The Synthetic & Rayon Textiles Export Promotion Council

MARKET WATCH 14 OCT, 2019

NATIONAL

INTERNATIONAL

RCEP trade ministers’ talks end in impasse

No joint statement will be issued, as certain key issues are yet to be resolved, even after two days of intense negotiations on October 11 and 12, according to one of the sources. Trade ministers and negotiators of the 16-nation Regional Comprehensive Economic Partnership (RCEP) grouping failed to drum up a concensus on sticky issues at what was expected to be the last ministerial in Bangkok before a potential deal in November and the talks remained inconclusive, sources told FE. No joint statement will be issued, as certain key issues are yet to be resolved, even after two days of intense negotiations on October 11 and 12, according to one of the sources. This has cast a shadow over a leaders’ summit, which was expected to be attended by heads of the 16 nations on November 4 to announce the RCEP deal. Nevertheless, trade negotiators will meet again in Bangkok between October 14 and 19 to resolve the vexing issues relating to trade remedies, e-commerce, trade competition, trade in services, rules of origin and investment, said another source. Commerce and industry minister Piyush Goyal, who represented India, tweeted after the meeting: “Participated in deliberations to promote trade & investment to achieve mutual economic growth, while safeguarding the interest of our domestic industry and farmers.” While potential RCEP partners, including Singapore, are piling up pressure on India to conclude talks early, New Delhi wants to make sure the interests of its industry is protected and it doesn’t end up becoming a dumping ground of products, yet again (its free trade agreements with Asean, Japan and Korea have already widened its trade deficit). Safeguards, particularly, remain a crucial part of India’s negotiations, as the government faces mounting domestic opposition to any RCEP deal. Already, scores of industries, from steel and pharma to textiles, have expressed fears of dumping by China, while the dairy industry, including players like Amul, have apprehended that subsidised dairy products from New Zealand would flood the Indian market. After a bilateral meeting with Damien O’Connor, minister of state for trade and export growth of New Zealand, in Bangkok, Goyal tweeted: “We discussed ways to further deepen our bilateral cooperation & strengthen our trade & investment ties, while taking into account the concerns of our farmers and the dairy sector.” Goyal also held a series of bilateral meetings in Bangkok with ministers of countries like Japan, China, Singapore, Malaysia, Australia and New Zealand. A source had earlier told FE that India was planning to employ an “auto-trigger” safeguard mechanism for imports from not just China but also Australia and New Zealand to better protect domestic players from irrational spike in imports. This mechanism will typically come into play once imports of a particular sensitive product breach a stipulated limit. India is in negotiations to be able to invoke “auto-trigger” in case of 68 sensitive products for at least 8-10 years initially. Similarly, New Delhi wants the flexibility of a snapback — or transitional safeguard — mechanism for all RCEP members. India and China on Saturday have pledged to work on reducing trade imbalance after talks between Prime Minister Narendra Modi and Chinese President Xi Jinping in Tamil Nadu. Both the sides decided to set up a high-level economic and trade dialogue mechanism to improve trade balance that is currently heavily tiled in favour of China. But the efficacy of any such mechanism can be tested only in the coming months. India’s merchandise trade deficit with China stood at $53.6 billion in FY19, or nearly a third of its total deficit. Its deficit with potential RCEP members (including China) was in excess of $105 billion in FY19. Similarly, between April 2000 and June 2019, FDI from China stood at just $2.26 billion, or a meagre 0.52% of the cumulative inflows, according to the DPIIT data. The RCEP is a proposed mega trade pact between the 10 Asean members, and India, Australia, China, Japan, South Korea and New Zealand. According to initial estimates, it accounts for 25% of global gross domestic product, 30% of trade, 26% of foreign direct investment flows and 45% of population.

Source: Financial Express

Back to top

Exporters draw DRI wrath for alleged GST violations

The country’s primary anti-smuggling intelligence agency has begun resending notices to exporters for availing GST exemptions where exports preceded imports. The Directorate of Revenue Intelligence (DRI) move followed a Supreme Court stay on a Gujarat High Court order favouring the exporters. The high court had quashed a revenue department notification allowing DRI to penalise exporters for allegedly not following “preimport condition” and availing wrongful Goods and Services Tax (GST) exemptions. Many exporters will now have to cough up Integrated Goods and Services Tax (IGST) and penalties as these notices mean that the tax department will not wait for another apex court directive. These companies had first exported goods and then imported raw materials but still claimed export benefits in the form of tax leeway. About 1,000 exporters have been issued such notices. “The exporters will have to opt for the legal remedy of moving to the respective high courts for obtaining a stay on such show-cause notices,” said Abhishek A Rastogi, partner at Khaitan & Co, who is representing some of the exporters in the case. The exporters have been asked to pay IGST first as the foreign trade policy has been amended and several notifications were issued in the last few months. ET has seen a notice issued to an exporter on October 10, while the Supreme Court stay was ordered on October 4. The IGST rate in these cases is 18% on the average, while for some products it is 12% and 5% for very few. Industry trackers say that under the earlier tax regime and foreign trade policy (FTP), there was no duty if imported raw materials were used for exports, even when exports preceded imports. The current GST framework has laid down certain conditions for exporters to avail certain benefits. A revenue department notification said raw materials cannot be imported after export of the final product. The government introduced an amendment in the GST framework that led to DRI chasing down the exporters. The amendment spoke mainly of a “pre-import condition” that every exporter needs to follow to avail duty exemptions on imports. “In cases where exports preceded imports, availment of exemption does not seem legal and proper. This office has initiated an inquiry in wrongful availment of exemption,” a notice read. “While the stay has been granted by the Supreme Court, it does not mean that the other exporters must pay the amount towards pre-import,” Rastogi said.

Source: Economic Times

Back to top

GST might have flaws but cannot damn it now: Finance Minister Nirmala Sitharaman

Conceding that GST may have some flaws in its present form, finance minister Nirmala Sitharaman on Friday asked tax professionals not to curse it and sought their help to make it better. The minister was replying to the concerns raised by taxation industry professionals here, who said the industry was "cursing" the government over how the GST was implemented. Billed as the biggest reform in indirect taxation, the goods & services tax, which does away with a host of levies from the federal to the local government levels, was implemented in July 2017. On several stakeholders "cursing" GST, Sitharaman even objected to a person who raised the question, and asked him not to damn the law which was passed by Parliament and all the state assemblies. "After a long time, many parties in Parliament and in state assemblies worked together and came up with the Act. I know you are saying this based on your experiences but suddenly we cannot call 'what a goddamn structure it is'," the minister said. She interacted with people from industries, chartered accountants, company secretaries and many other stakeholders in the financial sector. Stating that it has been only two years since GST was implemented, she said she would have wished the new structure was satisfactory from day one. She also said she wants all stakeholders to give some solutions for better compliance. "We cannot damn it. It might have flaws, it might probably give you difficulties but I am sorry, it is the law of the land," she added. BM Sharma, a member of the Cost Accountants Association, later explained why he said what he said. "I said that the objective of GST was to ease of doing business, reduce tax complexities, rationalise 13 taxes, and reduce litigation and corruption. But the same is not being achieved due to several problems and industries and professionals are complaining now," he said. As Sharma suggested some solutions, the minister asked him to meet her in Delhi. Earlier during a presser, when asked about the low GST collections, minister attributed it the difficulties due to weather-related disasters and also poor compliance. "Yes, GST collection in some areas has not been strong enough. Various districts in Maharashtra, Karnataka, Himachal, and Uttarakhand were flooded and we had to postpone filing returns from these areas," she said. She also said the revenue secretary has already formed a committee to indentify where collection has not been adequate as per our expectation. "We have some reports on how in some cases evasion has happened. The committee will look into how this can be plugged and if there has been any under-invoicing," she said.

Source: Economic Times

Back to top

India seeks checks on 50% of Chinese imports in trade pact

India's insistence on providing a safety valve to cover at least 50% of Chinese imports under Regional Comprehensive Partnership (RCEP), the proposed 16-nation trading bloc, has held up conclusion of talks for the mega trade agreement that has been in the works for over six years now. During the ministerial meeting over the weekend, commerce and industry minister Piyush Goyal also demanded that India's concerns on e-commerce, investment, taxation, micro, small & medium enterprises (MSMEs) and policies framed by local bodies should also need to be reworked before it could sign the deal, triggering complaints by negotiators from other countries, which have been pushing for early conclusion of talks, sources told TOI. While Asean and others are ready to sign the deal, India is accused of holding it up. Just when things looked settled, Goyal and his team raised concerns resulting in a situation where the talks ended without a joint statement by the ministers. Negotiators from other countries, especially Singapore and Thailand, blamed New Delhi for holding up the deal. A report in Japan Today alleged that Indian negotiators "almost banged the table" at the "very tough and serious" meeting in Bangkok.

