The government may extend benefits to exporters under the Merchandise Exports from India Scheme (MEIS) till March 31 next year, when the updated Foreign Trade Policy (FTP) 2020-2025 will go live. The current deadline for the scheme to be disabled is December 31. The government is also considering key suggestions such as introduction of industry rates for deemed exports and removal of pre-import conditions requirement in the Self Ratification Scheme. The suggestions have emerged out of hundreds of meetings between government and industry associations, people in the know, said. Adding an array of agricultural products in the interest equalization scheme and making extensive changes to scheme such as Export Promotion Capital Goods (EPCG) and Export Credit Insurance Scheme are also under consideration for the upcoming FTP, source said.
MEIS cheer
The decision to extend MEIS benefits is expected to draw the biggest cheer from the industry, which had opposed its withdrawal. Last month, the government had announced a new scheme named Remission of Duties or Taxes on Export Products (RoDTEP) to replace the MEIS for all goods exports. Introduced in 2015 under the FTP, the mega MEIS was created out of a merger of five existing reward schemes. It incentivises merchandise exports of more than 8,000 items now and is the biggest of its kind. Exporters earn duty credits at fixed rates of 2 per cent, 3 per cent, and 5 per cent, depending upon the product and country. Officials said the new RoDTEP would also be based on this method but the rates were yet to be decided. For the EPCG scheme, the government is considering removal of annual average and keeping only specific export obligations. Also, total exports of a third party will be counted as export obligation instead of only proceeds realised from third party by EPCG holder.
Other changes
Apart from taking a decision to soon implement the recommendations of the Baba Kalyani Committee on revamping Special Economic Zones, policymakers have turned to export oriented units (EOUs) to provide the next level of growth. While duty benefits for infrastructure may not be extended, policy formulation, regulation, and administration may be brought under one roof for EOUs. For deemed exports, the government may allow a reintroduction of all industry rate for drawback, which is now limited to only the brand rate. The Centre may also include central excise duty on fuel in the drawback. However, a suggestion to double the rate of interest on delayed payment to 12 per cent from the present 6 per cent may not be allowed, sources said. On the other hand, for the advanced authorisation scheme, composition fee may be rationalised while norms may be fixed at a faster rate. The new FTP is expected to have new chapters on services and e-commerce.
Source: Business Standard
The government plans to extend the two-year moratorium for debt repayments by textile units struggling because of goods and services tax (GST) refund delay, said sources in the textiles ministry. The sources said the finance ministry is set to approve the textiles ministry's recommendation on the moratorium. “The textile industry is facing huge liquidity problems due to delay in refund of the Merchandised Export from India Scheme (MEIS) and Goods and Services Tax (GST). This is hurting business sentiment. The industry needs immediate ease of liquidity crisis for improvement in business sentiment. The two years of moratorium on debt repayment to banks would help improve liquidity for textile units,” said Rahul Mehta, president of Clothing Manufacturers Association of India (CMAI). The industry has formed the National Committee on Textiles & Clothing (NCTC), which comprises various groups under the chairmanship of T Rajkumar. NCTC has urged the government to place recycled polyester staple fibre under 5 per cent of GST rate. It urged the government to release pending tax rebate claims and reduce margin money for working capital from 25 per cent to 10 per cent and the debt equity ratio norm from 1:1.33 for the textiles industry.
