The Synthetic & Rayon Textiles Export Promotion Council

MARKET WATCH 16 DEC, 2019

NATIONAL

 

INTERNATIONAL

Credit exposure to textiles at 187677 crores: Irani

NEW DELHI:  As per RBI data credit exposure to the textiles sector increased to Rs. 203549 crores during March 2019 from Rs. 196818 crores during October 2018 which declined to Rs. 187677 crores during October 2019. Bank credit record 8.4% year on year growth (October 2019/October 2018) for Jute Sector 9.5% year on year growth for Man Made Textiles (MMT) and 2.1% for other textiles. This information was given by the Union Minister of Textiles Smriti Zubin Irani in written reply in the Rajya Sabha this week. Credit availability she said is expected to grow further with capital infusion of Rs.1500 crores during 2019-20 and other measures announced by the Government like infusion of Rs. 70 000 crores capital into Public Sector Banks Rs. 350 crores allocated for 2% interest subvention for all GSR registered MSMEs on fresh or incremental loans enhancing thresholds expansion from Rs. 20 lakhs to an amount exceeding Rs. 40 lakhs for supplier of goods. Overall global growth slowdown impacted the growth of most of the domestic sectors including textiles and subsequent improved demand and profitability will be partly countered by sticky working capital requirement but the Government has taken series of measures in addition to the above mentioned interventions for improving profitability such as repo rate reduction by RBI provision of capital infusion of Rs.1500 crores during 2019-20 implementation of Pradhan Mantri Credit Scheme for Powerloom weavers reduction in custom duty for wool fibre wool tops extension of benefit of reduced corporate tax rate new SFURTI clusters to help artisans introduction of automated GST module one nation one grid power sector tariff and structural reforms simplification of tax paying procedures announcement of ROSCTL for apparel and made-ups exports. To enhance the growth and profitability of textile industries various schemes are also being implemented by the Ministry such as Integrated Skill Development Scheme (ISDS) ‘Samarth’ Scheme for Capacity Building to train 10 lakh youth launching a special package of Rs.6000 crore in 2016 to boost investment Amended Technology Upgradation Fund Scheme for upgradation of t e c h n o l o g y/ma c h i n e r i e s (ATUFS) Scheme for Production and Employment Linked Support for Garmenting Units (SPELSGU). Other schemes are Integrated Textile Park (SITP) Power Tex India Scheme - for power loom sector development Silk Samagra- the integrated silk development scheme Integrated Processing Development Scheme (IPDS) North Eastern Region Textile Promotion Scheme (NERTPS) Incentive Scheme for Acquisition of Plants and Machinery (ISAPM) for jute industry and jute diversified products manufacturing units National Handicraft Development Programme (NHDP) Comprehensive Handicrafts Cluster Development Scheme (CHCDS) National Handloom Development Programme (NHDP) scheme for knitting and knitwear sector Textile Minister said.

Source: Tecoya Trend

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EU FTA talks: India looking at ways to end stalemate, re-start negotiations

Keen to put the India-EU Free Trade Agreement (FTA) talks back on track after exiting the Regional Comprehensive Economic Partnership (RCEP) last month, India is carrying out a stock taking exercise to examine the areas where the negotiations are stuck and think of a possible way ahead, a senior official has said. “The Commerce and Industry Ministry has decided to put its focus back on the India-EU FTA talks as there is a general feeling that a number of sectors could gain from such a pact. A report on the recent interactions with the EU on the FTA is being prepared by the Commerce Department with suggestions on the way ahead,” the official told BusinessLine. The EU, interestingly, has said that it will agree to formal restart of the FTA negotiations, called the Broad-based Trade & Investment Agreement (BTIA), only when there is a convergence of views on certain basic issues like market access for automobiles and alcohol and inclusion of government procurement and labour standards. “The EU believes that there is no point going back to the negotiating table if certain basic issues remain unresolved. It will serve no purpose if an agreement is reached that has provisions that the EU Parliament will not give its approval to. It is, therefore, vital that the basics are agreed to before we seriously proceed in the negotiations. That is why India and the EU are holding technical discussions on the sticking points to see if they could be resolved,” a person close to the negotiations said. India and the EU have been negotiating the BTIA since 2007. In 2013 the talks collapsed over issues such as inadequate market access being given by India to automobiles and wine and spirits from the EU and Delhi’s refusal to open up the financial services sector like banking, insurance and e-commerce. Also, the EU’s attempt to include issues such as labour and environment in the pact, which India has strong objections to, played a role in derailing the talks. Several attempts to re-start the talks since then have not borne results.

RCEP exit impact

A day after India exited the 16-country RCEP, comprising the ASEAN, China, India, Japan, South Korea, Australia and New Zealand, last month, Commerce and Industry Minister Piyush Goyal said that the country was interested in concluding an FTA with the EU. He pointed out that sectors such as gems and jewellery, textiles and agriculture have been making a case for a bilateral pact with the bloc as it could result in increased market access. India decided to exit the RCEP at the Leaders’ Summit in Bangkok last month as it was not happy with some of the provisions in the proposed pact that could have led to the Indian market being flooded with Chinese goods imported at zero or very low duties. Getting into an FTA with the EU is an attractive proposition for India as it is the country’s largest trading partner, accounting for €92 billion worth of trade in goods in 2018 or 12.9 per cent of total Indian trade, ahead of China (10.9 per cent) and the US (10.1 per cent). “The status report to be prepared by the Commerce Ministry on the recent engagements between India and the EU on the proposed BTIA could help India in framing its future strategy,” the official said.

Source: The Hindu Business Line

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GST Council meet may turn stormy over states' cess; Rs 50k-cr dues pending

The Centre has, so far, not given any definite timeline for making the pending compensation cess payments to states, thereby triggering a face-off between the two sides. The compensation cess payment issue is not part of the official agenda circulated for the Goods and Services Tax (GST) Council meeting on December 18, and that precisely is setting the stage for a stormy show. Sources in the know said finance ministers (FMs) of non-Bharatiya Janata Party (BJP)-ruled states were likely to discuss on Monday their strategy for the Council meet. Some were already suggesting a walk-out if the Council failed to take up the compensation issue on Wednesday. In the absence of any meaningful discussion on compensation, there may not be any decision on GST ...

Source: Business Standard

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Major rejig of GST slabs unlikely for now

While the Centre apparently believes that nothing less than a major rejig of the goods and services tax (GST) slabs will suffice to boost collections given a big revenue shortfall, most states are unwilling to vote for such an overhaul in the GST Council meeting on Wednesday and may argue that the immediate exercise of rate changes should be a limited one. Speaking to FE, Bihar deputy chief minister Sushil Modi said that it was unlikely the GST Council would agree to move items in the 5% tax slab to a higher slab of 8-10%, as it would put an onus on the common man and hit consumption, without yielding any substantial revenue gains. Stating that states had not suggested any rate hikes while such a proposal had been made by the GST Secretariat at the Centre, Madhya Pradesh’s commercial tax minister Brijendra Singh Rathore told FE that it was unreasonable for the Council to raise the rates upwards at this juncture. “Earlier, rates were pruned without proper consultations due to political expediency but the practice of frequent rate revisions is not acceptable,” he said. Speaking to a TV channel last week, Kerala finance minister Thomas Isaac said that his state would oppose any suggestion to raise rates of items, which are currently taxed at 5%. However, he added that if rate hike is the only recourse then the 18% slab should be moved upwards. Speaking to FE, state tax officials from Maharashtra and Jharkhand, who are part of fitment and law committees of the GST respectively, broadly agreed that the idea that a major slabs recast is easier said than one. They added that such an exercise was anyway unlikely to be approved by the Council on Wednesday, as the pros and cons of it had been not been analysed by states. They said, however, that some rate hikes for a handful of items along with imposition of cess on a few more items could be considered. A group of ministers could be set up to study the rate rationalisation and build a consensus on hiking slabs and merging 12% and 18% slabs, one of these officials said. Even West Bengal finance minister Amit Mitra, who has called for immediate steps to augment GST revenue in the context of the delayed compensation payments to the states, said that input tax credit frauds were continuing unabated and this could be a major reason behind the revenue shortfall. According to him, development of business intelligence systems in each state was the need of the hour. At the time GST was launched in July 2017, the effective overall tax rate was 14.4% but after several rounds of rates cuts over the last two years, the effective rate is now 11.6%. The central tax officials say that revenue collections would improve only if rates are ‘corrected’ and the brought back to the revenue-neutral levels computed before GST roll-out. As reported by FE earlier, the council will likely increase the existing cess on so-called luxury/demerit goods and also impose such levies on a clutch of other items. It 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. Addressing reporters here on Friday, Union finance minister and chairperson of the Council Nirmala Sitharaman countered speculations about a restructuring of the GST slabs of 5%, 12%, 18% and 28% to address a big shortfall in collections, saying the finance ministry hasn’t yet discussed any such issue. “Buzz is everywhere other than my office,” she remarked, but did not rule out a hike in GST rates of some items. Modi had earlier told FE that, “Increasing the cess on automobiles has limited utility given that vehicle sales are down.” According to him, the cess route is “the only feasible option” to ensure that the states continue to enjoy the protected SGST revenue growth of 14% annually. 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. After two consecutive months of contraction, GST 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. A pick-up in consumption during the festive season seems to have contributed to the increase in mop-up, rather than any incipient economic recovery. GST mop-up in October — concerning mostly September transactions — came in at Rs 95,380 crore, 5.29% lower than in the year-ago month. The September GST collections were just Rs 91,916 crore, a 19-month low and 2.7% lower than the year-ago month. Given the yawning revenue 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 recent letter from the council secretariat to states, the options include reviewing the current list of exempt items, as well the current GST and cess rates.

