The Synthetic & Rayon Textiles Export Promotion Council

MARKET WATCH 21 DEC, 2019

NATIONAL

INTERNATIONAL

 

Commerce and Industry Minister meets export promotion Councils and Boards

Union Minister for Commerce and Industry & Railways, Piyush Goyal met with all Export Promotion Councils (EPCs), Federation of Indian Export Organisation (FIEO) and Commodity Boards under the Department of Commerce, Ministry of Commerce and Industry. In a marathon five-hour meeting held yesterday in New Delhi, Piyush Goyal reviewed and sought inputs from EPCs for the Foreign Trade Policy and get their views on steps that may be taken to boost India’s exports. Pre-budget inputs from EPCs was also taken so that they may be sent to the Finance Ministry. Thirty-seven EPCs, FIEO and three Commodity Boards of the Department of Commerce attended the meeting and took this opportunity to discuss with Commerce and Industry Minister each and every issue that the Councils are facing while exporting merchandise and services and also give their feedback on the various initiatives that are being taken by the Ministry of Commerce and Industry to ease lending and credit availability to exporters. The EPCs also gave their views on India’s FTAs/ PTAs with other countries especially ASEAN. The problem of exporters identified as “risky exporters” by CBIC was taken up and Commerce and Industry Minister directed that a nodal officer be appointed in the office of Directorate General of Foreign Trade (DGFT) and he urged the Councils to send a list of those identified as risky exporters to the nodal officer in DGFT so that this issue may be taken up with the Finance Ministry. Councils were directed to send this list by 31st December 2019 to Additional DGFT, Vijay Kumar. Commerce and Industry Minister further suggested that rationalization of EPCs must be taken up in order to avoid duplication of work and suggested that the big exporters may continue to be part of FIEO and smaller Councils may merge with bigger EPCs that deal with products of similar nature. Commerce and Industry Minister urged the EPCs to study the non-tariff barriers (NTB) being faced by them while exporting to other countries so that a study may be done to look at these NTBs and take up this issue by laterally with the countries especially with whom India has FTAs/ PTAs. Commerce and Industry Minister urged exporters to make use of the NIRVIK (Niryat Rin Vikas Yojana) Scheme that will soon be approved by Cabinet so that exporters are able to access easy lending and enhanced loan availability that will cover 90% of the principle interest and will also include both pre and post shipment credit. Director General and CEO of FIEO, Dr Ajay Sahai suggested that the New Foreign Trade Policy should study profile of our exports as well as global imports trends as India is largely exporting textiles, leather, handicraft, carpets, marine and agro products. While these are important for employment their share in global exports is in decline. The top 5 products in global exports, accounting for over 50%, are electrical & electronic products, petroleum goods, machinery, automobile and plastic goods. However, their share in India’s exports is less than 33%. India’s global share in these 5 products, put together, is about 1%. Therefore, the New FTP should facilitate the export of these products suggested Dr. Sahai. The issue of India’s low share in high technology exports was also discussed by FIEO. High technology exports accounts for 6.3% of our exports, whereas the same is 29% for China, 32% for South Korea, 34% for Vietnam, 39% for Singapore. (India USD 20 billion, Malaysia USD 90 billion, Singapore USD 155 billion, South Korea USD 192 billion, China USD 652 billion). The specific issues and problems being faced by certain EPCs like Telecom, Forest Produce and Shellac Export Promotion Council, Sports Goods EPC and CAPEXIL will be taken up with other line Ministries assured the Minister so that these issues and problems may be sorted out as soon as possible. At the end of the meeting, it was decided by the Minister, in concurrence with all EPCs and Boards, that another meeting will be held after the Budget in February 2020 to review the tasks achieved and those still pending, that were discussed in yesterday’s meeting. All EPCs and Commodity Boards express their appreciation for time given by Minister of Commerce and Industry to hear out even the smallest of their problems and the prompt manner in which someone of them were disposed of during the course of the meeting and the assurance given by the Minister to solve the long standing issues of certain EPCs. Commerce Secretary and other senior officers of both Department of Commerce and Department for Promotion of Industry and Internal Trade were present at the meeting.

Source: PIB

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Flag nations with non-tariff barriers, Piyush Goyal tells India Inc

Commerce and industry minister Piyush Goyal on Friday asked the industry to flag the countries that are placing non-tariff barriers on Indian exports and promised to take retaliatory action against such countries even as he assured the industry that India is the best place to invest in. “It’s the place where you get both — competitive edge and a huge domestic market aspiring for a better quality of life,” Goyal said at the 92nd annual convention of Ficci, adding that India needs to be more competitive and address problems of the entire value chain, be it inverted duties, dumping, or unfair subsidies. He also pointed out that the industry and government need to work together to rejuvenate that entrepreneurial spirit and find solutions to certain problems which are real. “The government will have to play the role of an enabler and facilitator and end that harassment faced at the lower ends,” Goyal said at Assocham’s annual conference. He said India dropped out of the Regional Comprehensive Economic Partnership trade agreement because it was turning out to be just an India-China FTA. “We desire to work with the world on an equal and reciprocal terms.” “India has a glorious future and $5 trillion is doable and will be achieved,” said Goyal, adding that the government has been doing a lot to support the startup culture and encourage entrepreneurship. He said, “We (the industry and government) are very keen that we understand each other’s position, be it litigation, regulatory certainty and predictability, and seamless compliances. We can work together on these,” he said. The minister also suggested if automatic selfapprovals can be looked at to start and run businesses. Referring to the over 370 experts certified to do a boiler inspection anywhere, he said 11 private sector organisations have been approved who can get their boiler inspected from anybody without going to the government. For overall development, he suggested infrastructure and innovation along with inclusive growth, and pondered if funds for corporate social responsibility can be used for research and development.