Source: Business Standard
Restriction on the quantity of import under HS55092100 to 2,000 tonnes per month through import licenses and mandatory European Union (EU) Flower and Oekotex certificates for all import shipments under HS55092100 are part of the suggested by the Northern India Textile Mills’ Association (NITMA) to be imposed on competitors like China, Vietnam and Bangladesh. HS code 55092100 refers to single yarn containing more than or equal to 85 per cent polyester staple fibres by weight (excluding sewing thread and yarn put up for retail sale). Imports under HS55092100 surged to 9,000 tonnes per month from 500 tonnes per month—a rise of 1592 per cent over 2.5 years. NITMA sent the list of its suggested non-tariff barriers recently to the ministry of commerce and industry and the ministry of textiles. Other suggestions include making the RKM (a measure of yarn strength) of all HS55092100 products 40 or more to meet the requirement of next-generation knitting and weaving machines, making all such imported products free of carcinogenic heavy metal compounds of antimony, and permitting such imports only against advanced license so that dumping from Indonesia, Vietnam and China can be harnessed to increase India's exports while at the same time protecting the domestic manufacturers from unfair competition, according to a NITMA press release. Imports under HS55092100 should only be permitted if the importer can pay directly to the exporter with his own foreign exchange obtained through his export activities abroad to further boost India's exports, NITMA said in the letter.The measures were suggested by NITMA in the wake of steps taken by Indonesia to tighten textile import rules to protect local the domestic industry, said NITMA president Sanjay Garg.
Source: Fibre2Fashion
Surat: Textile traders, who have shops in one of the oldest textile markets on Ring Road, are in the soup. The lease of their shops on 24,435 square metres of land owned by Surat Municipal Corporation expired on April 28, and the civic body says it will be renewed only at current Jantri rates. This means the textile traders will have to shell out Rs127 crore to ensure that they don’t lose possession of the land and before that service charges of Rs1.27 crore also to start the procedure for renewable for another 50 years. Municipal commissioner Banchhanidhi Pani said, “We were to meet committee members of Surat Textile Market Cooperative Shops and Warehousing Limited a few days ago. The meeting could not materialize, but we will try to meet this week definitely.” The general board of the civic body had earlier passed a proposal for renewal of the lease under which shop owners in the textile markets needed to pay up at the Jantri rate of Rs52,250 per square metre for the land besides non-refundable service charges of Rs1.27 crore. The textile traders are not interested because earlier they paid just Rs2 per square metre of land for 50 years lease. STMCSWL committee had in May itself had made it clear that the shop owners were not in a position to pay up the amount and wanted some concession on the grounds that the textile sector was facing recession. However, BJP, which controls the civic body, is unwilling to give up SMC land at free of cost. Aslam Cyclewala, Congress councillor, stresses on the need to recover money from the textile traders and also possession of the land. This particular textile market, which was set up in 1968, has 1,025 textile shops and in another 75 there are banks, a post office, offices of chartered accountants, a nursing home and 70 warehouses.
Source: Times of India
With the objective of highlighting the issues and challenges being faced by the textile and clothing industry as well as the urgent policy interventions required to address the same, all the stakeholders of textile and clothing industry, namely National Textile Associations, Export Promotion Councils (EPCs) as well as regional-level textile and clothing industry associations, representing the entire textile value chain, have formed a steering committee called the National Committee on Textiles & Clothing (NCTC) under the chairmanship of T Rajkumar, chairman CITI. The NCTC comprises major textile associations and EPCs at regional and national level like TEXPROCIL, AEPC, PDEXCIL, SRTEPC, CITI, CMAI, ITTA, AFI, AMFII among others. The NCTC is now meeting regularly to discuss various issues ranging from fibres to fashion to arrive at a common understanding on both short term and long term policy measures for domestic and international markets. For the purpose of long term policy measures, the NCTC has decided to hire the services of a competent agency to undertake a study and recommend various policy measures to enable the entire textiles and clothing value chain covering all types of fibres and products to remain globally competitive and achieve a sustained growth rate, both in the domestic and international markets. In the meanwhile, a list of short term policy measures has been finalised and the NCTC delegation led by T Rajkumar, Chairman CITI met the Ministers for Finance, Commerce and Textiles respectively to apprise them of the grim situation facing the T&C sector.
