MARKET WATCH 13 JAN, 2020

NATIONAL

INTERNATIONAL

SRTEPC resolves to achieve US$ 7 bn. exports during 2020 amidst continued challenges in the MMF sector

It has been envisioned by the Government to achieve a US$ 5 trillion economy by 2024-25 and this was announced by the Government during the presentation of Union Budget 2019-20. Textiles segment including the Manmade-fibre textiles is one of the sunrise sectors- a key driver for contributing to India’s USD 2024-25. In this direction the Government has already several ongoing initiatives across sectors focused on growth. The proposed Industrial Policy 2018 proposed New Textile Policy etc. are likely to provide overarching sectoragnostic agenda for the textile sector and envisions creating a globally competitive Indian KVIC opens first silk processing plant in Gujarat to boost production of signature Patola Saree NEW DELHI JAN. 11— In a historic initiative taken by Khadi and Village Industries Commission (KVIC) a first Silk Processing Plant was inaugurated at Surendranagar in Gujarat which would help cut down the cost of production of silk yarn drastically and increase the sale and availability of raw material for Gujarati Patola Sarees locally. The plant has been set up by a khadi institution at a cost of Rs 75 lack in which KVIC has contributed Rs 60 lakh. The unit has employed 90 local women 70 of which belong to the Muslim community. Patola the trademark Saree of Gujarat is considered to be very costly and worn only by the Royals or the Aristocrat. Reason being the raw material silk yarn is purchased from Karnataka or West Bengal where silk processing units are situated thus increasing the cost of the fabric manifolds. Chairman KVIC Mr. V. K. Saxena said that cocoons will be brought from Karnataka and West Bengal and Silk yarn will be processed in house thus reducing the cost of production and giving a major boost to the sale of famous Gujarati Patola Sarees. Surendranagar district is a backward district in Gujarat where KVIC has invested Rs. 60 Lakhs to build the Silk Processing Plant in order to generate livelihood and boost sales of Patola Sarees by making silk more ready available at a low cost for the Patola Saree manufacturers in the nearby area. Traditionally every region in India has had its own unique weave for the Silk Saree. It is quite notable that Patola Silk Saree is amongst the top five silk weaves which are desired in every Indian Saree Lover’s wardrobe. Textile industry that is modern sustainable and inclusive. The ongoing export trends of total MMF textiles export from India though not encouraging value added segment like Fabrics exports witnessed nearly 8% growth during April-October 2019- 20 as compared to the same period of the previous year. We are optimistic that the green shoots in exports will get further momentum in the remaining months of the financial year 2019- 20 Mr. Ronak Rughani Chairman Synthetic Rayon and Textiles Export Promotion Council (SRTEPC) mentioned. He said that along with the various initiatives of the Government the Synthetic and Rayon Textiles Export Promotion Council (SRTEPC) which is the only Export Promotion body for the Manmade fibre (MMF) and MMF textiles has been making constant efforts to enhance the contribution from the MMF and MMF textiles in achieving the target of US$ 5 trillion economy by 2024-25. According to him SRTEPC has prepared a 20 points strategy for the development of Manmade fibre textile segment as mentioned below:( 1) Fibre Neutrality:The MMF textile segment is highly capital intensive and operate in decentralised textile sector being predominance of MSMEs. It is urgent to bring in fibre neutrality and policy parity between fibres. (2) Raw materials to be made available at international price. In India the price of textile raw materials is 5-10% higher than international price which is why our exports are not competitive globally. Therefore, a proper mechanism to put in place forensuring availability of raw materials at international price for the entire MMF textile value chain. (3) Higher interest rate. Measures to make funds available at low rate of interest at least at 5-6% rate of interest. Interest rates in India are amongst the highest in Asia and it is one of the reasons for higher cost of textile products in India and it is also one of the reasons for becoming NPAs in the country. (4) Textile Job worksto be considered as Manufacturing in the GST regime. In the textile sector value addition works such weaving knitting processing embroidery etc. are done mostly through job work which accounts for a significant part of the total manufacturing costs. Therefore, these job work/ services need to be considered as manufacturing and allow for ITC/ refund of the duties paid on these activities under the GST regime. (5) Textile Merchant Exporters to be considered as Manufacturer exporter. Textile Merchant Converter Exporters should be treated on par with Manufacturer Exporter or the role of Textile Merchant Converter Exporter may be defined separately so that all benefits as available to the Manufacturer Exporter can also be extended to Textile Merchant Converter Exporter. (6) Branding. Current global visibility of the MMF textile industry is inadequate. In line with the successful apparel brands such as INDITEX (ZARA) Hennes & Mauritz Gap Marks & Spencer etc. from EU and USA India also needs to have textile brands that will have global presence. (7) Perception on Indian Textile Industry to be changed. Indian textile industry has been viewed primarily as a cotton industry globally. World does not know the actual strengths of Indian MMF textile segment and hence global perception is not encouraging. This perception needs to be changed. (8) Government Schemes. Continue the existing Chapter – 3 benefits/ Schemes such as MEIS RoSL/RoSCTL Interest Equalisation etc. New Scheme RoDTEP also needs to cover entire MMF textile value chain such as fibre yarn fabrics made-ups. etc. (9) WTO compatible Schemes. Government needs to support the textile segment by continuing the existing schemes until the new WTO compliant Schemes are made functional. (10) Rationalisation of GST on MMF textiles segment and Refunds (IGST/ITC) to the exporters/ business need to be immediate. Refund of IGST/ GST on import/procurement of capital goods for encouraging new investments. (11) Organise an Annual International Event in India on a regular basis. Lack of proper exposure and aggressive marketing is one of the weakest linkages for exports of Indian textile products. Therefore there is an urgent need to have a mega Exhibition/ Fair like “Textiles India 2017” that will showcase the textile value chain of India (12) Include Developed Markets also to extend the benefits under MAI Scheme.The developed countries viz. United States Turkey Germany Italy etc. play major roles in sourcing MMF textiles from India. Therefore, the above developed countries also need to be included under MAI Scheme and expenses for buyers from the developed countries also need to be reimbursed under the MAI Scheme for conducting RBSMs. (13) Inclusion of Manmade Fibres (MMF) MMF Yarns under the Interest Equalisation Scheme. Funding requirements are more in case of the MMF and MMF yarns segments. Therefore, the Interest Equalisation Scheme needs to be extended to Manmade fibres (MMF) MMF yarns segments also. (14) Schemes for production and development of Manmade fibre (MMF) raw-materials Manmade fibre and Filament segment in line with Cotton Jute Silk etc. Schemes/ Mission Approach in line with Cotton Silk Juteneeds to be introduced specially for production and development of Manmade fibre raw materials viz. PTA MEG Caprolactam etc. Manmade made fibres and Filament segment domestically in line with Cotton Jute Silk etc. (15) Effective FTAs. FTAs with major textile consuming markets will give us substantial price advantage. Therefore, the FTAs with EU GCC Turkey USA etc. need to be prioritised along with review of the India – ASEAN FTA. (16) Extend TUFS for Manmade fibres and Filament yarns. Application of latest Technology is vital for Manmade fibre and filament segment and benefits of ATUFS to be extended to MMF and filament segment also. (17) Resolve Anti dumping cases.Government also needs to extend financial support to exporters by enhancing the funds under MAI for fighting the ADD cases in major MMF textile importing countries viz. Turkey Peru USA etc. (18) Mandatory follow up of FTP guidelines for issuing RCMC by the EPCs and FIEO. It has been under discussion that FIEO would be granting membership only in case the subject product is not covered by any EPCs as mentioned on Para No. 2.94 (b) of HBP of FTP 2015-20. This will help SRTEPC to focus on the specific Manmade fibre textile segment and continue its efforts to take exports to greater heights in the International Market which is not possible for FIEO being a multi-product Organisation. (19) Upgrading R&D to achieve Zero Defect - Zero Effect and there is Need to change the present profile of Indian MMF fabrics segment dominated by woven fabrics as the world’s ratio is 40% Knits and 60% wovens. (20) Attract investment in indigenous manufacture of Stateof- the-art textile machinery accessories and equipment (except spinning as all other machines are imported). Mr. Rughani informed that amidst current challenges it is hoped that after suitably addressing the mentioned issues exports of Indian Manmade fibre textiles will be around US$ 7 bn by end of Financial year 2020-21 witnessing a growth of at least 10% from the current level of export.