Source: Economic Times

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Govt approves changes in Interest Subvention Scheme to boost MSME output

The minister highlighted that the government is committed to enhancing credit to the MSME sector and the implementation of the scheme is being closely monitored to help micro, small and medium enterprises. Union Minister Nitin Gadkari on Monday approved changes in the Interest Subvention Scheme guidelines for micro, small and medium enterprises, and said the modifications are expected to boost their productivity through access to credit at reduced cost. The Minister for Road Transport & Highways and MSME reviewed the functioning of the scheme. "It is expected that the modifications in the scheme guidelines will lead to fulfilment of objectives of the scheme, i.e. to increase productivity in MSMEs through access to credit at reduced cost," Gadkari said. The minister highlighted that the government is committed to enhancing credit to the MSME sector and the implementation of the scheme is being closely monitored to help micro, small and medium enterprises (MSMEs) get incremental credit of up to Rs 1 crore with an interest subvention of 2 per cent. The modifications to the scheme include settlement of claims based on internal or concurrent auditor certificate and submission of statutory auditor's certificate once by June 30, 2020; and acceptance of claims in multiple lots for a given half year by eligible institutions. "The improvements are set to provide momentum giving fillip to the MSME sector," an official statement said. The Interest Subvention Scheme for MSMEs was launched by Prime Minister Narendra Modi in November 2018. Besides, in the modified scheme, requirement of Udyog Aadhaar Number (UAN) has been dispensed with for units eligible for GST and the last date of submission of claims for the half-yearly period ended March 31, 2019, has now been extended till December 31, 2019. Under the changes approved, trading activities without UAN have also been made eligible. "The modifications in operational guidelines carried out are based on suggestions made by various stakeholders, including banks and lending institutions who had brought to light operational difficulties which were hindering a smooth roll-out of the scheme," the statement said.

Source: Business Standard

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Do not want businesses to shut, will help revive: Sitharaman to India Inc

Addressing industry representatives, Sitharaman said India's macro-economic indicators were on a solid footing. Finance Minister (FM) Nirmala Sitharaman on Friday assured India Inc that the government would help revive businesses as it did not want any company to shut down, and urged industry to come out of “self-doubt”. “This government does not want businesses to close. We want to help them to be revived by legislative and other administrative changes... we are with you. I want this mood of self-doubt to be completely removed from your minds,” the FM said at an event by industry body Assocham. “Several steps (have been) taken post-Budget which were essentially responding to industry and some of them are probably showing some impact on the ground now.” The FM said state-owned banks had been told to lend more instead of holding it in reverse repo with the Reserve Bank of India. The most stressed NBFCs had been provided liquidity, as the government looks for ways to turn around a flagging economy, she added. The government has identified at least 10 projects so far as part of an infrastructure pipeline and these will get funds upfront. “I had announced during the Budget that Rs 1 trillion will be given for infrastructure and I also announced that this is front-loaded. At least 10 new infrastructure projects are ready for clearance in the coming year so that they get the money upfront,” she said. After Sitharaman’s Budget announcement, the Centre had, in September, set up a high-level task force to identify infrastructure projects for Rs 100 trillion investment by 2024-25. Addressing industry representatives, Sitharaman said India’s macro-economic indicators were on a solid footing. Inflation had been kept under control, macro-economic fundamentals and foreign direct investment (FDI) inflows were strong, and foreign exchange reserves at record highs. Highlighting some of the steps taken by the government after the Budget, she said liquidity crunch was addressed, capital was infused in public sector banks as well as the NBFC sector and professionalisation of Public sector undertaking (PSU) boards was done. The government’s decision to slash corporation tax rate in September has made a difference and a lot of new investments are expected to flow into India, she said. The FM also emphasised that the government has brought in transparency and technology in tax collection and eliminate harassment. With the introduction of faceless assessment, tax harassment is going to be a thing of the past, she added.

Source: Business Standard

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PM says economy has resilience to reverse slowdown, exhorts India Inc to take bold investment decisions

Prime Minister Narendra Modi on Friday said the Indian economy has the resilience to reverse the current slowdown and return to high growth trajectory and exhorted corporates to take bold investment decisions to help push up GDP growth. Modi highlighted his government's decisions such as decriminalisation of corporate offences and promised them that "no inappropriate action will be taken on genuine corporate decisions". Speaking at an industry chamber Assocham event, he said a massive Rs 100 lakh crore will be spent in the coming years on building infrastructure and another Rs 25 lakh crore on rural economy and this in turn will help nearly double the size of the Indian economy to USD 5 trillion by 2024. "I am fully aware of the discussions happening around (current economic slowdown). I don't challenge comments made on it. I try to take away positives from such discourse," he said. He went on to add that economic growth had fallen to 3.5 per cent in one of the quarters during the previous Congress-led UPA regime with headline consumer price inflation hovering at 9.4 per cent, core inflation at 7.3 per cent and wholesale inflation at 5.2 per cent while the fiscal deficit had widened to 5.6 per cent of the GDP. During the tenure of Modi government, GDP growth has fallen for six consecutive quarters to a six-year low of 4.5 per cent in JulySeptember 2019 amid slump in manufacturing and declining consumption. "I don't say why some people were silent when GDP growth rate slipped quarter after quarter," he said. "These kinds of ups and downs (in economic growth) have been seen in the past but the country has the potential to come out of these circumstances," he said exuding confidence of returning to a high growth trajectory. The Prime Minister highlighted that India climbed from 142nd among 190 nations on the World Bank's ease of doing business ranking to 63rd place in three years and noted that India is among the top 10 nations which have in the last three years made continuous improvement. "This hasn't come without having to face anger and allegations from people," he said. "We have been told that we are corporate agents. But we are agents of 130 crore Indians." He said many provisions of Companies Act have been decriminalised and more amendments will follow. Also, companies facing failures have been given exit routes in the insolvency and bankruptcy code (IBC), he said. These decisions will help in safeguarding the corporate world and its capital, he said. "I want to assure banking and corporate world that we have been able to overcome weakness in the system to a large extent. And so they should now take bold decisions fearlessly, invest boldly and spend undauntedly." "I want to assure no inappropriate action will be taken in case of genuine commercial decisions," he said. He, however, said the interest of the labour force should also be taken care of. Modi said the time taken to register companies has been cut to few hours from months and better infrastructure has enabled the cut in the turnaround time at airports and ports. Dynamic changes have been made in the Goods and Services Tax (GST) on the suggestion of trade and industry, he said. "We are not afraid of any challenges." India received highest foreign direct investment during the last five years and its global competitiveness has improved, he said adding the country has the third-largest start-up ecosystem in the world.

