MARKET WATCH 13 FEB, 2020

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INTERNATIONAL

Can push exports, assemble in India: CEA

Chief economic adviser (CEA) Krishnamurthy V Subramanian on Wednesday said that amid the uncertainties in China owing to the novel Coronavirus outbreak, there is an “actual opportunity” for India to push its exports. He also mentioned an “Assemble-in-India” model. “If you go by episodes like these, it is very hard to say what exactly it will manifest in terms of India’s trade relations with China. For economists, it is ‘unknown unknowns’. The 2002 SARS virus outbreak in China, for instance, did not impact India that much. Because of the uncertainties faced by China, it’s actually a good opportunity for our country to utilise the time (for exports expansion),” Subramanian said on the sidelines of a lecture on ‘Wealth Creation’ at the IIM-Calcutta. The CEA was replying to a query on China’s current halt in the exports market of networked products like cellphones, automobiles, white goods, apparel and textiles. India is one of China’s leading trade partners in Asia and has a huge trade deficit with that country. “China itself imports components from the rest of the world, assembles them in their country and exports them. In mobile handset manufacturing, India is following the same model. So, if one looks from this perspective, it provides a scope for us,” he said. The CEA referred to the latest Economic Survey and prescribed how India could integrate assemble-in-India and export-driven models. On sagging IIP numbers, the CEA said: “When you are getting out of a phase of deceleration in growth these kinds of phenomenon are anticipated. Some will volatility in the numbers will be there.” According to him, it is high time that the Essential Commodities Act, 1955 be withdrawn as it was an “anachronistic piece of legislation”. "That act was needed when there was ravaging famines and foodgrain production was low. This act is now anachronistic," the CEA said. On the probable timeframe to arrest the demand slump despite short- and long-term measures taken by the government since August last year, Subramanian said: “We all know how tough it is to control temperature in an AC room. Imagine, how tough it could be for a complex economy. Going forward, the real growth should be higher at 6-6.5% in the next financial year from 5% as projected for the current fiscal. We have focussed a lot on rural consumption, the 16-point agenda that we announced and the steps on capital expenditure side.” On the need for fixing the fiscal deficit budget, “The FRBM Act specifies limit for the fiscal deficit and also provides the escape clause within 50 basis points. In this delicate balancing situation between spurt in growth and fiscal prudence, we need to lean on growth and not to put all the weight on growth.

Source: Times of India

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Trump's India visit: Officials rushing to create a trade agreement

A visit by Trump's right hand man for trade negotiations - United States Trade Representative Robert Lighthizer - also remains uncertain. Officials are scrambling to create a trade pact, to be signed with US President Donald Trump, before his visit. On Tuesday, Trump said he would sign a trade agreement with India during his visit only if it was the “right deal”. However, with the US demanding broad trade concessions across multiple sectors such as agriculture, information technology, and automobiles, talks have reached a stalemate, multiple officials said on Wednesday. A visit by Trump’s right hand man for trade negotiations — United States Trade Representative Robert Lighthizer — also remains ...

Source: Business Standard

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Industrial output disappoints again; IIP contracts even as govt points to green shoots of revival