Source: Business Standard

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Industry favours staggered GST returns, seeks HSN code only up to 4 digits

In the new returns, there would be one main form - GST RET-1, which will contain details of all supplies made, input tax credit availed, and payment of taxes. Industry has pitched for staggered implementation of new tax returns under the goods and services tax (GST) system, which are scheduled to be introduced from the beginning of next financial year. In their feedback to the government, businesses have sought continuation of the use of harmonised system of nomenclature (HSN) code up to the four-digit level only. The GST Council had earlier decided to defer the implementation of these returns from the planned staggered implementation from October this year. New returns are simplified version after businesses complained about the current complicated forms. In the new returns, there would be one main form — GST RET-1, which will contain details of all supplies made, input tax credit availed, and payment of taxes. This return will have two annexures — GST ANX-1 and GST ANX-2. Form GST ANX-1 will have details of all outward supplies and form GST ANX-2 will contain details of all inward supplies. Currently, taxpayers are filing two returns: GSTR-1, which contains details of all outward supplies made, and GSTR-3B, which is a monthly self-declaration of outward supplies, input tax credit availed, and taxes paid. Initially, businesses had a fear that their cash flow would be blocked because there was a proposition of only allowing credits to those invoices that were uploaded by vendors and tax discharged. To address the issue, the government had proposed allowing businesses to avail input tax credit on the basis of self-declarations in GSTR-3B for initial months even under the new mechanism. As such, industry demanded that initially only ANX-1 and ANX-2 forms be allowed to be filled along with the currently used GSTR-3B. Only when industry is used to these forms, filing of RET-1 be made mandatory after GSTR-3B is done away with. Businesses with annual turnover between Rs 1.5 crore and Rs 5 crore are currently required to report HSN code at two-digit level, while those above Rs 5 crore will have to report the code with four-digit level. The new return format, however, makes it mandatory for businesses to use HSN code at six-digit level. Abhishek Jain, tax partner at EY, said companies would need to review the HSN code for all their supplies and execute modification and upgrade their ERP configurations, entailing huge time and efforts from a business perspective. As such, he suggested the current mechanism of reporting HSN code be continued. “The taxpayers need to very quickly align their ERP and business processes to meet these requirements as the government proposes to introduce the new return format effective April one, 2020,” he said. There is then this issue of HSN wise reporting of imports and exports. Harpreet Singh, partner at KPMG, said this should be substituted with consolidated bill of entry wise reporting without HSN details. This arrangement should be made till the GSTN portal gets integrated with Indian Customs Electronic Gateway (ICEGATE), which is a portal of the customs department that provides e-filing services to the trade electronically. He also wanted reporting of exports be made without HSN details as is the current practice in the form GSTR-1. HSN code is a six-digit code, developed by the World Customs Organisation to classify products in a systemic and logical way. It contains 21 sections and every section is divided into chapters with each of them having separate heading. The first two digits represent chapter number, the next two are heading number and the last two digits are a product code.

Source: Business Standard

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States divided on raising rates: GST Council may discuss plugging revenue leakage

Several measures aimed at plugging revenue leakages under the goods and services tax (GST) regime are expected to figure at the upcoming GST Council meeting on Wednesday as the Centre and the states look to perk up collections. A concept paper based on the report of the committee of officials on revenue mobilisation is likely to be presented to the council, said a government official. A row has also been brewing between states and the Centre about releasing compensation payments. The states remain divided on the issue of raising rates or carrying out a significant revamp of the structure at this time. Punjab and Kerala have backed raising rates or tweaking them to make up for the revenue shortfall while others do not see this as an opportune time due to the economic slowdown. A final call on this will be taken by the GST Council. The concept paper will highlight key reasons for the shortfall in revenue. They include lowering of tax incidence following the GST rollout, a large number of exemptions and administrative loopholes. Goods and services such as hospitalisation in deluxe rooms, mobile phones and fabrics such as linen could be in focus with some states keen to shrink the list of exempted items or raise rates on some.

Tweak in GST Slabs

There are suggestions that the slab of 5% be raised to 8% or 10%, and the 12% and 18% slabs be bumped up into one of 20%. The GST Council secretariat had, at the end of last month, sought the views of states to address the issue of revenue shortfall, including rate rationalisation. The Centre is expected to ask the states to share the burden of revenue loss on the count of cuts in tax rates as also exemptions. Some of these changes had been made at the behest of state governments themselves. GST collections crossed the Rs 1 lakh crore mark in November after three consecutive months in which there were below this mark. The panel of officials has also suggested administrative tightening measures, including the extensive use of data to plug evasion, which could be taken up by the council, the official said.

Compensation delay

The upcoming meeting could be a stormy one with states, especially the Opposition-ruled ones, expected to try and pin the Centre down over the delay in the release of compensation in lieu of revenue loss on account of the shift to GST. “I would request Union finance minister Nirmala Sitharaman to expeditiously release the August-September compensation instalment,” Bihar deputy chief minister Sushil Modi said. Seven states including Kerala have threatened to approach the Supreme Court against the Centre over the delay. A senior official from another state said the delay in compensation will need to be addressed urgently if the Centre wants harmony to prevail on the council. “Delays in release of funds have hurt state finances,” the official said. Another state government official pointed out that the opening balance for the current financial year was over Rs 47,000 crore. A payout of Rs 65,151 crore was made to states and cess collections stood at Rs 41,574 crore, leaving a fund balance of Rs 23,695 crore with the Centre. “Payment to states can well be made on ad hoc basis... Actual shortfall, if any, would reflect only in the last quarter.”