Although the commerce department refused to comment on the issue, sources said negotiators have been given time till October 22 to try and address India's concerns, leaving just a small window of a fortnight before leaders from the 16 countries meet to take stock of the talks that were to be end by the year. Sources said, there is a distinct possibility that only a limited deal would be possible to be thrashed out over the next month, unless adequate protection is built into the agreement. At the heart of the friction is the government's concern over a possible surge in Chinese imports once the deal is signed as India has indicated that it can allow up to 80% of goods to enter the country at zero duty. Indian negotiators have now demanded that the automatic safeguard mechanism, which will result in higher duties in case of a sharp jump in imports, should cover more goods instead of 60-65 proposed at the moment. Similarly, it has also demanded that there should be more protection for re-routing of goods via a third country to prevent China from shipping, say, a refrigerator via Vietnam by only attaching a handle. Although import duty on 80% of Chinese goods will be lowered to zero over a 20-year period, a bulk of goods from Asean nations will be able to enter Indian ports without payment of customs duty over the next few years.

Source: Times of India

Back to top

India, China looking at ‘RCEP protocol’ to fix trade imbalance

India and China are looking at the feasibility of a new bilateral mechanism or protocol under the Regional Comprehensive Economic Partnership (RCEP) to address New Delhi's concerns over trade imbalance. India is weighing RCEP despite domestic concerns that the country could be flooded with cheaper Chinese goods. Chinese President Xi Jinping's reported assurance to Prime Minister Narendra Modi during the second informal summit held on October 11, 12 at Mamallapuram that India's concerns would be taken into account was an indication that the two sides could have separate protocol under RCEP for a balanced trade, people familiar with the matter said. China and India, Xi said, should strengthen coordination within the framework of multilateral mechanisms including the G20, the BRICS, the Shanghai Cooperation Organization, and the China-Russia-India cooperation, and need to explore the gradual expansion of the 'China-India Plus' cooperation to South Asia, Southeast Asia and Africa. The two countries should create a more unobstructed regional connectivity network and strike the Regional Comprehensive Economic Partnership (RCEP) agreement as early as possible, according to a report in state-run Chinese Xinhua. Modi, according to Xinhua, said India is willing to join hands with China to push for an RCEP agreement at an early date, and boost connectivity and anti-terror cooperation. ET has learnt that Modi had told Xi that RCEP deal should be balanced and equitable, and this could lead to a separate India-China protocol under RCEP. "Obviously, when trade is being discussed, one of the issues briefly touched upon was the RCEP, the discussions between sixteen countries on forming a common regional trading agreement, and PM said that India looks forward to this but it is important that RCEP is balanced. That a balance is maintained between trade in goods, trade in services and investment. And President Xi noted this and said that China and India are ready to discuss it further and that Indian concerns would be taken into account. It was a brief discussion but an important point," foreign secretary Vijay Gokhale told reporters.

Source: Economic Times

Bangladesh, Nepal to grow faster than India: World Bank report

Strong domestic demand, which propped high growth in the past, has weakened, driving a slowdown across the region, the report states. Bangladesh and Nepal are estimated to grow faster than India in 2019, according to the World Bank, which said that overall growth in South Asia is projected to slow down this fiscal in line with a global downward trend. Pakistan’s growth rate is projected to deteriorate further to a mere 2.4% this fiscal year, as monetary policy remains tight, and the planned fiscal consolidation will compress domestic demand, it said. Growth in South Asia is projected to fall to 5.9% in 2019, down 1.1 %points from April 2019 estimates, casting uncertainty about a rebound in the short term, the World Bank said in its latest report.

Regional trends

The latest edition of the South Asia Economic Focus, Making (De)centralization Work, finds that strong domestic demand, which propped high growth in the past, has weakened, driving a slowdown across the region. Imports have declined severely across South Asia, contracting between 15 and 20% in Pakistan and Sri Lanka. In India, domestic demand has slipped, with private consumption growing 3.1% in the last quarter from 7.3% a year ago, while manufacturing growth plummeted to below 1% in the second quarter of 2019 compared to over 10 per cent a year ago. “Declining industrial production and imports, as well as tensions in the financial markets reveal a sharp economic slowdown in South Asia,” said Hartwig Schafer, World Bank Vice President for the South Asia Region. “As global and domestic uncertainties cloud the region’s economic outlook, South Asian countries should pursue stimulating economic policies to boost private consumption and beef up investments, he said. The report noted that South Asia’s current economic slowdown echoes the decelerating growth and trade slumps of 2008 and 2012. With that context in mind, the report remains cautiously optimistic that a slight rebound in investment and private consumption could jumpstart South Asia’s growth up to 6.3 per cent in 2020, slightly above East Asia and the Pacific and 6.7 per cent in 2021.

 

Decentralisation for public services

In a focus section, the report highlights how, as their economies become more sophisticated, South Asian countries have made decentralisation a priority to improve the delivery of public services. “Decentralisation in South Asia has yet to deliver on its promises and, if not properly managed, can degenerate into fragmentation, said Hans Timmer, World Bank Chief Economist for the South Asia Region. “To make decentralisation work for their citizens, we encourage South Asian central governments to allocate their resources judiciously, create incentives to help local communities compete in integrated markets, and provide equal opportunities to their people, Mr. Timmer said. In India, growth is projected to fall to 6.0% this fiscal year. Growth is then expected to gradually recover to 6.9% in fiscal year 2021 and to 7.2 per cent in the following year. In Bangladesh, the real GDP growth is estimated at 8.1% in 2019, up from 7.9% in 2018, the report said, adding that the country’s growth is projected at 7.2% in 2020 and 7.3% in 2021. The garment industry of Bangladesh has benefitted immensely from the ongoing trade tensions between the U.S. and China, Timmer said. “In general, what we see in high frequency data is that Bangladesh is doing better than the rest of the region, especially than India, Sri Lanka and Pakistan. We see that in industrial production, we see that in exports,” he said. In Nepal, GDP growth is projected to average 6.5 per cent over this and next fiscal year, backed by strong services and construction activity due to rising tourist arrivals and higher public spending. In Afghanistan, with improved farming conditions and assuming political stability after the elections, growth is expected to recover and reach 3% in 2020 and 3.5% in 2021. In Bhutan, GDP growth is expected to jump to 7.4 % this fiscal year. In Maldives, growth is expected to reach 5.2% in 2019.

In Sri Lanka, growth is expected to soften to 2.7% in 2019. However, supported by recovering investment and exports, as the security challenges and political uncertainty of last year dissipate, it is projected to reach 3.3% in 2020 and 3.7% in 2021. “Pakistan’s economy is slowing as the country passes through yet another macroeconomic crisis with high twin deficits and low international reserves. With an IMF Extended Fund Facility supported stabilization program in place, growth is expected to remain low in the near-term,” the report said. “Obviously, the tensions are problematic for the whole region, but as we set off a year ago, the lack of integration into international markets is not just because of a lack of regional integration. Like India, Pakistan is underperforming in all markets and in the world,” Mr. Timmer said.

