MARKET WATCH 09 DEC, 2019

NATIONAL

INTERNATIONAL

GST Council may use cess route to boost revenue

As it may not find it easy to raise the tax rates on mass-consumption, high-revenue items, given the overall demand slump, the Goods and Services Tax (GST) Council will likely increase the existing cess on so-called luxury/demerit goods and also impose such levies on a clutch of other items. The idea is to ensure that the steps taken to boost GST revenue don’t hit consumption and ruffle too many feathers in political circles. Further, the Council may also correct the inverted duty structure (where the tax on input is higher than on the final product) on a host of items. This is expected to address the issue of certain sections of taxpayers claiming input tax credits more than the actual tax content in their inputs — in some cases, even claiming refunds without any actual output tax outgo in cash. The Centre has delayed payment of the compensation amounts to states for the August-September period, which were due in October. The payment for October-November would be due by December 10. Though states argue there is sufficient funds currently in the compensation cess fund, it isn’t clear why the central government is holding on to the funds. “Increasing the cess on automobiles has limited utility given that vehicle sales are down,” Bihar deputy chief minister Sushil Modi told FE. The cess route is “the only feasible option” to ensure that the states continue to enjoy the protected SGST revenue growth of 14% annually, he added. Modi added that it was difficult to see the Council agreeing on increasing the tax rate on items which attract nil tax now (there are 156 such items). These items include unpackaged grains and other items of mass consumption. He also said increasing the cess on tobacco and aerated drinks could be the most viable option. Given the yawning GST revenue shortfall and the shrinking compensation kitty, the 38th GST Council session to be held here on December 18 is slated to discuss several options to boost revenue. According to a recent letter from the Council to states, the options include reviewing the current list of exempt items, as well the current GST and cess rates. The GST collections saw contraction in September and October. Though the revenue grew 6% in November 2019 (concerning mostly October transactions), to report the third-largest monthly mop-up of Rs 1.03 lakh crore since the tax’s launch in July 2017, this is largely attributed to the Diwali season and is likely to be unsustainable. The Council, according to sources, could look at imposing cess on items in the 18% tax bracket if there is a consensus that these items can be classified as non-essential, an official said. This makes sense as nearly half of GST revenue comes from items in the 18% slab. The cess is now there on a handful of items that aren’t in the 28% tax slab while all items in the 28% slab attract cess. Sushil Modi said a 14% assured revenue growth for states was high at a time when nominal GDP growing has slowed (the growth was at multi-year low of 6.1% in Q2). “In the few years preceding GST, most states’ tax revenues were growing at average rate of 10-11%,” he said. Under GST Act, the states are guaranteed a 14% revenue growth year-on-year which works out to be Rs 55,800 crore per month of state GST collection this fiscal. However, in the April-November period, the average monthly collection was short by over Rs 8,500 crore. While the compensation cess requirement for this period is nearly Rs 69,000 crore, the cess fund has held Rs 64,500 crore, a deficit which is likely to get worse over the rest of the fiscal. While the Centre had disbursed over Rs 47,000 crore in compensation to states for the April-July period, the bimonthly payment for August and September, which traditionally happens in the subsequent month, has been delayed. Though states acknowledge that the guaranteed growth is steep especially when the economy is facing consumption slump, they didn’t buy into the suggestion made by the Finance Commission to pare it down.

Source: Business Standard

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We are not done with stimulus: Nirmala Sitharaman on reviving economy

Finance Minister Nirmala Sitharaman Saturday said the government was working on more steps, including rationalisation of personal income tax rates, to revive the sagging economy. When asked if the government was considering rationalisation of the personal income tax rate for putting more money in the hands of people, the finance minister said, “One among many things that we are thinking of.” The GDP growth slowed down to more than six-year low of 4.5% in the second quarter of the current fiscal year from 5% recorded in the first quarter. The government has taken several measures during August and September to boost the economy, she said at an event in Delhi. Besides, she said, public sector banks have disbursed nearly `5 lakh crore without compromising on prudential norms in the last two months to boost consumption in the hinterland. “So there are ways in which for giving stimulus for consumption. We are adopting a direct method and also the method through which we are spending on infrastructure, whose spillover can go to core industries labour and so on,” she said. Asked if there could be more measures announced to bolster economic activity, she said, “If I say yes, it will be when, and if I say yes it is also going to come back to me, saying are you not too close to the budget. So I don’t want to say yes although I am wishing I can say. At the same time, I will not say no, because we are working on more.” On the goods and services tax (GST), the finance minister said, the rate structure will have to be decided by the GST Council. Eventually, the rates have to be rationalised and the entire tax system has to be simplified, she added. “One, the tax per se is getting complicated because of this unstructured bringing down of rates. Another, it is also getting complicated because you want to be sure that you’re doing everything correct, but end up asking for so much more information in a technology-driven system. People just get fed up of wanting to give so much information. So, we have problems in both the hands,” she said. With regards to apprehension raised on the genuineness of data, she said, “There’s no doubt, we need to bring credibility back to the data.” The government is aware of the debate which is going on data and its credibility, she said, adding, the intention is to make sure that any kind of inappropriate methodology which is coming into the data will have to be addressed. “So we will have to work towards better credibility, we have to work towards making available data without any obstruction,” she said. Asked how she reacts to criticism of her from various quarters, she said, “I don’t allow it to worry me. I am not inhuman. I do sometimes get affected by it. But I suppose it is part of the job. So, I can’t really wish it away. It comes, let it keep coming. I handled it.” Assuring that there would be no harassment of taxpayers, Sitharaman said the intent of the government was to further simplify taxation systems, including removal of exemption. Citing the example of corporate tax, she said, “From now on, they’re moving towards a greater simplified and exemption free regime. Therefore, a harassment-free, a subjective interpretation-free taxation regime.” Besides, she said the government has introduced faceless assessment for direct tax and soon this would be introduced in indirect tax to eliminate harassment.