Source: Economic Times

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Liquidity hit! Benefits to garment exporters held up

The government has held up the release of benefits worth thousands of crores to garment and made-up exporters under two major schemes — the Merchandise Export from India Scheme (MEIS) and the Rebate of State and Central Taxes & Levies (RoSCTL) — at a critical juncture when exports are slipping. While MEIS gains have been held up since August, benefits under the RoSCTL, meant for compensating garment/made-up exporters for various state and central government imposts, have never been extended since its introduction in March, exporters told FE. This has exacerbated a liquidity squeeze for the exporters, who typically factor in such incentives while firming up deals — and hurt their ability to honour fresh contracts on time ahead of Christmas, the most critical season for western apparrel buyers , said Ajay Sahai , director general and chief executive at exporters’ body FIEO. Benefits worth Rs 5,000 crore are stuck under both the schemes at a time when the flow of bank credit remains muted and exports have dropped for months, according to Gautam Nair, managing director at Matrix Clothing, one of the country’s largest garment exporters. Since 80% of the garment exporters are MSMEs, with very limited ability to raise resources, they have been hit very hard, he added. A senior government official said the resource-strapped revenue department felt that since garment/made-up exporters were to get the RoSCTL benefits (which are not extended to other exporters), they shouldn’t be simultaneously granted the MEIS benefits, which, in any case, had come under the WTO scrutiny. However, the textile ministry is learnt to be backing the garment exporters’ claims and wants both the MEIS and RoSCTL to co-exist. At least one of them must be extended urgently to contain a fall in exports until a final decision is made, said a commerce ministry official. The matter is now being considered by the Prime Minister’s Office. Exporters said the problem started in March when the textile ministry, after a Cabinet decision, notified the RoSCTL scheme for garments and made-up exporters to replace an earlier scheme that was reimbursing them for only the state levies. But while the earlier scheme — called the remission of state levies (RoSL) — was scrapped in March, the benefits under the new one (RoSCTL) were never granted. The problems got compounded when the revenue department asked the directorate general of foreign trade (DGFT) to stop the release of MEIS benefits to garments/made-up exporters from August 1. Thus, these exporters were stripped of “legitimate benefits” worth 8-10% (4% on account of MEIS and another 4-6% due to RoSCTL, depending on the nature of garments) of the freight-on-board value of shipments, they said. Exporters claim the MEIS and the RoSCTL are totally different schemes and must run simultaneously. “The RoSCTL is aimed at keeping exports zero-rated, as per best international practices, while the MEIS is intended to help exporters deal with several infrastructual bottlenecks, including exorbitantly high logistics costs. Garment, in any case, deserves a special treatment because it’s the most labour-intensive sector after agriculture and 80% of the exporters are MSMEs,” Matrix Clothing’s Nair said, pitching for benefits under both the schemes. The stand-off comes at a time when outbound shipment from the labour-intensive textile and garment sector has shrunk (even on a favourable base), aiding a decline in overall exports that have contracted for for four months in a row through November. Unless the issue gets resolved expeditiously, exports in the labour-intensive sector would only worsen and businesses will go to new competitors like Vietnam, Cambodia and Poland etc, warned the exporters. One of the sources, however, said since the textile and garment sector has achieved “global competitiveness” (with a share of more than 3.25% in international trade for three consecutive years), offering incentives to the exporters would be in violation of the WTO rules. Countries like the US have already dragged India to the WTO over export subsidies, both for textiles/garments and other sectors. While India recently appealed against a ruling by the dispute settlement body of the WTO against its overall export subsidies, the dole-outs for our textiles/garment sector were supposed to have been abolished even earlier in accordance with the “global competitiveness” criterion. Exporters, however, argue that since the WTO’s appellate body has been paralysed due to the US’ blocking of the appointment of judges, the government should focus more on removing domestic bottlenecks to exports. “Along with RoSCTL, we must get something for logistics costs that remain very high due to the absence of reforms by the government,” said one of the garment exporters.

Source: Financial Express

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Niti begins work to improve data quality

Niti Aayog, India’s key policy think tank, has begun work on a roadmap that will suggest steps to swiftly tackle quality issues confronting official data. NITI Aayog vice chairman Rajiv Kumar has chaired two rounds of high-level meetings to chalk out a roadmap to prevent leakages and establish credibility of data, which has seen a major dent in the past after government tried to suppress bad news. The move comes close on the heels of a controversy over the consumption survey that was subsequently junked by the government on data quality concerns. It also comes amid a move by the Ministry of Statistics and Programme Implementation (MoSPI) to address data quality issues of various surveys, introducing checks for data collection apart from increasing the sample size of surveys to improve accuracy. Sources aware of the deliberations told ET that the government is serious about addressing the data problem at the earliest. “Two rounds of discussions have been held between top officials of Niti and the statistics ministry,” one of the officials who is privy to the discussions told ET on the condition of anonymity. A formal notification on the committee and its composition may be issued soon, the official said. “Official statistics have become such a big issue that the Aayog can’t stay aloof. Its job is to advise the government. They are looking at the statistics including GDP,” another source aware of the development confirmed to ET. Statistics is no longer the old system, but has a huge technology component as well, the source added. “It is a challenge to obtain, store and maintain data and so is data governance, especially who has access to data,” the source said. Prime Minister Narendra Modi is the chairman of the Aayog and officials believe that it has the authority to drive the turnaround of India’s data system. The credibility of India’s official data has come under strain following last month’s leak of the draft Household Consumer Expenditure report, which showed a decline in spending in rural India in financial year 2018, and was later shelved. Earlier this year, the government withheld the Periodic Labour Force Survey report that showed unemployment sharply rising to a high 6.1% in fiscal year 2018 compared with 2.2% in financial year 2012, following which the Niti Aayog stepped in for a cover-up. Issues were also raised about gross domestic product (GDP) data based on the new series, with economists citing quality issues. Recently, a parliamentary panel suggested regular recruitment and use of technology to improve efficiency at the MoSPI in the wake of the ministry outsourcing primary level field work, as it faces a manpower shortage. “The ministry should not compromise in any manner on the quality of statistical staff at the field level, so that the credibility of the whole process is not jeopardised,” the parliamentary standing committee on finance said in a report to the Lok Sabha last week. It emphasised that “appropriate IT systems may also be considered to improve efficiency and reduce manpower needs”. However, experts like economist Pronab Sen have questioned the competence of the Aayog in such matters. Former members of the National Statistical Commission had accused the government of sidelining the commission and interfering with its working.

Source: Economic Times

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CBDT extends advance tax payment deadline for northeastern states to December 31

The CBDT on Sunday extended till December 31 the deadline for making advance tax payments for the northeastern states in view of the protests against the amended Citizenship Act. Earlier, the deadline was Sunday, December 15. "In view of the recent disturbances in the North Eastern region of India, CBDT has decided to extend the date for payment of 3rd instalment of Advance Tax for FY (financial year) 2019-20 from 15th December, 2019 to 31st December, 2019 for the North Eastern Region," the Central Board of Direct Taxes (CBDT) said in a statement. "Notification will follow," it said. Advance tax payments, under the direct taxes category, are made four times in a financial year.

Source: Economic Times

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Economic slowdown: A long road to recovery

