Addressing a state consultation workshop on Make in India, the minister said India would enter into any FTA or comprehensive partnership on its own terms India would not sign any free-trade agreement (FTA) in a "rush" but will engage with the world without compromising the interest of domestic industry, Commerce and Industry Minister Piyush Goyal said on Wednesday. He said India would enter into an FTA or comprehensive partnership agreement on its terms and would do what would be best for the people and national interest. "In terms of RCEP (Regional Comprehensive Partnership Agreement), lot of wrong information have been spread all over. Let me assure each one of you that India will no more sign any FTA in a rush. "India is not in a weak leadership which had worked only on deadlines to execute FTAs. India will enter into an FTA or comprehensive partnerships on India's terms," he said here.He was addressing a state consultation workshop on Make in India. The minister said the government is careful when it is negotiating trade agreements. Trade is a complex process, "therefore any engagement which we will do will result in the best for the people and our industry," he added. Goyal also said, "We cannot remain in an isolated world also. We have to engage with the rest of the world. The world is moving towards more and more global integration. So, India will have to finally balance our imperatives to protect domestic interest, yet also engage with the rest of the world." "And that is the fine balance that the government is working on to ensure that we are part of international trading blocs and engagements but not in any way that compromises national interest," he said. The RCEP is a mega free-trade agreement being negotiated by 16 countries. The members include ASEAN (Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam), Australia, China, India, Japan, South Korea and New Zealand. The negotiations for the RCEP deal have reached at a fundamental phase as the member countries are targeting to conclude the talks by November. As per the target of the member countries, conclusion of the negotiations could be announced in the summit. Several domestic players from industries such as metals, dairy, electronics, and chemicals have raised serious concerns over this agreement due to the presence of China in the grouping, with which India has a huge trade deficit of over USD 50 billion. Further, he said that necessary and adequate safeguards will be provided to ensure that the Indian industry has a leg-up and has sufficient potential to grow and explore new markets to increase the country's exports. "It has to be a two-way win-win situation. No trade or international agreement can be done unless it's a two-way benefit and that is what we will ensure, when we do any FTAs," he said. Talking about other agreements, he said India has started discussions with the European Union (EU). A proposed free-trade pact is stalled since May 2013 between India and the EU as both the sides failed to iron out differences of several issues. "The new EU commission is being formed. Soon after that, we will engage with EU to start discussions on an FTA with them," he said adding discussions with Britain would start after Brexit. Further talking about ways to attract investments, he suggested that states should not change policies mid-way as stability and predictability in policy is important to attract investors. However, Goyal said that in certain exigencies, the Centre tweaks its policies. Citing an example, he said the World Trade Organization (WTO) is assessing export incentive schemes of India, and after the decision, India may have to look at some changes. In March, the US dragged India to the WTO's dispute settlement mechanism over export subsidies, saying these incentives were harming American companies. The minister said they are working to create a single-window system and this would need state, local bodies and the Centre to work together. He urged states to support in this initiatives and also look at their labour laws. "We will work on central clearance cell, which can actually help you get central and state clearances on a fast track basis," he said adding that the ministry is working with the external affairs ministry to engage mission abroad to make them trade facilitators. On land issue, he said one can utilise unused or surplus land of public sector units for setting up industrial parks. Citing few examples, he said Kota power plant in Rajasthan is "dangerous and polluting" and it should be closed. "They have 1000s of acres of land. It can be used properly. Think on all this," he said adding that Dadri gas-based power plant can be closed and on that land, an industry park can be planned. On the issue of state taxes, he said domestic industry is facing a disadvantage as they pay certain taxes like electricity duty in states and they do not credit or refund for that. "We have taken note of this. We will see what kind of taxes the domestic industry has to bear where they do not get refund or offset... We shall be working towards providing a suitable mechanism to safeguard domestic industry from such unfair competition," he added.
Source: Business Standard
Modi has long sought to portray himself as both a reformer and a global statesman. A bold decision would not only shore up his reputation , it would point India in the direction of recovery. India, not long ago the world’s fastest-growing major economy, is struggling. Growth has plummeted to 5 per cent — well below potential and not nearly enough to employ the millions of young Indians entering the workforce every year. Lending has slowed to a trickle, as has consumer demand. Voices across the political spectrum say the last thing the country can afford now is to lower its trade defenses. In fact, that’s exactly what’s needed. India’s immediate question is whether to join the Regional Comprehensive Economic Partnership, which if completed would represent the world’s biggest free-trade agreement. Fifteen other nations — Australia, China, Japan, New Zealand, South Korea and the 10 members of the Association of Southeast Asian Nations — appear ready to conclude nearly 30 rounds of negotiations when they meet this weekend in Bangkok. India is the main holdout. Although the agreement’s ambitions have been scaled back since talks began in 2012, it would nevertheless encompass about 40 per cent of global gross domestic product and 45 per cent of the world’s population. At a time when governments have been raising more barriers to trade than they’re lowering, announcing a deal would give proponents of deeper global integration a welcome boost. Critics say joining RCEP would open up India to a flood of cut-rate Chinese goods, not to mention cheaper dairy products from Australia and New Zealand, worsening an already large trade deficit. Their objections reflect a more deep-rooted suspicion of free trade, one that’s shared by many factions within the ruling coalition. Despite Prime Minister Narendra Modi’s rhetoric about economic reform, his administration has adopted an increasingly protectionist stance. That’s a mistake. At this stage in its development, India needs more trade, not less. As country after country in East Asia has demonstrated, integrating into global value chains is a proven route to prosperity. The process raises productivity, boosts output, creates jobs and ultimately stimulates demand. The World Bank notes that joining such production networks increases per-capita incomes 50 times as much as standard trade does. There are few other plausible ways for India, which despite its size accounts for less than 2 per cent of global merchandise exports, to employ its burgeoning population and make the transition from an agriculture-based economy. It’s important to remember, too, that joining RCEP would lower barriers not just to finished products, but also to the cheap Chinese inputs needed to boost India’s manufacturers. It would send a signal that India embraces rather than fears globalization, which would reassure companies that have heard too much recently about import substitution and protecting domestic industries. And it would help India to capitalize as factories shift production out of China due to rising labor costs and trade frictions with the USMost important, lowering trade barriers would force India to compete. Much still needs to be done to make the country an attractive place to manufacture. Laws need to be changed so that companies can more easily acquire land and hire and fire workers. Investors are still deterred by India’s red tape, corruption, clogged courts, uncertain policy-making and overzealous tax officials. Although RCEP wouldn’t directly mandate internal reforms, the pressure of added competition would hopefully spur change. Modi has long sought to portray himself as both a reformer and a global statesman. A bold decision in Bangkok would not only shore up his reputation on both fronts — it would point India in the direction of recovery.
