Days after commerce and industry minister Piyush Goyal warned against imports under the ‘others’ category, the ministry issued a trade notice on Friday asking traders to strictly mention the respective tariff codes (called HS code in trade parlance) in their bills of entry at the time of imports, failing which the government will consider imposing restrictions for inbound shipments of those goods. The Directorate General of Foreign Trade (DGFT) also asked traders to suggest appropriate HS codes for products imported by them which do not have any classification and fall under the ‘others’ category. Every traded product is categorised under an HSN code (harmonised system of nomenclature)—the global systematic classification of goods. Of over $500 billion worth of imports in 2018-19, the ‘others’ category accounted for goods worth $130 billion. Goyal had last week said that high duty will be imposed within a month on products categorised as "others" if they do not carry globally accepted tariff codes. Asking traders to avoid as far as possible ‘others’ category, DGFT said that the matter will be reviewed shortly and “in the event of noncompliance and continued mis-classification by the importers, government may consider bringing a licensing regime for all items imported under the ‘others’ category by shifting these items from free to restricted category”. Referring to a notification it issued on October 22 last year asking members of trade and industry to be careful while filing their bill of entry at the time of import, DGFT said they were advised to mention specific HS codes at 8 digit level, where they exist instead of using the “others” category. The directorate said it was also informed that many importers are not doing due diligence in mentioning correct codes and are casually putting the item under “others” category, which is a residual code category. “However, despite clear advisory in this notification, it has been noted that import under ‘others’ category continue to be widely used in the bills of entry,” it said.
Source: Economic Times
Commerce Minister Piyush Goyal will lead the Indian delegation to the 50th World Economic Forum at Davos from January 20 to 24. Goyal will also participate in an informal WTO Ministerial gathering being held in Davos during this period, the commerce ministry said in a statement. The union minister will hold bilateral meetings with ministers of Australia, South Africa, Russia, Saudi Arabia, Switzerland, Korea and Singapore. He will also meet Director General of World Trade Organization and Secretary General of Organisation for Economic Co-operation and Development (OECD). Apart from this, Goyal will hold bilateral meetings with CEOs of companies, attend WEF sessions and round tables on 'Accelerating Investments in Indian Railways' and attracting Global Institutional Investments in India, the statement said. The minister will participate in the WEF along with Union Minister of State for Shipping and Chemical and Fertilizers, Mansukh L Mandaviya; and Chief Ministers of Karnataka and Madhya Pradesh; Finance Minister of Punjab and the IT Minister of Telangana.
Source: Economic Times
The ambitious Ayushman Bharat Yojana has already benefitted 50,000 residents of the UT while 3.5 lakh cards have been distributed, the Union minister said. Union Minister Smriti Irani on Sunday said that a textile unit would be set up in Jammu and Kashmir's Reasi district while asserting that a "new wave of development has just begun" in the Union territory. As part of the Centre's public outreach programme, the minister for textiles and women and child development held public meetings at Moori village and at Spiritual Growth Centre in the district. Responding to public demand for a textile unit in the district, she said, "A suitable unit would be set up immediately after a formal request by the district administration." Appreciating the enthusiasm of people towards Panchayati Raj and other democratic institutions, the minister said all things are possible with dialogue and public participation.
"A new wave of development has just begun," Irani said.
Counting the achievements of the Central government, she said more than eight lakh farmers are being benefited under the Pradhan Mantri Kisan Samman Nidhi while around 24,000 saffron growers in Jammu and Kashmir have benefitted till date under the National Saffron Mission. Under the Pradhan Mantri Ujjwala Yojana, more than 12 lakh gas cylinders have been distributed to poor households of the Union Territory. The ambitious Ayushman Bharat Yojana has already benefitted 50,000 residents of the UT while 3.5 lakh cards have been distributed, the Union minister said. Irani said that over 140 district and sub-district level hospital projects have been identified for up-gradation in Jammu and Kashmir in addition to the two upcoming AIIMS with a Rs 2,000 crore corpus. Union Minister of State for Finance and Corporate Affairs Anurag Singh Thakur urged the people of the Union Territory to leave their past and contribute their efforts towards making a "new India"."Jammu and Kashmir has suffered immensely due to the historical mistakes, and this has had a detrimental impact on its political, social and economic development," he said inaugurating various developmental projects at Nagrota in Jammu. About the sports talent in Jammu and Kashmir, he said sports infrastructure would be upgraded to tap into the huge potential among the youngsters. Thakur said the Block Development Council elections in the union territory was a historical step that made the local self-government a part of the decision-making authority of which "they have been deprived of for the last 72 years"."The government wants grass root-level participation to become an integral part of democracy which can then empower people socially, economically and politically," he said.
Source: Indian Express
The Minister for Railways and Commerce also announced that Kashmir would be linked with the rest of the country by train by December next year. Describing Jammu and Kashmir as a "jewel" of the country, Union minister Piyush Goyal on Sunday said the Centre would come out with an industrial package for the Union Territory soon and expressed hope that it would attract large amounts of investment to the valley. The Minister for Railways and Commerce also announced that Kashmir would be linked with the rest of the country by train by December next year. He asserted that development work has gathered pace in Jammu and Kashmir, especially after June 18, 2018 when the erstwhile state came under Governor's rule. "I am very happy at the progress (of development) that I have seen on the ground and I am sure that in the days and months to come this process will continue relentlessly. We will soon come out with an industrial package and we hope to see large amounts of investment coming to Kashmir," he told reporters at the Jammu airport before returning to Delhi. Goyal was in Jammu as part a week-long public outreach programme initiated by the Centre to apprise people of the potential benefits of the revocation of Jammu and Kashmir's special status after nullification of Article 370 of the Constitution. He was part of the second batch of seven Union ministers who reached Jammu and addressed a series of public meetings and inaugurated various projects in different districts. "What we have heard since our childhood that it is paradise on earth. It was paradise on earth and it will remain so as well. It is a jewel of the country and truly a paradise on earth and I am proud of Jammu and Kashmir," Goyal said. Article 370 was nullified in August 5, 2019 and the state was bifurcated into Union Territories -- Jammu and Kashmir, and Ladakh.