16 out of 23 industry groups in the manufacturing sector have shown negative growth during the month of December 2019. The factory output in the month of December contracted again after a mild uptick in November 2019. The index of industrial production (IIP) shrunk by 0.3 per cent in the last month of 2019. While the street estimated the factory production to expand on the backdrop of green shoots of economic revival, the contraction may once again bring back the cloud of pessimism. The manufacturing output expanded by 2.9 per cent in December 2018, which shrunk by 1.2 per cent in December 2019. India’s businesses and industries showed subdued growth in the last calendar year, on the back of a major economic crisis. Consequently, the GVA growth rate of the industry has been hit much more severely than the overall economy. Going by the February’s bulletin of RBI, the GVA growth rate of industry dramatically fell from 9.9 per cent in Q1 FY19 to 6.1 per cent in Q2 FY19; 1.7 per cent in Q1 FY20; and -0.5 per cent in Q2 FY20. Industries include mining, food processing, beverage & tobacco, textiles, leather, petroleum, chemicals, etc. The growth rates in the indices of Industrial Production for the mining and electricity sectors for the month of December 2019 stood at 5.4 per cent and (-) 0.1 per cent, compared to December 2018. The cumulative growth in the three sectors, mining, manufacturing, and electricity, during April-December 2019 over the corresponding period of 2018 has been 0.6 per cent, 0.5 per cent, and 0.8 per cent respectively, according to the Ministry of Statistics & Programme Implementation. In terms of industries, sixteen out of the twenty three industry groups in the manufacturing sector have shown negative growth during the month of December 2019. “The contraction in the IIP in December raises concerns about the sustainability of the green shoots in industrial activities that were visible until last month. This does not bode well for the overall economy as global headwinds already pose significant challenges to overall industries,” said Rumki Majumdar, Economist, Deloitte India. The large outbreak of the coronavirus in China can adversely impact India as China is one of the largest trading partners and with several factories being closed down in China temporarily, the electronics and auto industry in India will likely be hit because of their dependence on Chinese imports of components and raw materials, Rumki Majumdar added. Meanwhile, the output of core industries returned to positive territory in December after four months of contraction, buoyed by five out of eight of its constituents – coal; refinery products; fertilizers; steel; and cement. Capacity utilisation (CU) in the manufacturing sector, measured by the Reserve Bank’s order books, inventory and capacity utilisation survey (OBICUS), fell to 69.1 per cent in Q2 from 73.6 per cent in the first quarter.

Source: Financial Express

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India's Textile City of Tiruppur is an Environmental Dark Spot

Residents and farmers have alleged that the dyeing and bleaching units in the city discharge dangerous chemical effluents directly into the river under cover of darkness or when it's raining. The ball boys and ball girls at the recently concluded Australian Open sported ‘sustainable’ clothes manufactured in the textile city of Tiruppur, in Tamil Nadu. According to news reports, the garments had been made using recycled PET bottles. While the story of an Indian hand in such an initiative could attract attention the city certainly deserves, the manufacturer’s claim to environmental sustainability is suspect. For starters, the recycled yarn was imported from Taiwan, knitted and dyed in Surat and finally tailored in Tiruppur. Such a wide footprint across countries can hardly qualify as anything green; more importantly, the long-term environmental record of the city’s textile industry is a cause for even more concern. Since experiencing explosive growth from the 1980s, Tiruppur has become a successful cotton knitwear export hub. The city’s hosiery industry counts global fashion retailers among its clients, contributes to the country’s export earnings and generates jobs. But its fortunes in a globalised era have always been accompanied by severe environmental degradation. Though Tiruppur’s growth story has tapered off in recent years, the people living in and around the export hub continue to pay an enormous environmental price for its industry’s appetite for profit. Specifically, the city’s dyeing and bleaching units that add colour and flair to its apparel have turned the once-beautiful Noyyal river into a toxic sewer, and destroyed vast areas of agricultural land the water body once sustained. Residents and farmers have alleged that the dyeing and bleaching units in the city discharge dangerous chemical effluents directly into the river under cover of darkness or when it’s raining. Such actions would violate orders of the Madras high court, which require the factories to treat their wastewater and reuse it. The industry has set up effluent-treatment plants in Tiruppur but the problem of water pollution is far from solved. White textiles may seem harmless for the lack of colour but are responsible for a significant amount of water pollution due to the impact of bleaching. Besides, all textiles dyed in any colour necessarily have to be bleached first, which adds to the toxic load of dyeing. In Tiruppur, effluents from the bleaching and dyeing processes let out into the river have seeped into the groundwater and riverside fields. Fertile agricultural land located within 2 km along either side of the Noyyal has thus been rendered unproductive, disrupting the livelihoods of thousands of farming households. During a recent visit to Tiruppur and its adjoining districts, I spoke with farmers in the riparian villages of Anaipalayam, Vengalapalayam and Arugampalayam (Tiruppur district); Kodumanal (Erode district); and Athipalayam and Anjur (Karur district) – all located downstream of Tiruppur. By road, these villages are 17 to 80 km from Tiruppur, and their lands have been rendered similarly barren in spite of their distance from the city. All farmers blamed Tiruppur’s factories for destroying their livelihoods. They described a diverse basket of crops, including rice, sugarcane, groundnut, sesame, turmeric, beetroot, green chilli, tomato, cotton, tobacco and various vegetables, that they grew on their farms before the dyeing pollutants began to impact them in the mid-1990s. Now, the river can only support a few crops, mainly maize for dairy and livestock farming, and coconuts. The economic and concomitant ecological transformation of the area has left these once successful farmers with meagre incomes. V.P. Muthusamy (65), who lives in Vengalapalayam village of Uthukuli taluk in Tiruppur district is the president of the Primary Agricultural Cooperative Society at Uthukuli. He owns a 10-acre farm right on the riverbank, where he used to grow sugarcane, paddy, banana and turmeric until the early 1990s. Now he can only grow coconut trees. “My children don’t even know what sugarcane and paddy look like,” he said. “Though the river skirts my farm, the pollutants discharged by the textile factories have contaminated its waters and subsequently [the water] in irrigation ponds and wells.” Even the coconut yield has plummeted: he had 600 coconut trees eight years ago but has only 250-300 left. Many of their coconuts are also smaller than healthy coconuts should be and so sell for less. A. Eswaran, a 55-year-old farmer from Anaipalayam village in Tiruppur district, has two small farms on the riverbank where he has been able to grow only coconut trees and maize. Standing at the edge of his land, the chimney of a dyeing factory about half a kilometre away was visible against the sky. “In the early mornings, I can see foam on the river due to the chemical effluents,” Eswaran said. His son, E. Karthic, recalled memories when his family used the river water for their daily needs; now, the water is dangerous. At the Orathupalayam dam further downstream from Anaipalayam, time stood still. Here, the environmental fallout of Tiruppur’s industrial success showed itself in concrete, inescapable ways. Dark greenish-brown water accumulated in pools and along the reservoir’s edges, stagnant, dirty and toxic. Flocks of tiny birds darted over the splayed forms of water hyacinth that had colonised the noxious tank. It was an eerie sight. D. Karuppusamy, an activist who has been fighting to improve the state of the Noyyal, said the Orathupalayam dam, built in 1992, had been designed to irrigate an area of around 10,000 acres in Erode and Karur districts. “But farmers were able to use the irrigation waters only for a few years,” he said. “Afterwards, the dam waters became toxic due to the indiscriminate dumping of textile effluents into the river. For many years, the gates of the dam remained closed as farmers feared the impacts of its polluted waters.” In 2005, when the gates were opened to take advantage of the heavy rains and so dilute the pollution, the reservoir released hundreds of tonnes of dead fish and copious volumes of a poisonous sludge. “The area within a 20-km radius from the dam is severely polluted,” Karuppusamy said. Today, the farmers don’t have an alternative source of irrigation because the dam’s reservoir hasn’t since been used to store water.

