The Synthetic & Rayon Textiles Export Promotion Council

MARKET WATCH 06 FEB, 2020

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Ball is now in your court: FM Sitharaman exhorts India Inc to invest more

Finance Minister Nirmala Sitharaman on Tuesday exhorted India Inc to shed its hesitation and make investments to push up economic growth, saying the government had taken several pro-business measures such as reduction in corporation tax rates, removing minimum alternate tax in the new tax structure, and scrapping dividend distribution tax (DDT) levied on companies. “We have done whatever little we can. We are ready to do more. But I want meaningful interventions from the government and not the ones which are irrelevant to the ground situation. Now, we expect you to be an equal engine to pull the economy forward,” she said at a post-Budget interaction, organised by the Confederation of Indian Industry (CII). Sitharaman said government spending alone could not pull the economy towards the growth rates that all wanted in today’s conditions. “Critics say the government has reduced corporation tax rates, but where are the investments? It is six months now,” she said, apparently nudging the captains of industry to pump money into the economy. She said some people had told her that maybe businesses were repaying their debts to banks by using tax savings. “I am quite happy with that too. At least banks are getting money. If you are giving dividends, it is equally good, as money is going back to shareholders,” she said. If you are saving dollars, I am quite okay with that, because beyond a point, that savings has to find a productive use,” she added. The FM said it was the choice of the corporate where to use the money which it got after the government's decisions. “Each one of us has to become engine of growth. Enterprise spirit is yours, we are facilitators," she added. She added the intention of her proposal to give options of lower tax rates without exemptions to personal income taxpayers was to eventually have low tax rates with a simple regime. “This would be reflected in other taxes as well, including DDT,” she said in response to a question. Sitharaman, along with all the secretaries of her ministry, will be travelling to Mumbai, Chennai, and Kolkata, beginning Friday, to discuss the Budget decisions. Interactions with industry and trade bodies, economists, and farmers groups are scheduled, the finance minister said. The special window for stressed housing projects has begun as a lot of funds of the construction sector are stuck. As many as 13 projects have been sanctioned so far, Economic Affairs Secretary Atanu Chakraborty said.

Source: Business Standard

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Budget 2020: Where will India Inc find the money?

Union Budget 2020 India: Finance minister Nirmala Sitharaman is exhorting India Inc to invest. That is a tall ask at a time when there is a shortage of liquidity, and demand. Since the government is short of cash, it is not repaying its dues, corporate cash-flows are crimped, not all banks have enough capital at a time when the NPA cycle hasn’t ended, and several large NBFCs are insolvent. If 2020 is to be a turnround year for the Indian economy, the money multiplier must be put to work.  But, the government’s revenue collections are optimistic—and overstated by about Rs1 lakh crore for FY20—and unless Vivad se Vishwas works, the shortfall will remain. Most banks remain unwilling to lend, despite having the capital or resources to do so, because the quality of corporate borrowers is poor, and also because demand for credit is muted. In Q3FY20, large lenders like State Bank of India and PNB have have seen virtually no increase in their corporate loan books; some have reported a contraction. So, they are lending to individual or retail borrowers and are happy to park some Rs3.5 lakh crore with RBI. To be sure, there is a clutch of strong NBFC lenders reaching out to customers not tapped by banks, and it is possible they will have enough liquidity to lend; the question is whether they will find enough good borrowers so as to protect their balance-sheets. Also, Crisil, on Tuesday, put out a study that said loan losses at NBFCs and HFCs could rise by 30-150 bps by March 2020, depending on the asset class; this on the back of a 20-150 bps increase in H1FY20. What’s worrying, the agency points out, is that even the relatively safer asset classes—retail loans for homes and cars—which account for over half of the NBFCs assets, are seeing a deterioration, so challenging is the economic environment. Bigger loan losses—whether at banks or NBFCs—will not only erode their capital, it will make lenders more risk-averse. The even bigger concern, as Crisil has observed, is that slippages in the wholesale loan book are expected to be significant, especially when the books come out of moratorium. NPAs, Crisil believes, could jump because the slowdown is hurting the businesses. Already, NPAs in the real estate segment are estimated to have increased to 3.3% in September 30, 2019, from 1.8% in March 2019. One might argue that real estate and structured credit comprised just 16% of the assets of non-banks in March 2019. But, that is a good Rs3.8 lakh crore, and while it isn’t that all of this may go bad, even a 25% slip would be enough to aggravate the liquidity stress. There are many who say India will get more than its fair share of foreign flows in 2020, and that foreign portfolio investors (FPIs) will put in big sums into India’s stock and bond markets. They may, but again, they will buy only into the best companies as they have done in the last couple of years. The Sensex may have posted big gains, but 80% of the stock market has lost value. That trend will not change simply because smaller companies are unlikely to post strong earnings until the economy is on a much firmer footing. The government may be able to attract foreign funds, but rather than borrowing on its balance sheet, it may be better to attract project-specific funding. Net household financial savings are falling as a share of GDP and are a cause for concern. But, cash-flows at most companies today are crimped; they are eking out profits, largely by cutting costs. A look at the Q3FY20 corporate results shows how revenues are barely rising; for a sample of nearly 460 companies, these have stayed flat year-on-year. It is because costs have been reined in, thanks to benign commodity prices, that operating profits have gone up. The bottom line, in many cases, has been hugely bumped up by the lower tax rate, but those like Bharti Airtel have reported a loss; at JSW Steel, profits crashed 80%.