Source: Business Standard
State Bank of India (SBI) chairman Rajnish Kumar on Sunday said banking credit would need to be doubled from the current level if India were to achieve its ambitious target of becoming a $5 trillion economy by 2024. “At present, the Indian banking credit outstanding is around Rs 99 trillion and for India to become a $5 trillion economy, it needs to be at least doubled over the next 5 years,” Kumar said here. He observed that Indian banks had the capacity to cater to such high volume demand from industry and other sectors. Kumar was talking to journalists this afternoon during his two-day visit to the SBI Lucknow Circle. Replying to a Business Standard query, the SBI chairman, however, said the working capital utilisation was still quite low in the domestic economy apart from the absence of big projects. “The banks have enough liquidity and we are capable of meeting all the credit requirement of industry,” Kumar said, adding he perceived a gradual improvement in the credit off-take situation on the basis of projects in the pipeline, which would slowly gain momentum. He said the expected results of the ongoing reforms process would be witnessed only after a certain period of time and not during the transitory phase. “A big transformation process is underway and we should not lose patience. The central government has initiated a lot of measures, including an elaborate consultative mechanism at the highest level.” On the question of low credit deposit (CD) ratio in Uttar Pradesh, he observed the CD ratio was directly proportional to the rate of industrialisation in any state. “If there is higher industrial growth then the CD ratio also tends to be higher. At some places, the CD ratio is more than 100 per cent, while in some states it is at a lower level of 40 per cent.” Currently, the CD ratio in UP stands at about 52 per cent compared to the national average of more than 70 per cent, which had prompted the Yogi Adityanath government nudge the RBI and commercial banks to take proactive steps to improve it further. Meanwhile, Kumar supported consolidation in the Indian public sector banks saying there was a requirement for consolidation and the process was on. “The merger process is underway and it definitely augur well for the banking industry as we need large sized banks in economy.” On the topic of non-performing assets (NPA), he said NPAs of banks had peaked in 2018 and the situation was now better. He said SBI was continuously working towards improving customer service through reorganisation and offering value added propositions. “Today, only 10 per cent of our transactions take place at the SBI branches, while 90 per cent of transactions occur outside the branches,” he informed.
Source: Business Standard
Economic deceleration in India has begun to worry analysts, as it could impact capital inflows, the value of the Indian rupee against other major currencies, and ultimately the stock prices on Dalal Street. The relative attractiveness of India’s growth story is fast fading as the pace of economic slowdown in India exceeds the rest of the world (RoW). According to the latest data from the International Monetary Fund, India’s growth premium over the emerging economies (EMs) will hit a seven-year low in 2019-20 (FY20) and an 18-year low against the developed economy, including the US. India’s gross domestic product (GDP) at constant prices is expected to grow by 5 per cent in FY20, against 3.9 per cent growth in EMs in the calendar year (CY) 2019. Given this, ...
Source: Business Standard
India may lower duties on 50 items from US such as apples, almonds and electronics India and the US could sign a limited trade deal, which will lower duties on apples, almonds, high-end mobiles among other items, during the proposed visit of US President Donald Trump to the country next month. “The two sides have made progress and some sort of deal could be announced during the visit,” a senior commerce ministry official said. The dates of Trump’s visits are yet to be finalised. Commerce minister Piyush Goyal said India and the US were in an “advanced stage” of dialogue to resolve some of the pressing issues. Both the countries can expand their relations, which in the future may result in a preferential or a free-trade agreement. “With the US, we are in an advance stage of dialogue to sort out some of the pressing issues,” he said at a seminar last week. Officials said the country could reduce the duties on over 50 US products. Besides, there may be duty reductions on Harley Davidson bikes, which had been raised by Trump many times. There could also be some agreement on the increased import of oil and gas from the US. In return, the country can expect greater access to some of its products, which had zero or nominal duty under the US’s Generalised System of Preferences (GSP) scheme that provided significant tariff concessions on imports from countries not as developed as the US. While going ahead with the deal, India will maintain it is open to the import of dairy products, but with the restriction that they are not given animal feed. Similarly, officials said the duty on US medical devices could be brought down but the price caps would continue. Trade economist Biswajit Dhar of Jawaharlal Nehru University said Trump was under pressure before the presidential election in November to show some results on trade issues after striking a deal with China. “The US has to blink and offer concessions to India as it is under significant pressure unlike New Delhi at this juncture.” “As I see it, the visit from Trump’s perspective would be more to drum up support from the Indian expatriate. “Given the state of the Indian economy, we cannot open up much at this time and any signal of the US investment would bolster sentiment and kickstart the growth engines. This could act as a fulcrum for a comprehensive deal at a later date,” he said. Ajay Sahai, director general and CEO of the Federation of Indian Export Organisations, said India should try to get concessions on those products which have been hit badly due to the withdrawal of GSP such as textile, leather, and engineering goods.
Investment issues
Since a bilateral investment treaty has not been finalised, something which the US wanted, India will come up with a quick dispute resolution system that would safeguard foreign investment, sources said. New Delhi had allowed most bilateral investment treaties to lapse, demanding clauses that allow arbitration in third countries only after exhausting all legal remedies within India. This was opposed by the US and others pointing out that the Indian judicial process was a long-winding one. Both the sides have shown intent in signing agreements, but nothing has materialised. US secretary of state Mike Pompeo had said last year in New Delhi that American investments worth trillions of dollars are waiting to be invested in India. Trump followed that up in Osaka by promising India “huge things… in terms of manufacturing in terms of trade” without providing details. During Prime Minister Narendra Modi’s visit to the US, a trade deal was expected to be announced by the two leaders, but, the two sides failed to resolve their differences.
Source: Telegraph India
The Rs 1,550 crore special economic zone (SEZ), to be set up along the Bangladesh border in Tripura, would be a multi-sector SEZ and not just agro-based food processing SEZ, official said here on Saturday. The Centre has decided that all notified SEZs will be deemed to be a multi-sector SEZ. "According to the previous notification, the proposed Tripura SEZ at Paschim Jalefa (near the India-Bangladesh border town of Sabroom) in south Tripura was to be agro-based food processing SEZ," said a Tripura Industries and Commerce Department official. The SEZ is expected to open new avenues and attract private investment across sectors considering its proximity to Bangladesh's Chittagong international sea port. A bridge -- Maitri Setu -- is under construction across the Feni river near the proposed SEZ. On completion by April, it will connect Tripura with southeast Bangladesh and facilitate transportation of goods to the Chittagong port, which is around 70 km from Sabroom. The official said the SEZ, to be developed by the Tripura Industrial Development Corp, could create 12,000 skilled jobs. Rubber-based industries, textile and apparel units, bamboo and agri-food processing industries will be set up in the SEZ. "The Centre will allow 100 per cent income tax exemption on exports for SEZ units under Section 10AA of the Income Tax Act for the first five years. Exemptions from the Goods and Services Tax (GST) and supplies to SEZs will be zero under IGST Act," he said. Addressing an event, Tripura Chief Minister Biplab Kumar Deb said on the request of the state government, the Centre decided to set up the SEZ with an aim to attract Bangladeshi investors. They could set up tea and rubber-based industries in the SEZ, he said. The state would get sincere support from Bangladesh Prime Minister Sheikh Hasina, slated to visit Tripura in February, he said. The Chief Minister said 25 acres of land had been acquired for the SEZ. At an expenditure of Rs 1,150 crore, the Northeast Frontier Railway (NFR) has extended railway lines up to two bordering sub-divisional towns of Sabroom and Belonia. The government-owned IRCON International has also been laying 12.23 km rail at a cost of Rs 972 crore to link Agartala with the Bangladeshi railway network at Akhaura. The Agartala-Akhaura railway line would facilitate easier ferrying of goods. Also, the journey distance between Agartala and Kolkata, via Bangladesh, will come down by a third, from 1,613 km through mountainous terrain via Meghalaya and Assam, to 514 km.