Source: Economic Times

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Government looking at deploying larger funds for startups: Piyush Goyal

The government is looking at deploying larger funds for startups through the banking process and simplifying regulations further, Commerce and Industry Minister Piyush Goyal has said. "With deployment of larger funds and changes in regulatory process based on inputs given by the sector, we are looking at a further simplified regime for the startup community," Goyal said addressing participants at the ' Startup India Global Venture Capital Summit' in Goa on Saturday through video conferencing. The startup community has been pushing for faster release of funds for investors from the government's Rs 10,000 crore Funds managed by the Small Industries Development Bank of India (SIDBI). According to data from SIDBI, the total allocation from the Rs 10,000 crore corpus stood at Rs 2,265.70 crore on March 31, 2019, up from Rs 1,750.70 crore as on December 31, 2018. The fund was launched in 2016. A total of 134 investors from various countries, including the US and Japan, are participating in the on-going two-day startup summit in Goa. Senior officials from the Department for Promotion of Policy and Internal Trade (DPIIT), SIDBI, SEBI and the RBI are also participating in the event to discuss regulatory issues. Goyal asked startups and venture capital investors to share their concerns with the government so that they can be suitably addressed. "Whatever difficulties and concerns that startups and investors are facing must be communicated to the government. I assure you that they will be addressed," Goyal said. While startups are now relieved with the government doing away with angel tax, they are unhappy with low deployment of government funds as well as imposition of GST on fund managers.

Source: Economic Times

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India Inc foreign borrowings jump over two-fold to $3.41 bn in Oct: RBI

Indian companies had raised $1.41 billion in borrowings from overseas markets in October 2018. India Inc's foreign borrowings grew over two-fold to $3.41 billion in October over the corresponding month a year ago, according to data from the Reserve Bank of India. Indian companies had raised $1.41 billion in borrowings from overseas markets in October 2018. Of the total money borrowed by the domestic companies, $2.87 billion was through the automatic route of external commercial borrowing (ECB), $538 million came in through the approval route of ECB, showed the data. In the ECB category, the major borrowers tapping the automatic route included Muthoot Finance ($400 million), HPCL-Mittal Energy ($300 million), Wardha Solar (Maharashtra) ($251 million), Larsen and Toubro ($200 million), Deccan Fine Chemicals ($140 million) and Aditya Birla Finance ($75 million). Two companies tapped the approval route with JSW Steel raising $400 million, while Shriram Transport Finance borrowed $138 million in October this year. No money was raised through the rupee-denominated bonds or the masala bonds during the month, nor in the year-ago period.

Source: Business Standard

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Can't compare GDP data with consumer spending report, says govt panel

A fall in household spending is a signal that poverty may have increased, according to experts. The findings of the National Statistical Office (NSO)’s consumer expenditure report of 2017-18 can’t be compared with the consumption data derived from gross domestic product (GDP), said a panel. The committee, set up by the Union government to review the survey, gave explanations for a decline in expenditure witnessed across various food and non-food items, especially in rural areas, which may find a place in the survey report of 2017-18, expected to be released within two months (see chart). Business Standard reported last month that consumer spending fell for the ...

Source: Business Standard

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India's real GDP growth in FY20 to come slightly below 5%: IHS Markit