Source: The Hindu

Back to top

India still fast-growing economy with much potential: World Bank economist

If you look at the growth of domestic demands that's slowing much faster than the growth of GDP: World Bank's Chief Economist for South AsiaIndia has been relatively hit hard by the recent global slowdown resulting in its projected growth dropping to 6.0 per cent in 2019, but it's still a fast-growing economy with a lot of potential, a top World Bank economist said on Sunday. "It's still a fast-growing economy. So even with the recent slowdown, it has growth numbers that are higher than in most countries of the world. It's still a fast-growing economy with a lot of potential," World Bank's Chief Economist for South Asia Hans Timmer told PTI. In its latest edition of the South Asia Economic Focus, the World Bank said that India's growth rate is projected to fall to 6 per cent this fiscal. However, it said the country was expected to gradually recover to 6.9 per cent in 2021 and 7.2 per cent in 2022. "It has been hit relatively hard by the recent global slowdown in their investments in durable consumption. And so that means that they have to deal with severe problems," Timmer said in response to a question on India's economy, whose growth rate in 2016 was 8.2 per cent and in the next two years it dropped by 2.2 percentage points. "No, it's not the biggest (drop), but it is comparable to what we saw in 2012 where there was also a slowdown. It's somewhat less than what we saw in 2009. But it's a serious slowdown. That is true," Timmer said. There are many signs of a sharp slowing of the Indian economy, recently, he noted. "We saw that with the last numbers on quarterly GDP, but it's even stronger when you look at the components of GDP. If you look at the investment then the annual growth now is 9 per cent below what it was a year ago. There was a sharp decline in consumption. And so that's mainly durable consumption, he said. "If you look at the growth of domestic demands that's slowing much faster than the growth of GDP because imports are slowing fast also. It's a typical case where investors both in companies and in households are cautious to invest. "In our view, that is very much in line with what is happening in the world, because everywhere in the world you see that investments very quickly are coming down and debt is driven by a sentiment that spreads across the world driven by uncertainty in global markets," he said. Timmer said that, the World Bank in its estimates, has found that "80 per cent of the slowdown" in India could be coming from the international causes. "That is a transmission mechanism that is not too traditional. In the past we always thought that you have a shock in another part of the world, say a high-income country than import amount is coming down, and that means that export opportunities for developing countries are coming down. They see their export slowing and then the whole domestic economy is slowing also, he noted. But since the great recession, the global financial crisis and other transmission mechanism has become much more important that it directly goes to domestic demand in the developing countries that...everywhere in the world investors are becoming very cautious, he said. It's either through the sentiments or through the financial markets and that in a case like that the imports are slowing much faster than the exports.

"That's what we are seeing in India now. We are seeing it in Sri Lanka. We are seeing it in Pakistan and to some extent we are seeing it in Bangladesh also, though the pictures there are little bit mixed because Bangladesh actually benefited from the trade tensions through the exports of garments...," Timmer said. According to Timmer, the slowdown is mainly due to investor sentiment. Because of the uncertainty in the world, everywhere one sees that investors are just hesitating. "Once they start delaying, that has a knock-on effect. And you see that on the company side and you see it in households' sides, he said. "It reinforces some of the problems that were already there in the Indian economy, which started more than two years ago when the slowdown started, it was especially the problem in the financial markets -- first in the banking sector and later in the non-banking...that actually was slowly being resolved perhaps too slow but slowly being resolved. "And now you have the additional slowdown where you could expect that that translates again into increased problems in the financial sector," Timmer added.

Source: Business Standard

Back to top

Goyal to stress on safeguards against import surges, better services deal at RCEP meet

Members, including the ASEAN and China, want liberal rules of origin. India is grappling with the challenge of gaining at least some concessions in the services sector and putting in place the necessary safeguards to protect its domestic industry and agriculture against import surges at the on-going Regional Comprehensive Economic Partnership (RCEP) Ministerial meet in Bangkok where the proposed pact is to be given a final shape. “The services agreement is in a pathetic shape. Most of the members, especially the ASEAN, are unwilling to give commitments that improve upon their present levels of openness. Members are also not keen to include sufficient number of items under the auto trigger mechanism for imposition of automatic safeguard duty in case there is an import surge once tariffs are eliminated,” a person close to the negotiations told BusinessLine. Trade and Economic Ministers from all 16 RCEP countries, which includes India, China, the 10-member ASEAN, Japan, South Korea, Australia and New Zealand, will hold an inter-sessional meeting in Bangkok on Saturday to move towards concluding the negotiations. Directions will be given to officials to give the required finishing touches over the next couple of weeks so that a conclusion of the RCEP agreement can be announced at the RCEP Leaders Summit in Bangkok on November 4.

Difficult call

Commerce & Industry Minister Piyush Goyal has his party’s support to go ahead with the RCEP pact, but he has also been advised to make some gains in the services sector and put in place necessary safeguards to protect vulnerable industrial and agriculture sectors. This is proving to be a difficult call. “Most of India’s demands for improving movement of workers and professionals are being denied or delayed. There are no clear commitments for increase in work visas or spouse visas and no immediate movement in RCEP travel cards while members are insisting on retaining their right to deny visas whenever they want. The services chapter is a total disappointment,” the source said. RCEP members are also reluctant to offer India adequate safeguards against import surges. “India had proposed tough rules of origin (ROO) to ensure that third countries don’t route their exports through another country. For instance, if India imposed additional tariffs against China for certain goods compared to other RCEP members such as the ASEAN, the ROO should be tough enough not to allow Chinese goods to be routed through ASEAN countries into India. But there has been huge opposition to India’s proposal from other members including China and the ASEAN,” the official said. New Delhi’s other proposal of putting in place an auto trigger mechanism for automatic imposition of safeguard duties once imports cross a given threshold limit has also been met with a lukewarm response. Most members are insisting that it be restricted to just a handful of items (about 100) and be implemented for a short period.

Seeking protection

The Commerce Ministry has been flooded with submissions for protection against import tariff cuts from sectors such as steel, copper, heavy industry, automobiles, engineering goods, chemicals, plastics, electronics as well as dairy and agriculture. “Very few of these sectors can actually be accorded protection under the RCEP as tariffs may be eliminated on about 74 per cent-80 per cent for China, Australia and New Zealand and on more than 90 per cent items for the ASEAN, Japan and South Korea. However, the Minister is expected to try his best to lower these numbers and lobby for better safeguards in his bilateral meetings scheduled on Thursday,” the official said.

Source: The Hindu BusinessLine

GST: Double whammy for SMEs; new rules for ITC refund may aggravate the cash flow problem

Input Tax Credit: The new rule notified on October 9 may aggravate the cash flow of SMEs. The Union government’s new circular to restrict the reimbursement of input tax credit to 20% of the total amount claimed in GSTR 3B return will aggravate the problem of SMEs that have already been grappling the issue of delayed payments. This 20% limit will apply in the case of those buyers whose suppliers have not uploaded the correct invoice details in the GSTR-1 form uploaded on the GSTN portal. The move is aimed to curb the use of fake GST invoices to claim the input tax credit under the GST. The Union government has unearthed a large number of cases wherein GST’s inbuilt mechanism of input tax credit to avoid cascading of taxes was misused by some companies to fraudulently claim the input tax credit. However, the move will also aggravate the problem faced by small assesses under the GST who were already facing the problem of delayed payments against the bills raised by them and belated reimbursement of the input tax credit from the government. Industry bodies representing the small and medium enterprises have already made several representations to the ministry of finance to allow them to deposit the GST tax on rrealisationof the bills raised by them. Under the present mechanism, the companies are required to file GSTR-3B returns within 20 days of the next month. They are also required to pay GST to be collected from a buyer to the government at the time of filing the return even if the buyer delays the payment. Although companies and government undertakings are required to clear the bills raised by the SME sector firms within 45 days of the receipt of the bill. However, the payment of SMEs is delayed in the absence of stringent penal provisions. Section 37 of the CGST Act, 2017 which deals with the furnishing of the details of outward supplies in form GSTR-1 mandates that a registered person shall furnish the details of such supplies within 10 days of the completion of the tax period. This week the government has restricted reimbursement of input tax credit under the GST to 20% of the total claimed amount in case a supplier has not uploaded the details on GSTN portal or if there is a mismatch. This new rule will adversely affect the cash flow of smaller companies that were already facing the delays in payment after the generation of invoices and also delayed reimbursement of the input tax credit from the government.