There are no signs India Inc will invest for at least another two years. First, promoters don’t have too much spare cash to put in as equity capital. This was never a problem in the past because, more often than not, the promoter’s equity contribution came from the total project cost—or by diverting the cash flows of another venture meant to repay loans. That might be hard to do today. Those that were able to borrow, did so, and picked up assets in the M&A market or via the IBC. The short point is that the debt profile for India Inc isn’t improving quickly and may even deteriorate even if the ratings agencies don’t want us to know. Right now, few companies have the wherewithal to leverage. In any case, there is no hurry because capacity utilisation collapsed to 69% in September from 73.6 in June, according to RBI’s OBICUS survey. And, there is little hope consumption will pick up anytime soon since capex has stagnated for at least three years and few new jobs have been created. On the contrary, with companies such as Jet Airways folding up, jobs have been lost.

Source: Financial Express

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Govt is examining complaints on ecommerce predatory pricing: Piyush Goyal

Commerce and industry minister Piyush Goyal on Wednesday said the government is examining representations regarding allegations about some ecommerce companies engaging in predatory pricing and excessive discounts. “Representations have been received in this department (DPIIT) alleging that some ecommerce platforms are engaged in predatory pricing and are providing excessive discounts....These representations are under examination,” Goyal said in reply to a question in the Lok Sabha. The current foreign direct investment (FDI) policy on ecommerce sector specifies that companies operating marketplace model business in the sector will not directly or indirectly influence the sale price of goods or services and shall maintain a level playing field, he said. Goyal said ecommerce companies having foreign investment can operate only a marketplace model and there are restrictions on the inventory-based model of ecommerce. As per norms, overseas-funded ecommerce marketplaces can’t engage in retailing goods themselves, and can only function as platforms for buyers and sellers. Small shopkeepers accuse Amazon and Walmart-owned Flipkart of flouting rules and driving them out of business through predatory discounts. This has prompted the government to tighten rules and increase oversight. The Competition Commission of India (CCI) recently ordered a probe against Amazon and Flipkart for alleged malpractices, including deep discounting and tieups with preferred sellers on their platforms. The government has made it mandatory for ecommerce companies like Amazon and Flipkart to get and maintain annual reports by statutory auditors on compliance with FDI rules by September 30 every year. Replying to a separate question, the minister said data is not centrally maintained for assessing the impact of FDI on employment generation. “FDI inflows serve to augment domestic capital and help to promote industrial development and employment generation across sectors,” he said. In reply to another question in the House, Goyal said there were seven instances of illegal export of minerals. At present, there is no proposal to review the existing export-import policy with respect to minerals and metals.

Source: Economic Times

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Manufacturing incentives scheme created 1,20,000 jobs so far: R S Prasad

A key scheme to incentivise domestic electronics manufacturing in the country has led to job creation of over 1,20,000 and a capital expenditure of Rs. 17,955 crore till January 2020 since its inception in 2012. Ravi Shankar Prasad, union minister for electronics and IT told the Lok Sabha on Wednesday in response to a question on Modified Special Incentive Package Scheme (MSIPS) which was notified in July 2012. The scheme provides subsidy on capital expenditure in the range of 20-25%. Under the Scheme, 397 proposals have been received so far out of which 252 proposals worth Rs. 72,048 crore have been approved while 145 proposals worth Rs. 36,076 crore are under appraisal. "As on date, incentives of Rs.897.07crore have been disbursed to 71 applicants," Prasad said. The reply also detailed that capex incurred from April 2019 to Jan 2020 was Rs. 7976 crore, with the highest investment in Gujarat at Rs. 3555 crore. Modified Special Incentive Package Scheme (M-SIPS) was notified on 27th July, 2012 an the scheme provides 20% subsidy for capital expenditure for investments in Special Economic Zones (SEZs) and 25% in non-SEZs. ET reported last week that the Internet and Mobile Association of India (IAMAI) has recommended bringing back the Modified Special Incentive Package Scheme (M-SIPS) to attract global investments in exports driven high-end mobile manufacuring.

Source: Economic Times

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How MSMEs are being a catalyst for the Indian economy’s growth

MSMEs are expected to play a significant role in the growth of the Indian economy. The development of this segment is very much essential to meet the national imperatives of financial inclusion and the generation of significant levels of employment across the country. The Indian economy is characterised as a developing market. The long-term growth prospect is positively owning to the country’s young population, healthy savings, and investment rates, and its increasing integration to the global economy. The Micro, Small, and Medium Enterprises (MSMEs) segment is expected to play a significant role in the emergence of the Indian economy. The development of this segment is very much essential to meet the national imperatives of financial inclusion and the generation of significant levels of employment across the country. The MSME segment accounts for 31 percent of India’s GDP and 45 percent of exports. There are an estimated 55.80 million MSMEs employing close to 124 million people. Out of this, 14 percent are women-led enterprises and 59.5 percent are in the rural areas. Hence, the sector has the scope for acting as a catalyst for economic growth across the geographic, social, and cultural strata of the country. Many developed and developing economies have demonstrated that the MSME segment is the catalyst for maintaining growth and employment generation, which provides stability during economic downturns. As a catalyst for socio-economic transformation of the country, the sector is critical in meeting the national objectives of generating employment and discouraging rural-urban migration. The MSME sector is the backbone for high growth businesses, and with the ‘Make in India’ initiative, it has an effective impact in the area of indigenisation. ‘Make in India with zero defect and zero effect’ is a very good platform available for MSMEs to grow globally. The new era of MSMEs should enable the development of a business ecosystem that will enable and continuously support businesses, which will gear up to deliver the right product, the right quality, the right solution, and the right service at a competitive price, both in domestic and international markets. The ‘Digital India’ revolution also provides a wonderful opportunity to promote MSME participation in the high-tech sector to enable the dream of digital India. The three main features affecting the growth of Indian MSMEs are:

Availability of finance

The appetite for debt finance to MSMEs is around Rs 69.3 trillion, out of which a major portion of 84 percent or Rs 58.4 trillion is met from informal sources. Among the formal sources which meet 16 percent of the credit requirement of MSMEs, Scheduled Commercial Banks account for 84 percent, with the rest met by other financial institutions like NBFCs, RRBs, etc. The gap in the availability of finance to MSMEs from formal sources is prominent among certain geographies and type of enterprise. The credit gap is 49.7 percent in the manufacturing sector as they are more capital intensive with longer working capital cycles and have a proportionately higher credit requirement. The Low Income States (LIS) and North Eastern States (NES) together account for 24.2 percent of the credit gap due to low level of bank penetration and a higher degree of risk aversion by financial institutions. The documentary requirements, legal formalities, and other credit assessment process for availing credit from formal financial institutions is the deterrent, which drives away the MSMEs, and in particular the micro-enterprises towards the informal sector for credit. The recovery mechanism under the formal sector is not as strong as the system available with the informal sector, which acts as a hurdle for the formal financial institution to tap the credit gap further.

Lack of formal registration

Out of the total 55.8 million MSMEs, only 8.2 million are registered MSMEs and the rest 47.6 million are un-registered MSMEs. Given the above scenario, the first and foremost challenge in addressing the hurdles faced by MSMEs is to bring all the un-registered MSMEs into the formal fold, so as to make them eligible for a bouquet of benefits. The un-registered nature of the MSMEs also acts as a deterrent for their access to credit from formal lending sources.

Competitive market environment

MSMEs function in a highly competitive environment and require an enabling environment to sustain growth. The three main interventions that can provide the enabling environment are- legal and regulatory support, government support, and financial infrastructure support. The government is taking a slew of measures to provide adequate support in these areas like the proposal to bring the change in the definition of MSMEs, the introduction of Pradhan Mantri Mudra Yojana (PMMY) for enabling hassle-free credit to MSEs, enabling e-marketplace for MSMEs, two percent Interest Subvention Scheme, introduction of TReDS platform for discounting of bills, conduct of loan melas, restructuring the loans of stressed MSMEs, etc. The MSME sector strategically has become the most important sector fuelling the economic growth of the country. The sector is slated to gain even greater prominence in the days to come owing to its potential for employment generation. It is also the bedrock from which large corporate of the future evolves. Hence, it is imperative for all the formal financial institutions to progressively reach out to the large extent of MSMEs untouched by these institutions. The MSMEs accessing finance from informal sources should also upgrade their profile to fall into the ambit of formal financial institutions, thereby making them eligible for credit from these institutions. This would reduce the credit cost of these MSMEs and increase their profits, thereby enabling development, reducing disparities, and fuelling the economic progress of the country.

Source: Your Story

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NIT-Warangal, Prime Textiles join hands for research

National Institute of Technology, Warangal, (NITW) and Prime Textiles, Warangal, inked a Memorandum of Understanding (MoU) here on Wednesday for educational and scientific research as part of IMPRINT project titled ‘Development and Demonstration of Pilot-scale Hybrid Waste Water Treatment System with Hydrodynamic Cavitation and Biosurfactant for Recycling Textile Effluent’ sanctioned to Chemical Engineering Department, NIT Warangal. The MoU will be valid for five years. Impacting Research Innovation and Technology (IMPRINT) is a first of its kind Pan IIT & MHRD initiative to address major engineering challenges. It is the first time local industry and NITW are attempting to solve the waste water treatment problem in Warangal. Prof NV Ramana Rao, Director, NIT, Warangal, and Vijay Prathap Reddy, managing partner, Prime Textiles, Warangal, signed the MoU in the presence of Prof Shirish H Sonawane, principal investigator of IMPRINT project. As per the joint statement released by Prof NV Ramana Rao and Prathap Reddy, the MoU is aimed at arranging internships, placements, guest lectures to graduates and post graduate students. It also aims at exploring mutual scientific cooperation between NITW and Prime Textiles.

Source: Telangana Today

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Atal Innovation Mission collaborates with Ministries to stimulate Innovation in various sectors