Source: Bloomberg
India keeps making last-minute requests after it agreed to terms for the world’s largest regional trade agreement, potentially preventing Asian leaders from announcing a breakthrough on the 16-nation pact during a summit in Bangkok next week, people familiar with the situation said. In recent days, India angered other negotiators by making additional requests on the China-backed pact covering half the world’s population, said the people, who asked not to be identified because the talks are private. Leaders of the countries had planned to announce a preliminary deal on Nov. 4 when leaders gather for meetings hosted by the Association of Southeast Asian Nations, they said. Chief negotiators are still confident they can reach a broad agreement on the deal, known as the Regional Comprehensive Economic Partnership (RCEP), during a planned meeting on Thursday in Bangkok, the people said. Any announcement would pave the way for nations to finalize the details on the legal framework in the coming months. A breakthrough after seven years of talks would mark a win for trade liberalization in an era of rising tariffs and resurgent nationalism. The deal would also further integrate Asia’s economies with China at a time when U.S. President Donald Trump is seeking to convince the region to shun Chinese infrastructure loans and 5G technology. India, which has raised some tariffs under Prime Minister Narendra Modi, has long been the main holdout on an RCEP deal due to strong domestic opposition over fears the country would be flooded with cheap Chinese goods. India Demands Modi, who is fresh off a landslide re-election win in May, agreed to move ahead with the deal after receiving personal assurances from Chinese President Xi Jinping in an informal seaside meeting earlier this month, an Indian official said. China has long pushed to conclude the pact, which also includes Japan, South Korea, Australia, New Zealand and 10 Southeast Asian nations. Still, India came up with new demands after a broad RCEP agreement was concluded, seeking changes in base duties and productspecific rules, according to an Indian official. Two Indian officials said Modi’s government would push for further concessions but is likely to agree to sign due to fears that India could be left out of the announcement, forcing it to negotiate with countries on a bilateral basis. The office of the prime minister in India didn’t immediately respond to a request for comment. A spokeswoman for India’s trade ministry didn’t answer two calls made to her mobile phone. ‘New Energy’ “I have been quite skeptical of a robust RCEP coming to conclusion, due entirely to India’s intransigence,” said Richard Rossow, the Wadhwani Chair in U.S. India Policy Studies at the Center for Strategic and International Studies in Washington. “However, since Modi’s re-election, there seems to be new energy behind completing the deal despite serious concerns about how it could impact India’s trade balance with China.” India will cut duties for more than 90% of items for most nations in RCEP, excluding China, with some duties being phased out over 10- year, 15-year and 20-year time frames, one of the Indian officials said. India’s government plans to sell the deal as a political win because tariffs won’t kick in for a decade, another Indian official said. But the administration still worries that local manufacturing will struggle when tariffs eventually drop and the country’s poor, small-scale and lowtech farmers would struggle to compete. It’s “highly likely” the RCEP deal will be agreed to in Bangkok even if the agreement is not completely finalized, according to Juan Sebastian Cortes-Sanchez, a senior trade policy analyst at the Asian Trade Centre think-tank in Singapore. I don’t think we can expect a complete, crisp agreement, with all the tariff schedules and information, and all the chapters completed,” he said. “But we would expect them to sign something so that they can move forward with it.”