Source: Economic Times
The government is considering corporatising the marketing arm of Khadi Village and Industries Commission (KVIC) as it looks to boost the organisation’s turnover to Rs 5 lakh crore, two officials aware of the matter said. “KVIC and the government are now exploring the possibility of assigning the marketing function to a professional entity on a profit-sharing basis,” a government official closely associated with the development told ET. The talks are, however, at a preliminary stage, the official added. Minister for micro, small and medium enterprises (MSMEs) Nitin Gadkari has been pushing for modernisation of khadi and increasing KVIC’s revenues in the second term of the BJP government. KVIC had reported a turnover of Rs 75,000 crore in 2018-19. It is expected to touch Rs 1 lakh crore in 2019-20. A Reserve Bank of India-led panel in its report on the MSME sector had recommended such a measure last year. “The committee recommends KVIC should be corporatised with focus on promotional work. The marketing function may be hived off and also corporatised to enable private participation and enabling (the) use of khadi in the private sector,” the recommendations of the panel had said. “We want that at least on the marketing, and exports side of things, we can introduce corporate culture,” a second official told ET, seeking anonymity. “This will help quick decision making.” The Khadi and Village Industries Commission Act, 1956 allows KVIC “to promote the sale and marketing of khadi or products of village industries or handicrafts and for this purpose forge links with established marketing agencies wherever necessary and feasible”. KVIC has, however, maintained that corporatisation of the organisation is not required and has conveyed the same to the MSME ministry through a letter, a third official said.
Source: Economic Times
They say Ahmedabad’s luck changed the day the first textile mill started in what was to later become the Manchester of the East. It was on May 30, 1861, the city’s first mill started operations. But Ahmedabad knew how to do business with foreigners then. Mahatma Gandhi and his idea of prohibition were yet to dawn 150 years ago. In the wake of the hooch tragedy, those calling for freeing wine and beer from the purview of Gujarat’s dry laws today should gain inspiration from the celebrations which Ranchhodlal unleashed in front of his British guests at the inauguration of the Ahmedabad Spinning and Weaving Mill. Business historian Makrand Mehta has noted in his book Indian merchants and entrepreneurs in historical perspective. The mill was now ready to start production. The leading citizens of Ahmedabad assembled on the mill premises to watch the opening ceremony on 30 May, 1861. they included-persons from all walks of life - teachers, medical practitioners, businessmen, lawyers, government officials, and artisans. The English officials, mostly with their families, were special guests. The company’s promoters had stocked liquor bottles for them to celebrate the occasion. The giant wheels started roaring in the midst of loud cheers as Edigton’s wife cracked a bottle on the ground. The speeches which followed were full of praise for Ranchhodlal. Edigton was the technocrat who trained workers to work on the machine. Ranchhodlal Chhotalal founded the first textile mill in Ahmedabad 150 years ago and the rest is history. Incidentally, Ranchhodlal himself was a teetotaller and staunch Nagar Brahmin.
Source: Times of India
At a recent exhibition and conference organised by an infrastructure firm in Noida, there was a special programme even before the formal launch event. While India Inc routinely emphasises the need for austerity, the extravagance and pomp on display during industry events present a stark contrast. At a recent exhibition and conference organised by an infrastructure firm in Noida, there was a special programme even before the formal launch event. There was a digital launch when tablets were handed out to ministers. A special mobile app replaced the ribbon-cutting ceremony. Gigantic screens across the hall were lit up, displaying what many thought were “needless graphics” accompanied by dancers wearing body-lights. The drama lasted for a full 10 minutes, during which the crowd wondered if there was indeed a slowdown. Not to mention, all this razzmatazz caused delays and chaos for visitors.
Shah & CAA
The Bharatiya Janata Party (BJP) has rolled out a pan-Indian itinerary to counter the Opposition narrative around the Citizenship Amendment Act (CAA). The campaign will kick off in Uttar Pradesh with Union Home Minister Amit Shah (pictured), Uttar Pradesh Chief Minister Yogi Adityanath, Defence Minister Rajnath Singh, etc addressing pro-CAA rallies. On January 21, Shah is arriving in Lucknow to address a public meeting, one of the six planned for UP in this phase. The rally will cover all the districts in central UP’s Awadh region. The state party organisation has started preparing for the mega event to showcase the BJP’s purported stand that the silent majority was always supportive of the new Act.
Pressing matter
Representative bodies of journalists are bracing themselves to legally contest entry curbs imposed by the government on accredited finance ministry reporters on entering North Block. The Press Council of India (PCI) has decided to hear a complaint from various journalist bodies, including the Press Association, Press Club of India, and Foreign Correspondents’ Club against the finance ministry, which imposed these curbs in July last year. The Press Association has been summoned by the PCI for a hearing on Monday and journalists may argue that the diktat has sparked a fear in the minds of bureaucrats to officially meet them. They may also make a strong case that most other ministries have no such restriction for accredited journalists.