Source: Nav Hind Times
India-US negotiations on a trade deal are going on in full speed, according to Indian finance minister Nirmala Sitharaman, who recently said she was hopeful of an agreement being signed soon. The negotiations came up for discussion during a pull-aside between Sitharaman and US treasury secretary Steven Mnuchin at the International Monetary Fund (IMF) headquarters. Nirmala Sitharaman was in the United States to attend the annual meeting of the IMF and the World Bank. “In fact, I broadly mentioned it to [US treasury] secretary [Steven] Mnuchin, but that is something on which the commerce minister and [US trade representative] Mr [Robert] Lighthizer are working,” Sitharaman said on October 19. “My inputs are that the negotiations are going in full speed and there is a great intensity with which both sides are engaging and hopefully the deal will be struck soon,” she was quoted as saying by a news agency. The ongoing trade deal negotiations briefly came up for discussion during a pull-aside between Sitharaman and Mnuchin at the IMF headquarters. Mnuchin is scheduled to visit India early next month. India has not faced the brunt of the global slowdown as much and other economies, SItharaman said. The two sides agreed to continue the dialogue in the first week of November during Mnuchin’s visit to New Delhi.
Source: Fibre2fashion
Merchandise exports in September fell by 6.6% to $26 billion. Exports during this fiscal have fallen 2.5% to $159.6 billion. The most worrying part is that labour-intensive exports, which create employment in large numbers, have been falling. Mint examines this decline.
Which sectors haven’t done well in exports?
Exports of petroleum products have fallen by 7.2% to around $22 billion during this financial year. Exports of non-petroleum products have fallen at a much slower pace of 1.7% to $137.6 billion. But within non-petroleum products, exports of major labour-intensive sectors have fallen at a much faster rate. For instance, agriculture and allied exports declined by 9.2% to $14.4 billion between April and August (the period for which data is available). In case of leather and leather manufacturers (products), exports during the April to September period fell by 8.3% to $2.4 billion.
Which other sectors are flagging?
The history of economic growth tells us that exports from the textiles and ready-made garments sectors are very important for a country to make the transition from “developing” to “developed”—all the more so because they create employment for women. As is well known, the labour force participation rate of women has fallen dramatically over the years. Between April and August, textile exports fell by 9.7% to $7 billion—this was the steepest fall in five years. When it comes to ready-made garments, exports between April and September increased by a minuscule 2.2% to $7.8 billion.
How are exports of skill-intensive sectors?
When it comes to engineering goods, exports fell by 3.9% to $40 billion, the worst drop in four years. Engineering goods are by far India’s largest exports. There is good news, however, in the case of electronic goods. Their exports jumped by 42.3% to $5.5 billion. Clearly, some sectors have a reason to cheer. There isn’t gloom and doom everywhere.
Why have exports fallen in H1 2019?
Export products need to be globally competitive, which isn’t the case with many Indian goods. There are specific reasons for this in every sector, other than India not being able to compete on the land and labour front. But, on the whole, labour-intensive exports have been hurt because of the Indian rupee being stronger than it actually should be. A weaker rupee would help Indian exporters compete on the price front by helping them earn more in rupee terms—thus allowing them to cut prices to stay competitive.
What’s holding the rupee back?
India imports the bulk of the fuel it consumes in various forms. In fact, the import dependency of crude oil during the April to August period has jumped to 84.8% against 83.3% last year. A weaker rupee would make petrol and diesel expensive. Further, governments earn a lot of taxes from petrol and diesel and are not in a position to cut these taxes. It’s really a choice between stronger labour-intensive exports and cheaper petrol and diesel.