Source: Economic Times
Last year, the Union ministry of commerce and industry set up a High-Level Advisory Group to recommend ways in which India could improve its export performance. This report has now been made public, and provides a useful indicator of the thinking in government circles about trade policy. From that point of view, it makes for worrying reading. While it accepts that much has gone wrong with India’s export performance, its recommendations are simply not up to the job. The report correctly points out that Indian exports are in severe trouble. This is not something that can be blamed upon deg..... (
Source: Business Standard
As it draws closer to the ASEAN Leaders Summit in Bangkok on November 4, Indian officials are working overtime to conclude negotiations on the 25 chapters of the Regional Comprehensive Economic Partnership (RCEP) text amid rising opposition to the 16-nation mega trade deal. Indian officials have concluded negotiations "in good faith" on over 21 of the 25 chapters, and the rest would be concluded before November 4, when Prime Minister Narendra Modi will join the leaders of the 10-member Association of Southeast Asian Nations (ASEAN) bloc and five other countries for the summit. Indian officials are "narrowing the gaps" during their negotiations, including putting in adequate protection against cheap Chinese imports which are feared to flood the Indian market, once RCEP is concluded. Differences over some areas, such as rules of origin, e-commerce, auto trigger mechanism and trade remedies, are being smoothed over by officials ahead of the summit. As negotiations, which began six years ago, are about to conclude, voices of protest have been rising sharply across the country over the deal, including from farmers, traders and the opposition parties -- even by the Congress which during its party-led UPA government had joined the RCEP negotiations. Farmers and affiliated organisations have appealed to the government not to sign the deal. They want agricultural produce and the dairy sector to be kept out of the purview of the RCEP. The All India Kisan Sabha has announced a nationwide protest on November 4. Farmers' unions and non-governmental organisations working in the agricultural and allied fields have formed an Indian Coordination Committee of Farmers' Movements (ICCFM) to coordinate the protests against the proposed mega deal. RSS affiliate Swadeshi Jagran Manch (SJM) too observed protests earlier this month against RCEP. Indian negotiators are trying to include adequate protection against cheap Chinese imports in order to make the deal more acceptable for the Indian industry and agriculture. However, to join RCEP, India will have to take on commitments for tariff elimination for about 90 per cent of items from the ASEAN, Japan and South Korea, and over 74 per cent from China, Australia and New Zealand. Whether to join RCEP is a "hard decision" that the political leadership will have to take, but if India decides against joining the deal, then the market for India will finish, said a source. "We seem to be reaching a climax in negotiations, but I think it is erroneous to presume that it would all end up in a positive conclusion. We should keep a little margin for another outcome, we should be a little wary of the outcome," former diplomat Rajiv Bhatia said. "The RCEP draft will rise or fall on the merits of the commercial and economic considerations. If the Indian leadership comes to the conclusion that in overall terms, it is beneficial to India, they will sign. If they come to the conclusion that their partner countries are not sufficiently receptive and cooperative, they can hold back," Bhatia, a distinguished fellow at the Gateway House, told IANS. He said there are two specific issues relating to RCEP for India. One is access to the Chinese market. "There we need to make sure our goods go in greater share to the Chinese market, and their goods come in a graduated scheme. The door cannot be opened all of a sudden to them, as they are more competitive than us. "The second issue is of the other countries, especially the ASEAN countries -- on opening of the services products to their markets and also investments to their markets. That is why Prime Minister Narendra Modi says that we want a balanced and comprehensive outcome to the negotiations. By balanced he means that there should be reasonable give and take by all concerned, from India's perspective." On the political and diplomatic angle, he said that India's 'Act East Policy' virtually entails that we should become part of the economic grouping in that region by joining RCEP. "But at the end of the day, it is not so much about the diplomatic consideration, as it is the economic one that will decide the issue," Bhatia said. He said that if India does not sign the deal on November 4, there are possibilities that negotiators will be given more time, or that the other countries say that if India does not want to sign now, let the others go ahead and sign. "In effect there are only three outcomes -- India signs and RCEP takes off, India stays back and RCEP moves forward, and third, the negotiations are given more time for further dialogue," Bhatia said. RCEP is a proposed free trade agreement (FTA) between the 10 member states of the ASEAN -- Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, Vietnam -- and its six FTA partners, China, Japan, India, South Korea, Australia and New Zealand. RCEP member states account for 3.4 billion people with a total GDP of $49.5 trillion, approximately 39 per cent of the world's GDP, with the combined GDPs of China and India making up more than half that amount.
Source: Economic Times
The RCEP negotiations are likely to be concluded at the 35th ASEAN Summit in Thailand during October 31 to November 4, 2019. Along with the RCEP, India is also moving close to signing a trade agreement with the US. Both are major developments for India in signaling deep and comprehensive external engagement with major and middle powers, and key regional forums like ASEAN. They are also significant in India’s decision to go ahead, notwithstanding stubborn domestic resistance. For quite some time, conflicting impressions have gone out regarding India’s seriousness in engaging with the rest of the world. The strongest of these struck at Davos in January 2018. Addressing the gathering at the annual meeting of the World Economic Forum, prime minister Modi highlighted three ‘greatest threats to civilisation’: climate change, terrorism, and backlash against globalisation. On the third, he alluded to ‘forces of protectionism … raising their heads against globalisation’ for ‘reversing’ the process—a trend reflective of countries becoming ‘more and more focused on themselves’, with the impact of such mindsets being no ‘less dangerous than climate change or terrorism’. The emphasis on protectionism dragging future progress of the world would have rekindled hopes among some of India—traditionally a hesitant and slow trade liberaliser—converting itself to be a new champion of economic globalisation. The