With both fiscal and monetary policy at the end of the road, there is little that can be done in the short run. pvt sector can’t pull all the weight either. Can anything really be done about the economy? Practically speaking, if it were so easy for a government to turn around an economy, there would be prosperity all around. All kinds of suggestions have been put up by the wise counsels and every option explored. Yet, it does not look like there is an imminent solution. The fact that there is little official acceptance that the slowdown is deep and hard to reverse, is important because as long as we believe that things are only transient, the deterioration will be fast. Using the argument that we are the fastest-growing economy sounds good for the pulpit, but does not really provide solace. The problem is three years old, starting with demonetisation, and the policy of ignoring the consequences has led to the present state. What can the government do? The government, to its credit, has done virtually everything that can be done to revive the economy short of announcing doubling of the fiscal deficit. The motherhood statement often made that more reforms are required is open-ended and not specific. The government has addressed issues pertaining to the auto and real estate sectors besides enabling flow of credit to the SMEs. Its expenditure on projects is on schedule. Policies relating to recapitalisation of banks, merger of PSBs, disinvestment, labour laws, addressing the NBFC crisis, etc, have all been put in place. RBI has, on its part, taken decisive steps in lowering the interest rates and opened the door to a regime of lower interest rates. Yet, there has been limited progress made by banks as the credit-risk factor lingers, and they are reluctant to lend. They have been goaded to lend to SMEs which may not be wise because it can build an adverse portfolio of NPAs. While retail loans are the flavour, it should be realised that if the slowdown continues, there is a good chance of delinquencies increasing as all home loans are taken with the assumption that the salaries are paid on time, and the bonuses and variable pay come in. Any pause here can have serious consequences for the system. The economy is in the classic state of liquidity trap which was highlighted by Keynes during the time of the Depression, when lowering of interest rates ceases to affect demand for funds. This has happened in Japan and the euro region too, where interest rates have lost their relevance. The rudimentary theory of demand, supply and prices does not work as the underlying assumption of ceteris paribus no longer holds in the present context. Credit risk perception is high and banks do not want to lend money to all and sundry given the NPA overhang. With both fiscal and monetary policy at the end of the road, there is little that can be done in the short run. Increasing the spending of the government by say Rs. 2 lakh crore is an option which looks unlikely, as it sends wrong signals to the market. Therefore, the ball is back in the court of the private sector. The private sector would rather not get into infrastructure given the challenges of finance. Usually, these projects would not have a good rating to be able to command funds from the debt market. Further, with several large companies waiting for the IBC to resolve the debt issue, possible investors may prefer to purchase them in the market rather than start afresh. Add to this the fact that consumption has slowed down and it means that there is surplus capacity in most industries which has made further investment non-viable right now. Therefore, the path to recovery is going to be a slow one. Three ingredients are required which have to fall in place and will do so only over a period of time. First, the financial sector has to get out of the labyrinth. It started with the AQR affecting the PSBs and later the private banks. Subsequently, the NBFC crisis has dealt a blow to infra finance, real estate and SMEs, thus choking the financial system. This piece has to be set right, and the news of possibly more hidden NPAs on bank’s books could prolong the recovery process. It has literally been a case of survival of the fittest in the financial world. This is within the control of the government, and RBI has to be expedited. Second, the rural economy still holds the clue to the recovery process and in a way is a necessary condition, though not a sufficient one. It is critical as it is independent of what happens in the industrial world, and hence, the optimal output and price are the key determinants to demand recovery. Any disruption, as has been the case with the vegetables and pulses crops this year, would upset the applecart as there are inflationary implications that make monetary policy even more difficult to conduct. Clearly, everything is not within the control of any entity, and, here, the states hold the key. The focus has to be on making farming more attractive and should be run as commercial ventures rather than a sector to be sympathised with through loan waivers and cash transfers. Policy has to aim at increasing productivity of land and providing end-to-end solution till the marketing stage. State farming has to be seriously considered. Third, job creation is necessary to generate sustainable income that will generate demand. Employment unfortunately gets linked with growth and normally follows the latter and cannot be created unilaterally. Unless there are more households with spending capacity, consumption won’t increase. As corporates cannot employ persons and keep them on the bench (given that they have already lost pricing power in the last three years), the emphasis must be more on gig workers who are able to generate income by working on a contractual basis as consultants. In the medium term, the education system should bring in courses that suit the needs of the day—specific engineering requirements or handling of back-office jobs, so that the human race does not head towards the standard courses of medicine, engineering and management. Demand will grow for such skill-sets, and short-term courses of 3-6 months which address these requirements will be appropriate. Evidently, there are no quick solutions here, and it can be said that most alternatives have already been explored by the government with limited success. Removing administrative bottlenecks is a must; and retaining processes merely because there are legacy issues in various government organisations has brought impediments for entrepreneurship. This environment of doing business at the micro-level has to improve, and the federal structure involving multiple clearances and permissions needs to be done away with (just like what the GST has done) to smoothen the process. Getting in marginal improvements to break the World Bank Doing Business Code does not work except for getting in newspaper headlines. There has to be a deeper commitment.

Source: Financial Express

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India's story has just begun: Amitabh Kant

The series of pathbreaking and ambitious reforms unleashed by the Modi government in the last few years will make India a very competitive and productivelyefficient economy in the long run, a top Indian official said on Friday. "There is a great positivity about India," NITI Aayog CEO Amitabh Kant told in an interview here as he wound up his three-city US tour for a series of interaction with academicians, innovators, startups, corporate leaders and government officials in Boston, New York and Washington DC. People here believe that the fundamental reforms that have been gathered out in India across the economy, including GST, in terms of ending crony capitalism with the bankruptcy code, in terms of real estate reforms through RERA and in terms of direct benefit transfer, "will make India a very competitive and productively-efficient economy in the long run," Kant said. "India's story has just begun," he added. "Our process of urbanisation, infrastructure creation, using technology to leapfrog has just begun and you will see a huge growth in the next three decades on the foundation of the reforms that have been carried out," the NITI Aayog CEO asserted. Replying to a question on the economic growth figures, which are among the lowest in recent years, Kant said these were short-term indicators and that India was on track to be a USD 5 trillion economy. "The goal of the government is to make it a USD 5 trillion economy by 2025. We are all working towards that. We will deliver that and make India one of the easiest and simplest countries in the world. "We are determined to reach the top 50 in the next year on World Bank's ease of doing business index and in the top 25 in the next three years," he said, adding, "This goal is very much achievable." Earlier in the day, Kant formally released the India Innovation Index in the United States at an event organised by the US India Business Council, along with Google. India, under Prime Minister Narendra Modi, was moving fast on the track of ease of doing business, the NITI Aayog CEO said. The prime minister, he said, had given the bureaucracy the challenge to crack India into the top 50 of the ease of doing business index in the next one year and into the top 25 in the next three years, he said, adding, "He has asked us to make India very very easy and simple." "We are a great believer that India necessarily has to be an integral part of the global supply chain. And therefore, India has opened up its foreign direct investment regime across sectors," Kant said, adding that India's FDI had grown significantly in the last five years, as against the across-the-board downfall in FDI in other parts of the world. India, after the implementation of the Goods and Services Tax (GST), was on its way to become one of the most formalised economies of the world, he said. The country had ended crony capitalism by bringing in the insolvency and bankruptcy code, Kant said, adding that the third key reform was in the real estate sector. These, along with biometrics and the direct benefit scheme, were transformational in nature, he asserted. "Across different sectors, India has gone digital. That's the biggest transformation that has taken place. "As a result, India has become hugely data-rich, even before it has become rich. This data richness of India has led to over 1,000 startups working in learnings, artificial intelligence and they are doing the kind of disruption that the world has never seen before. Many of them are doing pathbreaking work," Kant told a select Washington DC audience.

Source: Economic Times

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Boost for India-UK ties

The stupendous victory of Tories, under the leadership of Boris Johnson, is a positive development for strengthening the India-UK ties, given the Conservative Party’s friendly approach towards India. Now that there is clarity on Brexit following a decisive mandate, the two countries can find new ways to collaborate, not only on bilateral ties but also on global affairs. With Johnson making it clear that the issues relating to Brexit would be settled by January 31, 2020, there will emerge new business and trade opportunities for India in the British market. During election campaign, the Conservative Party emphasised on how much it valued the contribution of British Indians in the UK while Johnson’s visit to two most important temples in London had struck a chord with Indians in the UK. More importantly, Johnson and his party colleagues have sought to de-hyphenate India and Pakistan and focused on growing convergence between London and New Delhi on a wide range of issues ranging from terrorism to environment. On the other hand, the Labour Party leader Jeremy Corbyn made statements that were widely seen as inimical to India’s interests, particularly on Kashmir and other internal matters. The blatant anti-India resolution passed by Corbyn’s party at its Brighton conference in September and statements by him and his colleagues reflected a hostile stance towards India. A mandate for Labour Party would have led to deterioration of bilateral relations. Since the UK was preoccupied with Brexit-related issues for a long period, there was hardly any time left for meaningful diplomatic engagement between the two countries. There is a need to re-boot India-UK relations by removing the trust deficit that had set in and the Tories victory is expected to create the right ground for it. Johnson’s proposal of a point-based immigration system will help in retaining the best talent among immigrants, and this will be taken positively by India. It will resolve one of the most contentious issues hampering the bilateral relations. The Prime Minister has also expressed his keenness to visit India soon and start negotiations on trade. This will set the stage for broadening the scope for bilateral trade in the post-Brexit scenario. Amid all the pessimism due to domestic economic slowdown, the UK election outcome may come as a blessing in disguise for India Inc. The companies from IT, automobiles, textiles, gems and jewellery, metal and mining sectors having business interest in the UK will be keenly looking forward to enhancing their long-term investments following Britain’s exit from European Union. India is the third largest investor in UK with a significant presence in the British economy and nearly 900 Indian companies have their offices in the UK which serve as the base for global operations.

