India has decided to appeal against a World Trade Organisation dispute panel’s verdict which ruled that its popular incentive schemes for exporters such as the Merchandise Export from India Scheme (MEIS) and the Export Promotion Capital Goods (EPCG) scheme flouted multilateral trade norms and should be withdrawn. "New Delhi is going to appeal against the ruling. There are a number of things that we don't agree with. The panel decision is being scrutinised by our legal team at the moment, and we will elaborate on the matter soon," a senior government official told BusinessLine. Once India appeals, it will have a time-frame much beyond the 90 days-180 days suggested by the panel for withdrawing the schemes. "It seems that the government will have enough time to implement the new Foreign Trade Policy (2020-25) scheduled to be announced in April 2020, where at least some of the schemes could be replaced with the ones that are compliant with existing norms. In case of others, where the country firmly believes that no rules have been broken, India can fight it out at the WTO,” a Delhi-based trade expert said.
WTO dispute panel's ruling
A WTO dispute panel, on Thursday, backed several claims filed by the US against export promotion measures adopted by India and rejected New Delhi’s contention that it was exempted from the prohibition on export subsidies under the special and differential treatment provisions of the WTO Agreement on Subsidies and Countervailing Measures (SCM). The panel, however, rejected the US' claims that the exemption from central excise duty on domestically procured goods under the EOU/EHTP/BTP schemes and the exemptions from customs duties on importation under DFIS are subsidies contingent upon export performance.
WTO's recommendations
As per the recommendations, India needs to withdraw the prohibited subsidies under the EOU/EHTP/BTP Schemes, EPCG Scheme, and MEIS, within 120 days from adoption of the report. Since the withdrawal of tax-related incentives for SEZ units could require amendment to the SEZ Act, the panel recommended a 180-days time-period for the same, after the adoption of the report. For schemes like the DFIS, which can be amended through a notification, a shorter 90-day time-period for withdrawal has been given. In case India files an appeal against the ruling, the time available for withdrawal will get further extended, especially since the normal functioning of the Appellate Body is likely to get disrupted in December this year with the US continuing to oppose the appointment of new judges. While the Centre was initially considering replacement of the MEIS scheme voluntarily by January 1, 2020, with the Remission of Duties or Taxes on Export Product (RoDTEP) scheme — a scheme to remit all input taxes at the State or Central level, which is compliant with WTO norms — the recent fall in India's exports made it consider an extension of the scheme till the end of March 2020 as remissions were higher under it. The WTO has called out for removal of most of India’s export incentives because India’s per capita Gross National Income has increased beyond $1000 per annum, which is the threshold beyond which export subsidies are not allowed.
Source: The Hindu Business Line
The government is likely to release the first index to rank states and Union territories based on their preparedness to promote exports, an official said. The exercise would help in promoting healthy competition among states and UTs to work on parameters for promoting the country's exports, which is one of the key indicators for boosting economic growth. The index will rank them on some key parameters such as business environment, infrastructure, transport connectivity, access to finance, export infrastructure and trade support, the official said. Both the Niti Aayog and the commerce ministry is working on this index. Besides overall ranking, it will also be there for coastal states, landlocked states and hilly states. According to experts, the exercise would help in giving a direction to states and UTs to work on their policies and infrastructure to attract both investors and exporters. "It would give an empirical tool to states and UTs for introspection for their export preparedness. Exporters will also get a direction and guideline," Professor at Indian Institute of Foreign Trade (IIFT) Rakesh Mohan Joshi said. The government is already carrying out similar exercise to rank states and UTs on the ease of doing business. Several steps are being taken to promote foreign trade as it constitutes 45 per cent of the country's economy. There is a target to increase share of the country's exports in global trade. India's share in global merchandise exports and services was 1.7 per cent and 3.4 per cent, respectively. The country's exports dipped by 2.39 per cent to USD 159.57 billion during April-September 2019-20. Since 2011-12, India's exports have been hovering at around USD 300 billion. During 2018-19, the shipments aggregated at USD 331 billion. Promoting exports helps a country to create jobs, boost manufacturing and earn more foreign exchange.