Source: Tecoya Trend

Back to top

Commerce Ministry looking at ways to revamp SEZ policy

The Commerce and Industry Ministry has examined revamping of the Special Economic Zone (SEZ) policy to meet the global challenges being faced by Indian exporters, an official statement said on Friday. It has also discussed ways for implementation of the remaining recommendations of Baba Kalyani report on SEZ to facilitate ease of doing business in the present global market scenario, the ministry said in a statement. Commerce and Industry Minister Piyush Goyal chaired a meeting here on Thursday to review these issues. The statement said the recommendations which have been completed include review of specific exclusions proposed in NFE (net foreign exchange) computation in light of 'Make in India' initiative, sharing of duty exempted assets/infrastructure between units to be allowed against specific approval, and formalisation of de-notification process for enclaves. The committee was constituted by the ministry to study the existing SEZ policy and had submitted its recommendations in November 2018. "If India is on the path to become a USD 5 trillion economy by 2025 then the present environment of manufacturing competitiveness and services have to undergo a basic paradigm shift," the statement said.

Source: Economic Times

Back to top

Commerce Ministry moving to put in place institutional structure to turn districts into export hubs

In line with Prime Minister Narendra Modi’s proposal put forward in his Independence Day speech last August on turning every district into an export hub, the Commerce Ministry is planning to put in place an institutional structure for this and is collecting data for the same. A plan for district-wise export hubs could be announced in the Budget to be presented by Finance Minister Nirmala Sitharaman on February 1, an official told BusinessLine. “Commerce Ministry officials will hold meetings with counterparts from the GST Network (GSTN) and ICEGATE to generate district-wise data on enterprises and exports,” the official said.

Information sources

As the GSTN has the responsibility of managing the entire IT system of the GST portal, which is the mother database for everything connected with GST, the Commerce Ministry hopes to get the district-wise information on manufacturing and exports. Exporters claiming IGST refunds submit all documents, including shipping bills to the GSTN.

ICEGATE, a platform for electronic data inter-change between various government bodies such as the Reserve Bank of India, the Directorate-General of Foreign Trade, and the Directorate-General of Commercial Intelligence and Statistics, too, can be a good source of data on exports, the official said.

Immense potential

Each district has the potential equal to that of a country with its own distinct handicraft and unique specialities like saris, perfumes, and utensils, which have export potential, Commerce & Industry Minister Piyush Goyal had said at a meeting of the Board of Trade in September. He had asked State governments, as part of their export strategies, to take measures to convert districts into export hubs.  “Although the Commerce Ministry has sought district-wise export data from the States, it wants to generate its own database, too, for expediting implementation of the plan,” the official said. Once the data is collated, the government can draw an export profile of every State and their districts and strategise accordingly, the official added.

WTO-compliant measures

India’s exports, which have declined around two per cent in the April-October 2019 to $211.93 billion, need government support. But they have to be compliant with World Trade Organization rules, as the country is already fighting disputes at the multilateral body over some of its export-support programmes. Goyal is also holding meetings with industry ministers and their teams from Gujarat, Haryana and Uttar Pradesh on preparing theroadmap for turning districts into export hubs. The Commerce Ministry wants every State to have a district-wise nodal officer to coordinate with the Centre and State governments.

Source: The Hindu BusinessLine

Back to top

Irani wants to see city as textile machinery hub

Union textile minister Smriti Irani asked businessmen and Southern Gujarat Chamber of Commerce and Industry (SGCCI) to work out a plan to make Surat a manufacturing hub of textile machinery. She met SGCCI office-bearers at the airport on a brief visit to the city on Sunday. If the city becomes a manufacturing hub of textile machinery, the textile industry will become more sustainable, she opined. SGCCI president Ketan Desai told TOI, “She asked us to participate in the expo which the government proposes to hold in August for textile machinery, and come up with plans and also contacts. SGCCI could host this expo as it will act as a stepping stone for the city becoming a manufacturing hub for textile machinery. We have been asked to schedule a meeting with her next week. We are supposed to take relevant data as this would be an advanced discussion between us on the subject.” Textile Machinery Manufacturing Association chairman Vallabh Thummar was also present in the meeting.

Source: Times of India

Back to top

CBIC extends waiver of GSTR-1 late fee

The Central Board of Excise and Customs (CBIC) extended the last date for waiving late fee on filing of output supplies statements through Form GSTR 1 for the period between July 2017 and November 2019, by a week to January 17. More than 54 lakh filings under goods and services tax (GST) were received by authorities, the finance ministry said through its Twitter handle Friday, more than double from the monthly average of 25 lakh filings, prompting the move. The government had initially decided to provide the waiver for filings for the period – if done till January 10 – on the recommendations of the GST Council that met last month.

Source: Economic Times

Back to top

Tariff war: WTO sets up dispute panel over India's duty hike on 28 American goods

The World Trade Organisation's (WTO) dispute settlement body has set up a panel to examine the US complaint against India which had increased customs duties on 28 American goods last year. The US in July had dragged India to the WTO by filing a complaint against New Delhi's move to increase customs duties, alleging the decision as inconsistent with the global trade norms. According to a communication of the Geneva-based WTO, the dispute settlement body has established a panel "to examine the matter referred by the US". The US had alleged that the additional duties imposed by India "appears to nullify or impair the benefits accruing to the US directly or indirectly" under the GATT 1994. The General Agreement on Tariffs and Trade (GATT) is a WTO pact, signed by all member countries of the multi-lateral body, aims to promote trade by reducing or eliminating trade barriers like customs duties. The US had also alleged that the duties imposed by India appears to be inconsistent with two norms of GATT. It had stated that India does not impose these duties on products originating in the territory of any other WTO member nation. As per the WTO's dispute settlement process, the request for consultations is the first step in a dispute. Consultations give the parties an opportunity to discuss the matter and find a satisfactory solution without proceeding further with litigation. After 60 days, if consultations fail to resolve the dispute, the complainant may request adjudication by a panel. The US has rolled back export incentives from India under its GSP programme and New Delhi has imposed higher customs duties on 28 American products including almond, pulses, walnut, chickpeas, boric acid and binders for foundry moulds. The other products on which duties were hiked include certain kind of nuts, iron and steel products, apples, pears, flat rolled products of stainless steel, other alloy steel, tube and pipe fittings, and screws, bolts and rivets. The duties were hiked as retaliation to the US move to impose the highest customs duties on certain steel and aluminium goods. India's exports to the US in 2017-18 stood at USD 47.9 billion, while imports were at USD 26.7 billion. The trade balance is in favour of India.