With a vision to bring together the stakeholders of the food processing and agriculture sector in India, Atal Innovation Mission, NITI Aayog (AIM) today started a series of innovation demo days where start-ups, Micro, Small and Medium Enterprises (MSMEs), entrepreneurs, corporate partners and sector academics are brought together for a showcase of government-funded innovations. The first such event was held today in association with Ministry of Food Processing Industries and Ministry of Agriculture & Farmers Welfare at Atal Incubation Centre (AIC)- Entrepreneurship & Management Process International (EMPI) Business school, New Delhi. The innovation demo day series initiative aims at promoting commercialisation of technologies funded by the Ministries of Agriculture and Farmers Welfare and Food Processing and Industries. It also aims at connecting innovation with sectors like Indian MSME industry and government funded research industries. Speaking on the occasion, the Mission Director AIM, NITI Aayog Shri R Ramanan said “We are sure that such initiatives will help take the technologies from lab to market, building a collaborative ecosystem. AIM, NITI Aayog will continue to make many such efforts towards making India, the innovation capital of the world.” “ARISE demo day is our initial attempt to stimulate and showcase innovation in various sectors and we will be working closely with ministries to take this forward. The idea is to ensure the government is able to support start-ups better. Since we are one of the fastest growing economies in the world, there is a tremendous focus by the government to ensure the innovation and entrepreneurship in the country is scaled up,” he added. Highlighting the need to promote food processing in the country, the Joint Secretary to Ministry of Food Processing Industries Shri Minhaj Aalam said that there is a dire need to push food processing as India is facing huge loss when it comes to recycling of food. “India is facing issues related to post-harvest crop processing which needs to be addressed. As per a study commissioned by our ministry through Ciphet Ludhiana, nearly 1lakh crore of food products are wasted every year. The processing has to be increased in the country which presently is at an average 10 per cent compared to 50 per cent in other countries. We need to encourage innovations which can help to solve this issue,” he said. He further said the ministry is encouraging and supporting the entrepreneurs and MSMEs for setting up food processing units by providing grant in aid and networking support with the help of AIM, NITI Aayog under ARISE scheme. CEO Agrinnovate India Limited Dr. Sudha Mysore also spoke on the occasion and stressed on technology commercialization frameworks in Indian agriculture. She gave an overview of the technology transfer efforts being undertaken by Agrinnovate, a Govt of India initiative to bring Indian agricultural science to the market. Meanwhile, the event saw a productive panel discussion by officials from both the Ministries, industry representatives, innovators, scientists and venture capitalists. The panellists spoke on ‘commercializing innovations from government R&D institutions into the market and the role of public & private institutions in innovation landscape of India.’ The officials also spoke about public research, importance of communication, technology delivery, technology development, technology commercialization, technology transfer, mentoring, training, job creation, start-up incubation support etc. More than 30 govt-funded/supported technologies related to food processing and agriculture were exhibited on the occasion. Out of 30, 12 technologies were pitched in detail by the budding innovators and researchers to the stakeholders from the agriculture and food processing ecosystem which was followed by a networking session.

Source: Press Information Bureau

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Fashioning the framework of a New India

A major solution to the present economic crisis is to go in for inclusive growth; it also means shared prosperity. The Indian economy is going through a severe crisis: a slowdown as well as a structural crisis. In the words of the former Chief Economic Adviser, Arvind Subramanian, it is headed towards the ICU. Almost all sectors of the economy are in decline: the rate of growth of the national GDP has declined to 5.0%, and may go down further; the construction sector, one of the fastest growing sectors so far, is growing at 3.3% this year; agriculture is growing at 2.1% while the auto sector is declining continuously in absolute terms. The Micro, Small and Medium Enterprises (MSME) sector too has declined, in turn raising the burden of non-performing assets of the banking sector as well as non-banking financial institutions. Also, exports have been declining in recent years, raising the crisis of current account deficit. Credit from banking and non-banking sectors has been declining in the last few years; the Financial Stability Report of the Reserve Bank of India (2019) says that it is unlikely to increase in the next nine months.

Impacting the poor

These developments have had an adverse impact on the bottom 30%-40% of the population. The incidence of absolute poverty, which has been falling since 1972-73, has increased to 30% (4% jump). As the Human Development Report (2019) has shown, more than 44% of the Indian population is under the multi-dimensional poverty line. The poorest 50% population at present owns only 4.1% of the national wealth, while the richest 10% people own 73% of the total wealth in India (Suisse Credit 2019). India has 15.2% population malnourished (women 15%) as against 9.3% in China. And 50% of the malnourished children in the world are in India. India’s global hunger rank has gone up to 112 while Brazil is 18, China is 25 and South Africa, 59. In the field of education as per a UN report (2015), overall literacy in India is 74.04% (more than the 25% are totally illiterate) against 94.3% in South Africa, 96.6% in China and 92.6% in Brazil. Almost 40-45% population is either illiterate or has studied up to standard 4. Given the quality of education in India, the overall population is very poorly educated, with the share of ‘educated unemployment’ rising by leaps and bounds. It needs to be realised that when exports are declining, the economy will have to depend on domestic demand for growth. It is no more feasible for the top 20-25% population to continue growing without depending on the demand from the bottom 40-45% population. There is thus a strong reason now for the economy to increase effective demand of this bottom 40-45% population at least to continue growing — to reach a $5-trillion economy by 2024.

Sub-optimal use of labour

However, this crisis needs to be viewed differently: a major reason for the crisis is that the growth process has marginalised the bottom 40-plus% of the population in the sense that they do not get a fair share of the economic growth, and are more or less deprived of productive employment with a decent income. These people have been treated as beneficiaries to whom some cash/kind grants are thrown at, but they have not been used as active participants in the growth process. Their potential has not been promoted. Though the bottom population depends on the government for basic health and elementary education (and also for access to higher educational opportunities), the government spends just 1.4% of GDP on health (against the norm of 4-6% of GDP) and 3% of GDP on education (against the norm of 6-8% of GDP). As a result, these people are left hardly literate and sick, with poor nutrition and high morbidity. They are incapable of acquiring any meaningful skills or participating actively when new technology is spreading in the rest of the economy. This sub-optimal use of the labour force in the economy is not likely to enable India to achieve optimal growth with proper use of the national resources — the labour force.