Source: Economic Times

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India must grow its share in global trade to 8-10%: Nitin Gadkari

India must increase its share in global trade to 8-10% to become a $5 trillion economy, said minister for road transport & highways and MSMEs Nitin Gadkari, adding that policy-making kept in mind import substitution for local industries to grow. “The most important thing for the $5 trillion economy is the export-import balance,” Gadkari said at the 92nd Annual Convention of Ficci on Friday. He said China contributes around 17% to global trade while India’s contribution is 2.6%. “This is the best opportunity for us to increase this to 8-10%. Today, costs in China are increasing, and they are facing some difficulties. This is a blessing in disguise for us,” he said. “We need to identify sectors which can help boost exports, and we are making a plan to see how we can reduce their import and increase exports,” he said. Gadkari said the government has already identified 25 such sectors. He said India was spending Rs 7 lakh crore every year on crude oil import and the country has the potential to reduce this bill by Rs 2 lakh crore by shifting to alternative fuels including ethanol, methanol, bio-CNG and electric vehicles. Gadkari also said he will not allow driverless cars in India, which has a shortage of 2.2 million drivers. Talking about the highways sector, Gadkari said projects worth Rs 15 lakh crore will be awarded in five years of the government’s second term. “By March 2020, we will have awarded projects worth Rs 2 lakh crore and next year (FY21) we will award projects worth Rs 3 lakh crore, and Rs 5 lakh crore in the following year (FY22),” he said. He said there was no dearth of government funds for investing in the highways sector and the ministry’s asset monetisation programme was contributing significantly to the pool.

Source: Economic Times

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Prime Minister Addresses the Inaugural session of 100 Years of ASSOCHAM

Prime Minister Shri Narendra Modi said that the goal of achieving the 5 Trillion Dollar Economy is achievable. He was participating at the inaugural session of the Hundred Years of ASSOCHAM in New Delhi today. Addressing a gathering of leaders from the Corporate World, Diplomats and others, the Prime Minister said that the idea of making India a 5 Trillion Dollar worth economy is not a sudden one. He said that in the past five years the country had made itself so strong that it not only could set for itself such a target but also make efforts in that direction. “Five years before, the economy was heading for disaster. Our Government not only stopped this but also brought in a discipline in the economy” “We brought in fundamental changes in India’s Economy so that it can run with set rules in a disciplined manner. We have met with the decades old demands of the Industrial Sector and we have built a strong foundation for a 5 Trillion Dollar Economy” He said, “We are building the Indian Economy on two strong pillars of formalisation and modernisation. We are trying to bring in more and more sectors into the horizon of formal economy. Along with this we are linking our economy with latest technology so that we can speed up the process of modernisation”  “Now instead of several weeks it merely takes a few hours to register a new company. Automation is helping quick Trading across borders. Better linking of Infrastructure is reducing the turn-around time at Ports and Airports. And these are all examples of a modern economy. “ “Today we have a Government that listens to the Industry, understands its needs and which is sensitive to its suggestions. Prime Minister said that the country could make a significant jump in the rankings of Ease of Doing Business due to a sustained effort. “Ease of Doing Business may sound just like four words, but in order to improve its rankings there is a lot of effort that goes into it including changing the policies and rules at the ground level” Prime Minister also emphasised the efforts being made towards a faceless Tax Administration in the country in order to reduce the human interface between the tax payer and the authorities. “In order to bring about transparency, efficiency and accountability in the Tax System, we are moving towards a faceless Tax Administration”, he said. Prime Minister said that the Government has decriminalised several laws in the Corporate Sector in order to reduce the burden and allow the industry to function in a fearless ecosystem. “You know that there were several provisions of the Company Act as per which even small deviations were also dealt as a Criminal Offence. Our Government has now decriminalised many such provisions. And we are trying decriminalise many other provisions.” Prime Minister said that the Corporate Tax at this time in the country is the lowest ever and this would propel a boost in the economic growth. “The Corporate Tax is the lowest at the moment, meaning if there is any Government that is taking the lowest Corporate Tax from the Industry, then it is ours” Prime Minister also spoke about the efforts being made towards bringing about Labour Reforms. He also spoke about the sweeping reforms in the Banking Sector to make it more transparent and profitable. “Owing to the steps taken by the Government today 13 Banks are on the path of profit which 6 banks are out of PCA. We have also hastened the process of unification of the Banks. Today banks are expanding their countrywide networks and are in the direction of achieving Global recognition” He said with this overall all round positivity the economy is propelling towards a 5 Trillion Dollar target. Prime Minister said that the Government would invest 100 Lakh Crore Rupees in the infrastructural sector and another 25 Lakh Crore Rupees in the Rural Sector in order to provide support to achieve the target.