For the first half of 2019-20 fiscal, GDP growth slowed to a pace of 4.8 per cent compared to the 7.5 per cent a year back. India's real GDP growth in 2019-20 fiscal is expected to be slightly below 5 per cent as the impact of stimulus measures will take time to filter through to the economy, IHS Markit has said. Latest GDP data for July-September quarter showed a significant further moderation in the pace of economic growth to 4.5 per cent, the weakest in six years with a key contributory factor being a slump in manufacturing output. This compared with the 5 per cent growth rate registered in the previous quarter and 7 per cent rate recorded a year ago in September quarter of 2018. For the first half of 2019-20 fiscal, GDP growth slowed to a pace of 4.8 per cent compared to the 7.5 per cent a year back. "Financial sector fragilities continue to weigh on India's economic growth momentum, with the high level of non-performing loans on the balance sheets of the public sector banks, constraining their new lending," IHS said in a report. Furthermore, there are also risks from potential contagion effects from troubled non-bank financial companies (NBFCs) to the balance sheets of some commercial banks, which could further weigh on the overall pace of credit expansion. In response to the growth slowdown, the Reserve Bank of India (RBI) has eased policy rates significantly during 2019, with a series of rate cuts since February, while the government announced a large reduction in corporate tax rates in September to help boost new investment spending. "Following the weak GDP outturn for the September quarter, Indian real GDP growth in FY 2019-20 is expected to be slightly below 5 per cent, as it is anticipated that the impact of stimulus measures will take time to filter through to the real economy," IHS said. The RBI also lowered its GDP growth forecast for 2019-20 from 6.1 per cent to 5 per cent on December 5. "Confronted with the sharp slowdown in economic growth momentum, the Indian government will face increasing pressure to roll out additional fiscal measures to bolster manufacturing output and kick-start an upturn in the investment cycle. Such measures could include accelerated government spending on infrastructure projects such as roads, railways, and ports, as well as urban infrastructure such as affordable housing and hospitals," it said. IHS said given that the process of strengthening bank balance sheets has been slow, taking a number of years already, India's financial sector problems are likely to remain a drag on the pace of economic growth over the medium-term outlook. "Furthermore, any turnaround in the investment cycle could also be relatively protracted, depending on the ability of the government to accelerate its own infrastructure spending program," it said. IHS said the weakest sector has been auto manufacturing, with output down by 24.8 per cent in September. "The Indian auto sector has slumped into a crisis, with hundreds of thousands of auto sector workers in the production and distribution segments having been laid off over the past 12 months".A key concern is also the sharp contraction in capital goods output, which was down 20.7 per cent in September 2019. "This indicates that India's investment cycle is experiencing a severe cyclical slowdown, as reflected in the further slowing of fixed investment growth during the September quarter," it said. "The construction sector growth also slowed to a pace of 3.3 per cent in the September quarter, compared with growth of 5.7 per cent in the June quarter".Measuring GDP from the expenditure side, an important factor supporting the growth was public consumption, which rose by 15.6 per cent in the September quarter. Private consumption growth also picked up modestly versus the previous quarter, although it continues to expand at a much slower pace than in the past two financial years, IHS said. "Although the RBI has also provided monetary policy stimulus through its monetary policy easing measures, the impact is likely to be more protracted, since monetary policy stimulus effects on the real economy generally act with long lags. Furthermore, the impaired balance sheets of many public sector banks and NBFCs also will dilute the flow-through of monetary policy easing to the economy," it added.

Source: Business Standard

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MPC note shows export stagnation a long-term trend

The Reserve Bank of India (RBI) has significantly cut its economic growth forecast for the current and next financial year. Apparently, its concern to rein in inflation rate has prevailed while deciding not to cut the repo rates, at least for now. On the external sector, the Monetary Policy Committee (MPC) noted that since its meeting in October 2019, global economic activity has remained subdued, though some signs of resilience are becoming visible. Growth has shown signs of picking up in some advanced economies (AEs) and emerging market economies (EMEs). Crude oil prices have ...

Source: Business Standard

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Govt to launch PMKVY-III in next financial year: Skill development minister

The government is planning to launch third phase of its flagship Pradhan Mantri Kaushal Vikas Yojana (PMKVY) in the next financial year, Minister of Skill Development and Entrepreneurship Mahendra Nath Pandey has said. The government launched the PMKVY scheme in 2015 and revamped it in 2016 to impart skills to one crore persons by 2020. The revamped scheme, called PMKVY 2.0, moved to a grant-based model where the training and assessment cost would be directly reimbursed to training providers and assessment bodies in accordance with common norms. According to official data, over 69 lakh candidates have been trained across the country under the PMKVY till November 11. On asked whether the ongoing scheme will see an extension as 30 per cent of the target is yet to be met, the minister told PTI: "We will be crossing 90 per cent of the target under the ongoing scheme...and as you know, training and skilling the youth are key objectives of the government. We will (also) be coming up with PMKVY-III." The target under PMKVY-III, which he said will be launched after March 2020, will be bigger and cover larger aspects. However, Pandey did not share any figures for the new phase saying it will be shared when it is officially announced. The minister also urged public sector and private sector players to lay emphasis on apprenticeship programme. "I assure all help from my ministry. They (companies) must go ahead and give, organise and promote apprenticeship," he said. Pandey also said that he and Minister of State for Skill Development and Entrepreneurship R K Singh will meet chairman and managing directors of central public sector enterprises (CPSEs) across various sectors before the end of this month and ask them to increase the number of apprentices. Recently, Singh said there are only 4 lakh apprentices in India, out of which 2 lakh are in central public sector enterprises. The number is significantly lower as compared to countries such as Japan where the number is 1 crore and China (2 crore). CPSEs have also been asked to triple the number of apprentice to six lakhs.

Source: Economic Times

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New-age jobs: Skilling the workforce for Industry 4.0

Corporates, too, are facing a widening gap between the skills needed by them and the expertise provided by their workforce. The 21st century will be remembered in history for the onset of Industry 4.0. India, along with the US and China, is expected to be among the frontrunners of Industry 4.0, creating new economic opportunities for the workforce. According to the Deloitte report ‘Preparing tomorrow’s workforce for the Fourth Industrial Revolution’, 79% of youth respondents confess they had to go outside of ‘formal school’ to learn requisite skills. So, to begin with, the Indian education system should focus more on exploring academic-industry collaborations, and lay more emphasis on practical training. Lifelong learning will play a prominent role in remaining relevant, and the role of soft skills, including creative and critical problem-solving and interpersonal skills, cannot be underestimated. A lifecycle approach must be adopted in skill development programmes—from the aspirations of people before training, to counselling and following up with the beneficiaries during their employment. Corporates, too, are facing a widening gap between the skills needed by them and the expertise provided by their workforce. They need to put in place a strategic plan much ahead of the timeline by which they need those skills. Learning strategy should be aligned to organisational strategy to prepare the workforce for this change. Technologies such as AI will create opportunities for entrepreneurial ventures, either by enabling more efficient access to the suppliers and markets through the platform economy, or enabling new opportunities for dispersed manufacturing and remote working. According to the Manufacturing Global Expert Survey 2018, India enjoys an edge over Brazil and China in setting the Industry 4.0 agenda. However, a majority of Indian enterprises digitising the manufacturing process remain stuck in ‘pilot purgatory’. They fail to integrate the digitisation process at a scale where one can reap economic benefits from it. The economy requires a mindset shift to focus on enhancing the existing asset base rather than acquiring additional capital expenditure. One must draw inspiration from European countries, especially Germany, wherein the integration of automation with contemporary systems has resulted in a giant leap towards workforce efficiency and productivity. The author is CEO, EduGorilla, an edtech company