All-encompassing growth

One important lesson for policymakers is this: a major solution to the present crisis is to go in for inclusive growth. Here, inclusive growth does not mean only including all sections of the population in the growth process as producers and beneficiaries; it also means “shared prosperity”. Since India has already committed to sustainable and inclusive growth at the UN General Assembly, India is definitely obliged to implement inclusive growth. This should be our “New India”. Under the “New India” the main requirements are as follows: To start with, to improve the capabilities of the masses as well as their well-being by expanding productive employment opportunities for them. The main steps to expand productive employment for all in the economy should be made up of: a process of inclusion — expanding quality of basic health for all and ensuring quality education to all, which will by itself generate large-scale employment in the government; having a well-educated and healthy labour force will ensure high employability; such people will be able to participate actively in the development process; having a well-educated labour force will help start-ups and MSMEs, in turn triggering a cycle of more productive employment in the economy. This will also improve the global competitiveness of our production units. Employment guarantee schemes such as the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) will also increase employment. Following the economic logic of R. Nurkse and A.O. Hirschman, assets generated under MGNREGA will expand capital formation in the economy, thereby raising the labour-absorbing capacity of the mainstream economy. Such a strategy has multiple advantages: First, it will raise incomes and the well-being of those who need it most urgently. Second, it will raise effective demand rapidly, which is so badly needed in the economy today to raise economic growth. Third, growth will be equitable and sustainable. The discussion had important implications for the Union Budget: need to raise expenditure on health to at least 5% of GDP and expenditure on education to at least 6% of GDP; to push up infrastructural development to enhance capabilities and opportunities of the masses and not just to promote corporate units; to promote agriculture by raising investment in agriculture and not just cash transfer (cash transfer provides relief to them no doubt, and does not raise productivity of agriculture which needs large public investment); and to facilitate credit flow particularly continuous working capital, to labour intensive sectors. Unfortunately, these steps are missing in the recent national Budget.

Public investments

Finally, how does one raise resources to increase new public investments in the selected sectors mentioned above, especially when public revenue is declining and the claims on public resources are rising? One major strategy is to raise direct taxes, both capital tax and wealth tax. Our experience in the past has shown by following crony capitalism, i.e. providing tax cuts and extra incentives and concessions to the corporate sector, exports increased and also our national GDP no doubt. But this growth does not much percolate to the poor. This is because during the growth process due to special treatment to corporate sector, the political economy radically changed in favour of the rich who are never willing to be taxed to raise government revenue to a level that it is enough to promote the capabilities and the well-being of the marginalised and the excluded. On the other hand, the unholy alliance between the government and the corporate sector also does not allow them to worry about the poor. Consequently, taxing the rich has to be a major strategy to raise government revenue. Second, if the public expenditure on raising capabilities is treated as social investment rather than social welfare, policymakers will be willing to spend on this capital formation. And, finally, there was no sound economic reason to control fiscal deficit ratio. Sound macroeconomics never supports this.

Source:  The Hindu

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Global Textile Raw Material Price 05-02-2020

Item

Price

Unit

Fluctuation

Date

PSF

998.45

USD/Ton

0%

2/5/2020

VSF

1356.98

USD/Ton

0%

2/5/2020

ASF

2006.90

USD/Ton

0%

2/5/2020

Polyester       POY

1024.16

USD/Ton

0%

2/5/2020

Nylon       FDY

2214.02

USD/Ton

0%

2/5/2020

40D       Spandex

4099.51

USD/Ton

0%

2/5/2020

Nylon       POY

2049.75

USD/Ton

0%

2/5/2020

Acrylic       Top 3D

2256.87

USD/Ton

0%

2/5/2020

Polyester       FDY

1178.43

USD/Ton

0%

2/5/2020

Nylon       DTY

2449.71

USD/Ton

0%

2/5/2020

Viscose       Long Filament

5356.50

USD/Ton

0%

2/5/2020

Polyester       DTY

1278.42

USD/Ton

0%

2/5/2020

30S       Spun Rayon Yarn

1992.62

USD/Ton

0%

2/5/2020

32S       Polyester Yarn

1621.23

USD/Ton

0%

2/5/2020

45S       T/C Yarn

2399.71

USD/Ton

0%

2/5/2020

40S       Rayon Yarn

2156.88

USD/Ton

0%

2/5/2020

T/R       Yarn 65/35 32S

1928.34

USD/Ton

0%

2/5/2020

45S       Polyester Yarn

1771.22

USD/Ton

0%

2/5/2020

T/C       Yarn 65/35 32S

2199.74

USD/Ton

0%

2/5/2020

10S       Denim Fabric

1.26

USD/Meter

0%

2/5/2020

32S       Twill Fabric

0.69

USD/Meter

0%

2/5/2020

40S       Combed Poplin

0.97

USD/Meter

0%

2/5/2020

30S       Rayon Fabric

0.53

USD/Meter

0%

2/5/2020

45S       T/C Fabric

0.67

USD/Meter

0%

2/5/2020

Source: Global Textiles

 

Note: The above prices are Chinese Price (1 CNY = 0.14284 USD dtd. 05/02/2020). The prices given above are as quoted from Global Textiles.com.  SRTEPC is not responsible for the correctness of the same.