Source: Telangana Today

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Maharashtra lures textile units facing in problems from Karnataka, TN

Maharashtra is capitalising on the problems faced by textile chains in and Tamil Nadu, by inviting them to invest in its domain. Textile units have been reeling under the impact of power cuts and frequent queries from the pollution control boards in the two southern states. Maharashtra's textile minister urged units to invest in the state, to enable the state government to make Solapur a uniform and textile hub. In order to intensify the appeal, the state government is organizing a three-day Uniform, Garment and Fabric Manufacturers Fair in Bengaluru between January 8 and 10, 2019. Since its launch nearly three years ago, nearly 400 textile units have been set up in the Solapur textile hub, which the government of Maharashtra plans to raise to 2,000 by 2022. “Our move is to give an equal opportunity to all stakeholders from the textiles industry to become part of it. All types of uniforms; be it school, industrial, hospital, work wear or hotel staff wear, will be made available under one roof at the venue. The fair will see brands, retailers, dealers, manufacturers, wholesalers, retail chains, semi wholesalers, traders, distributors, e-commerce agents, retail chains participating in the Fair in large numbers. Solapur has the unique distinction of being the country’s centre for the high-quality uniforms and allied garments,” said Deshmukh. In its new textile policy, the announced a power tariff of Rs 3 per unit for co-operative cotton mills and Rs 2 per unit for power looms, cloth processing, and garment and hosiery units in the state. In an initiative to promote processing of cotton, silk and other raw material used in traditional and man-made textiles, Maharashtra intends to invest as much as Rs 46.49 billion between 2018 and 23, under various schemes to be implemented under its “Fibre to Fashion” mission. The state aims to generate 1 million jobs by 2023.

Source: Denton Daily

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5 key govt decision makers impacting the Indian MSME sector

MSMEs form the backbone of the Indian economy and are critical to India’s vision of becoming a $5 trillion economy by 2025. The MSME industry contributes 29 percent of the country’s GDP, and also holds the key to solving India’s job crisis. A CII survey reveals that the MSME sector created the most number of jobs in the country in the last four years. To boost the capabilities of MSMEs and small businesses in 2020, the MSME Ministry implements various schemes and programmes. This makes Union Minister for MSME Nitin Gadkari and the Ministry crucial stakeholders in creating a bright future for MSMEs in 2020. But the ministry cannot work alone. Other Government departments such as the Ministry of Commerce and Industry, Ministry of Textiles, and others have an important role in coming together to collaborate and implement schemes that will uplift and empower small businesses, young entrepreneurs, artisans, weavers, and more. Here are five key government bodies and decision-makers that will impact the future of MSMEs in India: The Ministry of MSME and Nitin Gadkari nitin gadkari Union Minister for MSME, Nitin Gadakri Just a few days after taking office, Gadkari said he would work with full strength to increase job opportunities in the MSME sector. His vision is to raise the contribution of MSME sector to the country's GDP to 50 percent from the present 29 percent, and ensure that it gives employment to at least 15 crore people against the 11.1 crore at present. In 2020, Gadkari and the MSME Ministry aims to increase the number of MSMEs in India on a sustainable basis through various schemes and programmes. To do this, Gadkari said the ministry is providing better credit facility, technology upgradation, and skilling to boost the entire MSME ecosystem in India. Gadkari has also been talking about starting an ecommerce portal for MSMEs and the Khadi industry. It is inspired by Alibaba from China and Amazon from the US. The government portal, which Gadkari has been talking to Commerce Minister Piyush Goyal about, is meant for selling products manufactured by small industries. Click here for more information on what the MSME Ministry and Nitin Gadkari are doing for the benefit of MSMEs. The Ministry of Commerce and Industry and Piyush Goyal Piyush Goyal Commerce Minister Piyush Goyal Union Minister of Commerce and Industry Piyush Goyal believes the future of India lies in the MSME sector and has urged MSME industries to demand government support in development of clusters near ports, availability of land in bulk, common effluent treatment plants, and common testing facilities. Besides talking to Gadkari about the MSME ecommerce portal, Goyal has promoted a new Export Credit Insurance Scheme (ECIS) by Export Credit Guarantee Corporation of India (ECGC), a company controlled by the Ministry of Commerce. Named Nirvik, the new insurance scheme is expected to make Indian exports competitive and benefit MSME exporters with tax reimbursements, reduced insurance costs, and ease of doing business. Going forward, Goyal has called for more participation by MSMEs of developing nations in domestic and global trade. The minister has also directed officials to make it simpler and less time-consuming for MSMEs to sell on public procurement portal Government e-Marketplace (GeM). The Commerce Minister also exhorted state-run banks to step up lending to MSMEs and also assured these lenders of all kinds of support. Click here for more information on what the Commerce Ministry and Piyush Goyal are doing for the benefit of MSMEs. The Ministry of Textiles and Smriti Irani smriti irani Textiles Minister Smriti Irani To address skill gaps and to supplement efforts initiated through the Special Package for Garments and Made-ups, the Ministry of Textiles approved the Scheme for Capacity Building in Textile Sector (SCBTS) in three years from 2017-18 to 2019-20. Smriti Irani and the ministry focussed on apparel and garmenting, knitting, metal handicraft, textile and handloom, handicraft and carpet, among others. The Rs 1,300 crore initiative known as "Samarth” signifies the broad objective of skilling youth for gainful and sustainable employment in the textile sector. Textiles minister Smriti Irani announced in August 2019 that out of 18 selected states, 16 state governments signed MoUs with the Textile Ministry to implement Samarth. “It has been the endeavour of the Prime Minister that for a new India, we ensure that each and every citizen who seeks resources for sustenance is skilled, and it is in this endeavour in the sector of textiles that Samarth took shape,” Irani said. Government information indicates the scheme's primary objective is to provide demand-driven, placement-oriented National Skills Qualifications Framework (NSQF)-compliant skilling programmes to incentivise and supplement the efforts of the industry in creating jobs in the organised textile and related sectors. Click here for more information on the Ministry of Textiles’ scheme and which states are taking part. Ministry of Skill Development and Entrepreneurship and Mahendra Nath Pandey pandey Skill Development and Entrepreneurship Minister Mahendra Nath Pandey Union Minister Mahendra Nath Pandey has maintained India needs more than 70 lakh skilled manpower “due to unleashing of economy”, adding that “more than 62 percent of India’s population is young and it is the Prime Minister’s vision to make India one of the largest skilled economies in the world.” Pandey is at the forefront of the National Skill Development Mission (Skill India Mission), launched on July 15, 2015 under the guidance of Prime Minister Narendra Modi, which Pandey said has been steadily making progress. “Nearly one crore youth are being given skill training every year under several programmes of the government through the Skill India Mission,” he said. Pandey also announced that 36 Indian states and union territories have submitted their consent for participation in the ministry’s World Bank loan-assisted Skills Acquisition and Knowledge Awareness for Livelihood Promotion (SANKALP) programme. Pandey announced that first year grants have been released by the ministry to nine states. They are Andhra Pradesh, Assam, Bihar, Gujarat, Jammu & Kashmir, Maharashtra, Manipur, Punjab, and Uttar Pradesh. Click here for more information on the work the Ministry of Skill Development and Entrepreneurship is doing to upskill youth and create employment. Ministry of Finance and Nirmala Sitharaman Nirmala Sitharaman Finance Minister Nirmala Sitharaman Taking over the portfolio from Arun Jaitley, Sitharaman presented the full Budget for 2019-20 on July 5, 2019, in the Lok Sabha. With a focus on small businesses and kirana stores, she announced a retail pension benefit scheme for three crore traders and shopkeepers with annual turnover less than Rs 1.5 crore. She then announced Rs 350 crore has been allocated for two percent interest subvention for GST-registered MSMEs on fresh or incremental loans, and also proposed the creation of a payment platform for MSMEs to enable filing of bills and payment on the platform. Besides the Budget announcements, the Minister's focus on empowering small businesses continued through the next few months. In a bid to boost lending, Sitharaman on September 20 asked public sector banks to hold 'loan melas' in 400 districts to lend to desirable shadow banks and retail borrowers.