Source: Financial Express

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Delhi HC issues notices to exporters over non-payment of IGST on imports

The Delhi High Court has issued notices to exporters in cases related to non-payment of integrated goods and services tax (IGST) on imports under an export incentive scheme.  The cases relate to the review petition filed by revenue authorities regarding imposition of IGST on imports of goods under the advance authorisation scheme, which allows exporters to import goods that go into exports without payment of duties.  Under the GST regime, the exemption was not clearly mentioned till October 13, 2017. During the period, exporters were not allowed to clear their goods unless they pay IGST.  Miffed at this, exporters moved the Delhi High Court, arguing that the prevailing exemptions under the custom notifications could not have been denied merely on the premise of the introduction of a new levy under GST with effect from July 1, 2017. The court had held that the benefit of exemption existed at that point of time, the most appropriate course would be for the respondent authorities to verify whether the petitioner has fulfilled the export obligations pursuant to the advance licences. If petitioner has done, there is no need for any further action.  The Central Board of Indirect Taxes and Customs (CBIC) moved a special leave petition (SLP) in the Supreme Court against the order in April. However, the SLP was dismissed by the court. CBIC then went to the Delhi High Court for review of its order. Following this, the court issued notices to the exporters.  Abhishek Rastogi, counsel of petitioners and partner at Khaitan & Co, said: “It will be interesting to see how the High Court reacts when the revenue’s SLP has already been dismissed by the Supreme Court.” He said the SLP would only aggravate problems for the exporters when the economy is facing a slowdown and India has already lost to the US at the World Trade Organisation with respect to the incentive policies for exporters.

Source: Business Standard

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Global Textile Raw Material Price 08-12-2019

Item

Price

Unit

Fluctuation

Date

PSF

959.31

USD/Ton

0%

12/8/2019

VSF

1424.04

USD/Ton

-0.30%

12/8/2019

ASF

2038.71

USD/Ton

0%

12/8/2019

Polyester    POY

974.94

USD/Ton

0%

12/8/2019

Nylon    FDY

2074.95

USD/Ton

0%

12/8/2019

40D    Spandex

4078.84

USD/Ton

0%

12/8/2019

Nylon    POY

2174.44

USD/Ton

0%

12/8/2019

Acrylic    Top 3D

1087.22

USD/Ton

0%

12/8/2019

Polyester    FDY

2359.19

USD/Ton

0%

12/8/2019

Nylon    DTY

5372.14

USD/Ton

0%

12/8/2019

Viscose    Long Filament

1222.23

USD/Ton

0%

12/8/2019

Polyester    DTY

1961.26

USD/Ton

0%

12/8/2019

30S    Spun Rayon Yarn

2011.00

USD/Ton

-0.35%

12/8/2019

32S    Polyester Yarn

1556.21

USD/Ton

0%

12/8/2019

45S    T/C Yarn

2394.72

USD/Ton

0%

12/8/2019

40S    Rayon Yarn

1904.41

USD/Ton

0%

12/8/2019

T/R    Yarn 65/35 32S

1719.65

USD/Ton

0%

12/8/2019

45S    Polyester Yarn

2288.13

USD/Ton

0%

12/8/2019

T/C    Yarn 65/35 32S

2316.56

USD/Ton

0%

12/8/2019

10S    Denim Fabric

1.26

USD/Meter

0%

12/8/2019

32S    Twill Fabric

0.68

USD/Meter

0%

12/8/2019

40S    Combed Poplin

0.96

USD/Meter

0%

12/8/2019

30S    Rayon Fabric

0.54

USD/Meter

-0.26%

12/8/2019

45S    T/C Fabric

0.67

USD/Meter

0%

12/8/2019

Source: Global Textiles

Note: The above prices are Chinese Price (1 CNY = 0.14212 USD dtd. 9/12/2019). The prices given above are as quoted from Global Textiles.com.  SRTEPC is not responsible for the correctness of the same.