Source: LiveMint
The committee has also sought adequate safeguard measures on imports of fibres, yarns, fabrics and readymade garments. The newly formed National Committee on Textiles and Clothing has urged the government to stop the import of used clothes from China, Bangladesh and Indonesia as the domestic textile industry is reeling under falling exports, rising imports and slowing demand. The committee has also sought adequate safeguard measures on imports of fibres, yarns, fabrics and readymade garments and called for extending the benefits of enhanced Merchandise Exports under India Scheme and Rebate of State and Central Taxes and Levies on Export of Garments till overall scheme on Remission of Duties or Taxes on Export Product comes into force. Also read: Textile mills in TN appeal for status quo on energy policies
Steering committee
Bogged down by various issues, textile and clothing associations such as Cotton Textile Export Promotion Council, Apparel Export Promotion Council, Clothing Manufacturers Association of India, Synthetic and Rayon Textiles Export Promotion Council and Confederation of Indian Textile Industry have formed a steering committee – the National Committee on Textiles and Clothing (NCTC) – under the chairmanship of T Rajkumar, Chairman, CITI. The NCTC has submitted a memorandum to Commerce Minister Piyush Goyal and sought a two-year moratorium on interest and loan repayment or provision for additional liquidity to support the financially stressed textile units as a short-term policy measure to bail out the struggling industry. The industry also apprised Goyal of the issues related to GST, the ease of doing business and Regional Comprehensive Economic Partnership negotiations.It has urged Cotton Corporation of India to factor in low international prices when procuring cotton under Minimum Support Price to protect the farmers’ interests. Domestic prices are trading firm due to high MSP while prices in global markets have fallen sharply on the back of a bumper crop. This has led to sharp spike in imports even as some domestic farmers are finding it difficult o sell their cotton at MSP to CCI.
Plea to FM
A NCTC delegation led by Rajkumar also met Finance Minister Nirmala Sitharaman and submitted a memorandum on the urgent need to release the pending claims under various incentive schemes; urging banks to expeditiously upload documents for release of TUF (Technology Upgradation Fund) subsidy, reducing the margin money for raising working capital from 25 per cent to 10 per cent and extend 5 per cent interest subvention to all textiles and clothing export products.
Source: Business Line
Former NITI Aayog Vice-Chairman Arvind Panagariya on Monday said India should bargain hard for the proposed Regional Comprehensive Economic Partnership (RCEP), but this should not become an excuse for not clinching the deal. When an economy opens up, it has to set its house in order to compete, which brings the best out of it, he said. “We need to be a little more aggressive. Compete with the best in the world. It brings the best out of you,” Panagariya, professor of Indian Political Economy at the Columbia University, said at the US-India Strategic Partnership Forum in New Delhi. He was responding to an observation by former foreign secretary Kanwal Sibal that India needs to bargain hard in RCEP due to security concerns that go beyond trade. Sibal said China was pressing for accelerating negotiations for RCEP due to its trade war with the US. “China wants to dominate RCEP because it is the biggest economy. It did not play by WTO rules, so will it play by RCEP rules? Will there be a dispute settlement mechanism?” he said. Panagariya sought to dispel the myth that import substitution leads to less imports. “If you import less, you export less as well. When India liberalised it imported more, but then it exported more as well,” he said.
AI boost to health sector
At a panel discussion earlier at the same event, Panagariya said there was a huge scope for India to improve medical treatment by taking advantage of technical developments such as AI (artificial intelligence) and data analytics. “With AI, data analytics and all the technology there, treatments can perhaps be done better (in India) as we go forward,” he said. By taking advantage of the technological changes such as AI and data analytics, India can bring good treatments almost anywhere in the country, he added. On the pricing issue in the medical industry, he said clearly this is being recognised in the trade agreements as well, citing that in some visible cases, prices have been negotiated between the companies (exporting and importing). Panagariya said the health sector was still evolving and very informal as it was largely dominated by the private sector and the government’s role largely had been into setting up medical colleges.