Source: Business Standard
Members of Gram Seva Sangh and some other eminent personalities are pushing for a ‘ sacred economy’ to boost the disheartening Indian financial landscape with focus on labour-intensive techniques sup. As Finance Minister Nirmala Sitharaman rises to present the budget in the Lok Sabha on February 1, all eyes will be on her. People across the country will be keen on knowing what the Narendra Modi government’s diagnosis of current economic slowdown would be, and more importantly, its prescription to deal with it. The government may announce several measures to put the economy back on track and ease the burden on the vast middle-class. However, a small group of highly committed individuals in Karnataka and other parts of the country is looking well beyond the budget, and are advocating what they describe as ‘sacred economy’ as a long term and sustainable way to address the sluggish economy as well as environmental degradation and social strife. According to the proponents of the sacred economy, the concept refers to the hand-making sector plus small sectors with 60 per cent labour and 40 per cent automation. Farm, handloom that comes under textiles ministry, khadi and village industries, handicraft, small and medium industries are all part of it. For many, the whole idea may sound abstract, but eminent people involved in the campaign and those supporting it feel it is not only practical but also inevitable. Noted theatre director and Gandhian activist Prasanna, who undertook ‘satyagraha’, including a seven-day fast, to make the civil society and the government understand the importance of sacred economy, says, “Gandhiji tried it, but because we were not faced with the terrible tragedy (of environmental degradation), its goals were never actually realised. Now, it has to either succeed or we perish.” According to him, it is similar to the Gandhian policy — Do not destroy the machines, but reduce their usage as much as possible. Although the handmade sector constitutes a large part of the economy, it is neither understood nor respected by the national authorities, says former chairman of Crafts Council of India and former director of National Institute of Design (NID) in Ahmedabad, Ashoke Chatterjee. “They have a very limited understanding of the handmade sector as India’s huge advantage, both in terms of domestic as well as international markets. The challenge we are facing is that unless the economics of the sector is understood, all the contributions that the crafts make are very easy to ignore. But it is economics which is ultimately responsible for the livelihood of many millions of Indians,” says Chatterjee. Challenges The biggest challenge is that there is no database for the handmade sector. The ministry of textiles estimates that about 11 million artisans, including weavers are involved in the sector, but the actual number is likely to be much higher as the ministry is concerned with only some crafts and not all of them. “We are working with the government to establish a reliable database for the sector. Just now, it doesn’t exist, “says Chatterjee. In fact, Prasanna and other members of the Gram Seva Sangh which is spearheading the movement are demanding that a separate ministry be formed to oversee the development of all the sectors that come under the sacred economy. They are currently under the administrative purview of 12 ministries of the Union government. Many prominent persons, including fashion commentator and industry expert Prasad Bidapa, social activist Medha Patkar and environment activist, food sovereignty advocate and anti- globalisation author Vandana Shiva wrote to the Prime Minister extending their support to the sacred economy movement. “Over 20 per cent of India’s population is directly involved in what they call sacred economy, which encompasses the traditional skills in crafts and textiles sector. From agriculture and the production of heritage art right up to the retail end, there is a need to recognise and rejuvenate every single one of them,” Bidapa says. According to the fashion designer, the government needs to revamp the skill programming to include the vast number of artisans in the country. “The beautiful textile art of India in particular needs to be revamped to create products with an international appeal. (It is) not a difficult task at all. Using Indian textiles, crafts and skills to create global products that could be sold through international retail chains like Ikea is a concept that needs to be encouraged across all platforms,” he says, adding: “This could change the very nature of employment in India, encouraging the next generation of artisans to join their family businesses and achieve prosperity and taking the sacred economy to great heights.” Given the need to focus on automation and use of latest technologies to be able to sustain global competition, it is certainly a huge challenge to strike a balance between the labour intensive handmade sector and modern technology-driven industries.However, the push for the handmade sector is not against technology. As Chatterjee says, it has always been a challenge and even Rabindranath Tagore and Mahatma Gandhi faced it almost a century ago, but the difference was that people had respect for artisans. “... Technology has always been part of the crafts sector. Charaka itself is a machine. If technology can reduce drudgery, it would help in terms of value addition. And if it can make the working environment safer, there is nothing wrong in it. All the time the benchmark should be whether the value of the hand is being respected or not and if it is enhancing craftsmanship or diluting it?” he says.
Lack of attention to handicrafts
The lack of adequate attention to the handmade sector is what many consider a cause of concern. For example, the handicrafts sector, which is the most important component of the sacred economy that Prasanna and others are talking about directly addresses 11 of the 17 of the United Nations Sustainable Development Goals (UNSDGs) which are the internationally accepted benchmark for progress today. The sector has the lowest carbon footprint, addresses climate change and 10 other sustainable development goals including “responsible production and responsible consumption”, which is almost like a charter for the handmade sector. And yet, the sector has not been given adequate importance. “Nowhere does the civil society or the government grab this advantage; nowhere do we tell the world and our own users that this is the relevance of craft in the 21st century. Because it addresses global challenges of today, that is what we should be doing and the sacred economy is all about that,” says Chatterjee. “It should be understood as a solution to the most important challenge the planet is facing today. But we are still going around with our old arguments and mantras that we pull out, which may be useful but for the new generation, they are not central. We have to get the Indian authorities to wake up to the fact that this is an engine of economic growth. And if you let the advantage slip, then you will lose an opportunity which will never come back,” he adds. For now, Prasanna and others are not even looking at the February 1 budget as they are aware that it is going to be a long-drawn struggle before the government wakes up to the importance of the sacred economy.All that they are focusing on is to spread awareness among people and the authorities. “Sacred economy will do good to all without any political divisions. We don’t want political divisions in this matter as that will not take us anywhere. It is a much larger question of saving the civilisation itself,” he adds.
Sacred sectors
All sectors with a minimum of 60 per cent human labour and 60 per cent local raw materials and less than 40 per cent use of automation and less than 40 per cent imported raw materials. According to Gram Seva Sangha, if khadi is hundred per cent sacred, handloom is 80 per cent sacred and powerloom 60 per cent sacred.
Advantages
Some push
After members of Gram Seva Sangh and other prominent persons met him and discussed the need for the sacred economy, Minister of State for Micro, Small and Medium Enterprises (MSME), Pratap Chandra Sarangi, wrote to the NITI Aayog to look into the demands. In his letter to NITI Aayog’s vice-chairman, the minister acknowledged that they flagged certain fundamental issues of the economic policies involving multiple sectors. The handmade sector helps preserve traditional art forms which are facing existential threat due to competition from big firms. Traditional art forms are also a source of innovation and creativity and that is one of the reasons why China, Japan and several other counties are investing big in the sector.
Source: The New Indian Express
The Confederation of Indian Industry has urged the Centre to converge multiple corporate tax rates to 15 per cent by April 2023 without any exemptions, and make the announcement in the upcoming Budget to facilitate investment decisions. "The Union Budget could announce a roadmap for convergence of all corporate tax rates to 15 per cent, with no exemptions and incentives, by April 1, 2023. A signaling to this effect could help further boost investor sentiment and encourage investments," CII President Vikram Kirloskar said. According to the industry body, the desired impact of the reduction in corporate taxes on the ground is still far from satisfactory. It said one of the reasons behind this has been the multitude of tax rates, which have created tax rate inequalities across manufacturing and service sectors. The government last year reduced corporate tax rates to 22 per cent, plus surcharge and cess. However, companies will not be allowed to avail any tax exemptions or incentives. Further, manufacturing facilities that start production before 31 March 2023 and are incorporated on or after 1st October 2019 would be taxed at only 15 per cent, plus surcharge and cess. The new rates have catapulted India to a very competitive position against many of the OECD (Organisation for Economic Co-operation and Development) and BRICS countries, and others like Indonesia and Philippines. Over time, the lower rates will reduce the cost of capital and catalyse investments. The announcement of convergence of all these rates to a single rate of 15 per cent by 2023 will provide a line of sight to industry and investors to take decisions now, CII said. The statutory corporate tax rate in India has been brought down in the last three decades from 45 per cent in 1991-92 to 22 per cent in 2019-20.