Source: Financial Express

Back to top

India wants data localization in RCEP for security interests

India has proposed locating computing facilities inside the country if it is meant to protect its essential security interests and national interests at the the ongoing negotiations of the proposed Regional Comprehensive Economic Partnership (RCEP) trade agreement. New Delhi also said that the participating countries may prevent cross-border transfer of information by electronic means, including personal information, only where it is “necessary to achieve a legitimate public policy objective” or “necessary, in the country's opinion, for the protection of its essential security interests or national interests”. India’s alternate proposal on the Asean Package for the agreement’s e-commerce chapter came on Friday after 14 members of the 16-country RCEP including ASEAN opposed data localisation. China was not a proponent. However, in the financial services chapter of the agreement, India is learnt to have agreed to financial data transfer in talks held in Vietnam in late September. It is believed to have agreed that financial services companies will be allowed to move and store data of Indians abroad. The proposal is crucial as the Reserve Bank of India’s (RBI) in its April 2018 notification mandated “all system providers shall ensure that the entire data relating to payment systems operated by them are stored in a system only in India”. It later clarified that a copy of domestic data can be stored abroad in the case of cross-border transactions. The financial services agreement (FSA) will partly nullify that position. Interestingly, although the FSA was negotiated by the RBI, the contact point for the FSA is the commerce ministry and not the central bank. In today's proposal, India also said that “no party shall have recourse to dispute settlement for any matter relating to electronic commerce arising under any of the chapters/ any provision in this agreement”. However, no data related issue has been finalised, officials said even as the RCEP talks reach their final stages before being concluded next month. Commerce and industry minister Piyush Goyal is attending the RCEP ministerial meeting in Bangkok from October 11-12. “Asean has moved a compromise proposal that is being discussed. No issue has been settled including on data transfers,” said an official. The Ministry of Electronics and Information Technology has approved the proposal, sources said. While the commerce and industry ministry had called for strict data localisation norms in its draft ecommerce policy, the electronics and information technology ministry is working on the Personal Data Protection Bill and has become the nodal agency for all data-related matters.

Source: Economic Times

Back to top

IIP shrinks 1.1% in Aug on dismal consumer, capital goods output

Industrial growth shrank 1.1% in August, after a gap of 26 months, reinforcing fears of a slowing economy and deteriorating consumer sentiment. Industrial production, as measured by the index of industrial production (IIP) had grown 4.8% August last year. Data released by the statistics office on Friday showed April-August factory output growth at 2.4% well below 5.3% for the same period in the last fiscal. “IIP growth has been lowest in last 81 months and first contraction after June 2017,” said Devendra Kumar Pant, chief economist, India Ratings.

In all, 15 out of 23 industry groups reported positive growth. Production of consumer non-durables, a barometer for the rural economy, rose 4.1% in August but that of consumer durables, demand for which is more urban centric, shrank 9.1%. Production of capital goods, an indicator of investment activity, contracted 21%. “Growth has been driven down sharply by consumer durables and capital goods. Quite clearly both the drivers of the economy are very much down and need a major push,” said Madan Sabnavis, chief economist at CARE Ratings. Two of the three key constituents of IIP--manufacturing and electricity contracted 1.2% and 0.9%, respectively while mining growth was 0.1%. India's passenger vehicle sales slumped 23.7% in September, the eleventh straight month of declines. As per Pant, further rate cuts in December 2019 monetary policy as the Indian economy is presently facing a structural growth slowdown originating from declining household savings rate, and low food inflation and agricultural growth. “Low agricultural growth is feeding into low agricultural and non-agricultural wage growth in rural areas, which is impacting rural demand adversely,” he said.

Source: Economic Times

Back to top

Govt considers making technical textiles must for ministries to boost jobs

Technical textiles are functional fabrics used in multiple industries such as automobile, construction, and agriculture. With an eye on boosting domestic production and job creation, the government will soon make the use of technical textiles mandatory for ministries and public agencies, according to sources. As many as 92 categories of technical textiles, including fire-resistant curtains, geogrid for railways, bulletproof jackets, leno bags for transporting agri commodities, and architectural membranes for tents, have been identified for mandatory use, say senior government sources. Seven ministries that undertake major infrastructure and public works will lead the initiative. These are the ...

Source: Business Standard

Back to top

Malaysia to study impact of India’s planned trade action

Government and industry sources told Reuters last week that New Delhi is looking for ways to limit palm oil imports and other goods from Malaysia, in retaliation for Mahathir's speech at the United Nations in September when he said India had” invaded and occupied” Jammu and Kashmir. Malaysia's Prime Minister Mahathir Mohamad said his government will monitor the trade situation with India, which is reported to be considering trade curbs on the Southeast Asian nation over his criticism of actions in Kashmir, news wire Bernama reported. Government and industry sources told Reuters last week that New Delhi is looking for ways to limit palm oil imports and other goods from Malaysia, in retaliation for Mahathir's speech at the United Nations in September when he said India had” invaded and occupied” Jammu and Kashmir. Malaysia had said it did not receive “anything official” from India. Mr. Mahathir said on Sunday his government will “study the impact of the action taken by India”, the government owned Bernama said. “They are exporting goods to Malaysia too. It's not just one-way trade, it's two-way trade,” Mr. Mahathir was quoted as saying in the report. India is the world's biggest importer of edible oils and is the biggest buyer of Malaysian palm oil. It bought 3.9 million tonnes of Malaysian palm oil in the first nine months of 2019, according to data compiled by the Malaysian Palm Oil Board. Malaysia's key imports from India include petroleum products, live animals and meats, metals, chemicals and chemical products.

Source: Reuters

Back to top

We need to improve the tight credit situation: NITI-Aayog VC

Low credit-to-GDP ratio, perhaps, implies the banking sector is unable to meet the economy’s credit needs: Rajiv Kumar “Talk of recession is completely misplaced,” Rajiv Kumar, Vice-Chairman, NITI-Aayog, said adding that “the RBI has perhaps been overly cautious” in cutting GDP growth numbers. A home-grown economist, Kumar believes that the economy is in a ‘cyclical’ downturn and says that “we will emerge out of it” with the help of the policy measures that have been announced. In a quick chat with BusinessLine, Kumar said that banks need to pull up their socks. “That there is a tight credit situation is undeniable from all the data you see. So, we need to improve this,” he added. Do you believe that we are in a phase of recession? Certainly not! Recession is when you get negative growth in two quarters consistently; we are nowhere near that. Our last reading was 5 per cent, which admittedly was low, but certainly nowhere near recession. Talks of a recession are completely misplaced. That is my firm belief. What we are seeing is a cyclical downturn from which we will emerge because of the policy measures taken by the government. Some structural bottlenecks also have to be addressed and the government will tackle them as well. Agencies have been slashing India’s GDP growth targets. How do you read the Reserve Bank of India’s lowering of GDP growth target? I think the RBI is perhaps being over cautious in trying not to be wrong. I think it may not have fully taken into account the impact of the measures announced in the last couple of months and which may be in the pipeline now. According to its (RBI) calculations, the second half growth will be 6.6-6.72 per cent; I think, it will probably be higher than that. So, our overall growth will not be 6.1 per cent (as suggested by the RBI), but higher than that. I think the first quarter (2019-20) performance could well be the bottoming out of the cycle and we should see higher GDP growth from the second quarter onwards. Growth in the third and fourth quarters could be significantly higher because of measures announced and being implemented. We will begin to see a cyclical upturn. Till last year, the discourse was about job losses; now we are talking of jobs created. Where has the shift or change happened? (Not evident) Let us feel good about the fact that, now, there is talk about job creation and the talk of job losses is over. Job creation, I think, is happening in the services sector, as I don’t see it happening in the manufacturing in any significant measure. Services such as civil aviation, health and private sector and those related to the financial sector, to some extent, are where I feel jobs are being created. Also, I think there may finally be some jobs created even in the real-estate sector in smaller towns and cities. What is the data you are looking at? I have been looking at CMIE (The Centre for Monitoring Indian Economy) numbers, which are released more frequently than the National Sample Survey Organisation (NSSO). I am hoping that NSSO will also be releasing numbers with greater frequency. The latest CMIE report reveals good increase in jobs for the month of September 2019. You have been talking about Development Financial Institutions (DFI). You think banks are not able to meet expectations? My point is that, perhaps, like China, India needs specialised banks, which can effectively address sectoral issues. The days of financial super markets may be passé. Even the Warwick Commission, headed by Avinash Persaud, appointed by the European Commission in the wake of the 2008 global financial crisis, of which I was one of the commissioners, had come to the same conclusion. Financial sector super markets do not effectively meet the specialised needs of specific sectors, specially the MSMEs, and often end up with asset-liability mismatches. Like in China, they have Industrial Commercial Bank of China, Agriculture Bank of China, China Construction Bank, Bank of China (specialising in foreign transactions) etc. In my view, if we can create specialised banks catering to the needs of specific sectors, then, they may perform better. The central issue is that our credit-to-GDP ratio is 54 per cent; in China, it is close to 200 per cent; in Korea, it is 140-odd per cent. How we raise this credit-to-GDP ratio is the challenge. Such a low ratio perhaps implies that the banking sector is unable to meet the credit needs of the economy. That, there is a credit need is undeniable going by all the data you get. So I am looking at ways to improve this. This (DFI) is one option on the table and I am sure there are also other options too. But the bottom line is, we need to improve the credit-to-GDP ratio. Talking about economic upturn, the auto sector is still worried. How do you counter it? Latest, I heard from Kia Motors — that their soon-to-be-rolled-out model has got huge bookings. So this in itself tells a story. I believe, based on what some industry representatives and observers have said, that the auto sector may need to re-look at its own business model — the frequency at which new models are brought out; their own response to price elasticity — can they discover new buying segments if they were to bring down prices; export strategy. It’s really time for the sector to introspect and we would be happy to work with it to evolve the way forward. The government has been coming out with packages — corrective measures — to check the economic downturn. Do we expect more packages? I think the government is constantly reacting to challenges which are emerging or have remained unaddressed. The situation is constantly under review and the government is ready to quickly respond to these challenges There are perhaps some issues on which you will see some response in due course. what are the areas that have remained unheard of and untouched? Not unheard of, but being addressed and measures are in the pipeline. The Prime Minister has himself said that we need to take some tangible measures for promoting exports. That is going to be the key for ramping up our growth rate, going forward. The Department of Commerce will follow up on the major announcement to replace the Merchandise Exports from India Scheme (MEIS) scheme. We need measures to further improve trade facilitation and trade logistics.