Source: Economic Times
Earlier last month, amid persisting differences, RCEP members had decided that all issues must be settled by negotiators by October 22. Ahead of a leaders’ summit on Monday in Thailand where a deal on the 16-nation Regional Comprehensive Economic Partnership (RCEP) is expected to be announced, commerce and industry minister Piyush Goyal on Friday met Chinese vice-minister of commerce Wang Shouwen at the 35th Asean meet in the east Asian nation. The two ministers “discussed bringing a trade balance between the two nations while curbing market-distorting trade practices’. Hard last-minutes negotiations on RCEP between India and others — including China — are expected over the weekend in Thailand, which will see India fiercely pitching for safeguard mechanisms to protect its domestic industry from any onslaught of dumping, a senior government official said. These talks will prepare the ground for the announcement of broad contours of the deal at the leaders’ summit, which will be attended by Prime Minister Narendra Modi, along with the heads of other RCEP member countries. Modi will be in Thailand from November 2 to 4 to attend the Asean, East Asian and RCEP summits. While most of the over two dozen issues relating to the RCEP are settled, differences on certain critical ones —including tariffs, safeguards and rules of origin — with countries like China are yet to be resolved. India has shown its keenness to be in the grouping provided interests of its industry are protected. Earlier last month, amid persisting differences, RCEP members had decided that all issues must be settled by negotiators by October 22. The issues that were not resolved by October 22 were to be frozen for a decision only by the leaders (heads of states), before they meet on November 4 to announce the RCEP deal. 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 with countries like China bilaterally even later. In the last meeting of RCEP trade ministers that ended on October 12 in Bangkok, no joint statement came out due to the persisting differences. Safeguards for domestic industry, particularly, remain a crucial part of India’s negotiations. India has been 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. Most RCEP members want to conclude the negotiations and announce a deal in 2019 so that it can be formally signed in 2020 (after the announcement by the leaders). Some of them are upset with what they call India’s “recalcitrance” in sealing a deal early. As for New Delhi, the RCEP deal faces fierce resistance not just from 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. Even without the mega regional trade deal, 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
Budget will be presented in Parliament in early 2020; people joining now will find it difficult to pick up. Finance Minister Nirmala Sitharaman’s key Budget team for 2020 has gaps in key positions. As the Budget season of the government begins in earnest, the posts of joint secretary (Budget) and of expenditure secretary are being handled as additional charges by other officers. On Wednesday, Economic Affairs Secretary Atanu Chakraborty was given additional charge as expenditure secretary. What is surprising is that Revenue Secretary Ajay Bhushan Pandey, despite being senior to Chakraborty, was not given the additional charge once Expenditure Secretary Girish Chandra Murmu was elevated ...
Source: Business Standard
October was the second month when the collection declined year-on-year. In September, it was down 2.7%. Goods and services tax (GST) collection remained below Rs 1 trillion for the third straight month in October. It was 5.3 per cent lower than in the corresponding period last year, the steepest fall in the first seven months of the current financial year, indicated rising weakness in consumer demand. Collection stood at Rs 95,380 crore in October, slightly higher than the Rs 91,916 crore in the previous month, when it fell to a 19-month low, the finance ministry data showed on Friday. October was the second month when the collection declined year-on-year. In September, it was down 2.7 per cent. “This is the second consecutive month when collection is less than in the corresponding period last year,” said Pratik Jain, partner, PwC India. This is expected to compound the government’s revenue woes amid a steep target for 2019-20. The government’s monthly GST collection target is around Rs 1.18 trillion. M S Mani, partner, Deloitte India, said the trend of lower-than-expected GST collection was possibly reflective of the slowdown in the economy. “Since GST is a consumption tax, lower collections during the past few months are possibly indicative of the decline in consumer spending,” he added. Collection in October was mainly for the month of September, which was a pre-festive month. Experts hope GST for October, which will be collected in November, may give some indication of a demand pick-up. For November, collection should be