Source: PIB

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Economists tell FM to focus on reviving economic growth, not fiscal targets

A number of economists on Friday advised Finance Minister (FM) Nirmala Sitharaman and her officials to focus on reviving economic growth and leave aside fiscal concerns for a while. At a pre-Budget meeting, the FM was asked to ensure that non-banking financial companies (NBFCs) come out of the liquidity crisis they are facing with the help of Reserve Bank of India (RBI). “Almost all economists present said fiscal expansion will be an inevitable consequence as the Centre needs to boost expenditure to revive the economy. Growth should be the priority,” said a person present at the meeting. The economists also spoke about the futility of trying to achieve a 3 per cent fiscal deficit target over the medium term, something which has never been accomplished since the Fiscal Responsibility and Budget Management (FRBM) Act came into being. According to the latest iteration of the FRBM Act, the Centre hopes to have a fiscal deficit for 2020-21 at 3 per cent of gross domestic product (GDP). The budgeted target for 2019-20 is 3.3 per cent. However, with the economic slowdown affecting tax revenues, fiscal deficit this year could be as high as 3.8 per cent. The economists present also spoke about the need to rescue NBFCs. “Some ideas which were suggested include a bad bank to take over the non-performing assets of NBFCs, or the RBI being a lender of last resort,” said the official. The idea floated was that the RBI can provide liquidity support and buy out the toxic assets from NBFCs. These assets will go into RBI’s books and there should be some arrangement with the government to liquidate them later, the person said. The experts also said that agriculture reforms should be carried out as soon as possible, and that the Centre should ensure more disposable income in the hands of the rural population through schemes such as PM-KISAN and NREGA. “The slowdown was discussed at length. Participants said that the Centre should remove policy uncertainty from certain sectors, like we are seeing now in the telecom sector,” the person said. India’s GDP growth for the July-September quarter came in at a 26-quarter low of 4.5 per cent. While the Centre is still hoping for a recovery in the second half of the year, other agencies don’t share its optimism, with even the RBI cutting its growth forecast for 2019-20 to 5 per cent from 6.1 per cent earlier. Additionally, the economists also raised concerns about the fiscal situation of the states and poor resource mobilisation through goods and services tax (GST). These points gain prominence against the backdrop of the Fifteenth Finance Commission submitting its first report for 2020-21 to the government. The report is expected to touch these two points at length. “The main focus areas of the discussions included steps needed to achieve $5-trillion economy, job-oriented growth with focus on manufacturing and services, transparency of fiscal arithmetic, monetary transmission, government’s fiscal prudence and fiscal stimulus, revival of NBFCs and inflation targeting among others,” said a press release after the meeting. The economists at the meeting included Neelkanth Mishra of Credit Suisse, Rathin Roy of National Institute of Public Finance and Policy, Shekhar Shah of NCAER, former chief economic advisor Arvind Virmani, executive director for India on the board of the IMF Surjit Bhalla, Abheek Barua of HDFC Bank, Soumya Kanti Ghosh of State Bank of India and Ajit Ranade of Aditya Birla Group. From the government’s side, the meeting was attended by Finance Secretary Rajeev Kumar, Economic Affairs Secretary Atanu Chakraborty, Revenue Secretary Ajay Bhushan Pandey, DIPAM Secretary Tuhin Kanta Pandey and Chief Economic Advisor Krishnamurthy Subramanian.

Source: Business Standard

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Oil prices sink but on track for third weekly rise on trade hopes

Progress in the trade dispute between the world's two biggest oil consumers has raised expectations of higher energy demand next year. Advancement of the U.S.-Mexico-Canada Agreement (USMCA), which is set to replace the North American Free Trade Agreement (NAFTA), has also boosted oil this week. The agreement was passed by the U.S. House of Representatives on Thursday. Oil fell on Friday, but prices were set for a third straight weekly gain amid the easing of U.S.-Chinese trade tensions, which has boosted business confidence and the outlook for global economic growth. Brent was down 55 cents, or 0.8%, at $65.99 a barrel by 1:33 p.m. EST (1833 GMT), but marking a weekly rise of around 1%. U.S. West Texas Intermediate crude was down 92 cents, or 1.5%, at $60.26 per barrel, but has gained about 0.3% on the week. Progress in the trade dispute between the world’s two biggest oil consumers has raised expectations of higher energy demand next year. China on Thursday announced a list of import tariff exemptions for six oil and chemical products from the United States, days after Washington and Beijing said an interim trade deal is set to be signed in January. Advancement of the U.S.-Mexico-Canada Agreement (USMCA), which is set to replace the North American Free Trade Agreement (NAFTA), has also boosted oil this week. The agreement was passed by the U.S. House of Representatives on Thursday. “The oil market in general has been supported from good news on the trade front,” said Andy Lipow, president of Lipow Oil Associates in Houston. Some selling ahead of the Christmas and New Year’s Day holidays was pushing prices lower, said Phil Flynn, an analyst at Price Futures Group in Chicago. “We’ve had a pretty good run the last couple of days, and I think the bulls are nervous about carrying positions into the holiday,” Flynn said. A rise in the U.S. oil rig count, an indicator of future supply from the world’s largest producer, also put pressure on prices. U.S. energy firms added the most oil rigs this week since February 2018, even though producers have been reducing spending on new drilling, energy services firm Baker Hughes Co said in its report on Friday. Companies added 18 oil rigs in the week to Dec. 20, bringing the total count to 685, the most since early November, Baker Hughes said. U.S. economic growth nudged up in the third quarter, the government confirmed on Friday, and there are signs the U.S. economy more or less maintained the moderate pace of expansion as the year ended, supported by a strong labour market. The end of 2019 offered much noise but little direction, and prices were treading water on average, Julius Baer analyst Carsten Menke said. “Looking forward into 2020, commodities as an asset class should continue to trade range-bound for most of the year,” Menke said. Meanwhile, France’s CGT oil sector workers union plans to step up a nationwide strike but will leave the decision over whether to halt production at refineries for workers to decide early next week, a CGT union official said.

Source: Financial Express

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Is India getting better for business?