Source : SMB Story

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Egypt seeks to upgrade relationship with Sri Lanka

Egypt wants to upgrade the relationship with Sri Lanka to the level it deserves in trade, investment, technology and knowledge sharing. Egyptian Assistant Foreign Minister for Asia Ambassador Hany Selim noted that the two countries have over the years supported each other in facing global challenges and presently combating terrorism was a common interest. Meanwhile, Foreign Secretary Ravinatha Aryasinha called for the regaining of Sri Lanka's economic prominence in Egypt to its traditional strength, consistent with the shared history, excellent bilateral political relations and the collaborative role the two countries play in the multilateral sphere. The Foreign Secretary made this observation when he addressed the Inaugural Session of the Bilateral Political Consultations between Sri Lanka and Egypt at the Egyptian Foreign Ministry in Cairo. The Session was Co-Chaired by the Egyptian Assistant Foreign Minister for Asia Ambassador Hany Selim. Sri Lanka's Ambassador to Egypt Damayanthie Rajapaksa, and officials from the Ministry of Foreign Relations and the Sri Lanka Mission in Cairo were associated with the Foreign Secretary during the talks. Welcoming the Sri Lanka delegation Assistant Minister Ambassador Selim highlighted the historical relationship between Egypt and Sri Lanka. Noting that the two countries have over the years supported each other in facing global challenges and that presently combating terrorism was a common interest, he called for the upgrading of the relationship to the level it deserves in trade, investment, technology and knowledge sharing. Secretary Aryasinha noted that relations between Sri Lanka and Egypt which date back to centuries old trade relations, was bolstered by the exile in 1883 to Sri Lanka of the Egyptian freedom fighter Ahmad Orabi Pasha and was later consolidated through Sri Lanka's support to Egypt in 1956 during the Suez Crisis, to African Liberation struggles and later multilateral partnership in the founding of the Non Aligned Movement and the furtherance of South-South Cooperation. He said the Political Consultations were held at a time when Sri Lanka's President Gotabaya Rajapaksa has pledged to steer a neutral foreign policy which will allow Sri Lanka to once again play a moderating role in the global community, devoid of aligning itself to power blocks, and to pursue Sri Lanka's national interest with friendship with all. In recent months the Foreign Ministry had also embarked on operationalizing a 'Revitalized Africa policy', that aims to address convergences and opportunities towards a more fruitful and mutually beneficial relationship befitting Sri Lanka's centrality in the Indian Ocean, through cooperation with countries of the African Union (AU), where Sri Lanka received Observer Status in 2014. It was recalled that while in the 1980s Sri Lanka provided 60% of Egypt's tea requirement, it had presently dropped to only 5% following the imposition of high tariffs and later the emergence of regional trading blocs in Africa. However, premier tea brands such as Dilmah, Superfine, Akbar, Impra and JAFF continue to offer gourmet specialty tea to the discerning tea connoisseurs in Egypt that needed to be expanded. Egypt is also the largest market of desiccated coconut from Sri Lanka for the purpose of confectionary industry. In addition, Sri Lanka has been exporting rubber products, leather products, spices, coir products, confectionary, cocoa and cocoa based products, porcelain and ceramic ware. Sri Lanka's imports from Egypt are mainly chemical and plastic products, metal-based products, fertilizer, oils and fresh fruits. Tourism was identified as a potential growth area, while modalities to ensure sustainable investment flows were also discussed during the consultations. To this end, it was also agreed to revive the Egypt-Sri Lanka Business Council originally founded in 2004, and to reconvene the Joint Commission on Trade and Economic Cooperation which last met in 2002. Opportunities for Sri Lanka to benefit from Egyptian Technical Support in cultivating Citrus, pomegranate, mango, dates and expanding agricultural training opportunities from the Egyptian International Centre for Agriculture (EICA) was reviewed, while Egypt showed interest to obtain plant materials of Pineapple, red banana, custard apple. Egypt has requested Sri Lankan investors to invest in the field of Agriculture, Tourism, textile and garment industries, Communication & Information Technologies, Oil refinement, while Sri Lanka welcomed Egyptian investors to the Colombo Port City. On security and defense cooperation, joint efforts in combating terrorism, extremism and transnational crime, reactivation of the security cooperation agreement signed in 1996, training opportunities in peace keeping at the Cairo International Center for Conflict Resolution, Peacekeeping and Peace building (CCCPA), and in counter-terrorism at the General Sir John Kotelawala Defence University (KDU) and other Training institutions in Sri Lanka, as well as establishing a focal point to share information and experiences with Egyptian authorities on preventing human smuggling and drug trafficking was discussed. The possibility was explored for Sri Lanka to obtain know-how in the development of Medical Tourism and to build bridges between the youth in both counties through enhanced participation of Sri Lanka Youth in World Youth Forum in Egypt. The importance of broad basing the current educational cooperation in Islamic religious education, to also include Medical, Management, Science, Engineering, and Archeology in Egyptian Universities was emphasized and the Egyptian side presented a draft MOU for consideration which offered 2 Undergraduate and 6 Graduate opportunities. Recognizing that Sri Lanka and Egypt were likeminded on global issues and had close collaboration in multilateral fora, the possibility of conducting Diplomatic Training for Junior Diplomats of both countries to appreciate the common global challenges faced was discussed. The two delegations also reviewed modalities for further cooperation between the two countries in international fora and within the African Union (AU), where Egypt is the current Chair. Developments in the Middle East and Africa, as well as Asia, and shared perspectives on a range of current international issues where Egypt and Sri Lanka cooperate including disarmament, migration, human rights and implementation of the SDGs were also discussed. The Sri Lanka delegation to the Political Consultations included First Secretary (Commercial) of the Embassy of Sri Lanka in Cairo Shiwanthi Abeyrathna, Second Secretary Anodya Chirasrie, and Assistant Director of the Africa Division of the Foreign Ministry in Sri Lanka Thulan Bandara.

Source: Colombo Gazette

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Bangladesh : Government lifts time bar on buying house registration

The government has withdrawn the time limit imposed on buying houses in the garment and textile sector to register with the Department of Textiles as only 211 entities had obtained the registration in the last six and a half months. The textile and jute ministry in November dropped a sub-section of a Gazette notice issued on May 28 that directed all buying houses to become registered with the DoT within 60 days of issuance of the notice in order to do business in the country. The sub-section had previously said that if any buying house sought time extension with valid reasons, the registrar could allow it additional time of 60 days. It had also stated that if any buying house failed to obtain registration on time, the government would take legal action against it as per the law. DoT officials said that only 211 out of around 1,000 buying houses in the country had registered with the department in the past six and a half months. They said that considering the reality, the ministry had withdrawn the time bar to allow newly established houses to obtain the registration. Bangladesh Garment Buying House Association president Kazi Iftequer Hossain on Sunday told New Age that many companies had failed to apply to the DoT for registration on time as they could not renew their trade licences in July. The decision would also be good for companies which were new in business, he said. Iftequer said that more than 500 members of his association had filed applications with the DoT and 211 houses had become registered. Earlier on April 1, the ministry issued a Gazette notice detailing the procedure for buying houses to obtain registration with the DoT. It said that the buying houses would have to file applications with the DoT along with documents of the updated trade licence, income tax certificate, certificate of incorporation as a limited company, estimated yearly turnover and bank solvency certificate. The textile and jute ministry has set a fee of Tk 20,000 for the registration.