hopes were consistent with the robust character of Indian foreign policy witnessed since prime minister Modi’s assuming of office in May 2014. The hopes were dashed when, within a few days of the prime minister’s speech, India’s Union Budget went all-out in raising customs duties on several imports for providing ‘adequate protection to domestic industry’. More contradictions between foreign and trade policies were variously evidenced before and after, particularly India’s studious reluctance to engage in FTAs. The eventual decisions to conclude RCEP, and working out a trade deal with the US are examples of India making trade a decisive instrument for both, economic and foreign policy goals. The bold attitude of the government is, in spite of domestic economic groups (e.g., the RSS-affiliated Swadeshi Jagran Manch (SJM) that organised a nationwide protest against joining RCEP), domestic industry, and even major government departments and ministries, remaining viciously opposed to India’s joining FTAs and lowering trade barriers. These defensive mindsets are not expected to change. But, what is interesting is the government’s decision to go ahead on two large trade deals in spite of the knowledge that it might end up antagonising several constituencies and stakeholders. However surprising it might seem, the decision reflects an executive mindset that has been seen before in India on implementing politically difficult economic reforms. The commitment to RCEP and a trade deal with the US come at a time when the Indian economy is not in the best of health. Since returning to office for a second term, the Modi government has been saddled with the challenges of reviving an economy whose GDP growth is slowing and several major sectors moving into a sluggish mode. Over the last three months, the government, led by the finance ministry, has announced a slew of measures for kick-starting growth, and reviving investment. These include those taken specifically for encouraging exports. Exports appear to have become a priority for the government with the realisation that, reviving external demand is essential for lifting overall demand. Exports can increase significantly if India is able to attract export-oriented FDI from the US, and major RCEP members. Such FDI, apart from triggering fresh economic activity at the ground level, including new jobs, would push Indian products deeper in foreign markets, enabling them to overcome the problem of stagnant domestic demand. The late, but much-needed focus on exports, along with the emphasis on attracting export-stimulating investments, fit well with the goals of joining RCEP, and getting a FTA with the US. Moreover, a generous corporate income tax cut, and a few other notable improvements in doing business indicators, should contribute to greater competitiveness of Indian exports, enabling them to take advantage of these trade agreements. Nothing comes free though. Both RCEP and the India-US trade deal would irk multiple domestic constituencies. Notable among these are dairy producers, the steel and chemicals industry, and the large number of constituencies opposed to India’s broader trade and investment relations with China and the US on geopolitical and ideological grounds. The current context of economic slowdown, however, offers the government the right opportunity of pushing through the trade deals. This is similar to what past governments have done in identical situations. The history of India’s economic reforms over the last three decades has several examples of the politically ‘difficult’ external sector reforms being implemented during episodes of economic slowdown. Beginning from policies taken by the Narasimha Rao government during the balance of payments crisis in 1991, and those during the later years of the Vajpayee government when GDP growth dropped below 4%, similar context and response were noted during the Manmohan Singh government in September 2012, following stagnating industrial growth and prospects of downgrade in global credit rating. Crisis produces opportunities. RCEP and India-US trade might be the latest beneficiaries of such opportunities given India’s proclivity of using difficult economic conditions to overlook domestic opposition in pursuing contentious reforms. Ironically, they might not have happened had the Indian economy not got stuck.
Source : Financial Express
With barely a week left for countries to make their positions clear on the Regional Comprehensive Economic Partnership (RCEP), the ball lies in Prime Minister Narendra Modi’s court, as he will take the final call on whether India would be part of the mega regional trade deal or not, sources told FE. A leaders’ summit, to be attended by the heads of the 16 RCEP nations, is scheduled to be held in Bangkok next week, where the deal was supposed to be announced. The deal faces fierce domestic resistance from not just industries, including steel and dairy, but also the government departments overseeing these sectors, thanks to persisting fears of dumping by countries like China. Fisheries, animal husbandry and dairying minister Giriraj Singh is the latest to ask the commerce ministry to keep the dairy sector out of the RCEP. The steel ministry has already expressed fears about dumping from China. Recently, the Congress party also stepped up its opposition to the trade deal. All these have multiplied challenges for the commerce as well as external affairs ministries, as they wrestle with domestic opposition, said one of the sources. “The Prime Minister has held multilple meetings with key ministers in recent months and he will take the final call,” said the source. Several experts, including noted economist Arvind Panagariya, have highlighted the importance of India joining the RCEP to better integrate with the global value chain and improve its trade competitiveness. Most RCEP members want to conclude the negotiations in 2019 so that a deal can be formally signed in 2020 (after the announcement by the leaders). Some of them are upset with what they say India’s “recalcitrance” in sealing a deal early. Singapore, for instance, is learnt to have asked India, at the last ministerial in Bangkok, to make up its mind about the deal. For its part, India has been trying to safeguard the interest of its industry that fears higher trade imbalance (Its past free trade agreements with Asean, Japan and Korea have already widened its trade deficit). Despite two days of intense negotiations through October 12, certain issues relating to trade remedies, e-commerce, trade competition, trade in services, rules of origin and investment remained unresolved. Consequently, no joint statement came out of the meeting of trade ministers at Bangkok. Safeguards for domestic industry, particularly, remain a crucial part of India’s negotiations. Amid persisting differences on certain key aspects of the RCEP deal, the group’s members had decided that all issues must be settled by negotiators by October 22. The issues that were not settled by October 22 will be frozen for a decision only by the leaders (heads of states), before they are expected to meet on November 4 to announce the RCEP deal, a source had earlier told FE. Trade ministers and negotiators of the 16 nations have to present to their respective leaders which issue can or can’t be settled now so that appropriate announcement can be made at the leaders’ summit, according to the source. However, New Delhi will have the scope to settle its differences on issues, including tariffs and safeguards, with countries like China bilaterally. However, even that window may not last long. A source had earlier said 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. Similarly, New Delhi wants the flexibility of a snapback — or transitional safeguard — mechanism for all RCEP members. Even without RCEP, 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 as much as $105 billion in FY19. The RCEP is a proposed mega trade pact between the 10 Asean members, 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
