment to be eased and rules governing foreign investment and ownership levels relaxed.
Paying Off
Some of the efforts to lure investment have begun paying off, although it might mean more competition for the local firms such as Sri Rejeki. Taiwan-based sportswear supplier Eclat Textile Co Ltd plans to invest US$170 million setting up a weaving and garment factory in Indonesia to diversify and reduce risks, it said in a filing last month. Despite some positive signs that a deal could be reached in the trade war, the geopolitical face-off is far from over. US and Chinese negotiators are expected to hold a fresh round of trade talks this month. “Everybody is now worried about how to move,” Lukminto said, referring specifically to the US textile companies that have business in China and are now looking for alternatives.
The trouble is China’s manufacturing prowess is hard to replace or replicate. It makes up 30% of the global market capacity, while Indonesia is only 2%, he said. “We cannot absorb it all,” Lukminto said. “The big players are also asking us to expand. They need it very badly.”
Source: Bloomberg