Source: Economic Times
|
Item |
Price |
Unit |
Fluctuation |
Date |
|
PSF |
1018.86 |
USD/Ton |
-0.43% |
1/20/2020 |
|
VSF |
1384.72 |
USD/Ton |
0% |
1/20/2020 |
|
ASF |
2047.93 |
USD/Ton |
0% |
1/20/2020 |
|
Polyester POY |
1045.10 |
USD/Ton |
0% |
1/20/2020 |
|
Nylon FDY |
2259.28 |
USD/Ton |
0% |
1/20/2020 |
|
40D Spandex |
4183.31 |
USD/Ton |
0% |
1/20/2020 |
|
Nylon POY |
1202.52 |
USD/Ton |
0% |
1/20/2020 |
|
Acrylic Top 3D |
2499.78 |
USD/Ton |
0% |
1/20/2020 |
|
Polyester FDY |
5466.00 |
USD/Ton |
0% |
1/20/2020 |
|
Nylon DTY |
1304.55 |
USD/Ton |
0% |
1/20/2020 |
|
Viscose Long Filament |
2091.66 |
USD/Ton |
0% |
1/20/2020 |
|
Polyester DTY |
2230.13 |
USD/Ton |
0% |
1/20/2020 |
|
30S Spun Rayon Yarn |
2033.35 |
USD/Ton |
0% |
1/20/2020 |
|
32S Polyester Yarn |
1654.38 |
USD/Ton |
0% |
1/20/2020 |
|
45S T/C Yarn |
2448.77 |
USD/Ton |
0% |
1/20/2020 |
|
40S Rayon Yarn |
1807.42 |
USD/Ton |
0% |
1/20/2020 |
|
T/R Yarn 65/35 32S |
2244.70 |
USD/Ton |
0% |
1/20/2020 |
|
45S Polyester Yarn |
2200.98 |
USD/Ton |
0% |
1/20/2020 |
|
T/C Yarn 65/35 32S |
1967.76 |
USD/Ton |
0% |
1/20/2020 |
|
10S Denim Fabric |
1.29 |
USD/Meter |
0% |
1/20/2020 |
|
32S Twill Fabric |
0.70 |
USD/Meter |
0% |
1/20/2020 |
|
40S Combed Poplin |
0.99 |
USD/Meter |
0% |
1/20/2020 |
|
30S Rayon Fabric |
0.54 |
USD/Meter |
0% |
1/20/2020 |
|
45S T/C Fabric |
0.68 |
USD/Meter |
0% |
1/20/2020 |
Source: Global Textiles
Note: The above prices are Chinese Price (1 CNY = 0.14576 USD dtd. 20/01/2020). The prices given above are as quoted from Global Textiles.com. SRTEPC is not responsible for the correctness of the same.
The UN projects Pakistan's economy to grow by estimated 3.3% for 2019-20, is projected to slip to 2.1% next year, while Indian economy will grow by 5.7% in the current fiscal year and expects it to rise to 6.6% in the next. Bangladesh is forecast to grow by 8.1% this fiscal year and 7.8% in the next. In Pakistan, the economy is expected to recover slightly from 2021 onward, amid the implementation of government reforms. The projections were made in the UN's World Economic Situation and Prospects (WESP) report. According to the report, only China has a higher growth rate than India among the world's large economies with a 6% forecast for the current calendar year. The report says Pakistan, meanwhile, has been struggling with a balance-of-payments crisis and the burden of high public debt, which have led to an arrangement with the IMF and corresponding fiscal tightening. High inflation and security concerns have hurt domestic demand and private investment, and the government's ability to address the slowdown has been severely curtailed by the fiscal tightening. Export growth has fallen to 0.4% owing to disappointing sales of textiles, which constitute 60% of the country's goods exports. GDP growth has remained weak at 3.3% in both 2018 and 2019-well below the 4-6% range of previous years. Nevertheless, the economy of Pakistan is expected to recover slightly from 2021 onward as increased government revenues from a tax hike allow expanded public investment and as other government reforms required by the IMF begin to bear fruit. In 2021 the economy is projected to grow by 3.3%. Continued commitment to reform, combined with productive investment in infrastructure and strategic capacity development, will be critical for the country to find its way back to its previous growth path. Meanwhile, the State Bank of Pakistan is balancing a stronger commitment to inflation targeting with a managed depreciation of the currency, but this is complicated by increases in energy tariffs that have been imposed as part of the fiscal reform package. While the tightened monetary policy in Pakistan is expected to help move inflation towards target levels in the years to come, the country's inflation remains extremely vulnerable to fuel price fluctuations and weather conditions, as is the case for most countries in the region. A good harvest and resulting moderate food price inflation will be of critical importance for the region's poor, whose household budgets are strongly linked to food prices. In Afghanistan, Bangladesh, Pakistan and Sri Lanka, for example, more than 30% of youth are not in education, employment or training; in India, this figure is over 40%. Briefing the media about the report, UN's Chief Economist Elliott Harris presented a dire picture of the global economy last year when the world's gross product growth rate dropped to 2.3%, the lowest in a decade. Elliott Harris said that rising tariffs and rapid shift in trade policies were responsible for the lower growth rate with the United States-China trade disputes playing a significant part. Associate Economics Affairs Officer Julian Slotman, the UN's point person for Indian and South Asia, said in an interview to foreign media that 'globally we have seen a large impact of trade tensions, particularly between the US and China, but also other major economies, that have affected growth rates across the globe and also, of course, India which is a very open economy, that has a lot to gain from international trade, Julian Slotman said. The world economy risks suffering a slowdown in 2020 that would derail efforts to tackle the mounting climate emergency and heightened poverty around the world, the UN warned. 'Impacted by prolonged trade disputes, the global economy suffered its lowest growth in a decade, slipping to 2.3% in 2019 however, (the world) could see a slight uptick in economic activity in 2020 if risks are kept at bay, United Nations said in its flagship World Economic Situation and Prospects (WESP) 2020 report. The report states that growth of 2.5% in 2020 is possible, 'but a flareup of trade tensions, financial turmoil, or an escalation of geopolitical tensions could derail a recovery. In a downside scenario, global growth would slow to just 1.8% this year. It said a prolonged weakness in global economic activity may cause significant setbacks for sustainable development, including the goals to eradicate poverty and create decent jobs for all. 'At the same time, pervasive inequalities and the deepening climate crisis are fuelling growing discontent in many parts of the world. UN Secretary-General António Guterres warned that these risks could inflict severe and long-lasting damage on development prospects. 'They also threaten to encourage a further rise in inward-looking policies, at a point when global cooperation is paramount.