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Amid tariff war, China's exports to US fall 23% to $35.6 bn

Beijing: China's trade with the United States sank again in November as negotiators worked on the first stage of a possible deal to end a tariff war. Exports to the United States fell 23% from a year earlier to $35.6 billion, customs data showed Sunday. Imports of American goods were off 2.8% at $11 billion, giving China a surplus with the United States of $24.6 billion. Exports to some other countries including France rose, helping to offset the loss. China's global exports were off 1.1% from a year earlier at $221.7 billion despite weakening worldwide demand. Imports were up 0.3% at $183 billion, giving China a global surplus of $38.7 billion. Hopes for a settlement to the fight over Beijing's technology ambitions and trade surplus rose after President Donald Trump's announcement of a “Phase 1" agreement following talks in October. But there has been no sign of agreement on details nearly two months later. The dispute has disrupted global trade in goods from soybeans to medical equipment and threatens to depress economic growth. Trump put off a tariff increase in October but penalties already imposed by both sides on billions of dollars of imports stayed in place. Another U.S. increase is due on Sunday on $160 billion of Chinese goods. That would extend penalties to almost everything Americans buy from China. Chinese spokespeople have expressed hope for a settlement “as soon as possible," but Trump spooked financial markets last week by saying he might be willing to wait until after the US presidential election late next year. Financial markets have repeatedly risen on optimism about the talks only to fall back when no progress is announced. The “Phase 1" agreement doesn't cover contentious issues including U.S. complaints that Beijing steals or pressures companies to hand over technology. Economists warn tensions could rise again next year and the bulk of tariff hikes are likely to stay in place for some time. For the first 11 months of 2019, China's total global exports were off 0.3% at $2.3 trillion despite the tariff war. Imports were down 4.5% at $1.8 trillion, adding to signs Chinese domestic demand is cooling. China's exporters have been hurt by the U.S. tariff hikes but its overall economy has been unexpectedly resilient. Growth in the world's second-largest economy slipped to 6% over a year earlier in the three months ending in September, down from the previous quarter's 6.2% but still among the world's strongest. Weaker Chinese demand has global repercussions, depressing demand for industrial raw materials and components from other Asian economies and oil, iron ore and other commodities from Brazil, Australia and other suppliers. The Ministry of Finance announced Friday that China was waiving punitive import duties on U.S. soybeans and pork, keeping a promise announced in September. A sticking point is Beijing's insistence that Washington roll back its most recent penalties on Chinese goods as part of the “Phase 1" deal. Beijing said last month the U.S. side agreed, but Trump dismissed that. A Chinese spokesman repeated Thursday that Beijing expects such a move in a “Phase 1" agreement.

Source: Live Mint

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Pakistan needs no-nonsense textile policy

In the first quarter of current fiscal year, textile exports fetched $3.3 billion. In the best-case scenario, the country can end the year in June 2020 with $13.8 billion in textile earnings, up from $13.3 billion in FY19. However, the policymakers who worked with General Pervez Musharraf had made him believe that Pakistan’s textile exports could hit $13.38 billion in 2005. They had launched a voluminous Textile Vision 2005 prepared with input from all stakeholders and told the nation that the document was a panacea for Pakistan’s textile sector. The country hit the magic mark of $13.3 billion 14 years after the targeted date. Such is the quality of target-setting in Pakistan. That is why younger Pakistanis have become sceptical. They are unwilling to let the policymakers take advantage of their credulity. Annual textile exports of $13-14 billion are too little for a large country like Pakistan with a strong history of textile manufacturing plus abundant supply of cheap labour. Annual textile exports of smaller countries Bangladesh and Vietnam are far greater – at about $39 billion and $38 billion respectively. Total textile exports of $13.3 billion in FY19 are just half the level the Pakistan Muslim League-Nawaz (PML-N) government had promised to take them to. Yes, the much-trumpeted textile policy of 2014-19 had targeted $26 billion worth of exports by FY19. That has not happened too. And, just like the policymakers of Musharraf era, who cite lack of implementation of their key recommendations presented in the Textile Vision 2005, the PML-N policymakers also lament that the recommendations made in the Textile Policy 2014-19 were not implemented in true letter and spirit. So, the issue is either the policymakers – whether serving under a dictatorial regime or a democratic setup – set overambitious targets or the bureaucrats and exporters are inefficient to meet the given targets. A combination of both can also be cited for failure after failure of the so-called export visions and export policies. Now, the Pakistan Tehreek-e-Insaf (PTI) government is trying to revive textile exports. However, so far nothing seems to be working. The reason is that massive rupee depreciation, withdrawal of energy subsidies, fears of NAB investigation, U-turn in tax and rebate policies and political uncertainties have depressed business sentiment. Foreign investment is not coming in – not at all in the textile sector. Low economic growth, large-scale manufacturing (LSM) slowdown and high inflation have eroded profitability of industries and affected domestic investors’ ability to invest. Besides, ill-conceived documentation drives have shattered their confidence.

Fair tax policies

Adding $1 billion to the current textile export earnings every year is very much possible if the government introduces a fair tax and rebate regime and if the private sector invests even one-tenth – $100 million – in the industry’s balancing, modernisation and replacement (BMR). But to make this happen, the government will have to make sure that the business community is not harassed by the Federal Board of Revenue (FBR) or the National Accountability Bureau (NAB), new tax and rebate policies are implemented honestly and cotton output of the country is raised to meet needs of the textile industry. According to recent media reports, NAB has decided to ensure that businessmen are not unduly questioned, the FBR has stopped conducting raids on business facilities and it is also going to address grievances regarding tax and rebate issues on a priority basis. The PTI government should now encourage local investors to start investing in the textile sector’s BMR projects, preferably on a public-private partnership basis, instead of offering sector-specific export revival packages. Such packages have never worked in the past and cannot work now. The simple reason is that the government in power uses them for gaining political support of the powerful business lobbies and the bureaucracy makes them a tool of corruption. The investment in textile on a public-private partnership basis can be directed towards installing the most modern textile machinery and replacing the old ones, creating an institution for dedicated textile export marketing, upgrading existing textile designing and fashion institutes, setting up a network of knowledge workers for achieving product diversification for the industry and promoting cotton yield and production. Without achieving these five objectives, sustainable growth in the textile sector cannot be ensured. The government and the All Pakistan Textile Mills Association (Aptma), in collaboration with foreign experts, can launch a study to find out where the productivity and investment gaps lie. Pakistan imports over half a billion dollars worth of textile machinery every year. Why these imports are not helping the textile sector become more export competitive? What kind of textile machinery is being imported? Do we need to change the source of such imports or do we need to import machinery different than what we have been importing? The proposed study can help answer these and similar questions so that we come to know what kind of investment is needed and where, and what skillsets are required to make the most of fresh investment in the textile sector. The writer is a mechanical engineer and is doing masters