Source: Economic Times

Back to top

Centre yet to realize importance of FTA, say apparel exporters

The Apparel Export Promotion Council (Aepc) on Sunday said the central government was yet to realize the importance of signing Free Trade Agreement (FTA) with the European Union (EU) and US, or Comprehensive Economic Partnership Agreement (CEPA) with Canada and Australia. Aepc chairman A Sakthivel said, “The absence of FTA and CEPA is one of the main hindrances to the country’s readymade garments (RMG) exporters in the international market. While we are exporting RMG worth $16.5 billion annually, our main competitors Bangladesh, Vietnam and Cambodia are exporting RMG worth around $38 billion, $28 billion and $12 billion, respectively. All the three countries have signed FTA and CEPA deals with various RMG importing countries and they are thriving in the exports.” For instance, he said, Cambodia’s RMG exports were worth only around $3 billion a few years ago. “But now, it has tripled. Despite having required infrastructure, raw materials and skill set, we are losing orders in the international market.” For signing FTA with EU, Sakthivel said, the country would have to compromise on free trade in automobiles and wine products. “The main talking point is on how to have such compromise in terms of our economic policy. It can be done because the textile industry is one of the self-sufficient industries in the country and it suits ‘Make in India’ bill well. Around 120 million people, including 60% women, are employed in the sector. Moreover, if FTA is signed, our RMG exports would be doubled and it would also benefit allied sectors like agriculture,” he said. Emphasizing that signing FTA was a realistic and an inevitable solution, the Aepc chairman said “The UPA-II government had taken steps to sign FTA and taken the automobile industry into confidence. It was about to enact a law in the parliament as well. But it did not take off due to change in government. Canada had recently shown its commitment to sign CEPA with us. But the BJP-led government did not take things forward.” He said it was important to have FTA with UK on the lines of Brexit. “Various textile bodies have urged the international buyers to push their governments to sign FTA with India. Because of the quality goods exported from India, many UK buyers have agreed to take up the matter with their government. An umbrella federation of nation-wide textile associations has been formed in New Delhi and we have decided to put pressure on the central government to act in favour of signing FTAs soon,” Sakthivel said.

Source: Times of India

Back to top

India to revamp scheme for states’ statistical capacity

The government plans to revamp the Capacity Development Scheme to improve the statistical systems and capacity of states. The Ministry of Statistics and Programme Implementation (MoSPI) and the World Bank will give $30 million each for the scheme to augment resources and training capacity for bringing out key economic indicators, various socio-economic surveys, capacity building and strengthening statistical coordination. “The World Bank team also made a brief presentation on the National Programme for Improving Quality of Statistics in India (NPIQSI), a project under preparation envisaging the assistance of World Bank under Investment Project Financing as a first phase,” the ministry said in a statement on Friday after it organized a one day workshop for strengthening of statistical system of states. The overhaul comes in the wake of the government working on an umbrella information portal collating official data on employment, industry, health, GST and trade is in the works to put out timely, credible and user-friendly official data through a single window. The scheme started in 2010 as a Centrally Sponsored Scheme with a total outlay of Rs 650.43 crore of which 80% was funded from World Bank and rest from the Indian government. “All this is for technical capacity building and training. It is still in the negotiation stage,” said an official in the know of the development. The project is likely to be a for a five year period. In addition, India is also seeking the multilateral funding organisation’s assistance to strengthen the states’ systems. That project to cost around $250 million. “Talks are on with the World Bank and this way we will get the best global practices,” the official said. Funds are released to states for this purpose after detailed examination of their proposals.

Source: Economic Times

Back to top

Govt measures to help India secure sustainable energy future: Niti Aayog vice chairman

Various policy initiatives undertaken by the government will help India achieve a secure, affordable and sustainable energy future, Niti Aayog Vice Chairman Rajiv Kumar said on Friday. Kumar said India has taken significant steps in improving energy efficiency and cleaner transport with electric vehicles (EVs). Speaking at the release of IEA's 'India 2020 Energy Policy Review' here, he said India has increased its focus on energy storage solutions, cleaner fuels and liberalisation of upstream sector. At the same event, Niti Aayog CEO Amitabh Kant said with the distribution of LPG under Pradhan Mantri Ujjwala Yojana and provision of piped natural gas connections through city gas distribution networks, India has crossed 280 million households, implying 98 per cent households with access to clean cooking facility. Kant also noted that India is working hard to move towards its aspirations of transition in the energy sector. "The government has placed electricity and clean cooking access as its topmost priority and with continuous efforts, India has seen a remarkable development in this area," he said. Kant also said the blue revolution is ensuring better quality of life to citizens, especially rural women.

Source: Economic Times

Back to top

Irani wants to see city as textile machinery hub

Union textile minister Smriti Irani asked businessmen and Southern Gujarat Chamber of Commerce and Industry (SGCCI) to work out a plan to make Surat a manufacturing hub of textile machinery. She met SGCCI office-bearers at the airport on a brief visit to the city on Sunday. If the city becomes a manufacturing hub of textile machinery, the textile industry will become more sustainable, she opined. SGCCI president Ketan Desai told TOI, “She asked us to participate in the expo which the government proposes to hold in August for textile machinery, and come up with plans and also contacts. SGCCI could host this expo as it will act as a stepping stone for the city becoming a manufacturing hub for textile machinery. We have been asked to schedule a meeting with her next week. We are supposed to take relevant data as this would be an advanced discussion between us on the subject.” Textile Machinery Manufacturing Association chairman Vallabh Thummar was also present in the meeting.