Source: The Hindu BusinessLine

Back to top

Narendra Modi, Xi Jinping talk trade and terror amid display of bonhomie

On the first day of their informal summit in the historical port town of Mamallapuram, Tamil Nadu, Prime Minister Narendra Modi and visiting Chinese President Xi Jinping on Friday discussed India’s trade deficit with China and the need to enhance bilateral trade, both by volume and value. They also discussed the common challenge of radicalisation and terrorism that the two countries face. In the wake of recent developments over the Kashmir issue, there were concerns if the two leaders would be able to rekindle the “Wuhan spirit”, a reference to their first informal summit in China in April 2018 that had helped the two Asian neighbours overcome the trust deficit of the 73-day Doklam military standoff. Briefing the media late Friday evening, Foreign Secretary Vijay Gokhale stressed that Modi and Xi spent “quality time” with each other. Officials highlighted that the two leaders, according to the original itinerary, were supposed to spend six hours over the course of the two-day summit, but spent nearly five hours on the first day itself. The Chinese president landed in Chennai Friday afternoon and then proceeded to the port city of Mamallapuram, some 50 km away. New Delhi hoped the Modi-Xi handshake, as they took a tour of the over 1,000-year-old rock-cut structures at the historical city in the evening, and a one-on-one dinner that stretched for 150 minutes, over an hour beyond schedule, would help break the ice on recent tensions post August 5 over Kashmir. The Foreign Secretary said Modi and Xi’s one-on-one discussions, first while touring the monuments, and later at the dinner, were evidence of their good “personal rapport” built over their two informal summits, first in Wuhan and now, and 17 other meetings. He said their respective delegations were not present at the time of the dinner. If New Delhi hopes to convince Beijing to see the Kashmir issue from India’s perspective, China, on the other hand, wants greater access of its products into India, especially now in the context of its tension with the US on trade. Gokhale said the two leaders, during their tour of the rock cut monuments, exchanged notes about the trading links between southern India and southern part of China, and the need to enhance this aspect of India-China bilateral relationship. dinner, the foreign secretary said the two leaders spoke of their respective national visions and priorities of their governments, with the PM speaking of his renewed mandate for economic development. Xi said he looked forward to working closely with the PM over the next 4.5 years, Gokhale said. The Chinese president said he would be keen to engage on all issues for the rest of the PM’s current term. There was no confirmation if the Kashmir issue came up for discussion. The Foreign Secretary said the two are scheduled to hold one-on-one discussions on Saturday, where they are likely to deliberate on international and regional issues. Developments preceding the summit have not been altogether conducive. Beijing hosted Pakistan PM Imran Khan, his third visit to China since August, just before Xi left for India. The Chinese President told Khan that Beijing was “paying close attention to the current situation in Jammu and Kashmir” and “the facts are clear”. China riled India further as it said the two neighbours must resolve the dispute based on the UN Charter, relevant UN Security Council resolutions and bilateral agreements. New Delhi responded sharply stating J&K is an integral part of India, and it was “not for other countries to comment on the internal affairs of India.” What is more, Xi is slated to visit Nepal after concluding his India visit on Saturday evening. Sources said the two sides are also likely to issue separate statements following the conclusion of the discussions on Saturday. Apart from trade, the need for confidence-building measures on the border is on the agenda. Trade ministers of Asean countries and their six trading partners, including China and India, are currently discussing the RCEP (Regional Comprehensive Economic Partnership) free-trade agreement in Bangkok. The Rashtriya Swayamsevak Sangh-affiliated Swadeshi Jagran Manch announced protests against India signing RCEP, specifically cautioning how dumping of cheap Chinese goods has forced most domestic industries to shut down. “In such a case, the commitment of zero import duty on 80 per cent of Chinese products in the RCEP is beyond comprehension. This will not only destroy our remaining industries but will also hurt our workers’ jobs and ‘Make-in-India’ will remain only a dream,” the Manch said. In the evening, the two leaders toured the historical sites. Modi, in a veshti, and Xi in white shirt and black trousers, attended cultural performances and partook of local cuisine. “The free-flowing nature of the informal summit at the UNESCO World Heritage site will continue and deepen contacts at the highest level and guide the future trajectory of India-China relationship,” Ministry of External Affairs spokesperson Raveesh Kumar tweeted. Modi arrived in Chennai at 11am on Friday morning, took a helicopter to East Coast Road and drove to Taj Fisherman Cove, the venue of the summit. “I am happy to be in the great land of Tamil Nadu, known for its wonderful culture and hospitality. It is gladdening that Tamil Nadu will host President Xi Jinping. May this Informal Summit further strengthen ties between India and China,” the PM tweeted. The Boeing 747-Air China, carrying Chinese President along with a 90-member delegation, landed at Chennai Airport at 2 pm. The delegation comprises senior members of the Communist Party of China, foreign minister Wang Yi and others. After a brief stopover, the Chinese President drove to Mamallapuram, 56 km from Chennai. Normal traffic was stopped in the IT corridor through which he travelled. Educational institutions and shops and other commercial establishments were closed for the day. Xi drove in a Hongqi, a Chinese luxury car 18 feet long, 6.5 feet wide and 5 feet tall, which weighs 3,152 kg. Hongqi literally means “red flag”. He arrived at Mamallapuram at 5 pm. and Prime Minister Modi received him and shook hands in front of the Arjuna's Penance, a monolithic monument in the historic location. Modi, who tweeted in Chinese and Tamil too, appeared in traditional Tamilian dress of white dhoti, white shirt and an angavasthram. He gave a personal tour to Xi for nearly an hour, as the Chinese president had of the Hubei provincial museum during the Wuhan summit. Both the leaders started from Arjuna Penance where they shook hands, Krishnan's Butter Ball 20feet rock and 250 tonne weight where they raised their clasped hands, with Modi explaining the history and mythology of the monuments. Both the leaders held informal talks on one-on-one without agenda, said officials. After the meet, for 30 minutes they witnessed cultural programme before heading to a private dinner near on the shores of Mamallapuram.

Source: Business Standard

Back to top

Karnataka textile policy failed to achieve intended target: CAG

There was inordinate delay in release of incentives and subsidies. The Karnataka textile policy 2013-18 failed to achieve its intended investment and job generation targets, said the Comptroller and Auditor General of India (CAG). “The ₹10,000-crore investment target and 5 lakh employment generation target envisaged in the policy were not achieved and shortfall was to the extent of 63 per cent and 76 per cent, respectively”, said the CAG in its economic social report for March ended 2018. “Imparting of skill development training to unemployed youth was reduced from 2.96 lakh to 1.09 lakh citing inadequate budgetary support, the report added. The CAG conducted a performance audit on the Karnataka Textile Policy 2013-18 to assess the outcomes of the initiatives and factors responsible for under performance, said Anup Francis Dungdung, Accountant General Karnataka. The government which had planned six textile parks in the State with integrated facilities with private sector participation had not fructified. An amount of ₹6.35 crore was irregularly released to an SPV in Kalaburgi though it had not fulfilled the prescribed conditions,” explained Dungdung. He said “There was inordinate delay in release of incentives and subsidy amount to beneficiary units, which affected their cash flow. Incentive/subsidy to one super-mega project was sanctioned by exceeding the admissible limit under the textile policy on extraneous grounds caused extra financial implications of ₹315 crore.”  “₹84.53 crore released for the implementation of various schemes was retained in the bank for period ranging from two to five years without utilisation. In another case, the department paid ₹51.89 crore to Bescom as penal interest for not clearing the bills in full.” he added.