Source: MENAFN
The Ghana Standards Authority(GSA) will from January 20, extend its testing service hours to satisfy customer needs of quick turnaround times. Testing services in the areas of Engineering, General Chemistry, Polymers, Textiles, Gold and Petroleum Products will be available on week days from 6 am until 10 pm. Prior to this, the Authority provided testing services on week days during normal hours, 8:30 am to 4:30 pm. Mr. Clifford E. Frimpong, GSA Director, Physical Sciences Directorate, said the extension is in line with Authority’s vision of becoming a customer-focused world-class standards organisation, bringing Metrology and Conformity Assessments services to the doorsteps of the general public. He added: “we wish to inform operators in the building sector that, a special exercise has begun to enhance the implementation of satisfying the requirements of the Ghana Building Code (GS 1207-2018). Industry players and the general public can now have all their building and construction equipment tested in record time. Additionally, we will provide On-site Testing of Precast Concrete Products, Conformity Assessment of Ready-mix Concrete Plants, Conformity Assessment of Quarry Aggregates and Testing of imported Clinker. Officers from the Authority, will visit the premises/factories of industry players to conduct specific tests. Included in the exercise is the inspection and testing of timber products for export with the aim to issue Certificate of Declaration /Compliance Reports or to provide Conformity Assurance to interested parties. GSA is the government agency responsible for developing, publishing and promoting standards in the country. It was established by Standards Decree, 1973 (NRCD 173).
Source: Modern Ghana
Trade and Industry Minister Nevine Gamae has said her Ministry is keen on boosting cooperation and partnership with all international organizations, particularly the UN Industrial Development Organization (UNIDO), with the aim to implement development programs that would also contribute to creating jobs for youth. Gamae was speaking during a meeting with acting regional director of UNIDO Bassel el Khateeb earlier Sunday. The meeting took up upgrading a partnership program between the Egyptian government and the organization meant to boost comprehensive and sustainable industrial development. Gamae stressed keenness on reaching an integrated program that would help hone the competitiveness of the Egyptian industry on local and foreign markets. The program focuses on the textile, food, leather, furniture, chemical and electronic industries, she said.The program will be implemented in coordination with government bodies concerned, as well as the private and banking sectors and international donors, Gamae added.
Source: MENA
Sri Lanka’s merchandise exports have been limping from around 2011. Exports which amounted to $ 10.6 billion in 2011 have changed at a very slow rate since then. During 2011-18, the average annual merchandise exports amounted to $ 10.75. During the first 11 months of 2019, exports had grown by 1.7% to $ 10.7 billion. A prorated estimate will reveal that Sri Lanka could reach an export level of $ 11.7 billion in 2019. However, due to the high export performance in December 2018, this estimated annual performance records a decline of close to 2% in 2019.
The inactivity of previous governments
I have in previous articles in this series, drawn the attention of both the Mahinda Rajapaksa government and the Ranil Wickremesinghe government to the peril of an unwarranted slow-down in export earnings. Exports for centuries have been the main source of Sri Lanka’s import financing, wealth creation, employment generation, poverty alleviation, exchange rate stability and servicing the external debt obligations. The non-recognition of these vital roles played by exports and remaining inactive in the midst of a major economic crisis by both governments have driven the country to a critical level today. Hence, Gota’s challenge has been to break loose from the past fetters and implement an immediate action program to reverse the ominous trend. Sri Lanka’s sluggish export performance during 2011-14 was known to RW administration. It was evident in the first economic policy statement which RW presented in Parliament in November 2015. The issues relating to exports and strategies to be adopted to resolve them had not been presented in the statement under one heading. Hence, one has to undertake the laborious task of piecing together the numerous references made in different places to exports to gauge his government’s strategy on the issue. Recognising the importance of exports in increasing the welfare of people, RW had emphasised that Sri Lanka should produce for a market larger than that in the country. For that purpose, the country should find space in the world market. That space would be harnessed by entering into formal trade agreements with India and China which will offer a market as large as 2.5 billion people to Sri Lanka’s exporters. The strategy to be adopted by his government, according to the policy statement, was to link Sri Lanka to the global value chain. This requires empowering the country with high technology. To acquire high technology, 11 business and technology development areas will be established throughout the island. This would be kicked off by establishing such areas in Hambantota, Ragama, Trincomalee and Mahaoya in 2016. The local and foreign investors who are to invest in Sri Lanka under the government’s incentive schemes will be linked to this value chain.
Export targets should not be mere wishes
None of these promises were delivered and as a result, they just remained a mere wish-list. But, in the next economic policy statement presented to Parliament in October 2016 the government made further revelations about the planned export growth. It had correctly identified that to have a high growth in exports, Sri Lanka needed to have a major capital infusion and greater investments. To attain better results, Sri Lanka should go for new technological innovations, better management of data systems and up to date market information systems, the policy statement opined. Lamenting over Sri Lanka’s lagging behind both Bangladesh and Vietnam which were pretty much below the country in export performance a few decades earlier, the second policy statement promised to create a suitable climate for investments to take place in the export sector in the country. While foreign investors were to be used as a vehicle to join the value chain, the government promised to help local investors too to join the same. In this manner, the proclaimed goal of the government, as pronounced in both policy statements, was to direct all investments toward achieving a higher export growth. But the promises made in the second economic policy statement too remained mere wishes with no practical application. Consequently, exports continued to show a sluggish performance in the first three years of the new administration. The annual average export level during 2015-17 amounted to just $ 10.7 billion marking almost the same level recorded during 2012-14. Exports for centuries have been the main source of Sri Lanka’s import financing, wealth creation, employment generation, poverty alleviation, exchange rate stability and servicing the external debt obligations. The non-recognition of these vital roles played by exports and remaining inactive in the midst of a major economic crisis by both governments have driven the country to a critical level today. Hence, Gota’s challenge has been to break loose from the past fetters and implement an immediate action program to reverse the ominous trend
The fate of the defunct Vision 2025
Towards the middle of 2017, the Government came up with a new medium-term policy statement titled Vision 2025. This vision did not have a detailed vision for the export sector except making some passing references. It had promised to put a stop to the anti-export bias that had dominated the economic policy making in the past. According to the vision, this anti-export bias had prevented Sri Lanka from entering the global production networks, which had been referred to as the entry into value chains in the previous policy statements. It had also envisaged to double the export earnings from $ 10 billion in 2017 to $ 20 billion by 2020. But there was no policy framework proposed in the Vision 2025 to attain this highly ambitious goal.