Source: Times of India

Back to top

Developing culture of manufacturing can drive Make in India’

In the post-Independence period, there has not been a year when the share of GDP has seen an upward trajectory as compared to other developed country’s manufacturing share of GDP, said Prof C P Chandrashekhar, Professor at the Centre for Economic Studies and Planning, Jawaharlal Nehru University, New Delhi. Addressing the Xavier Institute of Management and Entrepreneurship (XIME) national seminar on ‘Make in India: Making it work’ for which BusinessLine was the media partner, Chandrashekhar said “It is as high as 25-30 per cent in the developed countries, whereas in India it is only 15-17 per cent, and this is a long-term failure for India.”  “Secondly, it is important to note that the principle drivers should have a spin off effect which can help in ensuring a continuous growth,” he added. Rajeev Gowda, Member of Parliament, primarily focused on sharing the stark distinction between what ‘Make in India’ aspired to do and what the reality is. “‘Make in India’ aimed at creating 100 million jobs since its inception back in 2014 but has failed to do so till date. Instead, the textile industry lost 30 million jobs. The manufacturing industry witnessed a slowdown and is already perceived to be lost in the desert,” he remarked. He further said: “More emphasis must be put down on the aspect that our thinking must not be limited to growth of only large corporates but also for MSMEs in case of manufacturing industries, as they have always been looked down.” In the session on ‘innovation for competitiveness’, Rakesh Sasibhushan, CMD, Antrix shared ISRO’s journey and said: “The space industry in India is at the cusp of major break-through. As per Morgan Stanley report, global space economy is expected to touch $1.1 trillion by 2040 and India is well positioned to garner significant market share of global space industry.” Vikram Kirloskar, President, CII speaking on “‘Make in India’ – the way forward” said: “I think, the big change that can drive Make in India, is the right attitude towards developing a culture of manufacturing within the country with the skill-sets we possess. We need to focus on developing on our own and not depend on technologies and services provided by other countries.” Prof J Philip Chairman, XIME & Former Director, IIM Bangalore, in his concluding speech said: “In the last five years, Make in India has been the most ambitious movement by the Government in the recent history to boost industrial advancement. This resulted in an increase in the FDI, especially in 2016-17, when we overall crossed $61 million. I strongly support the Government’s approach to Make in India. Although it is a bold initiative, there is a slowdown within the industry currently which is prompting the industry members to be in a wait and watch mode.”

Source: The Hindu Business Line

Back to top

Industrial output breaks 3-month downward streak, expands by 1.8% in Nov

The rise in IIP helped pull up cumulative growth in industrial output to 0.6 per cent in the April-November period of FY20. A rebound in manufacturing activity pulled up November’s overall industrial output, helping it to grow 1.8 per cent after declining for three consecutive months. Output had declined by 3.8 per cent in October after a 4.3 per cent contraction in September, the steepest fall in eight years. The rise in the Index of Industrial Production (IIP) helped pull up cumulative growth in industrial output to 0.6 per cent in the April-November period of financial year 2019-20 (FY20), the data released on Friday showed. However, this was still lower than the 5 per cent rise in output registered in the previous fiscal year. Broad-based slowdown across sectors has meant that output was negative in four of the eight months till November in FY20. Manufacturing output rose 2.7 per cent in November. The sector accounts for 78 per cent of the index. In October, it had contracted 2.1 per cent.

Return of manufacturing

Of the 23 sub-sectors within manufacturing, 10 recorded year-on-year contractions, down from 18 in the previous month. However, economists suggested that the worst may not yet be over. “As anticipated, a favourable base effect led to the IIP posting a turnaround to a mild growth in November 2019, although the pace trailed our expectations. On average, industrial performance remained lacklustre in October-November 2019, with a year-on-year decline of 1.2 per cent, driven by all the use-based categories, except intermediate goods and consumer non-durables,” Aditi Nayar, principal economist at ICRA, said. Most importantly, the capital goods segment, which signifies investment, contracted 8.6 per cent in November, after a 21 per cent fall in the previous two months. Production in the category remained in the red for the tenth month, despite government efforts to open up even more sectors to easier foreign direct investment (FDI) flows earlier this year. The IIP database showed that contraction remained entrenched across automobile segments, with motor vehicle production falling 12.6 per cent in November, albeit lower than the 28 per cent fall in October. Similarly, production of electronics also reduced almost 10 per cent in November, lower than the 30 per cent fall in the previous month. This comes in spite of the government pushing domestic production in the sector over the past two years through a series of benefits and a phased manufacturing programme, aimed at reducing imports of electronics goods. Auto components, steel and sugar, were flagged by the government as sectors pulling down overall IIP growth. Machinery production shrank four per cent, lower than the 18.1 per cent contraction seen in the previous two months.

Consumer demand fizzles

A month after the festive season traditionally begins, November saw production of consumer durables contract for a sixth consecutive month. However, production contracted 1.5 per cent in November, a much lower pace than October’s 18 per cent. The contraction baffled economists who said e-commerce sales in October were very high. Crucially, the consumer non-durables category turned positive in November, after having contracted for two months, with production growing 2 per cent. “The turnaround in factory output growth still cannot be interpreted as some kind of a green shoot on the industrial front. Until a majority of the use-based sectors show positive growth on a sustained basis, it would be difficult to believe that Indian industrial sector has come out of the woods,” Sunil Kumar Sinha, principal economist at India Ratings, said. Meanwhile, mining output rose 1.7 per cent after an eight per cent fall in October. Contraction in electricity generation fell to five per cent from 12 per cent in October. Economists said the growth of mining output would strengthen in December 2019, while the pace of contraction of electricity generation would narrow, thereby supporting the overall performance of the IIP.

Source: Business Standard

Back to top

India to propose easing foreign investment rules further

India is considering further opening up its insurance and aviation sectors to foreign investors to help spur the economy, according to people familiar with the matter. The Finance Ministry has suggested increasing the limit on foreign direct investment in insurance and pension companies to 74% from the present 49% and allowing foreign airlines to own Indian carriers, the people said, asking not to be identified as the plan is not public. It also wants to allow 100% foreign investment in railway operations, education, and rental housing management companies, the people said. FDI is currently prohibited in railway operations.

A spokesman for the Finance Ministry wasn’t immediately available to comment.

Prime Minister Narendra Modi wants to double the size of the economy to $5 trillion by 2025. With government revenue under pressure amid an economic slowdown, authorities are banking on private investment to drive growth. Relaxation of FDI restrictions in the aviation sector may help attract bidders for national carrier Air India, which the government is trying to sell after a failed attempt previously. The government also plans to dispose of Bharat Petroleum Corp., the country’s second-largest state refiner, and Shipping Corp. of India Ltd., the biggest shipping company. Last year, authorities eased foreign investment rules in retail, manufacturing and coal mining to attract investments from companies such as Apple Inc. and BHP Group. While FDI equity inflows into Asia’s third-largest economy have risen 15% to $26 billion in the six months to September, the ratio to GDP has declined over the years to 1.5% in 2018, according to World Bank data.

Source: Economic Times

Back to top

What FM Nirmala Sitharaman could do in Budget 2020 to boost demand and revive economy

India is going through no ordinary economic turbulence. As Finance Minister Nirmala Sitharaman rises to present the Union budget on February 1, there is little elbow room, fiscally, for any audacious act: consumer demand is lacklustre, tax collection is modest and the estimated GDP growth for 2019-20 is 5%, an 11-year low. As Sitharaman walks a tightrope, there is a silver lining. A handful of options are still available for the FM, especially when the industry’s expectations from the budget would be somewhat modest after a slew of recent interventions, including the slashing of the corporate tax.

What, then, are the options before Sitharaman?