Virtual water

As if the effluent discharge wasn’t enough, producing cotton textiles is a very water-intensive exercise. For a cotton t-shirt weighing 250 grams, researchers estimated a virtual water tag of 2,700 litres in 2005, including the impact of cotton farming and textile processing in terms of water use and pollution. In his book When the Rivers Run Dry (2006), Fred Pearce investigated Tiruppur’s textile-processing units’ use and abuse of groundwater. During the 1990s and in the first half of the 2000s, some people had switched from farming to siphoning groundwater 24/7 to sell to the factories. According to Pearce’s book, in 2003, the water table was 1,000 feet below the ground and rapidly falling at about 50 feet a year. This thirst quickly became a dive to the bottom of the aquifer. In response, in 2005, the Government of Tamil Nadu commissioned the New Tiruppur Area Development Corporation Limited (NTADCL), a water supply project on a public-private partnership model. NTADCL was empowered to bring water from the Cauvery-Bhavani confluence, less than 100 km away, to Tiruppur primarily for industrial consumption. But while this plan substantially lowered stress on local water sources due to the textile industry, there have been no efforts to understand its effect on the water security of the Bhavani basin. This state of Tiruppur’s riverine and groundwater resources is a blot on its success as an export hub – a story that fits neatly into the celebrated narrative of India’s economic liberalisation. The recycled t-shirts that one of Tiruppur’s companies manufactured for the Australian Open make for a feel-good news report only until we remember that the city’s exports have extracted a terrible price from the region’s farmers, and from the Noyyal itself. Neeta Deshpande is working on a book on the human and environmental story of cotton in contemporary India. She is a recipient of the 2018 New India Foundation fellowship.