Source: Business Standard
|
Item |
Price |
Unit |
Fluctuation |
Date |
|
PSF |
1002.45 |
USD/Ton |
-1.25% |
10/21/2019 |
|
VSF |
1515.67 |
USD/Ton |
0% |
10/21/2019 |
|
ASF |
2166.56 |
USD/Ton |
0% |
10/21/2019 |
|
Polyester POY |
1016.57 |
USD/Ton |
-0.69% |
10/21/2019 |
|
Nylon FDY |
2329.64 |
USD/Ton |
0% |
10/21/2019 |
|
40D Spandex |
4080.39 |
USD/Ton |
0% |
10/21/2019 |
|
Nylon POY |
2301.40 |
USD/Ton |
0% |
10/21/2019 |
|
Acrylic Top 3D |
1129.52 |
USD/Ton |
0% |
10/21/2019 |
|
Polyester FDY |
2527.30 |
USD/Ton |
0% |
10/21/2019 |
|
Nylon DTY |
5336.98 |
USD/Ton |
0% |
10/21/2019 |
|
Viscose Long Filament |
1249.53 |
USD/Ton |
-0.56% |
10/21/2019 |
|
Polyester DTY |
2181.39 |
USD/Ton |
0% |
10/21/2019 |
|
30S Spun Rayon Yarn |
2124.91 |
USD/Ton |
-0.13% |
10/21/2019 |
|
32S Polyester Yarn |
1623.69 |
USD/Ton |
0% |
10/21/2019 |
|
45S T/C Yarn |
2414.35 |
USD/Ton |
0% |
10/21/2019 |
|
40S Rayon Yarn |
1976.66 |
USD/Ton |
-0.71% |
10/21/2019 |
|
T/R Yarn 65/35 32S |
1778.99 |
USD/Ton |
0% |
10/21/2019 |
|
45S Polyester Yarn |
2273.16 |
USD/Ton |
0% |
10/21/2019 |
|
T/C Yarn 65/35 32S |
2371.99 |
USD/Ton |
-1.18% |
10/21/2019 |
|
10S Denim Fabric |
1.25 |
USD/Meter |
0% |
10/21/2019 |
|
32S Twill Fabric |
0.69 |
USD/Meter |
0% |
10/21/2019 |
|
40S Combed Poplin |
0.96 |
USD/Meter |
0% |
10/21/2019 |
|
30S Rayon Fabric |
0.57 |
USD/Meter |
0% |
10/21/2019 |
|
45S T/C Fabric |
0.66 |
USD/Meter |
0% |
10/21/2019 |
Source: Global Textiles
Note: The above prices are Chinese Price (1 CNY = 0.14119 USD dtd. 21/10/2019). The prices given above are as quoted from Global Textiles.com. SRTEPC is not responsible for the correctness of the same.
Vietnam’s textile industry is facing many difficulties due to the prolonged China-US trade war, witnessing a fall in both export and production, say industry experts. Buyers are seeing fewer and smaller orders because of the conflict, said a ministry of investment and planning report. Export of raw materials to China plummeted as China cut back on imports. China has been traditionally a major market for Vietnamese products and accounts up to 60 per cent of the country’s total export volume. A performance review of the Vietnam National Textile and Garment Group (VINATEX), one of the largest in the country also indicated the same trend. Among the most affected was yarn export with the price continuing to fall. “As the global yarn industry faces worsening prospects due to the on-going trade war, competition among rival countries such as India, Indonesia, Pakistan, Thailand and Vi?t Nam has intensified,” said the review. In stark contrast to last year when there were more than enough orders to work on until the end of the year by September, companies are scrambling to secure orders to maintain production, according to a report in a top Vietnamese newspaper. A vast majority of orders, if they were signed at all, were of small volume and short-term as customers were constantly on the look-out for new developments of the trade war. In addition, more and more Chinese orders have been shipped to countries with better tax incentives like Cambodia and Bangladesh. The possibility of Vi?t Nam’s textile industry hitting its target of $40 billion in exports this year is getting slimmer, said VINATEX vice president Truong Van Cam. Along with the trade war’s adverse effects, expectations for trade deals such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the EU-Vietnam Free Trade Agreement (EVFTA) were set unrealistically high, Cam said, adding such deals will take a while to make a real impact.