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U.S. trade deficit falls in 2019 for first time in six years as China tariffs reduce imports

The numbers: The trade deficit fell slightly in 2019 to mark the first decline in six years, mostly reflecting U.S. tariffs on Chinese goods that reduced the flow of imports from the Asian giant. The U.S. deficit slipped 1.7% to $617 billion last year from almost $628 billion in 2018. Last year’s trade gap was the highest in a decade. Earlier in the year American wholesalers rushed to import goods from China before stiffer U.S. tariffs kicked in and they cut back in the fall after the Trump administration raised duties. An interim trade deal signed by the U.S. and China that reduces some tariffs and seeks to ease tensions could lead to a rebound in Chinese imports in 2020. But the outbreak of the coronavirus adds another X-factor that could also severely disrupt global trade the world economy if it spreads, analysts say. The annual trade deficit declined in 2019 even though the gap in December rose for the first time in four months. The deficit shot up 12% in December to $48.9 billion, the government said Wednesday. In 2019, the U.S. petroleum deficit shrank to $13.7 billion to mark the lowest level on record. The U.S. has become an energy superpower again and the world’s biggest producer of oil and natural gas thanks to the fracking revolution.

Auto exports fell, however.

Imports rose an even faster 2.7% to $258.5 billion in December, led by incoming shipments of crude oil, computer chips, cell phones and precious metals for industrial use. The U.S. still imports a lot of crude oil that it refines and ships to the U.S. and other parts of the world. Imports of goods from China tumbled nearly 18% for the full year, slowing to $345.6 billion in 2019 from a record $419.5 billion in 2018. Rising deficits with other nations, however, prevented the total U.S. deficit from falling very much last year. Companies merely shifted to other foreign sources such as Vietnam, Mexico and South America for goods that became too expensive to buy from China. Imports from Europe also rose. As a result, the U.S. registered record trade deficits in goods with all those trading partners in 2019. Big picture: The small decline in the trade gap last year is unlikely to become a regular event despite intense efforts by the White House to reverse years of large deficits. The U.S. simply no longer produces many of the goods that it imports heavily, such as clothing, cell phones, consumer electronics and certain industrial supplies. Yet even though trade deficits subtract from gross domestic product, the U.S. economy is still growing at a steady pace and outperforming most other wealthy nations. That allows Americans to spend more on imported goods and, ironically, to contribute to chronic deficits.What they are saying? “The trade war has taken a bite out of the trade deficit with China,” said Ward McCarthy, chief financial economist at Jefferies LLC.

Market reaction: The Dow Jones Industrial Average DJIA, +1.68% and S&P 500 SPX, +1.13% rose in Wednesday trades. Stocks have rebounded from a selloff that took place after the outbreak of the coronavirus last month.

Source: Financial Express

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EU Confronts Make or Break Decisions for Vietnam and Cambodia

Two upcoming calls will help define the European Union’s ties with the Southeast Asian countries. “Europe today has unpleasant relations with ASEAN,” Cambodian Prime Minister Hun Sen, no stranger to controversial and at times bizarre comments, observed last week, referring to the Association of Southeast Asian Nations (ASEAN) bloc. It is certainly true that Malaysia and Indonesia are peeved by the European Union’s phasing out of palm oil imports, an environmental policy that will hurt the world’s two largest producers of palm oil. The two have threatened to take Brussels to the World Trade Organization over the ban. The EU is also trying to do something (whatever that may be) about the genocide of the Rohingya in Myanmar and human rights abuses in the Philippines, both of which wary of any foreign involvement in their affairs. But Hun Sen’s comment was mostly self-referential. It comes as the EU makes an ultimate decision, after years of conjecture, over the fate of both Cambodia and Vietnam’s economies. Later this month, the European Commission will publish its final report on whether to remove Cambodia from the EU’s preferential Everything But Arms (EBA) trading scheme, which grants tariff and-quota free access to almost all Cambodian exports. As the EU is Cambodia’s largest export market, new tariffs could severely affect the country’s export-dependent economy. Meanwhile, the European Parliament will have the last say on whether to accept a free-trade trade with Vietnam (known as the EVFTA) after it has now been passed by all other European bodies. Economists in Hanoi reckon this could eventually boost Vietnam’s growth by up to 7 percent within a decade. Communists in Hanoi have waited nervously for years as the EVFTA’s progress has faced delays in Brussels, though Hun Sen has tended to oscillate between rebuking Brussels – as he did last week – and daring the EU should get a move on with withdrawing Cambodia’s place in the EBA scheme, as punishment for his government’s democratic backsliding since 2017. Sensible officials within his government talk in more fearsome tones, though. Phnom Penh is already predicting a dip in economic growth this year because of a global slowdown, from 7 percent in 2019 to 6.5 percent. The IMF predicts the EBA’s withdrawal could shave three percentage points off growth this year, and the World Bank estimates that it will see exports decline by $654 million. But the actual economic cost on ordinary Cambodians is likely to be much greater. For instance, most garment workers are young, female migrants from the countryside, who, according to numerous reports, send home a large chunk of their monthly salaries to fund at least one or two family members still living in rural areas. The EU Parliament stated in a report last year that “judging by this precedent, forecasts of over half of Cambodian textile workers losing their jobs are probably over-pessimistic.” But if the EBA’s withdrawal sees 10,000 garment workers lose their jobs (the number of manufacturing jobs lost in Sri Lanka when the EU cut its GSP+ status between 2010 and 2017, as noted by the aforementioned report) then this could impact the fortunes of some 30,000 Cambodians. Yet even such an optimistically small number will, then, further impact the rural economy and, importantly, the country’s microfinance sector (one of the most oversaturated in the world) which has left hundreds of thousands of rural Cambodian languishing in debt. It also needs to be stressed that this comes at a time when the country’s rice sector, the backbone of the rural economy, is also faltering. Indeed, Phnom Penh feels all the more aggrieved as new tariffs imposed on its rice exports to the EU in early 2019 (in order to protect European farmers, not because of Cambodia’s political situation) are a major reason for the considerable problems in this sector. For Hanoi, if the European Parliament finally okays the EVFTA this month – which is a most probable, despite concerns by some MEPs about Vietnam’s human rights record – it could boost GDP by 3.2 percent by 2023 and possibly as much as 7 percent by 2030, according to the Ministry of Planning and Investment. The separate investment treaty is likely to take much longer to be implemented than the free-trade deal, however, as it must be ratified by all EU member states. To some – probably including the Cambodian Prime Minister – all this reeks of hypocrisy. Many in Brussels say Cambodia needs to be stripped of its EBA status because of its authoritarian turn since 2017, when the ruling party forcibly dissolved the only viable opposition party and then went on to win all 125 seats at a rigged general election, and labor rights violations. Yet, at the same time, there’s a great deal of energy in Brussels to push through the EVFTA, which would basically be rewarding Vietnam, a far worse human rights offenders in the region, with spanking new trade bonuses. Granted, Hanoi in December pledged to allow independent trade unions to operate for the first time, but, so far, this is only a promise and a good deal of skepticism should be held until the Communist Party follows through. Indeed, Vietnam is a formal one-party, communist-run state that doesn’t even offer an aperture of democracy or political liberalism, while at least Cambodia’s government tolerated some form of political opposition up until 2017, and can still point (not very reasonably, however) to the dozens of smaller parties that exist. If it was the United States making these decisions, it would be straightforward. Cambodia is now Beijing’s closely ally, and Vietnam’s its leading opponent, in Southeast Asia. So rewarding a China-opponent and punishing a China-ally makes geopolitical sense. But the EU isn’t motivated by any real desire to punish Beijing’s allies. More likely, this seeming hypocrisy is motivated by a sense that change is more possible in Cambodia. All Brussels asks the Cambodian government to do (which it has so far resisted) is to return political conditions to how they were in early 2017; that is, restore the now-dissolved opposition party and allow its exiled politicians to return, and open up civil society once again. It also argues that EBA status comes with explicit conditions on democracy and human rights – and because European taxpayers are essentially subsidizing cheaper exports for Cambodia, there needs to be a little give with the take. In other parochial terms, European businesses will at least be gaining something from the EVFTA through more investment opportunities in Vietnam. All the while, affecting change in Vietnam, where the Communist Party has never even imagined a multi-party system, is far less likely – and far more difficult for the EU which lacks anything other than market power in Asia. One unappealing lesson of foreign policy is, indeed, not every problem can be fixed – and, even if it seems unfair, the more straightforward of problems often take primacy.