India, not long ago the world’s fastest-growing major economy, is struggling. Growth has plummeted to 5% — well below potential and not nearly enough to employ the millions of young Indians entering the workforce every year. Lending has slowed to a trickle, as has consumer demand. Voices across the political spectrum say the last thing the country can afford now is to lower its trade defenses. In fact, that’s exactly what’s needed. India’s immediate question is whether to join the Regional Comprehensive Economic Partnership, which if completed would represent the world’s biggest free-trade agreement. Fifteen other nations — Australia, China, Japan, New Zealand, South Korea and the 10 members of the Association of Southeast Asian Nations — appear ready to conclude nearly 30 rounds of negotiations when they meet this weekend in Bangkok. India is the main holdout. Although the agreement’s ambitions have been scaled back since talks began in 2012, it would nevertheless encompass about 40% of global gross domestic product and 45% of the world’s population. At a time when governments have been raising more barriers to trade than they’re lowering, announcing a deal would give proponents of deeper global integration a welcome boost. Critics say joining RCEP would open up India to a flood of cut-rate Chinese goods, not to mention cheaper dairy products from Australia and New Zealand, worsening an already large trade deficit. Their objections reflect a more deep-rooted suspicion of free trade, one that’s shared by many factions within the ruling coalition. Despite Prime Minister Narendra Modi’s rhetoric about economic reform, his administration has adopted an increasingly protectionist stance. That’s a mistake. At this stage in its development, India needs more trade, not less. As country after country in East Asia has demonstrated, integrating into global value chains is a proven route to prosperity. The process raises productivity, boosts output, creates jobs and ultimately stimulates demand. The World Bank notes that joining such production networks increases per-capita incomes 50 times as much as standard trade does. There are few other plausible ways for India, which despite its size accounts for less than 2% of global merchandise exports, to employ its burgeoning population and make the transition from an agriculture-based economy. It’s important to remember, too, that joining RCEP would lower barriers not just to finished products, but also to the cheap Chinese inputs needed to boost India’s manufacturers. It would send a signal that India embraces rather than fears globalization, which would reassure companies that have heard too much recently about import substitution and protecting domestic industries. And it would help India to capitalize as factories shift production out of China due to rising labor costs and trade frictions with the U.S. Most important, lowering trade barriers would force India to compete. Much still needs to be done to make the country an attractive place to manufacture. Laws need to be changed so that companies can more easily acquire land and hire and fire workers. Investors are still deterred by India’s red tape, corruption, clogged courts, uncertain policy-making and overzealous tax officials. Although RCEP wouldn’t directly mandate internal reforms, the pressure of added competition would hopefully spur change. Modi has long sought to portray himself as both a reformer and a global statesman. A bold decision in Bangkok would not only shore up his reputation on both fronts — it would point India in the direction of recovery.
Source: Bloomberg
Micro, Small & Medium Enterprises (MSMEs) that have adopted lean manufacturing practices have shown tremendous results in terms of empowering their workers to take independent decisions, ability to focus on new business opportunities and increasing the time availability to work with more people, a senior government official said here on Wednesday. “This (lean manufacturing) is the way forward if you are adopting to Industry 4.0. I request you to kindly adopt to lean manufacturing and also make use of the subsidies provided by our government for this purpose,” said Sudhir Garg, Joint Secretary, Ministry of Micro Small and Medium Enterprises. He was delivering the inaugural address at the MSME Tech Summit titled ‘Vision for the Future – Moving from Want to Need for Transformation’, organised by the Confederation of Indian Industry, Southern Region. Garg said the Ministry is offering 80 per cent subsidy to micro units and 60 per cent to small units that adopt lean manufacturing practice. Highlighting that the practice (of lean manufacturing) is not restricted only to manufacturing industries, Garg shared feedback received from an electronics industry player who was able to bring down the cost of production by 30 per cent and improve the design capability of his team after adopting lean manufacturing practices. “The Ministry of Micro, Small & Medium Enterprises is laying a lot of emphasis on new technologies like lean manufacturing, design improvements, setting up of common facility centres and digitisation,” he added. Listing out the government initiatives to enhance manufacturing technologies, Garg said India currently has 18 Technology Centres (TCs) and the government has recently added another 15 TCs at a cost of ₹3,000 crore. TCs, earlier known as Tool Rooms, offer support to MSMEs by providing access to advanced manufacturing technologies, skilling manpower with technical know-how and providing business and technical advisory support to MSME entrepreneurs. Garg also said the government is adding 120 more centres, of which 20 will be large with an investment of ₹200 crore each and 100 small district centres at an investment of ₹20 crore each. The high-end design centres will also have facilities such as reverse engineering, testing, standardisation and consulting. Earlier, in his special address, Ashok Reddy, President-Corporate Affairs and Infra, Cyient Ltd, said: “Technology and innovation are no longer an option for MSMEs but have now become a key necessity.”