Source: Fibre2fashion
ISLAMABAD: The textile exports from the country increased by 2.95 percent during the first quarter of the current fiscal year compared to the corresponding period of the last fiscal year. The textile exports during July-September (2019-20) were recorded at $3371.974 million against the exports of $3275.303 million during July-September (2018-19), showing growth of 9.95 percent, according to the latest data of Pakistan Bureau of Statistics (PBS). The textile commodities that contributed in positive growth in trade included raw cotton, exports of which grew by 53.65 percent, from $7.047 million to $10.828 million. The exports of yarn (other than cotton yarn) increased by 21.95 percent, from $7.759 million last year to $9.462 million whereas the knitwear exports went up by 11.14 percent, from $701.393 million to $779.548 million. Likewise, the bed wear exports increased 2.84 percent, from $583.949 million to $600.562 million whereas the exports of readymade garments increased by 11.49 percent, from $598.612 million to $667.361 million. The exports of art, silk and synthetic textile also increased by 8.37 percent from $72.568 million to $78.641 million while the exports of cotton (carded or combed) witnessed cent percent increase and amounted $0.032 million during the period under review. The products that witnessed decrease included cotton yarn, exports of which decreased by 6.19 percent, from $313.707 million to $294.280 million, the PBS data revealed. The exports of cotton cloth also declined by 5.6 percent, from $529.053 million last year to $499.419 million this year, export of towels decreased by 2.31 percent, from $184.431 million to $180.169 million. The exports of tents, canvas and tarpaulin exports went down from $16.717 million to $15.758 million, showing negative growth of 5.74 percent, made-up articles (excluding towels bed-wear) by 6.58 percent, from $160.152 million to $149.613 million whereas the exports of other textile materials decreased by 13.63 percent, from $99.915 million to $86.301 million. Meanwhile, on year-on-year basis, the exports of textile group increased by 4.38 percent during the month of September 2019 as against September 2018. The textile exports during September 2019 were recorded at 1068.701 million against the exports of $1023.891 million. On month-on-month basis, the textile exports however declined by 10.26 percent during September 2019 when compared to the exports of $1190.843 million in August 2019. It is pertinent to mention here that the country's merchandise trade deficit plunged by 34.85 percent during the first three months of the current fiscal year (2019-20) as compared to the deficit of the same month of last year. The trade deficit during July-September (2019-20) was recorded at $5.727 billion against the deficit of $8.791 billion during July-September (2018-19). The exports increased from $5.374 billion during last year to $5.522 billion during the current fiscal year, showing growth of 2.75 percent. On the other hand, the imports into the country witnessed declined of 20.6 percent by falling from $14.165 billion last year to $11.249 billion during the current fiscal year, the data revealed.
Source: Brecorder
Hanoi (VNA) - China will step up cooperation with five Mekong countries, namely Vietnam, Cambodia, Laos, Thailand and Myanmar, in the field of textile and apparel, according to the China National Textile and Apparel Council (CNTAC). More efforts will be made to strengthen trade and investment interaction and improve cooperation mechanisms, so as to deepen the integration of industrial chains, including clothing, yarn and textile equipment, said the CNTAC. CNTAC Vice President Xu Yingxin said since the launch of the Lancang-Mekong cooperation mechanism, export-import of textiles and apparel between China and the five Mekong countries has grown steadily with expanding investment scale. Last year, China’s export-import of textiles and apparel with the five Mekong countries reached 29.79 billion USD, accounting for 9.6 percent of China's total trade in the sector. Xu said cooperation between China and the Mekong countries will be more diversified in the future, including in high-end areas. At the Lancang-Mekong Cooperation Textile and Apparel Summit held in east China's Suzhou city, a textile and garment industry dialogue mechanism was officially launched in a bid to promote collaboration.
Source: Vietnam Plus
DHAKA – The Bangladesh Denim Expo and Sustainable Apparel Forum (SAF) will return next month between the 5-6th, with a focus on sustainability and responsible manufacturing techniques. Held concurrently in the Bangladeshi capital, the second iteration of the SAF will leverage the continued momentum enjoyed by its sister expo event, held for the 11th consecutive year. Whilst the denim expo will cast its eye over responsible business practices and manufacturing technologies, “the title for this year’s Sustainable Apparel Forum is enabling sustainability through policy and leadership,” says event organiser Mostafiz Uddin, founder of the Bangladesh Apparel Exchange (BAE). “The time for talking on sustainability issues is over. It is now time for actions.