The new export strategy was no better
In April 2018, the Government came up with a new export strategy that had provided a detailed plan to boost the country’s exports. However, the New Export Strategy had been silent on the main strategy proposed in the Prime Minister’s economic policy statements, namely, Sri Lanka’s joining the value chain or the global production networks. Instead, it had proposed to develop six selected areas of exports – two already mature, two emerging and two visionary sectors – which the designers of the strategy had considered as important for Sri Lanka to increase its export earnings quickly. The two mature sectors are the development of the country’s Information Technology plus Business Process Management and Spices and Concentrates. The two emerging sectors are the Wellness Tourism and Processed Foods and Beverages. The two visionary sectors are Building Boats and Electrical and Electronic Components. Though the designers of the new export strategy had been working on a set of internal physical targets for merchandise exports over the planned period, they had not been revealed in the document containing the national export strategy. These internal targets had envisaged Sri Lanka to increase its earnings from merchandise exports at an exponential rate of 11% during 2017 to 2025.
The ambitious targets in the strategy
This strategy was also not implemented by the Government like the previous economic policy statements and the Vision 2025. As a result, the actual export performance fell far below the targets. In 2018, the plan had envisaged to earn $ 13.1 billion through merchandise exports. But the actual realisation was $ 11.9 billion only. Similarly, in 2019, the target of export earnings was $ 15.1 billion. But the developments so far in the export sector shows that the country would not be able to earn more than $ 11.7 billion. It is inevitable that the same fate would befall on the targets for the rest of the period too. The exponentially growing exports are to reach, according to the internal targets, $ 17.4 billion in 2020, $ 19.1 in 2021, $ 21 billion in 2022, $ 23.1 in 2023, $ 25.4 billion in 2024 and $ 27 billion in 2025. As it is, the installed capacity – technological as well as managerial – would not permit Sri Lanka to reach these targets. This is the position which Gota is facing today. Even a modest growth in export earnings in the next six-year period would require Sri Lanka to adopt a special policy package relating to the export sector. The problem can be summarised as follows. He should not make the mistakes made by the two previous governments. Instead of coming up with a mere wish list, he should present a comprehensive action plan, with time bound targets, to diversify the country’s merchandise exports and link them to global markets by activating all the possible global production networks
Sri Lanka’s saturated export structure
As at today, Sri Lanka’s exports to the rest of the world are being dominated by two product categories, apparels and ‘the three tree crops’ – tea, raw rubber and coconut. In 2017 in which its exports figures were the highest in the recent years, the former accounted for 44%, while the latter ‘three tree crops’ had a share of 17% of total export of goods. A brand-new category that had been added in the recent decades had been manufactured rubber products – mainly solid tyres – that had acquired a share of 7%. This has been the country’s export structure in the last four decades and it had been happily savouring marginal improvements in these categories whenever such improvements occurred as if Sri Lanka had hit the ‘next big thing’ in its exports. That complacency had sowed the risk viruses that have stunted its growth as a mature growth sector. On the one hand, they had already reached the saturated point given the country’s limited resource base. On the other, there were no new products added to the list, and worse, no concerted action had been taken to charter the unchartered territory of ‘services’. With proper logistics in place and elimination of unfriendly policies, services offer a good opportunity for Sri Lanka to bring its own next big thing in expanding the earnings base in foreign exchange. Sri Lanka’s main manufactured export – textiles and garments – face a major challenge due to two related developments. The textiles and garments sector benefitted from the wave of globalisation that took place in the global economy in 1980s. Accordingly, the rich countries in the world taking advantage of the low wage costs in low income countries began to set up their mass consumption product factories in the latter category of countries. This process was known as off-shoring. However, an unintended consequence of this process was the development of the bazaar effect, as first revealed by German economist H.W. Sinn, in which the rich countries simply became trading nations – bazaars in a traditional sense – with manufacturing off-shored to low income countries. With the consequential decline in manufacturing jobs in rich countries, there was a wide public outcry against off-shoring which became a political weapon for leaders to gain popularity among the masses. Hence, the production model was changed to locate the mass production consumption goods industries near the final markets – called near-shoring – or on the land itself – called on-shoring – through product automation. The textile and garments industry has been the first industry to exploit these new production models. New production model to replace off-shoring by on-shoring and near-shoring A recent survey conducted by McKinsey and Company on the apparel sectors in North America and Europe has revealed that both near-shoring and on-shoring have become the most popular production model adopted by a large segment in the final consumer countries. According to the survey, about 67% of the US apparel executives and 80% of the global chief procurement officers have indicated that the top-most priorities in the apparel sector have been the speed at which the final products should be delivered to the market and how the goods could be procured within the season. In the past, fashions developed by apparel companies had been forced on consumers. But, that trend is fast changing and instead, a bottom-up consumer preference system in which the consumers will inform garment manufacturers to produce the fashions they desire is developing in the apparel sector. To gain capacity to produce and supply these products, apparel trading companies need to have manufacturing facilities near the markets. That is the reason for near-shoring and on-shoring to get established in the apparel sector value chain. On-shoring has been facilitated by automation of apparel manufacturing brought in by such technological advancements as 3D print manufacturing, gluing and bonding instead of stitching and robotic employment. Already, a Sri Lanka-born start-up entrepreneur Gihan Amarasiriwardena, together with partner Aman Advani, both of whom are MIT alumni, has begun a global enterprise in garments using 3D print manufacturing processes. The new enterprise called Ministry of Supply is to change the landscape of apparel production in the globe in the coming years. All business giants today have started their empires from humble beginnings and Gihan and Aman are set to creating such an empire in the coming years (For details see: https://medium.com/authority-magazine/empathetic-invention-the-process-of-inventing-new-products-services-and-experiences-but-b137ee71617d). As a result, the cost advantage enjoyed by low income countries like Sri Lanka with respect to garment manufacturing is fast eroding.
Apparel sector is to return home
McKinsey Survey has predicted that by 2025, a large segment of both the North American and European markets will be supplied by both on-shoring and near shoring. Table 1 presents the countries that are located around North America and Europe standing to benefit by adopting the new value chain model.
Will Sri Lanka lose its markets?