CAMPA

On the Compensatory Afforestation Fund Management and Planning Authority (CAMPA), Dungdung said there was a shortfall to the extent of 51 per cent in raising compensatory afforestation in compensatory lands in respect of forest lands diverted during 2013-18.

Source: The Hindu Business Line

Back to top

India Ratings pares India’s FY20 growth forecast on sluggish consumption demand

India Ratings and Research on Thursday pared India’s gross domestic product (GDP) forecast for 2019-20 to 6.1%, the second downgrade in two months. The agency had revised its GDP growth estimate to 6.7% from its earlier forecast of 7.3% in August. The downward revision follows the Central Statistical Organisation (CSO) estimating first quarter growth at 5%, lower than India Ratings’ estimate of 5.7%. “Although India Ratings had cited a slowdown in both urban and rural consumption demand growth as one of the key reasons for the downward revision of GDP in its August 2019 forecast, CSO’s fIrst quarter estimate shows that the slowdown has been much sharper than expectation,” the ratings agency said in a report. Private consumption crumbled to 3.1% in the first quarter compared to 7.2% a quarter ago and 7.3% a year ago.  “The GDP growth in first half is likely to be 5.2%. India Ratings expects it to recover to 6.9% in the second half, mainly on account of the base effect,” it said. It highlighted that demand side is the bigger challenge facing the economy due to a collapse in consumption demand and private corporate investment not forthcoming. Therefore, Ind-Ra believes the need is to take steps/measures that will enhance the disposable income/put additional money in the hands of rural/urban households,” it said. Additionally, the government also needs to step up its spend on rural infrastructure activities such as rural roads/rural housing, Mahatma Gandhi National Employment Guarantee Scheme to generate large-scale employment that could add/stimulate consumption demand.

Source: Economic Times

Back to top

Global Textile Raw Material Price 13-11-2019

Item

Price

Unit

Fluctuation

Date

PSF

1008.58

USD/Ton

0%

10/13/2019

VSF

1513.57

USD/Ton

0%

10/13/2019

ASF

2164.57

USD/Ton

0%

10/13/2019

Polyester    POY

1053.72

USD/Ton

1.15%

10/13/2019

Nylon    FDY

2341.60

USD/Ton

-0.60%

10/13/2019

40D    Spandex

4076.63

USD/Ton

0%

10/13/2019

Nylon    POY

2574.35

USD/Ton

-0.27%

10/13/2019

Acrylic    Top 3D

5332.07

USD/Ton

0%

10/13/2019

Polyester    FDY

1283.65

USD/Ton

0%

10/13/2019

Nylon    DTY

2200.54

USD/Ton

0%

10/13/2019

Viscose    Long Filament

2299.28

USD/Ton

0%

10/13/2019

Polyester    DTY

1170.80

USD/Ton

0%

10/13/2019

30S    Spun Rayon Yarn

2158.22

USD/Ton

0%

10/13/2019

32S    Polyester Yarn

1636.30

USD/Ton

0%

10/13/2019

45S    T/C Yarn

2426.23

USD/Ton

0%

10/13/2019

40S    Rayon Yarn

1777.36

USD/Ton

0%

10/13/2019

T/R    Yarn 65/35 32S

2271.07

USD/Ton

0%

10/13/2019

45S    Polyester Yarn

2426.23

USD/Ton

0%

10/13/2019

T/C    Yarn 65/35 32S

2031.26

USD/Ton

0%

10/13/2019

10S    Denim Fabric

1.25

USD/Meter

0%

10/13/2019

32S    Twill Fabric

0.69

USD/Meter

0%

10/13/2019

40S    Combed Poplin

0.96

USD/Meter

-0.29%

10/13/2019

30S    Rayon Fabric

0.57

USD/Meter

0%

10/13/2019

45S    T/C Fabric

0.66

USD/Meter

0%

10/13/2019

Source: Global Textiles

Note: The above prices are Chinese Price (1 CNY = 0.14106 USD dtd. 13/10/2019). The prices given above are as quoted from Global Textiles.com.  SRTEPC is not responsible for the correctness of the same.

Back to top

Trump says US-China working towards meaningful progress in trade talks

Trump's tweet fed a stock rally, with Wall Street erasing the week's losses as investors bet a partial pact would see the US postpone next week's scheduled tariff increases in Chinese imports. President Donald Trump on Friday said Chinese and American officials were working toward meaningful progress in trade talks, boosting hopes for a detente in the two sides' damaging trade war. Trump's tweet fed a stock rally, with Wall Street erasing the week's losses as investors bet a partial pact would see the United States postpone next week's scheduled tariff increases on hundreds of billions of dollars in Chinese imports. "Good things are happening at China Trade Talk Meeting. Warmer feelings than in recent past, more like the Old Days," Trump said on Twitter shortly after officials resumed negotiations for a second day. "All would like to see something significant happen!" Trump is due later Friday to meet with Beijing's top trade envoy Liu He in a sign the two sides expect to make a positive announcement. With the White House engulfed in turmoil, Trump could do with even a partial win. He faces an intensifying impeachment probe by Democrats, which polls show is gaining in public acceptance, and stinging bipartisan criticism for allowing a Turkish assault on Washington's Kurdish partners to go forward by pulling American special forces away from the border in northeast Syria. Since the trade war began last year, however, moments of comity and cheer have more than once been shattered, giving way to jolting deteriorations in relations between the two sides. In the spring, officials said a deal was more or less at hand, only to have Washington resume tariff increases in May after accusing Beijing of reneging on core commitments already put down in writing. Overnight, meanwhile, China's securities regulators set a timetable for removing foreign ownership limits in finance companies in 2020 -- helping attract foreign investment as China's economy slows but also removing constraints on foreign capital. In Beijing, Foreign Ministry Spokesman Geng Shuang told also reporters that China hoped "to promote positive progress" in the talks. Media reports this week have drawn the contours of a partial deal that, while not addressing Trump's core grievances about China's trade practices, would offer something for both sides. China will continue to increase purchases of US farm exports and pledge to refrain from currency manipulation while Washington will suspend a tariff increase, Bloomberg reported. Myron Brilliant, head of international affairs at the US Chamber of Commerce, told reporters on Thursday he had spoken with both sides and that an agreement on currency could emerge this week. "I think that could lead to a decision by the US administration not to put forward a tariff rate hike on October 15," he said. The US Treasury in August branded China a currency manipulator, accusing Beijing of deliberately weakening the RMB to gain unfair trade advantages, making good on a Trump campaign pledge. Where matters go from there remains to be seen, however. China has so far balked at Trump's demands for profound changes in the way Beijing manages its economy, something analysts say could politically undermine the Communist Party. In an editorial on Friday, the party-owned China Daily said a partial deal "is a more feasible objective and one that would be in the common interests of both sides." Meanwhile, the Trump administration has continued to examine ways in which it could exert more pressure on Beijing beyond simply taxing Chinese imports. Washington accuses China of attempting to dominate global industry through massive state intervention in markets, theft of intellectual property, hacking and subsidies, accusations shared by Europe and Japan. Larry Kudlow, a top White House economic aide, said this week this could include heightened regulatory scrutiny of Chinese companies operating in the United States. Elsewhere, Trump has is already raising the temperature for Beijing through non-tariff means. Just since Monday, Washington has imposed visa restrictions on senior Chinese officials and blacklisted more than two dozen Chinese firms, accusing them of persecuting ethnic Uighur Muslims in China's western Xinjiang region.