Source: Eco Textiles
Trade Shows Apparel Sourcing Paris and Shawls Scarves, unionized by Messe Frankfurt was held from Sep 16-19 at LE Bourget, Paris. Nearly 648 exhibitors with 17 totally different nationalities participated during this season’s shows. Apparel Sourcing Paris assembles international vesture producers, wherever as Shawls Scarves Paris hosts designers of accessories that cover shoulders and heads. Apparel Sourcing Paris and Shawls Scarves Paris showcase a real variety of skills and experience, creating it an imperative event for consumers of the finished products. The atmosphere remains firmly orientated towards business; however, there are still many inventive areas to be found, as designed by the creative administrators of the trade fairs, who highlighted a range of outfits and accessories. In order to form the visitors' itinerary easier, this year the organizers conjointly reviewed how the exhibition area was divided. The classes accustomed classify the areas of experience for fashion vesture were welcome by guests. They coated clothing, craft, made-to-order craft, and sportswear, evening wear, outerwear, made-to-measure, nightclothes and swimwear, workwear and textile accessories. This year, guests conjointly showed substantial interest in women’s vesture, knits, and garb, a phase that's pretty much on-trend. "We met up with a large vary of shoppers and many opportunities arose," said Yung, an assistant at Meisya Garment (Dalian), a manufacturer of vesture manufactured from technical textiles. In addition, the catwalk space again served to present international style with several catwalk shows from individual countries: Asian nation, Cambodia, China, Ethiopia, Hong Kong, Myanmar, and Sri Lanka. Apparel Sourcing Paris, complemented by Shawls Scarves Paris, remains the center point of the EU garment industry. Subsequent Apparel Sourcing Paris and Shawls Scarves Paris are going to be held from Feb 10-13, 2020 in Paris, Le Bourget.
Source: Industry Global News
The current account deficit for September 2019 at $259 million would have sounded extremely outlandish a year ago. But it is happening. And it is primarily driven by the massive improvement in trade deficit – which has lately hit a multi-month low. Bulk of it is down to the import compression, as exports are still facing an uphill task, despite visible improvement in terms of quantity. A way of looking at export performance is an increase of 2.76 percent year-on-year, which does not instill much hope, especially when it is not coming at the back of a high base. Factor in the massive rupee depreciation that has happened in the last year or so – and the criticism on overall export value growth does not seem entirely out of place. Only that it may not be as bad as it seems from the outside. Textile exports, the heart line of Pakistan's exports, have done well enough to keep Pakistan's exports from plunging. Although, in value terms the textile exports have grown in line with overall growth at 2.9 percent year-on-year during 1QFY20, it is the quality within, that is heartening. Almost all of textile export growth is backed by volumetric growth in double digits – which is invaluable given the steep decline in commodity prices all around the globe. Unit price of Pakistan's major export items have historically responded more closely with international oil prices, than to the rupee dollar parity. The oil prices have stayed low for quite a while, and a rebound in international commodity prices, does not seem a near-term proposition, as the global economic growth outlook has been revised downwards by most observers. This is where Pakistan will have to keep the pace up in terms of volumetric growth in textile production – especially in the value added category. Both readymade garments and bed wear, have reported massive volumetric jump in exports by 37 an d24 percent year-on-year, respectively during 1QFY20. Together, they account for one-fourth of the country's total exports, and the continued growth is imperative, if Pakistan is to even maintain exports at previous year, as the prices have also dived sharply by 17-20 percent. It has to be said that while volumes I most textile categories are touching all-time highs, same is also true for unit prices. Improved textile volumes do indicate the results of the industrial support package extended in January 2019. There have been some changes after July 2019, but the numbers continue to be strong. The government will have to continue to work closely with the industry players, in terms of refund issues – so as to keep the volumes coming. The second largest exporting group, food has also performed well with a double digit increase year-on-year. The real deal is Pakistan's re-found mojo in the rice market, where Basmati and non-Basmati have staged a comeback. Fruits and vegetables too, have fetched good rates in the export market, and it would not hurt for the horticulture industry to be treated more seriously. The larger picture will still revolve around the global commodity price scene.
Source: Brecorder