FM can loosen the purse strings by relaxing the fiscal deficit target by half a percentage point and engineering a debtleveraging exercise with the extra kitty. Most economists and corporate honchos seem to be okay with it. If newly managed resources are spent in the infrastructure sector, and more so in smallticket rural ventures, the demand will revive, luring cash-rich industries to invest more, which in turn, could help pull the economy up from the abyss. Vinayak Chatterjee, chairman of Gurgaonbased Feedback Infra, says a development finance institution (DFI) has to be created to cater to core sector project financing. “What the budget can do is announce the setting up of a DFI, with a proposal for raising Rs 2 lakh crore equity by relaxing fiscal deficit targets and boosting asset monetisation, divestment, etc. By leveraging debt, the kitty could be worth Rs 18-20 lakh crore,” Chatterjee told ET Magazine, estimating that debt leveraging could be as high as 9-10 times that of the equity. In an interesting turn of events, economists, who often call for fiscal prudence over anything else during budget season, have become more realistic, conceding that there is a need to breach the fiscal deficit target. In her July 2019 budget, Sitharaman set a fiscal deficit target of 3.3% for 2019-20 this was much stringent than that set in the UPA regime when it allowed the deficit to balloon to 5.7% in 2011-12 before a fiscal consolidation road map was by and large adhered to by successive FMs. A target of 3.2% was set in the 2017-18 budget. Former chief economic adviser Arvind Virmani does not worry too much about not sticking to the fiscal deficit target. What he wants to see in the budget is an introduction of long-pending reforms on the direct tax code and the simplification of the goods and services tax (GST). “A short-term (12-18 months) increase in fiscal deficit will be accepted by capital markets, if they can be convinced that gains from efficiency and voluntary compliance will reduce the fiscal deficit over the next few years,” he adds. Virmani urges the government to ensure that most of the ongoing strategic sale of public sector enterprises is completed by March 31, 2020. “Zero sale in 2019-20 will again dent the credibility of the government, whatever be the reason given to justify the delay,” he adds. The proposed sale of Air India, for one, will not be a painless job. The sale of the debt-ridden national carrier got off the ground earlier this week with Home Minister Amit Shah-headed group of ministers allowing the government to call for bids. The government is looking for a 100% sale. Meanwhile, the Cabinet Committee on Economic Affairs has also given “in-principle” nod to strategic disinvestment in four public sector enterprises — Minerals & Metals Trading Corporation, National Mineral Development Corporation, MECON and Bharat Heavy Electricals — all of which will eventually fill the government’s coffers and make the fiscal math easier for Sitharaman. However, to boost demand and revive a sagging economy, something more is needed. Chief economist of Crisil DK Joshi says the government must focus on putting money in the hands of the masses. PM-KISAN, for example, is yet to be implemented in full, he adds. “There should be a push for labour-intensive industries such as construction, housing, road-building and irrigation. These will trigger immediate consumption,” he adds. Niranjan Hiranandani, MD of Hiranandani Group, says the need of the hour is to bring liquidity to the market, and although a larger responsibility lies with RBI, the Finance Ministry has to play its role here to ensure the economy gets back on rails. Hiranandani, a senior vice-president of Assocham, has asked for a one-time rollover of bank credit, like the one the central bank allowed in 2008, to ease the liquidity pressure on India Inc: “Otherwise, a lot of companies will enter crisis mode, even if they have positive net worth.” To trigger demand in the market, he says the government should engineer a one-time, 25% reduction of GST across all rates with an in-built mechanism for compensating the shortfall from deficit financing. “It will cost the government a little but will immediately boost the economy,” he says, adding that the government also needs to tweak tax concessions in the real estate sector. For instance, raise tax deduction on rental income to 50% from the present 30% to give a boost to rental housing. With 7-10 days left for the budget documents to be printed at the press in North Block’s basement, Prime Minister Narendra Modi has swung into action, meeting corporate honchos and economists, indicating that some of their lastminute ideas might find a place in Sitharaman’s “bahi-khata”. For the government, the biggest challenge is to cajole large and profitable companies to spend money on expansion. Slashing of corporate tax in September last year from 30% to 22% for companies not availing of other tax breaks, and from 25% to 15% for new manufacturers, was mainly intended to incentivise profitable companies to spend more. According to ETIG Research, the corporate tax cuts saw companies’ profits going up by 11% in the June-September quarter of 2019. But the extra money has yet to find its way to the ground, as India Inc is waiting for consumer demand to accelerate. Earlier this week, Modi met 11 industrialists, including Ratan Tata, Mukesh Ambani and Sunil Mittal, from top 10 business groups, to brainstorm on the revival of the economy and the creation of jobs. At the bourses, the group companies represented by these industrialists have a combined market capitalisation of Rs 34.17 lakh crore. Their combined annual revenues for 2018-19 were Rs 21.32 lakh crore, roughly 10% of nominal GDP, with the combined profit being Rs 1.19 lakh crore. Even if the PM is at his persuasive best, these corporate honchos are ultimately answerable to the shareholders of their listed companies. Non-promoter shareholding in most of these 10 groups are over 40% in some cases, promoters do not hold even 50%. Shareholders will be convinced only if there is profitability and promise of a good return on investment — and that can happen only when demand picks up. Ahead of the budget, it is a quandary: can there be demand without investment and vice versa?

HERE ARE THE BUDGET WISH LIST OF SOME OF THE KEY SECTORS:

Steel: Banking on Two Pillars of Economy Ahead of the budget, scheduled to be presented on February 1, top managers of the plant want Finance Minister Nirmala Sitharaman to announce a road map of hefty spending on infrastructure, which in turn will invariably boost. Financial Services: Tackling Demand and Credit Crises One of the key issues the country’s financial sector faces today is how to transfer the excess liquidity sitting with risk-averse banks, especially public sector banks, as credit to fund consumption growth. There are two problems: first is about making liquidity available to a wider set of lenders — the NBFCs or shadow banks — and the second is Startups: Waiting for Regulatory Relief Entrepreneurs, already hard-pressed for time to raise funds and scale their businesses, have to spend a considerable amount of time and energy sorting out tax issues.