Source: The Tribune

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EU to boost garment industry in Myanmar

The new phase of the European Union’s SMART Textile and Garments project will bring together brands, trade unions and business associations to boost social and environmental sustainability in Myanmar’s garment industry. The project, funded by the EU, was officially launched in Myanmar last Friday. The SMART Textile and Garments project will work with more than hundred garment and textile factories in Yangon, Mandalay, Bago, Pathein and other regions. The project, which will feature the involvement of local and European experts, will deliver on-site assessment and training on topics such as human resource management systems and workplace communications, occupational safety and health, chemicals and waste management, and energy efficiency. “The European Union’s unwavering commitment and support plays an important role in improving decent work conditions and responsible business practices in Myanmar,” said Ministry of Labour, Immigration and Population Permanent Secretary U Myo Aung during the launch of the project. “The project’s aim to is to further strengthen sustainable production practices and responsible supply chains in Myanmar and Europe,” said Jacob A. Clere, team leader of SMART Myanmar. The SMART Myanmar project has been working with garment factories since 2013 to promote sustainable consumption and production (SCP) of garments bearing the label “Made in Myanmar” – a concept with emphasis on resource efficiency and social responsibility. SMART Textiles and Garments builds on SMART Myanmar and will expand training and capacity building programmes for social and environmental performance to more than hundred garment and textile factories in different locations across the country. SMART Myanmar has proven to be an extremely relevant programme in accompanying Myanmar’s apparel industry’s shift to more sustainable practices, said Pedro Campo Llopis, deputy head of development cooperation of the EU Delegation to Myanmar. “Europe is one of the world’s largest consumer markets and European consumers pay a lot of attention to where the products they buy come from and how they are produced. Sustainable production and respect for international labour standards are therefore important topics in the EU’s trade relations with Myanmar and this makes our cooperation with the Myanmar garment sector through the SMART Textiles and Garments programme so important,” Campo Llopis added. Several international retailers including H&M, Bestseller and C&A, have agreed to support the new programme to boost performance within their Myanmar-based supply chains. In fiscal year 2018-19, Myanmar-made garments were among the largest export categories in the country, with over US$4 billion worth of garments exported, according to the Ministry of Commerce. Since 2013, Myanmar’s garment sector has shown staggering export oriented growth. The garment industry serves largely the European market and has created job opportunities for thousands, mostly women.

Source: Myanmar Times

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Bangladesh: For the sustainable development of our apparel industry