Source: Business Line
Lack of desired reforms has made exporters rely on the crutches of government subsidies that are being challenged at the WTO, such as those under the Merchandise Export From India Scheme (MEIS) that the government has now decided to replace with another WTO-compatible scheme. Even as the government is set to formally release the report of a high-level advisory group under noted economist Surjit Bhalla on ways to boost exports on Wednesday, recommendations of similar panels in the past have hardly been implemented. Inadequate government action has often rendered the practice of setting up panels largely irrelevant, while the country’s export growth continues to remain below par and miss targets frequently. Various committees, working groups, inter-ministerial panels have, in the past, suggested steps to address structural hurdles,including elevated logistics costs, inflexible labour laws and inverted/distorted duty structure (especially in textiles), which continue to cripple India’s ex-port competitiveness. Archaic labour laws have long militated against firms acquiring size and scale in critical jobs-intensive sectors, while logistics costs make up for as much as 15-16% of exporters’ consignment value. Exporters have also cried hoarse over a “strong rupee”. But follow-up action on most of the suggestions, especially the bold ones, has been hanging fire for long. Lack of desired reforms has made exporters rely on the crutches of government subsidies that are being challenged at the WTO, such as those under the Merchandise Export From India Scheme (MEIS) that the government has now decided to replace with another WTO-compatible scheme. No wonder, export targets have been frequently missed in recent years. The aim under the foreign trade policy (for five years through FY20) was to achieve annual exports, both goods and services, of $900 billion, which remains a dream (In FY19, the exports reached only $540 billion). While merchandise exports have contracted in three of the first six months of this fiscal, services exports are still to achieve the growth witnessed in earlier years. The Bhalla panel was set up in September last year in the backdrop of an escalating global trade war and India’s lacklustre export performance. The 12-member panel has suggested, among others, the launch of “elephant bonds” (25-year sovereign bonds) in which people declaring undisclosed income will be bound to invest 50%. The funds will be utilised for infrastructure financing. It has also called for lowering effective corporate tax rate (before the government announced the sharp cut in corporate tax rates recently), bringing down the cost of capital and simplifying regulatory and tax framework for foreign investment. It also recommended a host of other steps that include a road map for doubling India’s exports of goods and services to over $1,000 billion by 2025. The Economic Survey 2018-19 has also favoured the implementation of the Bhalla panel recommendations (wherever possible) to boost exports. However, given the successive governments’ reluctance to herald radical reforms to raise the country’s export competitiveness, the fate of the report will be known only later. Fixed-term employment options introduced for all sectors starting with garment manufacturing in 2016 haven’t had the desired impact so far, either. The textile and apparel sector was subjected to various policy rigidities and taxation issues that thwarted the efforts of integrated business units with economies of scale and technological prowess to flourish. Although most of these problems have been addressed over the past decade and state support has been given to technological upgrade in this labour-intensive sector, this has proved to be too late. By the time the sector was able to reap the benefits of the changes, countries like Vietnam and Bangladesh had moved ahead and occupied the space ceded by China in the world markets for mass-consumption textile and clothing items, virtually keeping India at bay. Admitting that many suggestions of various panels on exports and related areas have not been adopted by the government, a senior official insisted the “perceived inaction doesn’t mean the reports were not taken seriously”. “Recommendations are always studied in detail before the government decides to either implement them or reject them. Not all suggestions are prudent and can be implemented because the government has to always look at the larger macro picture and not just a micro one that is limited to a particular sector. Even then, these reports offer necessary intellectual inputs for policy making. Also, some suggestions are adopted after a time lag, if not immediately,” he said.
Source: Financial Express
NEW DELHI: India and China are projected to see accelerated economic growth in the fourth quarter of this year, bucking trends in the US and the European Union, according to a report. The Economist Intelligence Unit on Wednesday said it expects third-quarter GDP growth to be weak across most of the world's biggest economies. "Of the G7 and BRICS economies, only India and the UK are expected to post third-quarter results that show an acceleration from the second quarter. In the case of the UK, however, there is limited cause for celebration, as this only represents a recovery from a disastrous second quarter," it said in a release providing excerpts of a report. In the third quarter, India's real GDP growth is estimated to be 1 per cent on a quarter-on-quarter basis and is projected to rise to 2.20 per cent in the fourth quarter, as per the report. According to the report, Canada and the US would be the fastest-growing G7 economies in the third quarter, with growth expected to come in at 0.4 per cent. "Indian and Chinese economies set to accelerate in Q4, bucking trends in the US and EU," the release said. The report noted that buffeted by the US-China trade war, a shrinking workforce and a leveraged banking sector, Chinese economic growth slowed to 1.35 per cent in the second quarter. The slowdown should continue into the third quarter but in the fourth quarter and in the first quarter of next year, "we forecast a pick-up in growth to 1.6-1.8 per cent as government stimulus kicks in and policies to boost the labour market and household impact are announced," it added. Noting that the US economy is showing signs of strain, the report said that consumer sentiment has softened as trade tariffs have become a greater cause for concern. "We expect the US to continue to slow in the fourth quarter and to post an annual result of 2.2 per cent for 2019 and just 1.6 per cent in 2020," it said. RAM ABM
Source: Economic Times
Filatex India, a manufacturer of polyester and polypropylene filament yarn and polyester chips, is looking to get into value-added offerings and the B2C segment as it eyes higher margins. The company has embarked on a ₹275-crore expansion that include ramping up facilities at Dahej (Gujarat) and also adding new lines to its plants for manufacture of fully drawn textured yarns. Around ₹200 crore will be debt. While capacity expansion of partially oriented yarn has happened, new lines for manufacture of value-added offerings are expected to go on-stream around March 2020. Drawn textured yarns are mainly used in weaving and knitting of fabrics, for making clothes, home furnishings, seat covers, bags, among others. NSE and BSE-listed Filatex’s current capacity across Dahej and Dadra and Nagar Haveli facilities together stand at 382,000 tonnes per annum, that include a recent addition of 60,000 tonnes. According to Madhu Sudhan Bhageria, Chairman and Managing Director, the company is considering an entry into the home textiles segment, and eyeing an estimated capex of ₹100 crore. More offerings can be explored if the foray into the home textiles is successful. “We are planning to get into home textiles later may be in FY21. Investment details are being worked out,” he told BusinessLine. The company is also putting up a captive power plant with a capex of ₹150 crore at Dahej. The 30-MW plant is expected to come-up in the January to March period of 2021 (Q4 FY-21). Around ₹100 crore will be borrowings while the remaining is internal accruals.
Improving margins
Post the capex cycle coming through (capacity addition and new value addition line), Filatex India is looking at a near ₹600 crore boost in its topline and a ₹70-crore improvement in bottomline in FY-21. According to Bhageria, EBITDA (earnings before interest, tax, depreciation and amortisation) margins should also improve to 8.5-9 per cent from the existing 7.5-8 per cent levels. “Margins are currently under pressure because of a slowdown. But things should revive November onwards,” he said. Exports are also likely to go up to 20 per cent of the turnover with the textured yarn facility coming on stream. It currently stands at 17-18 per cent of turnover. China continues to supply 75 per cent global demand for polyester; while India accounts for around 10 per cent. The company has a debt to equity ratio of 1.2:1 and Bhageria says the repayments are being made on time. “In FY20, debt to equity ratio will be a bit high. But next fiscal onwards it will be in 1:1 ratio. Every year we are repaying around ₹70-80 crore,” he said, adding that cash profits are to the tune of ₹150 crore.