Source: Economic Times

Back to top

View: For the economy to grow, here's what the govt exactly needs to do

Since the 1991 balance of payments (BoP) crisis, India has witnessed bouts of economic crisis — current account deficit, inflation, fiscal deficit, banking — of various magnitudes. For the first time in a generation, the country faces a different kind of crisis it’s not used to: a growth crisis. The National Statistical Office (NSO) has forecast an expansion of 5% for the current fiscal, an 11-year low. Depending on where one stands, this could not have come at a better or worse time. For policymakers, it’s a nightmare ahead of the budget. For lobbyists, it’s the right time to push their agenda. In keeping with pre-budget tradition, the beauty parade of industrialists, economists, investment managers and other experts has started in earnest. They have identified the cause of the problem and have solutions in hand. For the industry lobby, it is GST. So, the magic wand is lowering the tax rates so that goods and services become affordable. Economists would say GoI’s imprudent financial management that crowded out private investment is the root cause of all ills. Investment managers fixated on outperformance on returns from stocks and bonds have identified banks’ risk aversion in doling out loans to corporates and NBFCs as the Gordian Knot. To revive growth, they recommend doing away with dividend distribution tax (DDT) and securities transaction tax. All of these are beneficial. But they address pockets of the economy. The catch is that GoI’s balance sheet looks more like a debt-laden Indian conglomerate’s than that of a frugal Indian saver. So, borrowing your way out is not an option without a bigger crisis two years down the line. Many solutions are piecemeal. This is the time for a surgery, not band-aids. At last week’s Suresh Tendulkar Memorial Lecture in Mumbai, Singaporean policymaker Tharman Shanmugaratnam touched upon the ‘big picture’ problem and likely solutions. The problem, according to him, is that ‘statism is still hanging over the economy’. And to overcome it, there is a need to ‘reorient the role of the government’. Approach to economic policies has changed substantially since 1991. But it remains limited to private sector freedom. Rules governing financial resources utilisation and the State’s visible hand in business via the Leviathan public sector banks (PSBs) and metal makers remains. Financial repression has been less talked about. Investment rules for Employee Provident Fund Organisation (EPFO), insurers and banks tailored to fund government borrowing needs to change. More than half the savings through these vehicles end up funding the state budget. It’s a double whammy. It eats up investments, and deprives savers higher income in their retired life. Some of the biggest buyers of Indian assets are retirees from Canada and Scandinavian countries. The likes of Canadian Pension Fund, Blackstone and GIC of Singapore are earning as high as 14-16% from Indian roads and power transmission assets. On the other hand, Indian pensioners earn 6-7% from government bonds. Letting these long-term funds to structure and buy income-earning assets could provide higher returns for savers and relieve GoI from stretching its balance sheet. Slowing growth has led to calls of higher GST. But higher indirect tax rate not only conflicts with a record low corporate tax rate, but would also worsen already weak demand. When options are limited, ‘reorienting’ the State’s priorities is applicable to the businesses it owns. When capital was scarce, taxpayer money was funnelled into building steel factories, power plants, telephones and even tractors and watches. When distressed corporations and individuals sell off assets for a better financial future, why should it be any different for a State? Over the years, many of these have lost value because of private competition. But some still carry value, and could turn bigger like Hindustan Zinc, or VSNL that is now with the Tatas. The longer the State holds on to these corporations, the steeper the value erosion for entities like Air India, BSNL and PSBs. Privatisation not only raises resources for the State to provide a social safety net, but it also frees up space for it to create capacity in social infrastructure. Attempts so far have been half-hearted. Instead of merely conducting accounting exercises — like selling Hindustan Petroleum to ONGC, or Power Finance Corp buying Rural Electricity Corp — to fill the budget gap, the aim should be to transfer private resources to the State through outright sale. Monetisation of assets first came up during the BoP crisis, and finance minister Manmohan Singh began by selling small stakes in Staterun companies. It can’t be the same today. This may be the time to complete the circle with a determined policy to exit businesses, leaving it to entrepreneurs while the State provides better schools, hospitals and retirement plans.

Source: Economic Times

Back to top

Global Textile Raw Material Price 12-01-2020

Item

Price

Unit

Fluctuation

Date

PSF

1030.21

USD/Ton

0.56%

1/12/2020

VSF

1369.77

USD/Ton

0%

1/12/2020

ASF

2022.86

USD/Ton

0%

1/12/2020

Polyester    POY

1043.22

USD/Ton

0%

1/12/2020

Nylon    FDY

2225.15

USD/Ton

0.65%

1/12/2020

40D    Spandex

4146.86

USD/Ton

0%

1/12/2020

Nylon    POY

2044.53

USD/Ton

0.35%

1/12/2020

Acrylic    Top 3D

2210.70

USD/Ton

0%

1/12/2020

Polyester    FDY

1192.04

USD/Ton

0%

1/12/2020

Nylon    DTY

2441.88

USD/Ton

0%

1/12/2020

Viscose    Long Filament

5418.38

USD/Ton

0%

1/12/2020

Polyester    DTY

1293.19

USD/Ton

0%

1/12/2020

30S    Spun Rayon Yarn

2015.64

USD/Ton

0%

1/12/2020

32S    Polyester Yarn

1647.19

USD/Ton

0%

1/12/2020

45S    T/C Yarn

2427.43

USD/Ton

0%

1/12/2020

40S    Rayon Yarn

2181.80

USD/Ton

0%

1/12/2020

T/R    Yarn 65/35 32S

1950.62

USD/Ton

0%

1/12/2020

45S    Polyester Yarn

1791.68

USD/Ton

0%

1/12/2020

T/C    Yarn 65/35 32S

2225.15

USD/Ton

0%

1/12/2020

10S    Denim Fabric

1.28

USD/Meter

0%

1/12/2020

32S    Twill Fabric

0.69

USD/Meter

0%

1/12/2020

40S    Combed Poplin

0.98

USD/Meter

0%

1/12/2020

30S    Rayon Fabric

0.54

USD/Meter

0%

1/12/2020

45S    T/C Fabric

0.68

USD/Meter

0%

1/12/2020

Source: Global Textiles

Note: The above prices are Chinese Price (1 CNY = 0.14449 USD dtd. 12/01/2020). The prices given above are as quoted from Global Textiles.com.  SRTEPC is not responsible for the correctness of the same.

Back to top

Pakistani firms get positive response from US, EU buyers

Pakistani companies participating in the Heimtextil 2020 fair in Frankfurt have received an encouraging response from European buyers while a huge number of US buyers have also expressed interest to switch to Pakistani export products over the next one and a half year. Officials from the Pakistani Embassy in Germany hoped that the exhibition would significantly help eliminate the stagnation of export of Pakistani home textile products to Europe. The effects of a stable rupee value have started bearing fruit, which is now being reflected in improvement in exports. Pakistan’s knitwear exports increased 23% during 2019 when export of similar products from Bangladesh, China and India declined due slowdown in the European market. Pakistani Commercial Counsellor in Frankfurt Khawaja Khurram Naeem told The Express Tribune that focus on EU market with effective marketing, investment in technology and innovative products are the basic reasons behind uptick in knitwear exports. Speaking on the sidelines of the event, he said that the home textile industry was following similar footsteps and he anticipated exports of such products to the European Union to increase as well. “The prospects for Pakistan are improving following the changing patterns in global trade,” he said. “To take advantage of them, local exporters have begun investing in technology and products already.” He added that the European market especially Germany, the largest economy, remained weak in 2019. He pointed out that the market did not boom during the year and growth remained negative. “The share of our trade rivals China, India and Bangladesh shrank in the knitwear segment but Pakistan managed to maintain its market share,” Naeem lauded. “In the past few years, Pakistan’s home textile exports had been stagnant but now, government policies are creating an environment conducive for exports.” He was of the view that the main reason behind the increase in home textile exports was the investment made by Pakistani export firms to introduce innovation in textile processing and products. On the other hand, he remarked that Pakistani companies had also paid special attention to turn their processes and products environmentally friendly. He underlined that the stable value of rupee began to bear fruit in the last quarter of 2019. “Increased certainty about the value of rupee is also boosting confidence among foreign buyers of Pakistan’s merchandise,” he said. Naeem held the opinion that Pakistan would also benefit from a trade war between China and the United States, adding that Pakistani exporters were very optimistic in this regard. The official said that demand for eco-friendly products was growing rapidly in Europe and the United States and stressed that understanding these trends was essential for Pakistani exporters to enhance their share in the European market. He maintained that Pakistani Embassy in Germany was working to raise awareness among the exporters to understand the laws and changing trends of the European market. Talking about the Heimtextil 2020, the envoy termed the exhibition a most effective platform for communication with European buyers. He added that Pakistani companies, who do not export to Germany, also participate in Heimtextil fairs to meet potential buyers from Holland, Czechoslovakia, France and other EU markets to enhance market access. The exhibition concluded on January 10, 2020. Exporters from Pakistan showcased their product range for home textile.