better, given the festivities in October, Jain said. “While with simplification of compliances and tightening of administrative measures, collection could slightly improve in next few months, there is definitely a need of stimulus to spur demand,” he said. The next month's collections, which will cover the festive period, will provide critical cues as to the extent of slippage that one could expect in the GST collections in FY20 relative to the budgeted target, Aditi Nayar, principal economist at ICRA, said. “With festivities in October, these numbers should witness a rise and meet expectations in the coming month,” said Abhishek Jain, partner at EY. Central GST collections stood at Rs 17,582 crore in October, compared to Rs 16,630 crore in September. State GST collections were Rs 23,674 crore versus 22,598 crore in the previous month. The integrated GST mop-up was also lower at Rs 46,517 crore as against Rs 50,612 crore in the previous month. Grim revenue position posed a grave challenge for the government, with the exchequer staring at an overall shortfall of close to Rs 2 trillion for the fiscal year. A 12-member panel comprising officers from the Centre and the state was formed last month to recommend measures for revenue augmentation in GST. The panel is examining mechanism to plug evasion loopholes and increase rates where necessary. The steep growth target of 16 per cent for the central GST in FY20 will likely be revised downwards in the upcoming Budget in February. The CGST collection target was, in fact, revised downwards to Rs 5.26 trillion for the fiscal year from Rs 6.1 trillion estimated in the interim Budget, following a 9 per cent shortfall in the actual collection for the previous year. “Weak demand, low GDP growth rate and decline in industrial output could be the reasons for decline in GST revenue in October,” said Vishal Raheja, DGM, Taxmann. Lower-than-expected revenues are also putting pressure on the Centre to compensate states for the revenue shortfall. The compensation cess collection stood at Rs 7,607 crore during the month, which appears much smaller than the approximately Rs 13,000 crore compensation going out to states on a monthly basis. There was a shortfall of around Rs 24,000 crore between the GST compensation cess collected till August and the compensation disbursed to states to meet the revenue shortfall. The number of returns filed for the month of September, up to October 31, was 738.3 million. India’s GDP growth fell to a six-year low of 5 per cent in the April-June period. The government is working on measures to plug tax evasion, including data analysis, new return formats, e-way bill, e-invoicing, and mandatory e-ticketing for movie theatres.
Source: Business Standard
The PMI report said the cooling of manufacturing sector conditions continued in October, with both factory orders and production rising at the weakest rates. A day after release of dismal core sector numbers, purchasing managers’ index (PMI) survey on Friday showed manufacturing activities’ growth fell to a two-year low in October. PMI fell to a two-year low of 50.6 in October from 51.4 in September. A print above 50 means expansion, while a score below that denotes contraction. PMI was lower at 50.3 in October, 2017. The PMI report said the cooling of manufacturing sector conditions continued in October, with both factory orders and production rising at the weakest rates. “Subsequently, job creation softened to a six-month low, while companies were reluctant to hold excess stock and lowered input buying in response,” it said. The PMI data for October showed a continuation of manufacturing sector weakness in India, “with sales growth softening to the slowest in two years", said Pollyanna De Lima, Principal Economist at IHS Markit. "Weakening demand had a domino effect in the manufacturing industry, knocking down rates of increase in production, employment and business sentiment," Lima said. With quantities of purchases contracting for the third month in a row, Lima pointed out that input costs fell for the first time in over four years during October. Official data released on Thursday showed that eight-industry core sector declined by a record 5.2 per cent in September. The economist pinned hopes on expected rate cuts by banks for higher consumption and economic growth. "Following five successive cuts to India's benchmark rate, and an apparent lag in how quickly this feeds through to consumers, the impending lowering of commercial lending rates could potentially revive private consumption and help to shift growth higher as we approach the year end," Lima said. Goods producers may then be encouraged to resume investments and create jobs, which combined with cuts to corporate taxes could bode well for the outlook, Lima said. Finance minister Nirmala Sitharaman had announced cut in corporation rates for companies not availing the benefits of tax incentives and 15 per cent for the new manufacturing units from October.