Business e-Readiness has improved between 2016 and 2019. But regional imbalances exist. Business e-Readiness assesses the ability of private businesses to use and produce Information, Communication and Technology (ICT)/ICT-enabled goods and services. Adoption of Information, Communication and Technology is productivity-enhancing and thus, merits an attention. To evaluate medium-term trends in Indian firms’ adoption of ICT, business e-readiness was assessed first in September 2016, and then in September 2019. The Survey has adapted an international framework used in its e-Readiness studies. The framework involves assessing firms on environment (policy and infrastructure), readiness (on ability to use and produce) and usage (use ICT-enabled goods and services). It uses the platform of the quarterly Business Expectations Survey that assesses business sentiments of 500-600 firms across six cities in India. The East covers Greater Kolkata, the North covers the National Capital Region of Delhi, the West covers Mumbai and Pune, while the South covers Bengaluru and Chennai.

Environment

The Environment component assesses the ICT policy of the company and the infrastructure quality of its local industrial area. Together, they provide an enabling environment for effective functioning of firms. The share of firms responding positively to the presence of an ICT policy has gone up between 2016 and 2019. Interestingly, even 71.2% of firms with annual turnovers of less than `1 crore responded that they had an ICT policy. While other regions showed improvement between 2016 and 2019, proportion of firms in South with ICT policy went down from 91% in 2016 to 81.6% in 2019. The East had the highest number at 91.7%.

Infrastructure Environment

The proportion of firms responding “good” to the ICT infrastructure in their industrial areas from East, West, North and South was 85%, 58%, 77.4% and 74.1%, respectively.

Readiness

The Readiness component involves assessing skill-capacity of firms to use the enabling environment, use of various software and the integration of their accounting software with the Goods and Services Tax Network (GSTN). In this domain, the overall share of positive responses on presence of IT department or dedicated IT manager has gone up between 2016 and 2019. There were regional variations in 2019—89.2% in East, 48.3% in West, 59.5% in North and 46.9% in South. Barring the West (2016: 70.6%), remaining regions showed improvement between 2016 and 2019. The use of software has improved between 2016 and 2019. The proportions of firms responding positively to this question from East, West, North and South in 2019 was 97.5%, 91.5%, 78.4% and 91.8%, respectively. Barring the North (2016, 84.8%), all other regions experienced improvement. Further, 67.5% of firms in 2019 responded that they had an accounting software, which was linked to the GSTN. The share of responses for computer literacy as a pre-condition for hiring managerial workers and imparting ICT training to them increased between 2016 and 2019. The share of firms pointing that computer literacy was a pre-condition for hiring managerial workers in 2019 was 93.3%, 71.2%, 100.0% and 97.1% in East, West, North and South, respectively. Barring the western region (97.1%, 2016), all other regions experienced an improvement. Interestingly, computer literacy is also becoming a pre-condition for hiring unskilled works (19.8% in 2019). This suggests that digital skills are increasingly becoming a pre-requisite for all types of jobs. The share of firms responding to the issue of imparting ICT training to managerial employees in the East, West, North and South in 2019 was 31.9%, 70.4%, 55.2% and 96.2%, respectively. While the East and South showed improvement (17% and 53.2%, respectively in 2016), the West and the North show worsening in this regard (96.1% and 64.4% in 2016). In the Usage domain, there has been a significant improvement especially in use of ICT in finance and accounting. However, the share of responses had come down in the West between 2016 and 2019 in finance and accounting, human resources and administration and sales/marketing/public relations. Overall, 69.7% of respondents said that they were transferring more than 75% of their employees’ wages electronically. The corresponding numbers for the East, West, North and South in 2019 were 53.3%, 86.4%, 56% and 80.3%, respectively. In sum, over time, business e-Readiness has improved nationally between 2016 and 2019. The East is relatively the best performer in the Environment domain and use of software. However, the North and South are the best in terms of digital skills, and the South in terms of ICT usage. The East has made significant improvement between 2016 and 2019. Simultaneously, the West which had fared the best in 2016 shows worsening. Adoption of new technology usually responds to external environment. Thus, regional heterogeneity in e-readiness needs further examination as to whether these are due to variation in business conditions or other reasons. Bhandari is a senior fellow, Gupta an associate fellow and Sahu a senior research Analyst at NCAER.

Source: Financial Express

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Give spending agenda, ease fiscal deficit target: Economists

Economists have asked the government to draw up a clear spending road map to reverse slowdown and relax fiscal deficit target, but ensure fiscal numbers are credible. They remain divided over reduction in personal income tax in the upcoming budget. At the pre-budget consultation with finance minister Nirmala Sitharaman, some economists suggested relaxation in fiscal deficit target, pegged at 3.3% of GDP for FY20. “If the government wants to go in for relaxation of fiscal deficit target, it should do so unapologetically, but it needs to ensure numbers are credible and honest,” said an economist who was present but did not wish to be identified. The economist said the point made was that markets only get unnerved over surprises and transparent and credible deficit, even if, higher would be acceptable. They also emphasised on boosting spending towards sectors such as infrastructure to boost growth, the person said. “We have bottomed out as far as growth reduction is concerned... what can be done to accelerate growth to 7-7.5%,” said former chief economic adviser Arvind Virmani, stressing implementation of Direct Taxes Code as crucial for small businesses. He also pitched for simplification of GST and rationalisation of slabs. An official statement on Friday said the economists put forth suggestions to achieve the $5-trillion economy, including streamlining policy matters, faster resolution of policy issues, fiscal management; power reforms; structural reforms to simplify GST and Direct Tax Code; securing supply chains for economy, continuity in economic policy making, land and labour reforms, ways to enhance rural demand; improve oversight of financial markets. Core sector wishlist The infrastructure sector wants funds meant for it released as soon as possible, for bringing in buoyancy in the economy. It has asked to make finance available for real estate to boost consumption of cement and steel. The industry also sought a captive renewable energy policy and exemption from cross subsidy and transmission charges for better viability for those willing to set up plants beyond factory boundaries. Industry groups present at the meeting highlighted challenges vis-a-vis framing of trade rules and policies in global context and quality of resilience.