Source: The Express Tribune

Back to top

Pakistan: 83 percent of global exports liberalised in CPFTA-II: Commerce ministry

Pakistan projects $3.2 billion exports growth in case of minimum 5 percent realisation of the free market access of 313 Pakistan's high priority tariff lines given by China under the Phase-II of China Pakistan Free Trade Agreement (CPFTA-II) which has been operationalised by January 01, 2020. Dr M Hamid Ali Joint Secretary (Foreign Trade-1) Ministry of Commerce in his presentation at a seminar said CPFTA-II has greatly secured Pakistan's export interest as around 83 percent of the country's global exports have been liberalised in the CPFTA-II as against 41 percent of the same in Phase-I. Similarly, 91 percent of Pakistan's exports to China have been liberalised in Phase-II as against 30 percent liberalised in Phase-I. This liberalisation covers 88.3 percent of China's global imports or $ 1.6 trillion. “If we captured only five percent market share out of the 313 tariff lines, our exports would surge up to $3.2 billion and these projections are based on Chinese global imports in 2016." Hamid said. The sensitive list has been enhanced from 1410 in CPFTA-I to 1760 in the CPFTA-II after thorough consultation with the stakeholders. The event titled ‘China Pakistan Free Trade Agreement Phase-II, Business and Export opportunities for Pakistan' was jointly organised by TDAP and MoC here at a local hotel. While highlighting the gains of CPFTA Phase-II, Hamid said provision has been introduced to address the Balance of Payment (BoP) difficulties. Effective enforcement of Electric Data Exchange will also ensure sharing of the real time trade data to discourage under invoicing and misreporting. China has granted concessions to a set of products including textiles and garments, seafood, meat and other animal products, prepared foods, leather, chemicals, plastics, oil seeds, footwear as well as engineering goods including tractors, auto parts, home appliances, machineries, etc.. Safeguard Measures (SGM) have been invoked to temporarily restrict imports of a product which cause injury or threaten to cause injury to the domestic industry. SGM in CPFTA-I were inadequate to address the concerns of the industry. Chief Executive (CE) TDAP Arif Ahmad Khan in his welcome address said that CPFTA-II offers enhanced and deeper market access to Pakistan as China has eliminated the tariff on 313 tariff lines of Pakistan's export interest, giving treatment at par with ASEAN. The CE further remarked that CPFTA-II will help Pakistan in enhancing export from Pakistan to China in coming years. Economic and Commercial Counsellor, Consulate General of China in Karachi Guo Chunshui briefed the audience about the trade profile between two countries and efforts involved in finalising the CPFTA. He assured the support of Chinese Government in smooth implementation of FTA Phase-II. The Vice President FPCCI Shaikh Sultan Rehman highlighted the role of FPCCI in finalising the CPFTA Phase-II. He also shared his concerns that a lot is needed to be worked out from Trade and other government institutions in addition to MoC to realise the gains out of the 2nd phase of CPFTA. The seminar was attended by businessmen from FPCCI, KCCI, women chambers, major trade associations and export sectors including textile, leather, agro food, chemicals industry, engineering etc.

Source: Business Recorder

Back to top

Chinese textile companies bank on BRI for growth

China’s textile industry, a sector that provides jobs to over 27.15 million people in both production and sales, will tap more growth seams in economies related to the Belt and Road Initiative (BRI) and improve garment makers’ innovation capabilities to stay competitive this year, said a senior industry official. As participating countries are expected to sign the Regional Comprehensive Economic Partnership (RCEP) this year, China’s textile industry must accelerate the adjustment of products, capacity and trade structure to better integrate regional development in the next stage, said China National Textile and Apparel Council president Sun Ruizhe. “The simplification and unification of rules will boost resource flows within the region, and cut transaction costs and risks,” he said, adding that the RCEP will further enrich regional cooperative content in areas such as digital economy and intellectual property protection, paving the way for future cooperation among industries across the mega trade bloc. The rise of emerging markets such as Vietnam, India and Bangladesh has also changed the division pattern of labor and trade in the global textile business, he said. Affected by weak demand from developed markets and the rise of protectionism, China’s textile and apparel exports dropped 2.2 per cent year-on-year to $232.31 billion between January and October last year, data from Beijing-based CNTAC shows. In the meantime, China’s textile and apparel shipments to the US, the EU and Japan declined 4.5 per cent, five per cent and 5.5 per cent year-on-year respectively, while its total exports to countries and regions participating in the BRI grew by 1.3 per cent, and exports to Africa jumped 6.6 per cent from the same period a year earlier. To improve the product value and tackle climate change, Sun said green textile products have already become the new trend in the textile industry. “Textile makers in China have already begun to adopt renewable energy sources, environmentally friendly textile materials including biomass fiber and recycled substances to make the whole production process pollution free, as well as cut dependence on crude oil when producing common synthetic materials such as nylon or polyester,” he said. Since the fourth industrial revolution is still in its infancy and many technical applications are immature, Sun said the instability of certain new technologies can lead to higher initial investments and trial costs. For example, Adidas said in November that its two automated plants in Germany and the US will soon shut down, and it will transfer the capacity to Asia. Huang Qunhui, director of the Institute of Industrial Economics at the Chinese Academy of Social Sciences in Beijing, said domestic companies must have a rational attitude toward relatively advanced industrial applications like quantum computing and other emerging technologies, and deploy more resources in innovation and green development to better compete with their established global rivals. Ningbo Peacebird Fashion Co Ltd, a Zhejiang-based multi-brand fashion company, plans to expand its global presence with more flexible branding strategies, international designers and innovation. Zhang Jiangping, the company’s chairman, said the firm will enter overseas markets such as Vietnam and Malaysia soon, after learning of local consumers’ higher purchasing power and changing lifestyles. “China has fabulous designers, a large market, and outstanding brands, but it needs to make global consumers aware of the charm of Chinese brands, which certainly can be promoted on a bigger stage,” he said. The business executive also found that crossover branding has become a hot term for many sectors. “Brand collaboration arouses consumers’ curiosity, giving them a new reason to spend. It usually generates unexpected market feedback and decent sales both at home and abroad,” he said.