Source: The Hindu Business Line
The United States Trade Representative (USTR) will commence on November 1, 2019 a process for considering extending for up to twelve months certain exclusions from additional tariffs on Chinese imports that were granted last December and are set to expire on December 28, 2019. The USTR had imposed additional duties on Chinese goods, effective July 6, 2018. The additional duties on goods of China with an annual trade value of approximately $34 billion were imposed as part of the action in the Section 301 investigation of China’s acts, policies, and practices related to technology transfer, intellectual property, and innovation. In a Federal Register notice to be published this week, USTR will provide details on the process for submitting comments favouring or opposing specified tariff exclusions. The period for submitting comments will run from November 1, 2019 to November 30, 2019, the USTR said.
Source: Fibre2Fashion
Italian foreign ministry officials held talks in Rome early this week with Bangladeshi foreign minister Abdul Momen to boost bilateral economic relations, the Italian foreign ministry said in a statement. Several Italian textile firms operate in Bangladesh and Italy hopes that business ties can be intensified, foreign undersecretary Manlio Di Di Stefano said. Di Stefano acknowledged the positive contribution of the Bangladeshi diaspora to the Italian economy and society, news agency reports cited the official statement as saying. Italian defence companies are also taking part in competitive tenders for major contracts in Bangladesh, he added.
Source: Fibre2fashion
THE government is facilitating a plan to establish Malaysia’s first textile manufacturing hub as part of an effort to revitalise the industry. International Trade and Industry Minister Datuk Darell Leiking (picture) said the proposal for the hub is currently being drafted by a team from the ministry, Malaysian Investment Development Authority (Mida) and the recently launched Federation of Malaysian Fashion, Textiles and Apparels (FMFTA). “We are re-industrialising Malaysia’s textile sector. I have to put the parties together first. This is something that the government fully supports because we believe the domestic investors are fully capable to develop this,” he said at the launch of FMFTA in Kuala Lumpur yesterday. FMFTA pro-tem committee chairman Datuk Seri Tan Thian Poh said the federation has suggested that 600ha to 1,000ha should be provisioned for the development of the textile hub. “We have urged the government to set up a fashion, textile and apparel hub in Malaysia, equipped with shared research and development (R&D) capabilities, common waste treatment and design centre, among others. “What we have in mind is that we are not looking at a small business, but rather a massive land between 600ha and 1,000ha to develop this initiative. “The foreign direct investment would be invited to participate along with state governments…because if the price of our land is too expensive, the investors will go to other countries,” he said. Tan added that the federation has also proposed for the hub to be established at the least-developed state which has connected logistics services. The project would in turn enhance the economic development of the chosen state. “We have been developing the richer states, but I feel like there are a lot of resources in the poorer states that have not been tapped. “Although employment rate is low, the rural areas have to be looked into. We have to industrialise those rural areas to bring up the standard of living and eradicate poverty,” he said. While it may be difficult to get local players to move their existing operations, Tan said the firms could be compensated by sufficient incentives. “This hub could be managed by FMFTA or industry players through a public-private partnership with the government. “We are aware that not many businesses are ready to uproot their operations to rural places but given the right support such as availability of land and assistance for the respective state government, we believe this is attainable,” he said. The textile and apparel industry is Malaysia’s eleventh largest manufacturing sector, employing over 155,000 people with an exports target of RM24 billion to be achieved by 2020. On the downstream and upstream segments, a total of 1,195 textile and apparel projects worth RM12.6 billion combined were implemented as at December 2018. For the first half of 2019, Mida has approved an additional investment of RM94.4 million for five projects, with RM120 million still in the pipeline. “On investment, we have an additional RM120 million that is still in the pipeline to be disbursed and it is all just for manufacturing projects. “For the designers, we know that they could leverage on other programmes and financial assistance that they can expose themselves to. “The government understands that moving up the value chain would require financial resources that may not be readily accessible to many local stakeholders,” Mida CEO Datuk Azman Mahmud said.
Source: The Malaysian Reserve
A breakthrough invention in wearable technology has the potential to change how we interact with the clothes we wear every day. A new study led by researchers at the University of Minnesota's Design of Active Materials and Structures Lab (DAMSL) and Wearable Technology Lab (WTL) details the development of a temperature-responsive textile that can be used to create self-fitting garments powered only by body heat. The study, led by graduate students Kevin Eschen and Rachael Granberry and professors Julianna Abel and Brad Holschuh was recently published in Advanced Materials Technologies. "This is an important step forward in the creation of robotic textiles for on-body applications," said Holschuh. "It's particularly exciting because it solves two significant problems simultaneously: how to create usable actuation, or movement, without requiring significant power or heat, and how to conform a textile or garment to regions of the body that are irregularly shaped." The textiles resemble typical knits, except they are created using a special category of active materials—known as shape memory alloys (SMAs)—which change shape when heated. In partnership with NASA, U of M researchers studied the unique dimensions of a human leg. They then subsequently designed, manufactured and tested an SMA-based knitted garment that can precisely conform to a leg's topography. "This technology required advancements on multiple scales," said Abel. "At the material scale, we tuned it to respond to body temperature without added power. Structurally, we manufactured it to adapt to the complex shapes of the human body perfectly. At the system level, we created an operation that maps the mechanical performance of textiles to human anatomy. Each advancement is important, but, together, they create a functionality that didn't exist before." These knits can be used in custom garments that can easily transform from loose to tight-fitting, and even bend in unique ways to conform to irregularly shaped regions of the body (e.g., the back of the knee). Examples of future use could be to create compression garments that are initially loose fitting and easy to put on which could subsequently shrink to tightly squeeze the wearer. "This creates an exciting new opportunity to create garments that can physically transform over time, which has significant implications for medical, aerospace and commercial applications," Holschuh said. Next steps will be to integrate the textiles into full-sized garments, which could solve a variety of problems where fit and conformance to the body are important, such as medical-grade compression stockings.