Source: Business Standard
Following the World Bank formula should not end in just bettering the rank but must also ensure that this is translated across all states and cities. Improvement in World Bank Doing Business ranking has been one of our stated goals. Against this background, the advancement to rank 63 is satisfying. The objective is to improve this rank further to under-50—this will be commendable when reached. The broader question is whether this has really helped to increase investment flows, and if not, does it serve any purpose? The Economist has always maintained that India, China, and Russia have made this achievement their sole goal, putting in all efforts to work on the formula that goes into giving this rank, and is, hence, against its spirit. However, a better rank, just like an improvement in the sovereign credit rating, enhances the stature of the country in the global arena. Is there anything wrong in this approach? Probably not, because as the World Bank uses a common yardstick for evaluating countries on their ability to improve the doing business climate, any work done should be welcomed. Hence, if we have moved up from rank 130 in 2015 to 63 in 2020, it is certainly something to be proud of. Besides, it also needs to be accepted that high ranks in doing business cannot be the preserve of developed economies alone. The score looks at 10 essential indicators when ranking a country, and includes parameters such as starting a business, getting necessary permits, credit, protecting investors, taxes, foreign trade, insolvency, etc. Contracting with the government is a new variable mentioned this time and will get included in subsequent surveys. While individual ranks are provided for each parameter, the consolidated rank is based on the weighted average score. Our rank today is very good when it comes to protecting minority investors (13), getting electricity (22), getting credit (25), and construction permits (27). There is work to be done in case of enforcing contracts (163), registering property (154), and starting business (136). With the IBC progressively catching on, and GST getting into place, there is evidently reason to believe that the target of 50 should be achieved in the next couple of years. The World Bank admits that there are limits to this methodology because it covers limited cities in a country, and, hence, cannot capture all aspects of regulation in federal structures. Therefore, if Mumbai and Delhi are the cities chosen, things could be very different in the rest of the country—the primary cities or centres are taken to be representative of the entire country. There are two aspects to this rank change. First, targeting the World Bank rank is a very good guide on what governments should do to ease the business environment. It actually sets a template to be pursued so that policies are focused, and effective. Very often, due to legacy issues, one may not be aware that there are, say, 50 permits needed for getting a construction go-ahead. Once the template is used, the government can consciously remove those that make little sense, and, hence, improve the environment for entrepreneurs. In the absence of such a tested template, governments may often skip certain steps due to ignorance. The second aspect is the impact of the same. It has been observed that the overall investment rate in the country has been virtually stagnant at 28-29% after being at a level of 34-35% before the slump began. Hence, if one juxtaposes the continuous improvement in ranking on this scale to the actual investment taking place at the macro level, there is not much of a correlation. This is not surprising because the decision to invest depends on several practical factors, which cannot be part of any formula. Even if demand conditions are set aside, for example, while India scores well on the parameter of getting credit, which is based on the institutional set-up for the same, banks may not be willing to lend for investment due to the NPA issue, or the ALM mismatch, or higher risk perception. Therefore, even though there are no physical barriers to borrow money, the willingness to lend is missing. Also, while a doing business formula captures the banking set-up for investment, the bond market, which is still not evolved to cover sub-investment grade projects, matters. Similar parallels can be witnessed in other parameters, too. Our rank in terms of resolving insolvency has improved manifold to 52 due to the implementation of the IBC. The World Bank scale would look at the structure put in, which is fairly comprehensive, and covers all aspects in terms of having a process in place, including time taken for resolution, and addressing insolvency at the limit. However, at the practical level, if cases exceed the 270 days limit, or get stuck in the litigation process, or the realisation rate falls sharply, the success of resolving insolvency would be low relative to the structure created. But, the ease of doing business score does not capture this aspect. From a global perspective, it has been observed that India has had a very steady flow of foreign investment—both FDI, and FPI. Improvement in overall rank does matter as these investors are constantly assessing the environment, and any investment in a company that has plans involving permits is of high priority for them. Similarly, investors would also be looking at the issues of enforcing contracts, and resolving insolvency. FPIs would be interested in the issue of protection for minority investors as this is an indicator of how markets are governed. Therefore, the individual scores and ranking of these parameters will be studied closely. Hence, the process of cleansing the system of unnecessary hurdles is essential, and does help in the long run. It does lower the cost of doing business, and would, hence, make projects more profitable, especially as a number of these investments involve both time, and costs. Following the World Bank formula should, however, not end in just bettering the rank but also ensuring that the same is translated across all states and cities, so that investment gets fair treatment everywhere. Two things need to be persevered with. The central government has already got into the act of getting states to improve their own business environment. This removes disparities, and, in a way, the business arbitrage that exists, where some provinces are more open to investment than others. Bringing about competitiveness among states is a good idea so that they clean up their houses to attract private investment. Second, the government can now target bringing about changes in the policies/regulation regarding those parameters where we do not do well. This will help lubricate the environment that supports future investment.