Source: Phnom Penh Post

Back to top

Traders’ viewpoint: Transporters’ strike badly affecting export sector

The countrywide strike of goods carriers and transport services have been entered in the second week, which is yielding negative impact over export sector, especially textile industry and halted the export activities putting millions of dollars export orders on stake and textile exporters are unable to meet international commitments whereas failure to perform will lead to disputes, loss of customers & market share as well as damaging Pakistan's reputation as a reliable supplier. Chairman Pakistan Textile Exporters Association(PTEA) Sohail Pasha apprehended that huge foreign orders are feared to be cancelled due to ongoing goods transporters strike and this would result in huge loss for exporters and the economy as well. A large number of export shipments ready to be shipped as per the deadline given by the foreign buyers, are unable to reach the seaports in time, resulting in the vessel sailing away without the consignment, he added. If the strike prolongs further, this would lead to a great loss to the exporters, fearing cancellation of vital orders, he warned. Under this situation, textile exporters are unable to meet international commitments and failure to perform will lead to loss of wide scale customers and market share. Entire textile chain is highly perturbed and economic activities have come to a halt in export sector, he said and added that the goods transport carriers strike has ceased business activities as the goods are not reaching the ports. If the situation would continue, our exports could fall horribly, he apprehended. Transports strike not only hit industrial production but also affected fulfillment of export commitments and shipment of goods on time. We have raw material in stores to continue production for next few days and if the goods transporters strike prolongs, it will create severe difficulties, he added. National economy relies heavily on textile exports and a crisis like situation is posing serious threat to the viability of the industry. Vice Chairman PTEA Yaris Yousaf was of the view that goods transport carriers strike is not only hurting shipments of export consignments but also disturbing import business as importers would be forced to pay demurrages for not clearing their consignments from the ports. Furthermore, the strike is also affecting manufacturing activities as industrial units are not receiving raw materials and fuel to run their mills, resulting in heavy financial loss. Meanwhile, Choudhry Salamat Ali, Central Chairman, PHMA, Rizwan Ashfraf, former Chairman APTEPMA, Waheed Khaliq Ramey, Chairman, Council of Powerlooms Owners and Rice Exporters have urged the provincial and federal Governments to intervene immediately and resolve the issue of transporters without any delay. If the strike will not to be called off, the exporters will have to face huge financial losses for shipping their goods by air to fulfill their commitments or lose their hard earned export contracts.

Source: Business Recorder

Back to top

Bangladesh: RMG sector draws lukewarm response from buyers

The export earnings from the readymade garments (RMG) sector continued to fall as the key export-driver is facing decrease in export order, triggered by ‘economic recession’ around the world, said industry players. Export earnings from the sector fell by 6.21 per cent to USD 16.02 billion in July–December of the 2019–20 fiscal year following lower shipments of apparel items. The earnings had totalled USD 16.08 billion in the corresponding period of the last fiscal year (2018–19), according to the data of the Export Promotion Bureau (EPB). RMG exports fell by 6.21 per cent in July–December of the 2019–20 fiscal year because of instability in international markets and the economic recession in Europe and North America, exporters said. Talking to The Independent, Mahmudul Haque, the chairman of Anlima Textile Ltd, said, “The economic recession is going on around the world. That’s why even our common clients are not placing orders with our buyers as before.”  “US-China trade tensions, continuous fluctuations in the world’s stock markets, devaluation of the taka against the US dollar and a rise in production costs against low prices offered by foreign buyers have caused the drop in exports,” he explained. The exporters, however, expressed hope that the quantity of orders would pick up if the ‘Phase One’ trade deal is signed between the world’s two biggest economies—the US and China—which should lead to lower trade tensions. Talking to The Independent, AM Chowdhury Selim, the vice-president of the Bangladesh Garments Manufacturers and Exporters Association (BGMEA), said, “The international economic recession and the rise in the prices of utilities, gas and electricity are responsible for lower production. These have further eroded our competitiveness in the international markets. As a result, the prices in international markets have dropped and export earnings show negative growth. The revised pay structure for the garments sector is also responsible.” “Buyers always search for cheaper and quicker ways to import products. However, exports through Chittagong Port are very time-consuming. As we cannot deliver our products in a timely fashion because of handling problems at the port and the costs of doing business are way higher in our country, buyers switch their interest from us to our competitors, especially India, Vietnam and Pakistan,” Chowdhury added. “We had set a target to earn an amount of USD 50 billion by 2021. But we are apprehensive whether this target would be met as with these obstacles, we cannot produce and export enough goods,” Chowdhury pointed out. When asked about the way forward, Chowdhury told The Independent, “Keeping the overall situation in mind, we ask for policy cooperation, incentives and a quick enforcement of a single-digit interest rate. The devaluation of the taka could affect imports adversely. We want enhanced prices for cost of making (CM).” “As the largest portion of export earnings comes from the RMG sector, the government and all relevant authorities should take effective measures to ensure a sound atmosphere for doing business,” Chowdhury added. According to the EPB, woven products earned USD 7.8 billion in July–December of the fiscal year 2019–20, marking a 7.28 per cent negative growth from the same period in the previous fiscal year, which had been USD 8.42 billion. The knitwear industry earned around USD 8.21 billion during the same time, down by 5.16 per cent from the same period last year, which had been USD 8.65 billion.

Source: The Independent

Back to top

EuRIC urges EU strategy for textiles in circular economy

The European Recycling Industries’ Confederation (EuRIC), has recommended market-based fiscal incentives for textile reuse and recycling end-of-waste criteria for prepared for re-use textiles to create a stronger internal market for second-hand textiles and labelling of sustainable textiles and apparel as part of an EU textiles strategy. EuRIC, the umbrella organisation for European Union’s (EU) recycling sector, , has strongly welcomed the European Commission’s decision to make textiles, apparel and fabrics a priority product category within the Circular Economy 2.0. EuRIC’s new textiles’ reuse and recycling branch has called for ambitious measures to render textiles circular throughout the value chain—from design to end-of-life preparation for reuse or recycling. EuRIC has also recommended extended producer responsibility (EPR) for new textiles with eco-modulation of fees rewarding textiles’ reusability, recyclability and recycled content. Additionally, fair and transparent financial contributions should be paid by the producer to cover the cost of the treatment for used textiles, in accordance with the minimum requirements set by the Waste Framework Directive. EPR fees should be directed to the textiles re-use and recycling industry, it said in a statement. Recycled content targets for textiles should be earmarked to pull the demand for quality recycled fibres, boost markets for separately collected used textiles and invest to scale up textile material recovery, it said. Efforts should also be made to alleviate trade and fiscal barriers, be it within Europe or imposed by third countries, affecting second-hand textiles markets, EuRIC added.

Source: Fibre2Fashion

Back to top

Xinjiang strengthens port facilities to boost foreign trade

Northwest China’s Xinjiang Uygur Autonomous Region has greatly benefited from developing its ports to boost foreign trade in 2019, according to the region’s ongoing legislature meeting. Among the region’s 18 ports, the port of Khorgos stood out with a total trade volume of 108.9 billion yuan (15.7 billion U.S. dollars) in the first 11 months of 2019, handling around 31.45 million tonnes of import and export goods. Xinjiang also pushed forward cross-border e-business and set up bonded areas to expand its trade cooperation with foreign countries, especially Belt and Road countries and regions. Xinjiang has set up trade relations with 170 countries and regions. From January to November last year, the regions’ total foreign trade has reached 149.17 billion yuan, up 31.1 percent year on year. In 2020, Xinjiang will continue to rely on the ports with improved infrastructure to boost its foreign trade, especially in the exports of textile and apparel, electromechanical, chemical engineering, construction and local agricultural products, according to the region’s government work report. Home

Source: Xinhua

Back to top

 

 

Subscribe to SRTEPC mailing list

Exchange Rates