Source: The Diplomat

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Indonesia, Pakistan aim to increase bilateral trade and cooperation

Indonesia and Pakistan are strengthening mutual relations in order to potentially deal in different sectors of the economy and the bilateral trade is also growing on a annual basis, said Consul General of Indonesia Totok Prianamto. “Being an official representative of Indonesia, one of the tasks given to me is to further strengthen the economic, trade and investment relations between the two countries,” he said. “Karachi is a very important port for Indonesia especially for trade and investment sectors.” Addressing a group of journalists, he said that major import items of his country from Pakistan included rice, chemical, raw cotton, wheat, paper, fruits, garments, leather, plastic materials, cotton yarn, cloth, other textile products, sports and surgical goods. He emphasised the potential that since Karachi was the largest city operating two large sea port, it serves as the main entry point for Indonesian products to potentially access the Pakistani market. “Several trade associations, chambers and businessmen from Pakistan participate in various exhibitions and trade shows in Indonesia,” he added. The Indonesian Consul General said that the business community of Karachi metropolitan were actively trading and consulting meetings with the Indonesian counterparts to boost bilateral trade and economic cooperation as well as to establishing strong people-to-people contacts.

Source: The Nation

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Egypt increases volume of textile investments with new orders

The Egypt General Authority for Investment and Free Zones, in cooperation with the Swiss Embassy in Cairo, organized the Egyptian-Swiss Investment Forum. The forum focused on developing economic and commercial relations between the two countries. Additional contracts for the modernization program of the Egyptian textile industry were also signed between Rieter and Cotton & Textiles Holding Company. In the presence of H.E. Hisham Tawfik, Minister of the Public Sector of the Egyptian Government, and Swiss Federal Councilor Guy Parmelin, Head of the Federal Department of Economic Affairs, Education and Research, the contracts that increase Egypt’s textile investment volume and orders had been signed by Dr. Ahmed Moustafa, Chairman of the Cotton & Textiles Holding Company, and Dr. Norbert Klapper, Chief Executive Officer of Rieter. Seven project deals worth 180 million Swiss francs were signed, covering compact and spinning systems at the ITMA 2019 in Barcelona last year. This investment volume increased to about 210 million Swiss francs with the latest additional contracts. Rieter expects the full amount of orders to be booked as order intake in the first half year of 2020. So far, 165 million Swiss Francs have been booked. Rieter CEO Dr. Klapper was very pleased at the signing ceremony. He said; “The next step of the program we agreed upon today underlines the strong partnership between the Cotton & Textiles Holding Company and Rieter. I would like to thank our Egyptian partners for the confidence they continue to place with Rieter. We will do our best to support the Cotton & Textiles Holding Company in making the modernization program a success”.