Source: Financial Express
Of all the traditional textiles India prides itself on, bandhani always seems to find its space in the exhibit tapestry. Extending the narrative on the craft is Craft Council of India’s upcoming pop-up that brings Abdul Jabbar of Kutch-based SIDR Craft to the city. The brand — working with over 250 women artisans — is known for the sarkam, dani and bharti techniques, and will have on sale bandhani saris (a blend of tussar, mulberry and moga), dupattas and stoles.“Traditional craftsmen have a fixed notion in their minds about what their fathers and grandfathers used to do,” says Jabbar, who leads the brand, along with elder brother, Abdullah. Not only does Jabbar experiment with the motifs and colours, but the material too. While gaji silk is traditionally used for bandhani, SIDR uses a variety of canvases: mulberry silk, georgette, crepe, chanderi, etc. As for the designs, Jabbar’s contemporary patterns find company with traditional ones such as khambhi and chandrakhani. The collection’s highlight is pieces crafted using the bharti technique which relies on the artisan’s eyesight and judgement to, quite literally, ‘fill in’ the spaces on the textile using the dots, with no pre-drawn pattern or sketches.
Source: The Hindu
US Treasury Secretary Steven Mnuchin on Friday sought further relaxation in India's FDI rules to facilitate American companies to increase investment in the country for boosting economic growth and be a partner in achieving USD 5 trillion economy. Addressing media after the 7th India-US Economic and Financial Partnership meeting here, he said both the countries are working together to promote growth and improve economic security. "I look forward to the government's goal of USD 5 trillion. And I think that they're going to hit that goal, even faster than they expect with what are great economic opportunities as they promote growth," he said. Prime Minister Narendra Modi has set a target of achieving USD 5 trillion economy by 2024-25. Mnuchin said that the US welcomes the growing bilateral foreign direct investment flows between countries. "We look forward to the opening up of certain markets where US companies can continue to invest here. We discussed the importance of paying greater attention to transparency and debt sustainability and development lending in Asia and beyond," he said. On the US-China trade deal, Mnuchin said both the countries are making progress as per the direction of President Donald Trump and Chinese President Xi Jinping. Speaking about the meeting, Finance Minister Sitharaman said India-US relationship is at an all-time high particularly after the Prime Minister's visit to the US in September 2019. India and the US, as the world's largest democracies have shared an interest in each other's economic prosperity and in ensuring economic security, she said. Our discussions took stock of the efforts undertaken to further improve mutual corporation on wide range of bilateral and multinational subjects including macroeconomic policies to raise growth, improving financial market development, anti-money laundering and combating financing of terrorism. "We not only discussed policies to stimulate growth but also deliberated on significant steps, India and the US have taken to strengthen the financial sector, including banks recapitalisation and plan to merge some of the state-owned banks. We discuss capital flows investment in infrastructure, closer people to people ties and as also cooperation in the overall global economic context," she said. With regard to Iran ties, the Finance Minister said, India did explain its position mainly the need for maintaining land-based access to Afghanistan, particularly need for Chabahar link. "Through Chabahar rail link to reach out to Afghanistan and also to recently how recently Afghanistan was able to export 700 ton of agriculture produce using this access to sea port. Also for strategic and other reason to continue with that. It was well heard taken cognisance of by the American side. "So we've explained the need for us to have to maintain our links through Chabahar side for Afghanistan. Considering the extent of our commitment for developing the social and other infrastructure in Afghanistan. Also in the context of Pakistan continuously denying us access to through land road," she said. Earlier this week, the United States and six Gulf countries agreed to jointly impose sanctions on 25 corporations, banks and individuals linked to Iran's support for militant networks, including Hezbollah, making import of oil from the country more difficult. However, Mnuchin said the US has been working with allies to make sure that there is significant supply in the market of oil to offset the sanctions. "I just came from the Middle East, was in Saudi Arabia where I met with the energy minister and others. And they and others have done a very good job so that it doesn't have an economic impact. We are sensitive to the fact that India has tremendous energy needs. We look forward to working with India on LNG and expanding capabilities," he added.