Source: The Wire

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Centre cancels Rs 52 crore Gulbarga Textile Park

The union government which has been dragging its feet in establishing a Railway Division Oice in Kalaburagi, sanctioned by Mallikarjun Kharge when he was the Minister of Railways, has given a shock to the people of Kalyana Karnataka by cancelling a Rs 52-crore Gulbarga Textile Park sanctioned in November 8, 2011, under the Scheme for Integrated Textile Park. If the park had been established, it would have generated 4,315 jobs. Replying to a question by KC Ramamurthy on the establishment of the textile park in Rajya Sabha, the textile minister has clarified that this project has been dropped. The issue has also been discussed at length at the Project Approval Committee meeting on December 3, 2019. The slow pace of work resulted in the cancellation of the project, the minister explained. Out of 50 acres of land purchased for this purpose, it was proposed to establish the park on 47 acres at Nandur-Kesaragi Industrial Area. A total of 47 members were registered under the Special Purpose Vehicle (SPV), under which the park was to be developed. When the park was sanctioned, it was proposed to establish about 100 units, but later it was brought down to 50 units.

DPR revised

According to the sources, the revision of the Detailed Project Report (DPR) is said to be the main reason for cancellation of the project. As per an inquiry report which DH has in its possession, the total project cost proposed in 2009 was Rs 52.10 crore, whereas the revised project cost submitted in 2014 was Rs 83.04 crore. Without following rules, tender has been awarded for a higher rate. Instead of Rs 6.2 crore initial project cost, work order has been given for Rs 8.87 crore, the report said. that Gulbarga Textile Park Private Limited has failed to collect equity share of Rs 7.85 crore (15%) so far from the members. Gulbarga Textile Park Private Limited Managing Director Subhash Kamalapure told DH that the government has cancelled the project as they failed to collect equity share. “We will approach the Centre seeking time to collect the same and to withdraw the cancellation order,” Kamalapure said. Regarding the revision of the DPR, he said, as per the original DPR, the project cost was Rs 52 crore. In the revised report, we have brought down it to Rs 48 crore, he explained.

Source: Deccan Herald

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Not in denial of state of economy, jobs: FM Nirmala Sitharaman

The government is not in denial over unemployment and the state of the economy, finance minister Nirmala Sitharaman said on Wednesday, adding there were clear indications that employment was rising and economy was looking up. She said there is a lack of comprehensive data for formal and informal sector employment, which was an impediment to a complete picture of the situation. “Did I say that everything is hunky dory? Did I say employment is not a critical criteria for, let's say, the common citizen?” she said at the TIMES NOW Summit on the theme - India Action Plan 2020. “Not at all. And we are coming out with triggers to show where it is happening and where you need to do more. There's no denying at all,” Sitharaman said in response to a question on whether the heightened unemployment was not an issue for the government. The finance minister said six indicators, including higher employee provident fund registrations and new Mudra loan seekers, showed that employment was on the rise. “There's no denying that comprehensive data for both formal sector employment and informal sector employment is absent. You do not have a comprehensive picture… As a result, all of us definitely can seek comfort of our own data,” she said. She said the government had owned up to issues in collection of data and had decided against releasing such data, which it thought was faulty. “But that does not mean that every data of the government is questionable that the government is hesitating to release every data related to, let’s say, employment or growth,” the finance minister said.

NOT IN DENIAL ABOUT ECONOMY

Sitharaman also said the government was also not in denial about the state of the economy, and had been consistently working on troubling issues since August last year, introducing reforms for various sectors that could in turn spur consumption and consumer demand. “If the government is in denial mode, from July to February, there are people who tell me you present a budget every weekend, which means I have been acting on it,” she said. The minister pointed to the consistent recovery in GST collections, besides uptake in retail lending from banks and also rise in home bookings and increased purchases of ready to move in homes, as “definite signs of positivity” in the economic sentiment. In response to a question on whether the government coffers were going empty, Sitharaman cited the 22% rise in capital expenditure, and GST collections crossing Rs 1 lakh crore each month since November 2019, as clear indicators that the economic and commercial activity was back on its feet.

FEAR OF PROSECUTION IN PSBs

On the issue of banking sector officials wary of taking genuine decisions for the fear of prosecution and vigilance inquiries later on, the minister said it was the call of the banks to not seek a CBI or vigilance inquiry into a particular case. She added that in cases that were hanging fire for a long time, the banks have the option of reviewing the involvement of CBI. “The exercise had already started and I hope because of these, that doubt which is there in their minds should really be removed,” she said. She added that an order from the Department of Financial Services in 2016 on holding the executive directors and chairmen of banks liable in case of something major going wrong, was also withdrawn.