Source: Business Standard

Back to top

Pakistan: High tariffs bar textile manufacturers from using imported raw materials: WB

Pakistan’s reliance on local raw materials as opposed to imported artificial fibres for textile and apparel production has been linked to exorbitant tariffs and regulatory duties by the World Bank. The World Bank, in its report titled ‘Trading for Development: In the age of global value chains’, has said the tariffs and duties in Pakistan on intermediaries averages 8 percent, which is four times as high in East Asia, including China and Taiwan. “Thus, Pakistani exporters of textiles and apparel — the country’s major export sector — rely mostly on domestic cotton rather than on imported artificial fibers, such as polyester (the leading input to the fast growing global imports of apparel),” the World Bank said in the report. The World Bank said a very small number of textile exporters in the country are presently availing the duty suspension schemes, such as the duty and tax remission on exports, for their imported intermediates as remission takes a much longer time for them. “In practice, approvals for remission take on average 60 days — twice the time specified by law — and clearing customs after approval takes an extra 5-10 days,” the bank said. “For that reason, a mere 3 percent of textile and apparel exporters use the scheme. In Bangladesh, by contrast, obtaining approval for duty suspension on intermediates takes on average 24 hours, and about 90 percent of textile and apparel firms use the scheme.” The World Bank, however, sees strength in the country’s agriculture and livestock sector that could help it improve its participation in the global value chain. “Pakistan’s ability to overcome an export ban on fish and expand horticultural exports attests to the value of building a strong national standards regime,” it said. “Pakistan’s development of a robust national quality standards regime helped to lift the European Union’s ban on the country’s fish exports and facilitated rapid growth in mango and mandarin exports by ensuring full traceability in the supply chain.” Although the country would seem most exposed to the threat of robotization-induced reshoring because its exports are heavily concentrated in goods that robots can help produce, it is one of the commodity exporters that “seem somewhat shielded from the threat of robotization-induced reshoring,” the World Bank said in the report.

Source: Pakistan Today

Back to top

Indonesia to tighten textile import rules following influx of goods: official

Indonesia’s Trade Ministry will tighten restrictions on textile imports in an effort to protect local industries, an official told reporters on Friday. The ministry will require all textile importers to gain approval from the government before they can ship in textile goods, foreign trade director general Indrasari Wisnu Wardhana said. The revision to regulations is targeted to be issued before President Joko Widodo, who takes office for the second term on Oct. 20, appoints new cabinet ministers, he said. The restriction is aimed at protecting local producers of products such as certain types of yarns, fabrics and other goods. “So products that have been produced domestically, should no longer be imported,” Wardhana said. Ade Sudrajat, chairman of Indonesia’s Textile Association (API), said the domestic textile industry has weakened in the past three years due to an influx of imported textiles, combined with sluggish consumption by Indonesian consumers. Imports of textile fabrics rose by 74% between 2016 and 2018, the trade ministry said citing data from the statistics agency. Indonesia imported 413,813 tonnes of fabrics in 2018, it said.

Source: Reuters

Back to top

Reform WTO, resist protectionism: Commonwealth ministers

Commonwealth trade ministers recently vowed to resist all forms of protectionism and to jointly work on an urgent basis towards reforming the World Trade Organisation (WTO). At a meeting in London, ministers from the 53 Commonwealth members declared their collective support for free trade in a transparent, inclusive, fair and open multilateral trading system. They agreed that any WTO reform should take into account the views of all members, underlining the special circumstances of the developing and the least developed countries, as well as small and vulnerable economies, including small island developing states (SIDS), according to a Commonwealth press release. The ministers also endorsed an action plan to boost trade among their countries to at least $2 trillion by 2030, through the Commonwealth Connectivity Agenda. Intra-Commonwealth trade is projected to reach $700 billion by next year. “The multilateral trading system is the only way for our countries, as diverse as they are, to trade in a predictable, stable, transparent and fair environment. While the global trading system may be far from perfect, it is the surest pathway towards eradicating poverty,” Commonwealth secretary general Patricia Scotland said. “We must work together to promote free trade and reform the multilateral system to make sure it works for every nation, small or large....Trade has the power to drive growth, jobs and opportunities; it is an essential tool in the fight against extreme poverty and insecurity, chair of the meeting, UK secretary of state for international trade and president of the board of trade Liz Truss said. Ministers called for an end to the impasse regarding the WTO’s Appellate Body, a key panel of judges, whose rulings help resolve the trade disputes. They highlighted the need to update WTO rules to address new challenges and opportunities, including e-commerce. They pledged support for a global agreement that would prohibit certain forms of fisheries subsidies that contribute to overcapacity and overfishing, and eliminate subsidies that contribute to illegal, unreported and unregulated fishing by the end of 2019.

Source: Fibre2Fashion

Back to top

Circular Fashion: Closing clothing’s waste loop

Clothing is one of our most basic necessities, but it is also one of our greatest contributors to environmental waste and pollution. The fashion industry on its own produces 20% of global wastewater and 10% of global carbon emissions. This is more than all international flights and maritime shipping combined. Beyond the production of clothes and apparel, the way we use and consume an article of clothing over its lifetime also contributes to waste. A study by the University of California at Santa Barbara found that polyester fleece jackets release 1.7 grams of plastic microfibres each time they go into the wash. Overall, the textiles economy is expected to have released over 20 million tonnes of plastic microfibres into the ocean by 2050. These alarming statistics call for greater urgency in integrating sustainability into fashion. This sustainability impetus should be a shared responsibility between consumers and businesses. If customers are growing increasingly wary of the purchase decisions they make, opting to buy more sustainable products, manufacturers need to likewise progress towards the manufacture of more sustainable, eco-friendly and, eventually, circular fashion. The ultimate goal for the fashion industry should be to operate within a circular economy. The concept of circularity deals with a departure from the take-make-waste extractive industrial model to one that decouples economic activity from the consumption of earth’s finite resources. This means the total eradication of waste and pollution from the entire system and maximising the utility of present resources. Decarbonisation, which is the overriding focus behind many of the environmental initiatives the industry is pursuing, is only addressing one part of the issue. Waste is the other significant part of the broader environmental conversation and begs for the same level of attention. Many issues plague the industry’s efforts to generate less waste. Apart from consumer demand leading to gross oversupply, with as much as 30% of garments produced going unsold each year, textile decisions also contribute to the problem. A single kilogram of cotton, which is arguably the world’s most popular material for garments, requires 20,000 litres of water to produce – water that cannot be used for any other purpose, which also compounds on the water scarcity issue that affects many of these cotton-producing countries. Much of the onus in moving to sustainable, circular fashion lies with clothing manufacturers and the supply chain. Manufacturing companies are responsible for ensuring that the downstream production for textiles involves as little wastage and use of biodegradable resources as possible. As the root source of the manufacturing process lies with them, the duty then falls largely on their shoulders to develop the industry into a circular economy. On the consumer level, many of the world’s most well-known brands like H&M and Zara are now considering the use of more sustainable materials like viscose, which is a biodegradable plant-based fibre and less taxing on water resources – up to ten times less water is needed to produce it compared to cotton. However, as demand could start to outpace supply, viscose producers must continue to invest in research and development efforts to increase recyclability of fibres so that these materials can remain in the loop without the need to generate waste. For example, Singapore-based RGE recently joined a group of investors including H&M Group, Virala and Fortum to help Infinited Fiber Company Oy (IFC) scale up its technology which turns textile waste and other pulp-based materials into new textile fibres. This is a truly circular method of textile fibre production that could show the way forward for the industry. While individual efforts to become more sustainable can help make some progress towards a circular fashion industry, more needs to be done between firms – even competitors. They must collaborate on common initiatives to educate and share information with consumers around the sustainability of materials used in their clothing. One such example is CircularID, which brings together H&M, Target, PVH Corp, Microsoft, Waste Management and others to promote circularity by creating a microchip that can be weaved into every product created. Consumers can scan this with their personal mobile devices to learn more about the item’s manufacture and origin. As consumers grow increasingly aware of the production context of their purchases and retailers and manufacturers start to incorporate circularity in their processes, the supply chain likewise needs to step up. New supply chain models are required to support this shift towards circularity. For a start, we need to find ways to recapture value at the end of the product lifecycle through reverse logistics that transports waste back into the loop for upcycling. From a materials standpoint, producers need to accept the challenge to innovate for closed-loop, regenerative manufacturing of textiles that can create sustainable apparel for the world, working together with more clothing brands to generate awareness and demand for these materials. Textile and apparel leaders need to lead the drive for circularity, not treating sustainability as a buzzword or a token initiative to get into investors’ good books, but to really exhaust themselves trying to integrate sustainability across the entire value-chain. They should also be open-minded and focused on the collective good for society, especially when it comes to working with other like-minded partners. Rather than “divide-and-conquer”, sustainability begs for a “unite-to-conquer” strategy. We can look forward to more positive forward momentum on circularity for the industry as the collective efforts of more partnerships start to bear fruit