Egypt revives with investments

Egypt, which has entered into a jerky period with the period called the Arab Spring and has gained a stable appearance in recent years, has accelerated its investments to increase its power in production and export markets. The textile industry is one of the main business lines for the country, which is one of the important cotton producers of the world. Having established a stable political and economic outlook in recent years; Egypt has accelerated its investments to increase its power in production and export markets. The textile industry is one of the main business lines for the country; which is one of the important cotton producers of the world. Cotton & Textiles Holding Company, the largest textile company in Egypt, signed a comprehensive series of investment agreements at ITMA 2019. The investment of approximately 1 billion euros covering the; finishing, printing and sewing segments, especially weaving and spinning technologies, was the main topic of the agenda. In his speech at the forum; Swiss Federal Councilor Guy Parmelin, Head of the Federal Department of Economic Affairs, Education and Research; said in the forum that economic and commercial relations have been between the two countries for 110 years. According to Swiss statistics, the volume of trade with Egypt in 2019 reached nearly 1.3 billion dollars. Currently, there are more than 60 Swiss companies in Egypt with an investment of 1.8 billion dollars.

Source: Textilegence

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Philippine manufacturing output further declines in December 2019

The Philippine Statistics Authority (PSA) said on Wednesday that the performance of manufacturing production in the Philippines continued to decline for the 12th consecutive month in December, resulting in a full-year decline in 2019. Based on the preliminary results of the Monthly Integrated Survey of Selected Industries (MISSI), PSA said that year-on-year volume of production index (VoPI) and value of production index (VaPI) declined by 10.1 percent and 9.5 percent, respectively. "Petroleum products and basic metals, with 47.9 percent decrement, contributed largely to the decrease of VoPI in December 2019," the PSA said. It added that the decline in VaPI was mainly influenced by the decreases in the indices of nine major industry groups led by basic metals, petroleum products and textiles. The National Economic and Development Authority (NEDA) said both indices remained in the negative territory in the 12 months of 2019, resulting in a full-year decline of 8.6 percent and 7.1 percent, respectively. This reversed the positive growth of manufacturing that was recorded in 2018, NEDA added. Socioeconomic Planning Secretary Ernesto Pernia said the government should continue supporting initiatives towards digital solutions in the private sector to boost manufacturing growth and bounce back from its decline in 2019. "We encourage industries to capitalize on innovation to reach their growth potential in this era of the Fourth Industrial Revolution. To this end, the government needs to formulate and implement policies and programs to stimulate innovation in the country," Pernia said. He added that building the capacity of the workforce and embedding innovation in training are also crucial to meet technical and emerging market demands. Moreover, he said the Philippines also needs to improve its reputation concerning intellectual property protection. "This will attract foreign companies to locate sensitive technologies and product operations in the country. These will also allow the country to expand from the production of basic products and commodities to higher value intermediate and specialty products for domestic and export purposes," Pernia added. To support manufacturing growth, Pernia stressed the need to strengthen the transport and logistics sectors by building quality and climate-resilient infrastructure. MISSI is a report that monitors the production, net sales, inventories, and capacity utilization of selected manufacturing establishments to provide flash indicators on the performance of the manufacturing sector.

Source: Xinhua

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Vietnam: Banks to provide support to customers affected by coronavirus

The State Bank of Việt Nam has asked credit institutions to prepare capital sources to meet borrowing demand and provide support to customers who have been affected by the coronavirus epidemic. With the epidemic significantly affecting business, production and daily life, the central bank’s Governor Lê Minh Hưng has told banks to actively keep a watch on production and business situations of customers who could be affected by the epidemic and evaluate the possible impact. Focus must be placed on the most vulnerable sectors such as tourism, agriculture and exports so measures can be put in place, he said in a recent document sent to commercial banks. Support could include rescheduling debt payments and reducing lending interest rates. The central bank also asked credit institutions nationwide to enhance cooperation with local management agencies to remove difficulties for affected businesses and borrowers. According to a report published on Monday by SSI Securities Corporation, a number of industries would suffer negative impacts from the coronavirus epidemic in the short term. As export-import played an important role in the Vietnamese economy, any interruptions from important suppliers like China could be challenges to the country’s economic growth. “Export of agricultural products and tourism will be negatively affected, at least in the short-term,” the report wrote. Among 23 industries SSI surveyed, 10 were predicted to suffer, including banking, garment and textile, retail, seafood, beer, petrol and oil, security, transportation, airport and aviation services. Only four industries might benefit, namely pharmaceutical production, information and technology, electricity and water. For example, the epidemic did not have direct impact on the demand for garment products but China’s GDP slowdown might hit consumption demand in the long term, which would affect garment and textile production of Vietnamese firms. Currently, China was the largest supplier of fibre for Việt Nam. Regarding the retail industry, the report pointed out that shoppers would tend to turn to online shopping, instead of going to traditional markets and stores. Deputy Minister of Industry and Trade Trần Quốc Khánh recently said that e-commerce with new delivery methods should be promoted as a measure to fight the epidemic. A recent report by VnDirect Securities Company also said that the demand for online shopping and delivery services would increase significantly. Bảo Việt Securities Company predicted that Việt Nam’s GDP in the first quarter of this year would grow at 6.5 per cent, 0.29 percentage points lower than the same period of 2019. Recovery could follow but might depend on the development of the epidemic. The company forecast that Vietnamese economy might suffer until the end of the second quarter.

Source: Vietnam News

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