Source: Economic Times

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These 6 sectors likely to benefit from fast-spreading Coronavirus

International benchmark Brent crude futures fell $10 a barrel since the China's shutdown, while base metals also corrected in double digit. The fast-spreading Coronavirus not only hit the world's second-largest economy China but also rattled nearby countries including Taiwan, Hong Kong, Philippines etc. The disease has now claimed over 1,100 lives and total confirmed infected cases have crossed the 44,000 mark in China. As a result, the Chinese government gradually shut down public services, schools and several manufacturing plants since the mid of January, which prompted rating agencies and research firms to cut the first quarter growth forecast of the country. But as a rule, one country's loss is another's gain. China is the largest consumer and supplier of many products in the world, be it spare parts, chemical, toys, lighting, base metals or oil. Many countries including the US and European Union which imported good from China have reached out to other countries to fulfil the rising demand. India is one such country which has seen heightened demand for its product in the wake of Coronavirus. We spoke to analysts to know what are sectors will benefit from China's temporary lockdown. According to them, the chemical sector will be the biggest beneficiary. Other sectors that will flourish include textiles, ceramics, sanitary ware, homeware and engineering goods. "Chemicals would be the obvious choice but the relationship is not so simple. China is a big consumer and also a supplier of raw materials and intermediates. Hence one will have to go company by company based on publicly available information to deduce the real beneficiaries of the scare (and that too if it lasts beyond mid-February)," Deepak Jasani, Head Retail Research at HDFC Securities told Moneycontrol. As China is the largest consumer, the wide-spreading Coronavirus has impacted several commodities prices including base metals, oil etc, which ultimately helped many companies in their earnings. International benchmark Brent crude futures itself fell $10/barrel since the China's shutdown, while base metals also corrected in double-digits. "While the exact impact of the Coronavirus on Indian sectors and stocks is difficult to assess, the decline in commodity prices could positively impact the profitability of sectors like auto, capital goods and other industries in which commodity (steel, aluminium, copper) constitute a substantial part of the raw material," Ajit Mishra, VP – Research at Religare Broking said. "Also, sectors like textiles, sanitary ware and ceramics players may benefit as India’s exports in this space may increase due to supply constraints in China. Also, a decline in oil prices due to the outbreak of the virus will benefit India’s oil marketing, paints and aviation companies as it brings down their input cost," he added.

Source: Money Control

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Coronavirus outbreak: China urges WTO members not to impose trade curbs

China has urged the World Trade Organisation (WTO) members to refrain from imposing unnecessary trade restrictions in response to the coronavirus outbreak. “India, like most other member countries, did not officially respond to the submission made by China at the recent meeting of the WTO Committee on Trade Facilitation in Geneva,” according to a Geneva-based trade official. New Delhi, however, has no plans to place restrictions on trade with China due to fear of the virus, another official in the Commerce and Industry Ministry told BusinessLine. On the contrary, India is taking steps to assist the neighbouring country by exporting protective clothing, including masks, the official added. “At the WTO meeting, China said it hopes members will abide by the WTO rules, respect the authority and professional advice of the World Health Organisation, and refrain from overreacting and imposing unnecessary trade restrictions,” the Geneva-based official said.

Call for solidarity

China contributes in a big way to global economic output and growth, and if its economy is impacted by ‘overreaction’, there will be an inevitable spillover on the world economy, the Chinese representative warned. Members should work together to safeguard the normal conduct of global trade and economic growth in the interest of all, he added. Prime Minister Narendra Modi, in a letter to Chinese President Xi Jinping last week, expressed solidarity with the Chinese people in the ongoing epidemic that has claimed over 1,100 lives. He offered New Delhi’s assistance to deal with the serious health emergency. At a press conference on Monday, the Chinese Foreign Ministry spokesperson Geng Shuang said that India's acts of goodwill fully demonstrate its friendship with China. Officials said that ports in India need to be careful to ensure that shipments from China are handled with care and all sanitary and phytosanitary norms and conditions are adhered to.

Trade imbalance

China is one of India’s leading trading partners.