Source: PTI
Germany is likely to urge India to restart talks on finalising a free trade agreement with the European Union during Chancellor Angela Merkel's meetings with government leaders in New Delhi on Friday, two sources with knowledge told Reuters. Merkel, accompanied by several Cabinet colleagues and a business delegation, began talks with Indian Prime Minister Narendra Modi that are expected to touch on trade, investment, regional security and climate change Germany is India's largest trading partner in Europe and more than 1,700 German companies operate in the country. "Having a free trade agreement with India is a long-pending demand from Germany," said one of the sources, who asked not to be identified because the talks are private. A second source made similar comments. Eric Schweitzer, president of DIHK Chambers of Industry and Commerce, told Reuters that India has enormous potential but there has been uncertainty among companies after an investment protection agreement between the two countries ended in 2016. A free trade pact that has been in discussion for years would help, he said. "Small and medium-sized German companies stand in a labyrinth of regulations and shy away from larger investment. Negotiations should restart and Merkel's visit could help," he said. VDA, Germany's car industry association that counts automakers like Volkswagen, Daimler, BMW and Audi as members, also wants India to restart the FTA talks, said the two sources. The Germans have raised a few other concerns, including the decline in India's auto sector, lack of stable policymaking and ad-hoc decisions which they say has affected buyer sentiment and created uncertainty among carmakers, they said. Daimler's Mercedes-Bez, BMW and Audi dominate India's luxury car market. India was expected to become the world's third-largest car market by 2020 with annual passenger car sales crossing 5 million but it has failed to live up to the heady growth it once promised. Wholesales of passenger vehicles to dealers have fallen for the past 11 months, with sales sliding 24 percent in September from a year ago. While a slowing economy and liquidity crunch among lenders is to blame for the recent decline, auto executives have said that a slew of new policies and regulations in recent years, some poorly conceived and implemented, have also hurt sales and economic growth. Merkel's visit started early on Friday, with a reception at the president's house followed by a visit to the memorial of Indian independence leader Mahatma Gandhi. Christian Hirte, state secretary in Germany's economic ministry, said there were several sectors such as technology and education where the two countries could collaborate. "I see good potential in the cooperation of German companies with Indian IT companies. But it would be important to sign an agreement about common standards in dealing and securing data – which is a precondition for getting data processed in India," he told Reuters.