Source: New Age Business

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Number of Chinese enterprises operating in Uzbekistan surpasses 1,600

The number of Chinese companies operating in Uzbekistan has reached 1,611 as of Dec. 1, second only to Russia in the number of foreign entities in the Central Asian country, information on Uzbek State Statistic Committee website showed. Chinese companies are involved in the areas of oil and gas exploration, pipeline transport, infrastructure building, telecommunications, textiles, chemicals, logistics and agriculture, according to the statistics committee. China is one of Uzbekistan's largest trading partners. Last year, China-Uzbekistan trade surged 48.4 percent year-on-year, reaching 6.26 billion U.S. dollars. Statistics show that enterprises operating with foreign capital in Uzbekistan are mostly from Russia, China, Turkey, South Korea, Kazakhstan and other countries. Their investments are concentrated in industries, foreign trade, construction and agriculture. Uzbekistan has been opening up its economy and carrying out reforms in the last two years to attract foreign direct investment. President Shavkat Mirziyoyev has tasked the government with increasing foreign direct investment up to 4.2 billion U.S. dollars in 2019.

Source: Xinhua

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Sri Lanka: Trade deficit shrinks by $ 2.4 b

Sri Lanka’s trade deficit shrank by $ 2.4 billion in the first 10 months of 2019 assisted by a decline in merchandise exports earnings and local policies driving down imports, latest data by the Central Bank shows. The deficit in the trade account contracted in October to $ 838 million, from $ 903 million in October 2018. On a cumulative basis, the trade deficit contracted by $ 2,405 million to $ 6,451 million during the first 10 months of 2019, in comparison to $ 8,857 million in the corresponding period of 2018. Meanwhile, the terms of trade, which represent the relative price of imports in terms of exports, deteriorated by 5.7% (year-on-year) in October, as export prices declined at a faster pace than the decline in import prices. In cumulative terms, the terms of trade deteriorated by 0.8% during the first 10 months of 2019 in comparison to the corresponding period of 2018. Earnings from merchandise exports declined marginally by 0.2% (year-on-year) to $ 977 million in October, as a result of lower agricultural exports. Decline in earnings from agricultural exports in October was driven by lower earnings from all sub-categories except minor agricultural products. Accordingly, earnings from tea exports declined due to lower average export prices in line with the fall in international market prices despite an increase in export volumes. In addition, earnings from spices declined, mainly due to lower export prices of cinnamon and lower export volumes of cloves and pepper with the decline in supply. Earnings from seafood exports also declined significantly with lower demand from the US market. Earnings from textiles and garments increased in October following the slight decline recorded in September, on a year-on-year basis, supported by higher demand for garment exports from all major markets. However, earnings from petroleum product exports continued the declining trend observed in the recent past, mainly due to lower bunkering prices in line with lower crude oil prices in the international market. Earnings from mineral exports, which only account for 0.4% of total exports, increased in October, year-on-year, led by ores, slag and ash exports. The export volume index in October improved by 13.8% (year-on-year), while the export unit value index declined by 12.3%, indicating that the decline in exports was driven entirely by lower prices when compared to October 2018. Contraction of merchandise imports continued for the 12th consecutive month with a 3.5% decline (year-on-year) in October to $ 1,816 million, driven by lower consumer and investment goods imports. Although food and beverages imports increased in October, expenditure on consumer goods imports declined as a result of the decline in non-food consumer goods imports, driven by lower personal vehicle imports. However, motor vehicle imports remained at a relatively high level, on average, since July compared to values recorded during the first half of 2019, mainly reflecting the impact of the resumption of personal motor vehicle imports under concessionary permits. Meanwhile, expenditure on food and beverages imports increased, mainly driven by higher imports of onions to supplement lower domestic supply. Expenditure on imports of intermediate goods increased in October, mainly due to expenditure on fuel, owing to higher volumes of imports of crude oil and coal, despite lower international prices. In addition, expenditure on base metals imports increased in October, driven by iron and steel imports. However, import expenditure on wheat and maize declined mainly due to volume effect while textiles and textile articles declined marginally, led by lower yarn and fabric imports. Meanwhile, expenditure on investment goods imports declined in October with lower outlays in all subcategories amidst subpar growth in industry activities, including the spillover effects of the Easter Sunday attacks. Accordingly, expenditure on machinery and equipment declined, mainly related to textile industry and machinery parts, while expenditure on transport equipment declined with lower imports of commercial vehicles such as tractors, ambulances and auto trishaws. Expenditure on building materials declined due to lower imports of iron bars and rods although articles of iron and steel related to bridges and bridge sections continued to increase in October. The import volume index increased by 3.8% while the unit value index narrowed by 7% in October, indicating that the decline in imports was driven entirely by lower prices when compared to October 2018. Foreign investment in rupee denominated government securities recorded a net inflow of $ 12 million in October. On a cumulative basis, net outflows from the government securities market amounted to $ 280 million during the first 10 months of the year. Foreign investment in the CSE, including primary and secondary market transactions, recorded a net outflow of $ 10 million during the month of October. Nevertheless, financial flows to the CSE recorded a marginal net inflow of $ 5 million during the first 10 months of 2019. Further, long term loans to the government recorded a net inflow of $ 102 million during October. Foreign investment in rupee denominated government securities recorded a net inflow of $ 12 million in October. On a cumulative basis, net outflows from the government securities market amounted to $ 280 million during the first 10 months of the year. Foreign investment in the CSE, including primary and secondary market transactions, recorded a net outflow of $ 10 million during the month of October. Nevertheless, financial flows to the CSE recorded a marginal net inflow of $ 5 million during the first 10 months of 2019. Further, long-term loans to the government recorded a net inflow of $ 102 million during October. Gross official reserves stood at $ 7.8 billion at end October, equivalent to 4.7 months of imports. Meanwhile, total foreign assets consisting of gross official reserves and foreign assets of the banking sector amounted to $ 10.4 billion at end October, equivalent to 6.3 months of imports.

Source: Financial Times

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Bangladesh: Reaping benefits in the era of trade 2.0

Our RMG industry needs to grow to take advantage of the US-China trade war

China, once regarded as “the factory of the world,” has seen a steady decline in its apparel industry exports over recent years. Although it’s still the largest apparel producing region globally -- rising labour and raw material costs and an increase in local manufacturers concentrating on the domestic market rather than exports, started a slow trickle of international customers away from the region. This has, most recently, been further compounded by the much-publicized tit-for-tat trade war between the two nations since January 2018, which has led to an increase in apparel product tariffs from the region and created unease amongst customers. The situation is popularly termed “trade 2.0.” Other sourcing hubs in the Asian region are reaping the benefits of the decline in China’s fortunes, most notably Vietnam. The country is targeting an export objective of $40 billion for the year 2019 for textiles and apparel, a 10.8% increase year on year. The largest market for Vietnamese garment production is the US and the country has seen an increase of 13.9% in apparel exports over the first nine months of 2019. This trend seems to continue as Vietnam appears set to be one of the biggest beneficiaries of the US-China trade war with US fashion companies looking to alternative sourcing areas. The Bangladesh RMG industry has also enjoyed an increase in apparel exports over the same period but lags behind Vietnam with an increase of 9.29%. One has to ask why, given the importance of the RMG industry to Bangladesh’s economy, we are not capitalizing more on the current trade friction between the USA and China. The Chinese apparel and textile industries were world-renowned for their diversity, able to produce nearly all garment product categories and cater for all market sectors from mass, price-sensitive brands, and retailers through to those operating in the luxury sector of the fashion industry. To their credit, the textile and apparel manufacturers in Vietnam have taken over this mantle, establishing an industry, with some 6000 manufacturing facilities, that cater to a diverse array of apparel products appealing to US customers. Sadly, I fear, the same cannot be said for the Bangladesh RMG industry. Historically, as all of us involved in the sector are aware, we have relied upon more basic, higher volume products to drive our business. Since its inception in the 1980s the growth of the sector has been outstanding, but, as the industry faces the transition to trade 2.0 over the coming years, surely now is the time to instigate real change within the sector. As mentioned earlier, using the example of Vietnam as a benchmark, we can see that the Bangladesh RMG industry falls some way short in the diversity of apparel product categories that it produces. To tackle this the industry needs to address the skill sets of its workforce, the extent of its research and development capabilities and its investment in the appropriate technology. Apparel categories including lingerie, swimwear, formalwear, and performance outerwear (to name a few) are not traditionally associated with Bangladesh but offer huge export business potential. It is in these, non-familiar product categories, that the RMG needs to be developing to take advantage of the US-China stand-off and to penetrate into other markets. With the correct guidance and training, there is no reason why our workers cannot develop the appropriate skills to manufacture more diverse product categories. It may be necessary for certain RMG companies to invest in and develop different production lines for the new product categories being manufactured. They will need to consider methods that allow increased flexibility, cater to smaller production runs and can be operated by operatives that can produce goods to the highest possible standards. The training of workers is not just a matter for factory owners and managers. The RMG sector contributes some 83% to our nation’s GDP, so it is an invaluable factor in the continuing development of the country. I believe that the government and other concerned bodies should be supporting the industry by making the necessary investments to establish a network of training facilities so that they are fully conversant with the processes involved and can take up roles within companies and offer an immediate impact. To support the investment in the establishment of manufacturing capabilities for new product categories we will need increased investment in the R&D sector. If the RMG industry wishes to diversify into a broader spectrum of apparel types, we need to consider the full development process and support it from concept through to finished product. New product categories require different R&D disciplines, and these will need to be developed in line with customers’ expectations and requirements. Coupled with investment in workforce training and R&D, the industry must be prepared to invest in technology and infrastructure relevant to the new product categories. Diverse product categories require a variety of different technologies, not necessarily existing in Bangladesh at present. With the correct investment in staff training, R&D and the appropriate technologies, there is ample opportunity for the Bangladesh RMG industry to learn from the success that Vietnam has made and shake off the image of a basic resource and offer a broader, more diverse range of apparel categories to both the US and wider international audience. 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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China’s textile B2B platform snags $300m from DST, Tiger Global, others