However, the big trade surplus that China enjoys with India is a source of concern for the country. While India's exports stood at only $16.75 billion in 2018-19, imports were at $70.31 billion, leading to a trade imbalance of $53.57 billion.

Source: The Hindu Business Line

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Delayed GST payments: Unpaid interest alone stands at Rs 46,000 crore

The last date for filing GSTR-3B for any month is 20th of the subsequent month; an annual interest of 18% is payable on the gross tax amount for any delay. In an effort to boost goods and services tax (GST) collections, the Central Board of Indirect Taxes and Customs (CBIC) has sent a directive to zonal heads of the indirect tax department to recover a whopping Rs 46,000 crore from taxpayers on account of penal interests arising from delayed payment of tax with GSTR-3B returns. The last date for filing GSTR-3B for any month is 20th of the subsequent month; an annual interest of 18% is payable on the gross tax amount for any delay. You are requested to look into the issue personally and to urge the field formations under your jurisdiction for making recovery of applicable interest from the identified taxpayers and to furnish weekly report of GSTIN-wise recovery of interest made in this regard,” CBIC member AK Pandey wrote to principal chief and chief commissioners on Monday. Additionally, Pandey clarified that interest liability would be on the gross tax dues and not just on the cash component. “Doubts have been raised by the field formations on whether interest has to be paid on the gross tax liability or the net cash liability. In this regard, the provision of section 50 (of the GST Act) are very clear that interest liability is required to be paid on the tax liability that is paid belatedly, either through cash or input tax credit. In other words, interest is required to be paid on total amount of tax liability as shown in GSTR-3B,” he added. The GST administration involves both the Centre and state governments. The collections (CGST, SGST and integrated GST) are shared between the Centre and states, while states are also being given compensation for any shortfall from a defined revenue level. The CBIC member added that GST Act provides for various methods by which the proper tax officer can recover any amount which is payable to the government. Experts said that tax officials could resort to draconian measures to recover dues under the pressure to meet targets as the financial year comes to a close. Levying a punitive interest of 18% on the taxpayers without giving any opportunity of being heard is a harsh practice that goes against the principles of natural justice. Under the law, the recovery proceeding allows tax officers to detain and sell off taxpayers’ goods, recover the amount from trade receivable, seize immovable property, freeze bank accounts and hold down other financial assets securities paid to any person,” Rajat Mohan, senior partner at AMRG & Associates said. Further, Mohan said that taxpayers were made liable for interest payment even though many cases of delayed return filing was attributable to the GST portal, which is still prone to glitch. The government had announced a staggered return-filing schedule last month to mitigate some of the technical issues with the system arising due to increased load on the portal on the last few days leading up to the deadline. On the GST revenue front, the government has set a target of Rs 1.18 lakh crore monthly collection in the last quarter of the fiscal. It collected about Rs 1.1 lakh crore in January, which was the second highest in the year but still short of the target. In the budget, the Centre cut the estimate for its GST revenue in the current fiscal year by about Rs 50,000 crore from the original Rs 6.12 lakh crore. The Supreme Court has stayed the Rajasthan High Court order that extended the deadline for filing of Form GSTR-9 (annual return) and Form GSTR-9C (reconciliation statement) without fine by up to a week to February 12, 2020 on a plea by the Centre that the move could undermine its efforts to boost GST compliance. The Centre has extended the deadlines for filing of Form GSTR-9 (annual return) and Form GSTR-9C (reconciliation statement) several times, in what has undermined its ability to curb tax evasion. In a related case, the government recently said in the Supreme Court: “Tinkering with such time lines (for filing of returns) would have a catastrophic impact on the functioning of GST law, as it has the tendency to create confusion and ambiguity in the trade.”