Source : Reuters
The surest way out would be for governments to work together, while moving to bolster growth at home. At last week’s meetings of the World Bank and International Monetary Fund, I repeatedly heard the same dismal view: The global economy is in for low growth and historically low interest rates for a long time. “Low for long” isn’t even the worst of it. In the event of a new recession, governments have limited monetary and fiscal firepower to stoke demand. The economic and political fallout of a serious downturn could get ugly. Does it have to be this way? Certainly not, if governments address the causes of the current slowdown. Most of the finance ministers, central bankers and officials gathered in Washington had no trouble naming the biggest single factor: Trade tensions, they believe, are now the main thing holding growth back. Economists at the World Trade Organization agree. They estimate that global merchandise trade will grow by only 1.2 per cent in 2019. As recently as April, their projection was 2.6 per cent. This is a dramatic deceleration. Two conclusions emerge from the data. First, uncertainty about access to markets and inputs is causing businesses to postpone investment. This means less output and job creation. Rising trade protection also means that capital and labour get deployed less efficiently. Underinvestment and misallocated resources in turn weaken productivity, leading to further losses in output and trade. Weak investment might already be holding trade back: New data suggest it will grow only half as fast as output this year. Second, slower growth in output and trade appears to be synchronised across regions. It’s the dangerous obverse of a coordinated recovery, in which demand in one region supports growth in another. Today, no single region or major economy is growing strongly enough to pull the world out of the ditch. The surest way out would be for governments to work together, while moving to bolster growth at home. Reducing trade-related uncertainty would be valuable in its own right and would boost the efficacy of whatever monetary and fiscal headroom countries still have. But there’s little sign of such cooperation. On the face of it, the new trade restrictions don’t amount to much: So far, they account for less than 5 per cent of world merchandise trade. But this is to understate their impact. The real damage to growth arises from uncertainty over future market access for all goods and services. Before committing resources to a new project, businesses want to understand the risks. If new tariffs might wipe out profits, investors will pause, regardless of how cheap capital might be. In this way, trade uncertainty increases the danger that low interest rates will drive funds into riskier, higher-yielding financial assets. That kind of investment doesn’t add to capacity or improve productivity. Instead, it exacerbates financial volatility and fragility. Failure to cooperate on trade also makes fiscal stimulus less effective. Increased public spending may come with calls to prevent demand from being met by foreign suppliers, reducing the benefits of a coordinated fiscal push. A decade ago, coordinated fiscal stimulus and a commitment to avoid protectionism helped countries bounce back from the worst of the 2008-09 crisis faster than would otherwise have been possible. That’s a far more promising approach.To restore confidence to the global economy, rolling back the trade restrictions introduced over the past two years would be an important start — but only a start. Ending the most conspicuous “trade wars” and making progress on bilateral trade agreements can yield fast results, but the gains aren’t secure. Growth built on strong structural foundations requires a broader approach, involving more governments and firmer multilateral commitments. Governments have an excellent opportunity to make progress of that kind and send a signal that they are ready to break the cycle of underinvestment and slow growth. They can commit to complementing ongoing bilateral processes with wider engagement — at the Group of 20, the World Trade Organization and other multilateral forums — to restore order to global trade.“Low for long” is eminently avoidable — if policy makers resolve to end the uncertainty that is now threatening to become entrenched. If they fail, and let impediments to trade persist or get worse, their citizens had better brace themselves for what lies ahead. The writer is director-general of the World Trade Organization.
Source: Business Standard
US Treasury Secretary Steven Mnuchin on Friday said that India will meet its $5 trillion economy goal faster than expected. US Treasury Secretary Steven Mnuchin on Friday said that India will meet its $5 trillion economy goal faster than expected. Adding he said that the US is also focussing on the structural changes made by the Indian government. India has announced a slew of economic reforms in recent weeks to boost the slowing economy. On Iran issue, he said that the US is working with allies to ensure there is enough oil and the sanctions don’t impact other nations, he said at a joint press conference after the conclusion of the 7th edition of India-US Economic and Financial Partnership Dialogue in New Delhi. In the global trade war, Steven Mnuchin said that the US is continuing to make progress on the trade deal with China. Speaking at the event, Finance Minister Nirmala Sitharman said that a wide range of discussions over a host ofssues happened in the meeting. Other members of the US delegation include undersecretary for international affairs Brent McIntosh and assistant secretary for terrorist financing and financial crimes Marshall Billingslea. Mnuchin, accompanied by Donald Trump’s senior advisor and son-in-law Jared Kushner, began a regional tour from Oct. 25 through Saudi Arabia, Israel, United Arab Emirates, India, and Qatar. America is seeking India’s support against Iran over its nuclear programme and its ties to militant networks, global news agency Reuters reported. Nirmala Sitharaman in October this year said that the negotiations between India and the United States on a trade deal are going on in “full speed” and expressed hope that it will conclude soon. The ongoing trade deal negotiations briefly came up for discussion during a pull-aside between Sitharaman and US Treasury Secretary Steven Mnuchin at the IMF headquarters.