Both North America and Europe are Sri Lanka’s established markets for apparel products. During the five-year period from 2013 to 2017, European Union absorbed 43% of Sri Lanka’s apparel exports, while North America absorbed 46%. Thus, these two markets had accounted for 89% of the country’s apparel exports. Accordingly, if they are to near-shore and on-shore apparel supplies, Sri Lanka’s traditional apparel industry will face a serious risk of maintaining sustainability. It is therefore necessary for Sri Lanka to change the focus of its production to new export commodities to avert possible downside development of its export sector. This is the challenge faced by Gota in rescuing the country’s merchandise export sector. He should not make the mistakes made by the two previous governments. Instead of coming up with a mere wish list, he should present a comprehensive action plan, with time bound targets, to diversify the country’s merchandise exports and link them to global markets by activating all the possible global production networks.
Source: Financial Times
All Pakistan Textile Mills Association (APTMA) has summoned an emergency meeting next week to discuss ‘options including the closure of textile mills’ as the federal government ends concessions on electricity bills, ARY News reported on Sunday. The distribution companies have received the notification of the Power Division which stated ending of exemption to the textile industries from the levy of electricity bills. According to the notification, the textile mills will pay Rs20 instead of Rs12 per unit in term of electricity charges. Following the development, APTMA summoned an emergency meeting in Lahore next week to discuss various option including the closure of textile mills, sources said. The owners claimed that it is impossible to run textile mills without receiving subsidy on power bills which had been promised by the federal government in the month of January last year. Earlier in November last year, Adviser to Prime Minister for Commerce and Investment Abdul Razak Dawood had said that the government was making all-out efforts to boost textile sector in the country. Talking to a delegation of All Pakistan Textile Mills Association (APTMA), who called on the advisor at his office, Razak Dawood said that the government would soon release funds under the new textile policy scheme. Liquidity crunch, access to finance, textile value addition and other issues were discussed in the meeting. The advisor assured the APTMA delegation that the government will address all their grievances on priority basis.
Source: Ary News
Notwithstanding the agreement, tariffs imposed by both sides on each other’s products during the last two years, continue. To that extent, the maximum comfort that can be derived from the deal is the signal that while the damage done won’t be undone, further damage is being avoided. Coming nearly two years after the US and China embarked on a trade war, the Economic and Trade Agreement between the countries—popularly referred to as Phase 1 of a bilateral deal—is a welcome development. It is not an indication of the world’s two largest economies having erased all differences on trade. Neither is a guarantee that trade tensions won’t flare again. Nevertheless, it is a signal that both are willing to engage to identify a possible common ground. Compared with expectations that the deal would be more of a face-saving, politically symbolic agreement, it certainly turns out to be more substantive. The substance though is not uniform. The most detailed are Chapters 1 (intellectual property), 3 (trade in food and agricultural products) and 6 (expanding trade). The depth and range of content in these chapters, particularly those on intellectual property, trade in food and agricultural products, and expanding trade, are very much in line with the grievances that the US has aired for a long time. The detailed provisions on safeguard of intellectual property are in line with US findings with respect to China, under the Section 301 of the Omnibus Trade Act of 1988. Intellectual property theft and violations have been major concerns of the US that have been flagged repeatedly for China, year after year, in the Special 301 reports of the USTR. The interesting part of the provisions is the effort to outline conditions under which wilful theft of trade secrets might invite criminal action. The US has been able to get away with the rather audacious provision that US holders of trade secrets need not ‘establish actual losses as a prerequisite to initiation of a criminal investigation for misappropriation of a trade secret’. It remains to be seen how forcefully the conditions are implemented in future. Similarly, on the short chapter on technology transfer (chapter 2), the emphasis is on non-insistence of transfer of technology by host governments from foreign businesses with respect to licensing arrangements. The interesting part of this chapter is that unlike chapter 1 on intellectual property, which is primarily on what China would, or wouldn’t ‘do’ for safeguarding US intellectual property, the technology transfer chapter doesn’t mention China or the US even once. Instead it is confined to the safe reference of ‘both parties’. This is clearly an area where much work remains to be done before specificities are reached. Chapters 3 and 6 are the two most politically important chapters. Chapter 3 aims to address many regulatory issues in the Chinese market, prevalent as sanitary and phytosanitary measures (SPS) that affect access of US food and agricultural products. The key US exports identified by the chapter are dairy, infant formula, poultry, beef, pork, meat, seafood, rice, food additives and pet food. While making efforts to remove qualitative restrictions on US exports of these items to China, Chapter 6 provides targets on how much China should import from the US. It is projected that during the period January 1, 2020 – December 31, 2021, China’s imports from the US should be $200 billion more than what they were in the baseline year 2017. The higher imports are across four broad categories: manufactured goods, agriculture, energy products and services. The maximum imports ($77.7 billion) are projected for manufactured goods, including industrial machinery, electrical equipment, pharmaceuticals, aircrafts and iron & steel. These are followed by imports of $52.4 billion of energy products (LNG, crude oil, refined products and coal); $37.9 billion for services (IP fees, tourism, financial services, cloud services) and $32 billion for agriculture (oilseeds, meat, cereals, cotton, seafood). The targets set out in Chapter 6, along with the provisions in Chapter 3, would enable president Trump to reach out to trade-oriented domestic constituencies in the election year. This includes both agricultural farming groups as well as industrial producers, who have been unhappy over the limited access they have been having in the Chinese market.
Chapters 4 and 5, which deal with financial services and macroeconomic policies and exchange rate, are again relatively less in content. On financial services, the emphasis is primarily on China liberalising foreign equity caps and limitations on scope of business operations for US service suppliers in insurance, banking, credit rating, electronic payments and securities services. Interestingly, this is a chapter where China appears to have been successful in pushing through reciprocal measures with the US committing to expeditious processing of pending applications of various Chinese financial service suppliers. Chapter 5, like Chapter 2 earlier, is largely prescriptive with an eye on avoiding currency manipulations. It is interesting that a couple of days before the deal was announced, China was taken off the list of currency manipulators maintained by the US. Finally, chapter 7, which formalises the arrangements and structure for implementing the deal, puts in place a high-ranking mechanism, comprising the USTR and a Chinese vice-premier, reflecting the importance both sides have attached to the agreement. Notwithstanding the agreement, tariffs imposed by both sides on each other’s products during the last two years, continue. To that extent, the maximum comfort that can be derived from the deal is the signal that while the damage done won’t be undone, further damage is being avoided. The possibility of the deal falling through, though, remains. While the import targets might be fulfilled, the crucial test of the deal will be on the success achieved by Chapter 1. US satisfaction over the improvement of the quality of protection for the IP held by its businesses would mean much in progressing on the next stages of the deal. In the meantime, truce might hold, given the ‘substantive’ achievements of the deal that can be showcased for US domestic constituencies.
Source: Financial Express