Source: Innovation in Textiles

Back to top

Companies welcome US-China trade truce, ask for more steps to end fight

President Donald Trump said Washington will suspend a tariff hike planned for Tuesday on $250 billion of Chinese goods. Companies have welcomed a US-Chinese trade truce as a possible step toward breaking a deadlock in a 15-month-old tariff war, while economists caution there was little progress toward settling core disputes including technology that threaten global growth. President Donald Trump said Washington will suspend a tariff hike planned for Tuesday on $250 billion of Chinese goods. In exchange, Trump said China agreed to buy as much as $50 billion of American farm goods. Details of other possible agreements weren't immediately released. The bruising battle over China's trade surplus and technology ambitions has disrupted global trade. Economists warn a final settlement might take years to negotiate. Despite that, financial markets rise ahead of each round of talks and fall back when no progress is reported. Companies acknowledged Friday's agreement was a modest step and appealed to both governments to step up efforts to end the fight that is battering manufacturers and farmers. Washington still is planning a December 15 tariff hike on $160 billion of smartphones and other imports. Before then, Trump and Chinese President Xi Jinping are due to attend an economic conference in Chile in mid-November. That is raising hopes a face-to-face meeting might produce progress. "Taking tariffs out of the equation for at last the next two months will give space for substantive negotiations," said Jake Parker, senior vice president of the US-China Business Council, an industry group. Trump said Friday's deal has yet to be put down on paper but said, "We should be able to get that done over the next four weeks." China's government welcomed "substantial progress" but gave no details of possible agreements. "I don't think it's a victory, but it eases the situation," said economist Yu Chunhai at Renmin University in Beijing. He said both sides want to restore business and consumer confidence. There was no word of agreements on the core issues that sparked the dispute. Those include US pressure on Beijing to roll back plans for government-led creation of global competitors in robotics, electric cars and other technologies. "There remains significant work ahead to address many of the most important US trade and investment priorities," Myron Brilliant, executive vice president of the US Chamber of Commerce, said in a statement. Still, he called Friday's announcement a "ray of hope." Washington, Europe, Japan and other trading partners say China's plans violate its market-opening obligations and are based on stealing or pressuring companies to hand over technology. Chinese leaders see those tactics as the surest path to prosperity and global influence. "With the key structural issues no closer to being resolved, we suspect that a mini deal would, at best, simply delay a breakdown in the negotiations," said Julian Evans-Pritchard and Martin Lynge Rasmussen of Capital Economics. Friday's announcement also made no mention of commitments by Beijing in sensitive areas including subsidies to industry and cyber security, or the status of telecom equipment giant Huawei, which faces damaging US sanctions. Trump imposed curbs in May on sales of American components and technology to Huawei Technologies Ltd., China's first global tech brand. Trump has said he is willing to use Huawei, one of the biggest global makers of smartphones and network switching gear, as a bargaining chip in the trade talks. "The two sides will now return to a 'muddle through' strategy that avoids further tariff escalation but may not substantially reduce tensions," Michael Hirson and Kelsey Broderick of Eurasia Group wrote in a report. "Both the US and China are likely to continue targeting each other through non-tariff measures, such as investment restrictions and regulatory barriers, which will be highly disruptive." Tit-for-tat tariff hikes by both sides have raised costs for producers and consumers. Some companies are shifting production and supply lines out of China to avoid the US tariffs, suggesting they expect the sanctions to stay in place for an extended period. China's exports to the United States, its biggest foreign market, have plunged, adding to pressure on Xi's government to shore up cooling economic growth and avoid politically dangerous job losses. The looming December 15 tariff hike leaves a "black cloud" over Apple Inc. and other tech companies with factories or customers in China, said Dan Ives of Wedbush Securities in a report. He said it would be a "gut punch" if it goes ahead. US complaints about Chinese technology policies, cyber spying and protection of patents and other intellectual property "will be the focus of tech investors," said Ives. Another potential stumbling block is how to enforce any agreement. Talks broke down in May over Beijing's insistence that Trump's punitive tariffs had to be lifted once a deal took effect. Washington says some must remain in place to ensure Chinese compliance. Trump and Xi agreed in June to resume negotiations but there have been no breakthroughs. Despite that, Beijing has gone ahead with other industry-opening initiatives aimed at making China's economy more competitive and productive. None, however, addresses Trump's complaints and business groups say they have had little impact on foreign companies.

Source: Business Standard

Back to top

PH to join ASEAN single window platform

The Philippines and seven other members of the Association of Southeast Asian Nations are expected to exchange customs and other trade-related documents over a single integrated online platform by yearend to boost cross-border trade and reduce the cost and time of doing business across the region. Finance Undersecretary Gil Beltran said that aside from the Philippines, the other ASEAN member-states that would go “live” on the ASEAN single window platform are Indonesia, Malaysia, Singapore, Thailand, Vietnam, Brunei and Cambodia. Myanmar and Laos are expected to join the ASW by November and December 2019, respectively. Beltran said that ASEAN member-states that are already “live” on the ASW―Indonesia, Malaysia, Singapore, Thailand, Vietnam and Brunei―exchange more than 460,000 customs and other trade-related documents a year at only 10 percent of the usual cost to traders. Starting next year, additional documents that are expected to be exchanged through the ASW include sanitary and phytosanitary certificates, animal health certificates, self-certification of product origin, and shipping documents, Beltran said in a report to Secretary Carlos Dominguez III during a recent Department of Finance executive committee meeting. Beltran said the United States, Australia and New Zealand would provide technical assistance to ASEAN to ensure that its members could take full advantage of the ASW by 2020. “Once the ASW is streamlined and used across ASEAN, businesses will benefit through lower transaction costs and less time to export their goods to countries within the region,” Beltran said. “Lower transaction costs will, in turn, enhance ASEAN’s trade competitiveness,” he said. The Philippines will join the ASW via its National Single Window dubbed TradeNet, which will facilitate online the processing of permits, licenses and other clearances for the export and import of goods across the region.

Source: Manila Standard

Back to top

Cambodia: Embassy of India hosts Khadi show to mark Gandhi’s birth

The Embassy of India to Cambodia held a Khadi Exhibition at the Mekong Ganga Cooperation Asian Traditional Textiles Museum (MGCATTM) in Siem Reap town to celebrate the 150th anniversary of the birth of Mahatma Gandhi, the ‘Father of the Indian Nation’. The exhibition, which started on October 12, will end next Monday. Ambassador of India to Cambodia Manika Jain said that Gandhi changed the fate of 383 million people of different races, languages, cultures, castes and classes over a vast territory during his fight for independence. Khadi – known as the Fabric of India – is India’s only indigenous fabric that has been popular in the country for centuries and is sought after in contemporary fashion trends worldwide. Khadi is spun and woven by hand, and was not only a means of liberation but also the ultimate goal towards swadeshi, or “made in India”, and swaraj, or “self-rule”, Jain said. “The shift brought about by the technological and industrial production of the cloth, combined with the strategic address and replication of cultural preferences of the masses by the British for economic gains, was countered by Gandhi’s revolutionary resolution of each citizen’s participation in spinning and weaving of Khadi,” she said. The Indian Embassy’s press release said the exhibition would give a good opportunity to local textile importers to think of importing Khadi and use it for garment manufacturing for export and domestic use. Textile stakeholders are encouraged to visit the event to discover future trade cooperation with Khadi producers and exporters. “MGCATTM has offered visitors access to the exhibition and museum free of charge during three days of the event. “Manufacturing one metre of Khadi requires just three litres of water, as against 56 litres of water for mill fabric. It has a zero carbon footprint because it is hand spun and handwoven,” said the press release. Apsara Authority spokesman Long Kosal told The Post on Sunday that the exhibition was hosted by the Embassy of India and the Ministry of Industry and Handicraft. Apsara participated in the exhibition as a cooperating partner with the MGCATTM. Gandhi was a peaceful, non-violence movement leader who influenced the world. He protested against British rule through hunger strikes and advocated for the civil rights of the Indian people. He organised the non-violent boycott of British rule through civil disobedience, ultimately gaining independence for India and the admiration of the world.

Source: Phnom Penh Post

Back to top