Nelson Mandela, the revered political leader, philanthropist and president of South Africa, said that “Education is the most powerful weapon you can use to change the world.” Wise words that should be considered when we consider the role education can play in the continuing development of a sustainable ready-made garment (RMG) industry in Bangladesh. With the world’s population reaching seven billion people and rising, with increasingly limited natural resources globally, it has never been more pertinent to ensure the education of the next generation of Bangladesh apparel industry professionals in sustainable development practices. As was recently highlighted by UNESCO: “There is growing international recognition of Education for Sustainable Development (ESD) as an integral element of quality education and a key enabler for sustainable development.” Given the importance of the topic, we need to be encouraging the introduction of ESD in the curriculum of our secondary and higher education tiers in Bangladesh. The benefits of the establishment of an effective ESD system are manifold, and of particular importance to the textile and RMG industries of our nation. As was highlighted during a panel discussion at the recent November edition of Bangladesh Denim Expo, where improvements needed to increase the sustainable credentials of the Bangladesh denim industry were discussed, education in sustainable practices is woefully lacking in Bangladesh today. We are not alone in this. The UNESCO report stresses that, despite the importance of ESD systems, the uptake in the Western world is negligible. This has been echoed in recent debates during the United Kingdom’s election campaign, with politicians from all parties promoting policies to increase the awareness of sustainability in the secondary and higher education tiers. I feel now is the time for Bangladesh to adopt a proactive approach to remedy the situation. The importance of the RMG sector and related textile industries to Bangladesh cannot be emphasized enough. Since its foundation, the RMG sector has enjoyed rapid expansion, reaching an audience of international buyers and contributing to 84% of our nation’s GDP, employing some four million people, and contributing over $34 billion to the economy. As all of us involved in the sector are increasingly aware, the industry is facing challenging times. We face increased price pressures, increased customer demands and, as we are all aware, a growing demand to operate in a sustainable, ethical transparent manner. Given the importance of sustainability to the RMG industry and for the wider beneficial effects for the nation, should we not all be encouraging a fresh approach as to how the subject of sustainability is addressed throughout our education system? How can we expect to develop in a truly sustainable manner both as an industry and a country if the lifeblood of the sector, our next generation of RMG industry employees, are not aware of sustainable issues and are not au fait with the benefits that they can bring? However, in a climate where sustainability issues are becoming increasingly more critical, the Bangladesh education system is sadly lacking in providing the necessary education in these fields to the next generation. UNESCO specifies that the education for sustainable development involves integrating key sustainable development issues into teaching and learning. Included in this program should be instructions regarding climate change, disaster risk reduction, biodiversity, poverty reduction, and sustainable consumption. ESD consequently promotes and enables competencies including critical thinking, the imagining of future scenarios and making decisions in a collaborative way. Equally important is to expose students to advances in technology and sustainable practices and systems and the best way to implement these. Imagine, if you will, the advantages to be gained by the RMG sector if a system of education in sustainability was introduced in the country. We would have, after a period of time, access to higher education graduates possessing ingrained competence in the field of sustainability. Over and above that we would be able to show to the global community that we are pro-actively developing sustainable thinking and practices amongst the next generation. As opposed to having to learn “on the ground” in the workplace, this new generation of RMG industry employees would be able to contribute in a positive manner in areas of sustainability and, quite possibly, be able to offer a fresh outlook on sustainable initiatives that the industry could adopt and pass these to the existing management teams and business owners. Advancing this sustainable development education approach will necessitate involvement and funding from government and educational bodies and, most importantly, interaction from industry leaders from the RMG sector. It will take time -- Rome was not built in a day. However, by taking the lead in this field, we have the opportunity to show our customers, business partners, and the wider global community that we, as an industry and a nation we are both sincere about the sustainability agenda and are, truly, leading where others can only follow. We need to see this as an important investment for the sustainable future of the nation’s RMG industry and, more importantly, for the long-term environmental and social benefits for the nation as a whole. Our industry will face many challenges over the years ahead and we need to be fully prepared to ensure that it is “match fit.” Encouraging the development of the next generation of apparel and textile industry employees in sustainable issues will bring long-term benefits to aid the RMG sector’s evolution and the nation’s elevation to developing country status. As an industry and as a nation as a whole, we need to take the responsibility of ensuring the education of sustainable practices and stressing their importance for the long-term benefit of the apparel and textiles sectors and the planet as a whole. Education in sustainable development will encourage the next generation of apparel industry drivers to change the way they think and to work in a manner that ensures a sustainable, responsible future for our industry. Mostafiz Uddin is the Managing Director of Denim Expert Limited. He is also the Founder and CEO of Bangladesh Denim Expo and Bangladesh Apparel Exchange (BAE).

Source: Dhaka Tribune

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WTO faces deepest existential crisis ahead of its silver jubilee

The WTO’s sorry state of affairs may also prompt countries to opt for bilateral or plurilateral deals, which will further fragment the global trading zones and weigh on supply chains as well. The World Trade Organization (WTO) will be left with only one judge after December 10. This will cripple its dispute appellate mechanism — a sharp rebuke to the very idea of rules-based free trade that the multilateral body represents —ironically ahead of its silver jubilee on January 1, 2020. The US has stubbornly refused to relent on its move to block the appointment of appellate members (judges) at the WTO at a time of heightened risks to global exports from the ongoing trade war. Since at least three members are required to hear an appeal, the fate of appeals against 14 rulings of the WTO’s dispute settlement body (DSB) —including on India’s export “subsidies” — remains uncertain. More importantly, the DSB’s rulings won’t be binding on the losing sides unless their appeals are heard and settled. Three of the cases involve India, while the US features in five such appeals. For India, a staunch advocate of the rules-based multilateral trading system, it will be a mixed bag, to start with. It will be spared the trouble of having to fast restructure some of its contentious trade export schemes, as its November 19 appeal against a DSB ruling in favour of the US against New Delhi’s export “subsidies” is still pending. However, the US, too, will get some relief, as it has a pending appeal against India’s victory in a case of illegal solar subsidies offered by some American states. Ironically, the US had won a similar case against India in 2016 and New Delhi reworked its solar programmes to comply with the ruling after losing the appeal. As for fresh disputes, India is in consultations with the EU, Japan, the US, Chinese Taipei, etc over its decision to raise tariffs (up to 20%) on certain ICT products, including mobile phones. Typically, if the consultations fail, the aggrieved parties are free to approach the DSB for the composition of a panel to adjudicate on the case. The panel’s findings can be appealled at the Appellate Body. What worries analysts is that the Appellate Body goes into a freeze mode when a trade war between the US and China is showing no signs of abating. A non-functional appellate mechanism leaves a greater scope for countries to step up protectionism and disrupt global trade, growth in which is expected to plummet in 2019 to the lowest level since the 2008 financial crisis. To be sure, countries can still initiate disputes against one another at the WTO; problems will arise only when a losing party appeals against the ruling of the DSB, which remains very much functional even after December 10. In 60 cases, the DSB has either set up panels to adjudicate disputes or is in the process of doing so. However, since over 70% of the disputes — and almost all high-stake cases — are usually settled after appeals, without a functional appellate mechanism, the WTO’s dispute resolution prowess will be all but diminished. The WTO’s sorry state of affairs may also prompt countries to opt for bilateral or plurilateral deals, which will further fragment the global trading zones and weigh on supply chains as well. And this will lead the global multilateral trading system to, what many analysts world over have warned, a “self-destruct” mode. The alternative of not joining any trade block, too, is fraught with risks of isolation. Either way, India, which last month pulled out of the RCEP trade deal, will have to make some tough choices. Importantly, since the blocking of the appointment of appellate judges by the US started under the Obama administration (although its WTO stance hardened under Donald Trump), even if a new President is elected there, it is unlikely to lead to any material change unless Washington makes up its mind on the merit of multilaterialism. Efforts to pursuade the US, the original WTO proponent which now believes the trade body has been unfair to it, haven’t so far borne fruit. Interestingly, Robert Lighthizer, current US Trade Representative and a staunch critic of the WTO, was nominated to the Appellate Body as a member in 2003 but his appointment wasn’t confirmed due to a lack of unanimous support. Abhijit Das, head of the Centre for WTO Studies at the Indian Institute of Foreign Trade, said: “If the multilateral system collapses in a few years, then the roots of the collapse cane be traced to the demise of the Appellate Body. Then we all know which country is responsible for it.” The WTO Appellate Body’s annual report for 2018 highlighted its role aptly. “While losing parties and sometimes other WTO members have criticised individual rulings, to date, no WTO member has explicitly chosen not to implement a ruling in a dispute that it has lost,” it said. “At the same time, they (the indicators of its success) stand in stark contrast to the institutional crisis we are currently facing.