Source: Financial Express
Automation in the textile industry started over two centuries ago with John Kay’s invention of the flying shuttle. The machine not only enabled an increase in production but also brought down the number of people required to operate the weaving loom, from two to one. While the earliest attempts of automation during the industrial revolution were directed at minimizing human efforts in labor-intensive processes, the tremendous advancements achieved in the field of technology in the past few decades have made it possible to completely eliminate human intervention from many quarters of the manufacturing industry. Groundbreaking developments in recent years in the fields of Robotics and AI have allowed the textile industry to progressively adopt automation in their manufacturing processes. Advanced computer-assisted design software and computer-controlled cutting systems have aided in alleviating the bottlenecks in the production process considerably. However, complete automation of apparel creation had always presented the manufacturers with certain challenges. The unpredictable nature of fabrics that are prone to stretching, warping, and folding has always been a major obstacle in the complete automation of sewing garments making human intervention unavoidable. With the launch of SoftWare Automation’s latest assembly line of fully automated sewing robots, named Sewbots, even this last mile of automation in the textile manufacturing industry has been covered. In this article, Vilkor looks at the potential of sewing robots to transform the functioning of the textile industry. SoftWear’s patented technology uses a highly calibrated machine vision that is capable of detecting distortions and robotically making adjustments accordingly. Believed to have higher accuracy than the human eye, it boasts of possessing high precision tracking of needle placement with variations less than half a millimeter. This could prove to be highly advantageous for an industry for which consistency in size and fitting is vital. The birth of the Atlanta based machine and robotics startup can be traced back to Georgia Tech, one of the top research universities in the country with a special focus on technology. After 7 years of research and development, working on projects with DARPA (Defense Advanced Research Projects Agency) and the WALMART Foundation, the company went into business in 2015 with a line of robots that could assist in the manufacturing of a range of products including home goods, footwear, and apparel. SoftWear Automation’s CEO, Palaniswamy Rajan, claims that the Sewbot work line can bring out nearly twice as many finished t-shirts in an eight-hour shift as manual sewing can produce in 24 hours. China-based clothing manufacturer, Tianyuan Garments Company, which is known to produce garments for Adidas and Armani, has already set up of 21 production lines of Sewbots in their Arkansas factory. By drastically cutting down the labor requirement and increasing the rate of production by more than double, the Sewbot can potentially spark off a drastic transformation in the functioning of the apparel industry. An increase in the cost of manufacturing is duly reflected in the retail cost of the apparel. Instead of scrambling from one cheap labor nation to another for cutting down the manufacturing cost, apparel companies can now invest in sewing robots for cost-efficient manufacturing. This could encourage a trend of onshoring in apparel production instead of companies resorting to cheap labor nations for cutting down the manufacturing cost. Therefore they help in shifting the supply chain closer to the consumer and major markets in the U.S. and Europe, enabling the production of high-quality products for a low cost. By accelerating the ‘speed to market’ of products, consumers can get hold of the current trends within impressive timeframes, thereby allowing manufacturers to cash in on the seasonal surges in the market. The greater accessibility of technology brought on by lower costs has incentivized apparel producers to jump on the automation bandwagon. Big players like Amazon, Nike, and Adidas have already embraced this shift in the industry and are employing automation in designing and cutting processes. Riding on the technology-enabled automation wave that is taking over the manufacturing industry, a significant number of companies are investing their resources in developing robotics and AI guided technology. Jonathan Zornow’s startup Sewbo Inc. has come up with yet another innovative solution for the complete automation of apparel manufacturing. With the help of a non-toxic polymer, Polyvinyl alcohol, the fabrics are temporarily stiffened, making it easier for the robots to manipulate the fabric just like a metal sheet. The water-soluble substance is then rinsed off in hot water once the pieces of clothing have been completely assembled. Amongst these developments, there is an increasing concern over the possible unemployment of millions of traditional sewing professionals who depend on the job for their livelihood. Studies conducted by organizations like the OECD and World Bank also point towards this impending danger that could be brought on by automation. The developing countries of South Asia and Southeast Asia, like India and Bangladesh, whose economy is greatly dependent on textile manufacturing, are going to be the worst hit by this phenomenon. Proponents of AI say that although the complete transition could take up to a decade, it is, however, inevitable.
Source: Robotics Tomorrow