Source: Economic Times

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Fitch reaffirms India rating, outlook

It had trimmed India’s economic growth projection by a massive 90 basis points to 4.6% for FY20 on the back of a sharp squeeze in credit availability, weighing on consumption and investment. After Standard & Poor’s, global rating agency Fitch on Friday reaffirmed India’s sovereign rating at ‘BBB-’ with stable outlook, despite factoring in an expected moderate fiscal slippage relative to the central government’s deficit target of 3.3% of GDP in FY20. “India’s rating balances a still strong medium-term growth outlook compared with ‘BBB’ (lowest investment) category peers and relative external resilience stemming from solid foreign-reserve buffers against high public debt, a weak financial sector and some lagging structural factors, including governance indicators and GDP per capita,” Fitch said in a statement. Fitch Ratings also retained its December 5 projection for India. It had trimmed India’s economic growth projection by a massive 90 basis points to 4.6% for FY20 on the back of a sharp squeeze in credit availability, weighing on consumption and investment. This means Fitch expects the current slowdown to worsen even further because growth in the June and September quarters stood at 5% and 4.5%, respectively, thus, averaging around 4.75% in the first half of this fiscal. Earlier, S&P had also reaffirmed India’s sovereign rating at ‘BBB-’ with stable outlook citing impressive long-term growth rates despite a recent deceleration, economic affairs secretary Atanu Chakraborty had tweeted on December 3. “We believe there is a risk of more significant fiscal loosening in the event of continued weak GDP growth, for example, in the context of lingering problems in the NBFC sector,” Fitch said. Fitch expects government debt level of 70.4% of GDP in FY20 (‘BBB’ median: 41.1%) and a general government deficit of 7.5% of GDP (‘BBB’ median: 1.8%). “We consider it highly unlikely that the government will comply with the general government debt ceiling of 60% of GDP by March 2025, as stipulated in the Fiscal Responsibility and Budget Management Act,” the rating agency said. Observing that what was once an investment-led slowdown has now broadened into weakening consumption, Moody’s on Monday cut its FY20 GDP growth forecast for India steeply to 4.5% from 5.8% predicted in October.

Source: Financial Express

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Why upcoming FTP could be a game-changer for economy

There is little doubt that India is one of the biggest economies in the world, and with the ambitious target of becoming a $5 trillion economy by 2025, it’s set to grow even bigger. Despite this economic power, however, the country’s share of global trade remains woefully low, contributing only 2 percent of total global exports in FY19. India’s trade deficit has further worsened by ongoing trade tensions internationally and the slowdown of the domestic economy. The Economic Survey 2018-19 noted that domestic consumption could only contribute in a restricted fashion to India’s GDP, because of a tendency for savings in the citizenry. As such, domestic demand has limited potential, acting as a multiplier only when high-income growth boosts consumption. Hence, exports and international trade play an extremely important role in GDP growth. Capitalizing on this role through an aggressive export strategy requires high investments in large-scale facilities that can create high-quality goods to meet overseas quality standards. The upcoming Foreign Trade Policy (FTP) for 2020-25, expected in the coming months, will be key to defining this strategy.

A Need for Change

The current FTP – in force for the last five years – relies heavily on incentives and subsidies to support and boost exports, such as those found under the Merchandise Exports from India Scheme (MEIS) and Services Exports from India (SEIS). However, in recent rulings, the World Trade Organization (WTO) has ruled these schemes as invalid, following a challenge by the US. The WTO ruling states clearly that given that India’s per-capita-GNI (gross national income) has crossed $1,000 for three years in a row (2013-2015), the country is no longer allowed to offer export subsidies. Indian exporters have been reliant on the incentives provided by these schemes for growth, leading to a culture of dependency and a lack of competitiveness. Soon after taking charge earlier this year, Minister of Commerce & Industry Piyush Goyal highlighted the same, stating, “I do not think that any programme or ambitious scheme can run only on subsidies and government help. We have to move out of this continuous effort and demand...and make our industry truly competitive and self-reliant.” The government has also indicated that it will not be challenging the WTO ruling, setting the stage for a new trade policy geared towards helping Indian exporters building competitiveness and self-sufficiency – the FTP 2020-25.

The Way Forward

Dr. Surjit Bhalla, the Executive Director for India at the International Monetary Fund (IMF), chaired a High-Level Advisory Group (HLAG) earlier this year which submitted recommendations in June 2019 on ways for India to triple its exports to over $1 trillion by 2025. The recommendations including lowering the effective corporate tax rate, reduction in cost of capital, simplification of regulatory and tax framework for foreign investment funds, and specialized security products for fundraising for long-term infrastructure spends. The Central government also needs to incentivize technology adoption across export sectors to build capability to meet evolving consumer demand and stringent quality requirements from overseas markets. For example, the Ministry of Textile promotes an Amended Technology Upgradation Fund Scheme, which aims to provide credit-linked capital investment subsidies to exporters. The Scheme facilitates improvements in investment, productivity, quality, employment, exports and import substitution via technology upgrades in the textile industry. Similar schemes in other sectors will help exporters, especially MSMEs, upgrade existing infrastructure with new-age technologies to reduce production costs and meet quality measures, leading to greater efficiency, growth and eventual job creation. Yet another opportunity exists with India’s vast labour force. Despite the high numbers, many Indian workers are unskilled and hence unable to meet the requirements of a value-added global supply chain. Hence, the government must look at leveraging existing schemes such as Skill India to train the under-skilled and promote their participation in export-driven industries such as textiles, gems and jewelry, and leather, among others. Startups have also played a significant role in building maturity in the Indian trade ecosystem, particularly in the sectors of finance and logistics. These technology-reliant and data-driven companies have significant potential to promote exports and overall growth of the economy. Instead of the traditional antagonistic approach to startups in fintech and logistics, the government should acknowledge their contribution and reach out to them to build a new wave of public-private partnerships. The new FTP should ideally include the above measures, as well as other ways to ensure that India’s exporters build capability and competitiveness at par with competitors from other export markets, instead of staying reliant on subsidies from the government. Given the ongoing economic slowdown, self-reliance will be key to growth for India’s exporters in the coming months, and the new FTP will have a critical role to play in achieving this, and helping the country achieving its $5-trillion-economy target by 2025.