Source: Financial Express

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Bangladesh: Woman entrepreneur ray of hope for Bangladesh garment industry

Entrepreneur Ankiti Bose’s online fashion portal Zilingo has been the ray of hope for a number of small scale garment factories of Bangladesh as it had helped in selling huge amounts of its productions globally. Apart from Bangladesh, Zilingo had helped many textile retailers, individual textile manufacturers and small scale garment factories of South East Asian countries and the United States (US) to sell their beautiful creations in an international market. Bose, who had started Zilingo along with her friend Dhruv Kapoor way back in 2015 has been offering cross-border shipping and inventory-management software to help merchants and factories sell internationally, part of a business-to-business operation that now accounts for the majority of its revenue. Bose who had been working in a company in Bengaluru, got the idea about starting Zilingo while visiting a local market in Bangkok. As per reports, the billion dollar company which has been selling many kinds of traditional and modern garments has also been licensed to sell Disney, Marvel, and Star Wars branded clothes in South and Southeast Asia. Moreover, the company is also planning to help a number of women become self –independent through its training programme on garment making.

Source: North East Now

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Pakistan: Commerce under big focus

The government has merged Commerce and Textile Divisions after which Ministry of Commerce and Textile has been renamed as Ministry of Commerce. The federal cabinet recently approved the merger in the light of recommendations prepared by Dr Ishrat Hussain, Prime Minister's Advisor on Restructuring and Austerity. However, textile sector is likely to be unhappy with the decision as it has always supported a separate Ministry as it is the top foreign exchange earner. According to a notification issued by the Cabinet Division with regard to allocation of business to the Commerce Division would include all imports and exports across custom frontier as well as: (i) treaties, agreements, protocols and conventions with other countries and international agencies bearing on trade and commerce; (ii) promotion of foreign trade including trader offices abroad, trade delegations to and from abroad, overseas trade exhibitions and conferences and committee connected with foreign trade; (iii) standards of quality of goods to be imported and exported; (iv) transit trade and border trade and; (v) state trading. Other responsibilities of Commerce Ministry will be: inter-provincial trade, commercial intelligence and statistics, organization and control of chamber of and associations of commerce and industry, tariff (protection) policy and its implementation, law of insurance, regulation and control of insurance companies, actual work, insurance of war, riot and civil commotion risks and life insurance but excluding health and unemployment insurance, export promotion, special selection board for selection of commercial officers for posting in Pakistan Missions abroad, anti-dumping duties, countervailing and safeguard laws, management of EDF/EMDF, domestic commerce reforms and development in collaboration with other Ministries, provincial and local government, Intellectual Property Organization of Pakistan (IPO), textile industrial policy, coordination and liaison with federal agencies/institutions, provincial governments and local government entities for facilitation and promotion of the textile sector, liaison, dialogues, negotiations, except trade negotiations, and cooperation with international donor agencies and multilateral regulatory and development organizations with regard to textile sector, setting of standard and monitoring and maintaining, vigilance for strict compliance of the standards throughout production and value chain, textile related statistics, surveys, commercial intelligence, analysis and dissemination of information and reports on international demand patterns, market access etc, linkage with cotton and textile producing countries, training, skill development, research for quality improvement and productivity enhancement throughout the production/ value chain and management of textile quotas. Commerce Division will also have administrative control of (i) Federal Textile Board; (ii) Textile City (projects), Karachi/Faisalabad; (iii) National Textile University, Faisalabad; (iv) Textile Commissioners Organization;(v) Directorate General of Textile & Quota Supervisory Council; (vi) all textiles related EPB/ EDF funded institutes concerned with skill development in various sub-sectors of textile industry; (vii) textile testing laboratory, Faisalabad; (viii) Garment City Projects at Lahore, Faisalabad and Karachi and; (ix) Pakistan Cotton Standards Institute, Karachi. Cotton hedge markets will also be dealt with by the re-named Commerce Ministry as well as three attached departments i.e. Cotton Board, Directorate General of Trade Organization and Textile Commissioner's Organization.

Source: Business Recorder

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