Source: University of Minnesota
Kraig has announced that operations at its Vietnamese production facility, which just formally kicked off earlier this month, are on track to set new production capacity records for the company. The company is a fully reporting biotechnology company focused on the commercialisation of new textiles and high performance fibres including spider silks. As expected, the first batch of production silkworms, announced earlier this month, are thriving on their diet of fresh mulberry leaves and the warm, humid climate at the facility in Vietnam, according to Kraig. The company expects that this first round of production will be complete within two to three weeks. The entire population of emerging silk moths, from this first production cycle, will be dedicated to breedstock population expansion, resulting in a more than a 100x increase in silkworm egg production and preparing for what the company believes will be its largest production batch, scheduled for November 2019. The November production batch, in Vietnam, is expected to expand the company’s capacity to produce its specialised recombinant spider silk to a level that collectively exceeds the entirety of its US based production, over the last ten years. This critical milestone, in the company’s commercialisation of eco-friendly and cost effective recombinant spider silk, has been the key focus of company management’s initiative to create high performance and environmentally sustainable alternatives to synthetic textiles. The completion of this first wave of production is validating the company’s business model and its transgenic spider silk silkworms. The company expects that its factory will have the capacity to produce more than 8 metric tons of its specialised silk in 2020, with a total capacity of roughly 40 metric tons per year, once fully utilised. “There has been considerable interest in Kraig Labs’ high-performance fibres, from multiple internationally recognised brands, so bringing our specialised silkworms online should allow us to deliver our first large batch of fabric and begin to fulfil the fibre request backlog. Having now successfully delivered the silkworms to the factory, watched our team hard at work rearing this first batch, and preparing the factory for the expanding workload, and walked the rows of silk production rack, tray, and mounting boxes, I believe that we are on track to meet our production targets for 2020,” COO of the company Jon Rice said.
Source: Fibre2Fashion
Mudassir & Brothers, a Nigerian textile trading company based in Kano, will set up a textile manufacturing firm worth over $50 million there. Its chairman-cum-chief executive officer Alhaji Mudassir Idris Abubakar recently said the decision to expand is to complement President Muhammadu Buhari’s policy of encouraging local production of qualitative goods. Abubakar said Kano state governor Abdullahi Umar Ganduje has allocated 22.5 hectares for the company, which will generate over 10,000 jobs, according to a report in a Nigerian newspaper.
Source : Fibre2fashion
Jakarta. Indonesian textile, garment and tire manufacturers are benefiting from the ongoing trade war between the United States and China, leading to optimism that Southeast Asia's largest economy may overcome global economic turbulence expected next year. Rosan Roeslani, chairman of the Indonesian Chamber of Commerce and Industry (Kadin), said he expected the trade war to continue for some time, but that local businesses had started to find ways to adjust and benefit from the dispute. "When the US and Chinese economies – two of our largest trading partners – started to decline due to the trade war, Indonesia's automatically followed," Rosan said during a discussion titled "2020 Economic & Capital Market Outlook" hosted by Investor magazine in Jakarta on Tuesday. Indonesian exports to the United States fell 1.5 percent year-on-year to $12.9 billion in the first nine months, according to Central Statistics Agency (BPS) data. Exports to China were meanwhile 1 percent lower at $18.3 billion in the same period. "But it is not all bleak. When I spoke with the textile association, they said next year's garment exports to the United States would increase by between 20 percent and 25 percent," Rosan said, adding that tire manufacturers also expect higher exports. Indonesia exported garments worth $63 million and tires worth $729 million to the United States last year, according to the United Nations Commodity Trade Statistics Database (UN Comtrade). Rosan said the increase in exports was due to a fair-trade agreement and the implementation of a reciprocal system between the United States and Indonesia. "They will buy our garments as long as we buy their cotton," Rosan said, adding that Indonesian exports are still exempt from US tariffs. He therefore expressed optimism that Indonesia's textile and garment exports would continue to increase next year, despite the expected global economic slowdown.
Indonesian Resilience
Various international institutions, including the International Monetary Fund and World Bank, have revised global economic growth projections for 2020 down to 2.6 percent from 3.4 percent. Several major economies, such as Germany, Italy and Britain, also face recessions. Emerging economies such as Turkey, Argentina, Iran, Mexico and Brazil, are also highly stressed. "In 2020, there will be a lot of pressure. However, Indonesia will not experience a huge amount of pressure, compared with other countries," Rosan said. He added that exports only account for a third of the Indonesian economy and that the country has yet to fully integrate into the global supply chain, making its economy more resilient to global shocks. "What must be maintained, is purchasing power if we want to maintain growth of 5 percent. We can be optimistic, but we must still be realistic. We have achieved 5 percent, which is very good amid global pressure," Rosan said. He said the business community appreciated Bank Indonesia's move to cut its benchmark interest rate by 100 basis points over the past four months and that he expected this to translate into increased borrowing by local businesses over the next three to six months. He also expressed hoped that the government would fulfill President Joko "Jokowi" Widodo's promise of improving the investment climate. "Investment is not easy, as we are competing with other well-performing countries," Rosan said. He added that Indonesia still had to reform its labor laws, improve productivity and integrate further into the global value chain to improve the investment climate.
Source: Jakarta Globe