Source: Money Control

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China to boost loan support to manufacturers, small bank reforms: regulator

China will offer extra financial support to manufacturers next year, the banking and insurance regulator said on Friday, after a run of bond defaults by private firms in the sector. The Banking and Insurance Regulatory Commission (CBIRC) has encouraged banks not to pull loans to firms facing temporarily liquidity issues, notably in the textile, clothing and paper-making sectors, and is promoting the use of creditor committees to help borrowers resolve their troubles. But China’s banking sector is facing pressure as economic growth slows to its weakest in nearly three decades, and five regional banks have been hit with management or liquidity problems this year. Non-performing assets of some small- and medium-sized banks are rising, curbing their lending capability, Yang Liping, chief supervision officer with the regulator, told reporters in Beijing. Loans to manufacturers make up the largest part of that portfolio. Yang said the process of absorbing bad loans needed time, and the situation would not improve in the short term.  “We’ll use designated approaches to resolve different problems of high-risk smaller (banking) institutions. But firstly, we need to know the real level of asset quality and then help them to increase capital,” she added to Reuters on the sidelines of the conference. Yang said banks could issue shares or perpetual bonds to recapitalize and, longer-term, cut their investment risk and focus on their local savings and lending businesses. In another measure to boost liquidity, authorities will push 2 trillion yuan ($285.5 billion) of new loans - partly state-funded - to small and medium-sized firms next year, according to CBIRC’s inclusive finance department head Li Junfeng. The government has previously said lending growth to smaller firms by China’s big five banks would be no less than 20% in 2020. Commenting on a debate between markets and watchdogs on how quickly and strictly to implement proposed tougher guidelines for once loosely regulated asset management products, the CBIRC said it would make small adjustments, without commenting on any extension period. The CBIRC also said it was approving the country’s first wealth management joint venture with a foreign controlling shareholder. Amundi Asset Management will hold 55% of the project and Bank of China Wealth Management the rest. It would be set up “under the current regulation framework,” said Wang Daqing, large bank department chief at the CBIRC. Other “leading and capable” foreign asset management firms were in talks with Chinese banks on setting up similar joint ventures, he said.

Source: Reuters

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ACIMIT's service centre to assist Italian manufacturers

Heimtextil, the global trade show for home and contract textiles, will open from January 7-10 in Frankfurt. During the show, Italian Trade Agency and ACIMIT, the Italian association of textile machinery manufacturers, will be present with a service centre designed to assist Italian manufacturers and provide information on Italian supply to expected visitors. From January 21-23, Colombiatex, the main fair for the Colombian textile sector, will be held in Medellin. An exhibition area will be set up by Italian Trade Agency. ACIMIT member companies like Btsr, Color Service, Fadis, Ferraro, Flainox, Itema, Kairos, Laip, Loptex, Mactec, Mcs, Mesdan, Ratti, Scaglia, Zappa, will be exhibiting in this area. In Latin America, Colombia represents a market of considerable interest for textile machinery, especially for the strong development of local fashion sector, well known throughout South America. “2020 will be a challenging year for our member companies, given the high number of planned exhibitions. We start immediately with two important events. Heimtextil is known for new trends and textile innovations. The drive for digitalisation has distinguished the offer of our manufacturers for some years now. For this reason, it is important for our association to be present in Frankfurt,” said Alessandro Zucchi, president of ACIMIT. "Colombia is a country whose textile and clothing industry has grown in recent years. The fashion sector has established itself throughout the continent thanks to its dynamism and originality. The presence of Italian manufacturers through collective participation is evidence of the value that the event and the Colombian market have acquired over time for the Italian textile machinery industry," added Zucchi. ACIMIT represents an industrial sector that comprises roughly 300 manufacturers, which produce machinery for an overall worth of around €2.5 billion, of which 83 per cent are exported.

Source: Fibre2Fashion

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Trump says talked with Xi on trade deal, Hong Kong, North Korea

U.S. President Donald Trump spoke on Friday with Chinese President Xi Jinping and claimed progress between the two governments on issues that have divided them, from trade to North Korea and Hong Kong. The two leaders spoke a week after their envoys sealed a “Phase 1” agreement aimed at ending an 18-month trade war that has rattled markets and raised tensions. Trump announced the phone call in a tweet. A White House official said they spoke on Friday morning. China Central Television said Xi spoke to Trump at the request of the U.S. president. “Had a very good talk with President Xi of China concerning our giant Trade Deal. China has already started large scale purchase of agricultural product & more. Formal signing being arranged. Also talked about North Korea, where we are working with China, & Hong Kong (progress!)” Trump tweeted. Further details were not immediately available. China was angered when Trump last month signed legislation that authorizes sanctions on Chinese and Hong Kong officials responsible for human rights abuses in Hong Kong, in what was seen as support for pro-democracy activists. Of paramount concern to the United States is a threat by North Korean leader Kim Jong Un for what he called a “Christmas gift.” U.S. officials have interpreted this to mean either a nuclear weapons test or a ballistic missile test. Trump and Kim have held three summits but failed to reach an agreement on lifting sanctions on North Korea in exchange for denuclearization by Pyongyang. China and Russia on Monday proposed that the U.N. Security Council lift a ban on North Korea exports such as seafood and textiles, according to a draft resolution seen by Reuters, in a move the Russian U.N. envoy said was aimed at encouraging talks between Washington and Pyongyang. The State Department took a dim view of the proposal, with an official saying the U.N. Security Council should not be considering “premature sanctions relief” for North Korea as it is “threatening to conduct an escalated provocation, refusing to meet to discuss denuclearization.” The U.S. special envoy for North Korea, Stephen Biegun, was due to leave Beijing on Friday after meeting with Chinese officials. Earlier in the week, Biegun also made stops in Seoul and Tokyo for discussions with counterparts. China said on Friday its relationship with the United States had experienced serious difficulties, but that the two countries should work in accordance with the consensus reached by their leaders to push forward a stable bilateral relationship. Chinese Vice Foreign Minister Le Yucheng made the comment at a meeting with Biegun, according to a statement from the ministry on Friday. The two officials exchanged views on North Korea and China reiterated its stance that it will safeguard its sovereignty, security and development interests, the statement said.