Textile-focused business-to-business (B2B) service platform, has secured $300 million in a Series D round of financing led by DST Global and joined by CICC Capital, per a company statement. The company’s existing investors Source Code Capital, Tiger Global Management, Yunqi Partners, Chengwei Capital and Bull Capital Partners also participated in the round. China Renaissance served as financial advisor. The latest round comes a year after the company gathered $100 million in a Series C+ round from its existing investors. Baibu, operated by Guangzhou Zhijing Information Technology Co., Ltd, is a supply chain service platform for the textile industry in China. Besides selling textiles and fabrics to businesses, it offers an ERP and inventory management system to help buyers locate and purchase materials. Baibu claims its Series D financing is the largest so far in China’s textile industry. Although China’s textile & clothing industry has suffered a setback due to rising labour costs, slowing overseas demand and the escalating US-China trade war, the country remains the world’s biggest textile producer and exporter. The textile industry is aiming to increase its exports by about 7 per cent annually and boost the export value of fibre products to $400 billion by 2020, according to China National Textile and Apparel Council. The top textile companies in China include Jiangsu Hengli Group, Shanghaitex Holding, and Lu Thai Textile. Baibu CICC Capital DST Glob

Source: Deal Street Asia

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China‘s ache, Italy‘s achieve: excessive prices push textile patrons west

HONG KONG/BIELLA, Italy – International textiles buyers are increasingly switching away from China, and back to Western suppliers, as rising labour, raw material and energy costs make the world‘s dominant producer more expensive. In Biella, a small town in the foothills of the Alps at the heart of northern Italy‘s wool industry, factory owners say a narrowing price difference with China and demands for nimbler production nearer home are winning back higher-end customers. In the office of his family business, Alessandro Barberis Canonico recounts how one high-profile European client called him recently to say he was giving up on China because of rising costs there and the increased demand for quality – and would need help from Biella for a big collection. “He had tried his luck going abroad; things did not go well, so he‘s now back,” Barberis Canonico said. For sure, China remains a world leader in textiles: employing over 4.6 million people, contributing a tenth of GDP and with exports, including apparel, of $284 billion in 2015, according to data from China‘s National Bureau of Statistics, the Ministry of Industry and Information Technology, and the China Chamber of Commerce for Import and Export of Textile and Apparel. But wages there have been rising at an annual compound growth rate of more than 12 percent, outpacing the economy, and are simply no longer cheap enough to compete just on price. At the same time, China‘s textiles sector faces rising costs of inputs such as cotton and wool, hefty import taxes for basic manufacturing equipment, and costlier environmental rules. The government‘s five-year plan for textiles, released in September, acknowledged that higher costs are weakening its international advantage, and it faces a ‘double whammy‘ from developed countries – like Italy – with better technology and developing countries with lower wages.

“LESS ATTRACTIVE”

The labour cost gap between Italian and Chinese yarn narrowed by around 30 percent between 2008 and 2016, to $0.57 per kg from $0.82/kg, according to International Textile Manufacturers Federation (ITMF) data. The hourly wage for a Chinese weaver last year was $3.52, according to the ITMF, up 25 percent since 2014, though still a fraction of the more than $27.25 paid in Italy, an increase of 9 percent over the same period. “When China‘s wages are not that low, the process of shipping materials so far to China and then shipping products back to Europe becomes a lot less attractive,” said Shiu Lo Mo-ching, Chairman of Hong Kong General Chamber of Textiles Ltd and CEO of textile manufacturer Wah Fung Group. “They‘d rather take the production back to Europe. This trend has been very obvious.” That proximity is also an advantage at a time when Western clothing brands are under pressure to offer more collections, and customers increasingly want customised looks. Their suppliers need to be closer, and faster. “In China … their supply chain is not close, and is scattered, giving (Italy) a competitive advantage,” said Ercole Botto Poala, CEO of Italian textile producer Reda. Italy‘s textile imports from China fell 8.7 percent in the first 10 months of last year, to 347 million euros ($370 million), according to SMI, Italy‘s textile and fashion association. Its exports to China rose 2.8 percent to 165 million euros in the same period, though total textile exports last year dipped 2 percent to 4.3 billion euros.

For buyers, quality and transparency are also key.

“Before, given (brands) were paying much less, they turned a blind eye to quality,” said Giovanni Germanetti, director general of Italian yarn and textile producer Tollegno 1900, one of several producers who told Reuters that clients were returning for what he described was better value for money. Alessandro Brun, professor at the MIP Milan Politecnico, said brands are also motivated by concerns over product traceability, and want to avoid potential reputational risk. While suppliers were reluctant to name specific brands they sell to, so as to protect business confidentiality, several international apparel firms are switching to Italian wool fabrics so they can name the mill they source from on labels to differentiate from rivals, producers said. Italian high-street brand Benetton said it used yarn from Tollegno 1900 in a newly-launched Made-in-Italy line of limited edition seamless wool jumpers.

MOVING AWAY

More than 9,000 kms (5,600 miles) from Biella, in the bustle of the biennial Canton Trade Fair, some buyers said they were moving away from China. “We already buy 60 percent less from China compared to two years ago,” said Olesia Pryimak, who attended the trade fair late last year to source material for her plus-sized fashion firm Opri in Ukraine. She said her company is turning increasingly to Turkey for fabrics, because of quality, price and proximity to Europe. Many of the producers and buyers interviewed said it was too soon for data to show the flow out of China. China‘s textile exports to the European Union grew a modest 1.4 percent in the first ten months of last year, but dropped 4.1 percent in October, according to Chinese data. In Zhuhai in China‘s industrial southern belt, middle-aged workers load bundles of white wool for washing and dyeing at a spacious, well-lit factory owned by Hong Kong-based Novetex Holdings, a supplier of wool and cashmere yarn to international brands including Burberry and Max Mara. The company employs about 1,100 workers during peak season, but rising wages mean it is now investing in more automation, and will cut two-thirds of its workforce in two years. “The overall cake is smaller. Many agents and smaller factories have shut down,” said director and CEO Milton Chan. ($1 = 0.9390 euros) (Reporting by Venus Wu and Giulia Segreti; Editing by Clara Ferreira Marques and Ian Geoghegan)

Source: Wellston Journal

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