Source: Reuters

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Wide-opened doors for Vietnamese products to enter EU market

The EU-Vietnam Free Trade Agreement (EVFTA) and the EU-Vietnam Investment Protection Agreement (EVIPA) open many opportunities to promote trade and investment between Vietnam and the European Union. Many experts considered EVFTA as one of the advances that Vietnam has gained during the process to negotiate free trade agreements because of comprehensiveness and market openness. Ms. Nguyen Thao Hien, deputy head of the European-American Market Department, said that after the EVFTA becomes effective, 85.6 percent of tariff lines will be removed, accounting for 70.3 percent of Vietnam’s export turnover to the EU. After seven years of the EVFTA, 99.2 percent of tariff lines will be eliminated, accounting for 99.7 percent of export turnover and 0.8 percent of the remaining tariff lines will be applied tariff rate quota with tariff rate in the quota at zero percent. Import tariff reduction by the EU will bring many opportunities for agricultural products, such as rice and rice products. Particularly, the EU will allocate a quota of 80,000 tons of rice per year with polished rice, unpolished rice and fragrant rice with within-quota tariff of zero percent. As for broken rice, import tariffs will be removed within 5 years for broken rice and within 3-5 years for rice products. Import tariffs of fresh and processed vegetables and fruits, fruit juice and fresh flowers will be immediately eliminated. Coffee, black pepper, cashew nut and honey will receive immediate tariff elimination. As for industrial products, garment and textile will have 42.5 percent of tariffs lines eliminated immediately and the rest will be reduced to zero percent after 3-7 years; leather and footwear 37 percent of tariffs lines eliminated immediately and to zero percent after 3-7 years; wood and wooden products 83 percent of tariffs lines eliminated immediately and to zero percent after 5 years; computers, electronic products and components 74 percent of tariffs lines eliminated immediately and to zero percent after 3-5 years; plastic products, cell phones and components, bags, steel products and basic glass products will be eliminated import tariffs immediately. Aquatic and seafood products will have 50 percent of tariffs lines removed when the EVFTA takes effect; the rest 50 percent of tariff lines will return to zero percent after 3-7 years. Currently, the EU is applying tariff rate quota of 11,500 tons per year for canned tuna and 500 tons per year for fish balls. Tariff reduction creates competitive edge for Vietnamese products but it also means that Vietnamese enterprises will have to face more challenges of protectionism via high technical barriers for import products in the EU market. According to the Industry Agency, footwear and garment and textile are the most advantageous industries when the EVFTA comes into effect because of high tax reduction and not-too-strict rules of origin. However, the similarity of these two fields is that they are mostly processing, so in order to take advantage of preferential tariffs of the EVFTA, garment and textile and footwear enterprises need to move to intensive, chain development stage from developing materials, designs to finishing products so as to ensure rules of origin in accordance with regulations of the EVFTA. For most of export products to the EU, besides meeting regulations on quality and food safety, they need to meet standards and administrative procedures regulated by the EU, take social responsibility seriously and ensure transparency about labor and production environment. Dr. Vo Tri Thanh, former deputy head of the Central Institute for Economic Management, said that the signing of several comprehensive and new generation agreements, such as CPTPP and EVFTA, showed that Vietnam is facing many opportunities to attract important investors in the world. In other words, Vietnam still has plenty of room for doing business.

Source: Saigon Online

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Isko awarded with Oeko-tex STeP certification

After becoming the first company in the world to be awarded with both EU Ecolabel and Nordic Swan Ecolabel, Isko, the leading ingredient brand on a global level, has recently reached another important milestone in its responsible journey. It has become the first Turkish denim manufacturer to be awarded with STeP by Oeko-tex modular certification system. The certification results in a powerful tool to implement the company’s Responsible Innovation approach. This mindful and holistic vision tackles environmental and social responsibility to reach the goal of a 100 per cent sustainable and ethical denim production, based on three main pillars – creativity, competence and citizenship. It is within this already responsible setting that this certification highlights where even better choices can be made, aiming at implementing responsible production processes in the long term by assessing six different areas of production conditions. These are chemicals management, environmental performance, environmental management, social responsibility, quality management and health protection and safety at work: together they provide an overall analysis that documents Isko’s responsible commitment in a clear and complete way. STeP integrates the independent verification system Detox to Zero by Oeko-tex, allowing to determine the status of chemicals management and wastewater quality in compliance with the goals of the Greenpeace Detox Campaign. “Responsibility and innovations go hand in hand, at Isko,” said senior sustainability and CSR executive Ebru Ozkucuk Guler. “To be awarded with such a prestigious certification is proof that one has to look at the big picture: sustainable actions need to involve and take into account the entire value chain, in the long run, considering not only production steps but also the development of a healthy and safe work environment. It is the perfect ending to a very fulfilling year; we are eager to see what 2020 will bring.” Isko is the first denim producer in the world to be recognised with the Nordic Swan and EU Ecolabel certifications. The company has a production capacity of 300 million metres of fabric per year with 2,000 high-tech automated looms. Isko has a global presence with offices in 35 countries, and is part of Sanko Tekstil, the textiles division of the Sanko Group. The Sanko Group is one of the largest conglomerates in the world, active in a wide range of sectors from construction and energy, to packaging, financial services, health care and education.

Source: Fibre2Fashion

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