Source: Financial Express

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Prolonged coronavirus outbreak can hurt Asia-Pacific economies, banks to take maximum hit: Moody's

The deadly coronavirus outbreak, which has so far killed over 1,100 people in China, can hit economies of the Asia-Pacific region if it prolongs, and the impact will be more pronounced on banks with poor profitability and asset quality, rating agency Moody's has said. Many parts of China are in a shutdown mode after the virus outbreak last month. The World Health Organisation has described the epidemic as very serious and has issued a global alarm. Already many industries have been hit across the world as China is the single-largest source market for the world economy today. Moody's in a note on Wednesday warned that the larger impact on regional economies will be visible through poor bank profitability and worsening asset quality because of the impact the hit on travel and tourism, consumption, commodity prices and supply chain disruptions will have on banks. "If the outbreak of the coronavirus outbreak intensifies and the disruptions stemming from it are not contained in the next few months, it will hurt the asset quality and profitability of banks in the Asia-Pacific region," Moody's Investors Service warned. "The severity and length of the outbreak remain highly uncertain. If the virus related disruptions are short-lived, there will be a limited credit impact on APAC economies and banks. However, the outbreak can also last for a prolonged period and become more severe," it said. On travel and tourism, the note said as people travel less, economic growth and employment conditions will weaken in these economies in general and those dependent on foreign travellers in particular. "This will hurt banks' asset quality, in turn driving up credit costs and weakening profitability," it said. If the outbreak lasts longer, it will force households to consume less at brick-and-mortar retail outlets, hurting businesses that are dependent on domestic private spending. Banks will face credit losses from exposures to weaker companies, it added. Factory closures in China will disrupt supply chains, particularly in electronics and automotive sectors, which are already impacted by it. "In that event, credit risks for banks will arise from financing for suppliers or subcontractors that are dependent on orders from major technology or auto companies," it said. Poor demand from China will drive down commodity prices, pulling down growth in commodity-exporting countries, impacting the financial health of commodity companies, which will pose risks to banks' asset quality. Real estate prices can decline as a result of weaker economic growth and investor confidence, leading to larger losses on mortgages and property exposures, it added. The impact on the financial markets will be visible through falling prices of financial assets, leading to a decline in value of mark-tomarket securities held by banks and fall in revenue from financial markets, it said.

Source: Economic Times

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Global Textile Raw Material Price 13-02-2020

Item

Price

Unit

Fluctuation

Date

PSF

975.53

USD/Ton

0%

2/13/2020

VSF

1362.87

USD/Ton

0%

2/13/2020

ASF

2015.61

USD/Ton

0%

2/13/2020

Polyester    POY

1028.61

USD/Ton

0%

2/13/2020

Nylon    FDY

2223.63

USD/Ton

0%

2/13/2020

40D    Spandex

4117.30

USD/Ton

0%

2/13/2020

Nylon    POY

1151.27

USD/Ton

0%

2/13/2020

Acrylic    Top 3D

2460.34

USD/Ton

0%

2/13/2020

Polyester    FDY

5379.75

USD/Ton

0%

2/13/2020

Nylon    DTY

1266.03

USD/Ton

0%

2/13/2020

Viscose    Long Filament

2058.65

USD/Ton

0%

2/13/2020

Polyester    DTY

2266.67

USD/Ton

0%

2/13/2020

30S    Spun Rayon Yarn

2001.27

USD/Ton

0%

2/13/2020

32S    Polyester Yarn

1628.27

USD/Ton

0%

2/13/2020

45S    T/C Yarn

2410.13

USD/Ton

0%

2/13/2020

40S    Rayon Yarn

1778.90

USD/Ton

0%

2/13/2020

T/R    Yarn 65/35 32S

2209.28

USD/Ton

0%

2/13/2020

45S    Polyester Yarn

2166.25

USD/Ton

0%

2/13/2020

T/C    Yarn 65/35 32S

1936.71

USD/Ton

0%

2/13/2020

10S    Denim Fabric

1.27

USD/Meter

0%

2/13/2020

32S    Twill Fabric

0.69

USD/Meter

0%

2/13/2020

40S    Combed Poplin

0.97

USD/Meter

0%

2/13/2020

30S    Rayon Fabric

0.53

USD/Meter

0%

2/13/2020

45S    T/C Fabric

0.67

USD/Meter

0%

2/13/2020

 

Source: Global Textiles

 

Note: The above prices are Chinese Price (1 CNY = 0.14346 USD dtd. 13/02/2020). 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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Germany is not just an export market, it’s also a business partner

Relations between Turkey and Germany goes far beyond the classic trade relations between two countries. Both the weight of the Turkish-origin population in Germany and the close historical and cultural relations between the two countries is drawing a new perspective for trade between the two countries. Largest economy in the European Union (EU) and the country in leading position, Germany is the main export market for Turkey, especially in the textile and ready-to-wear. A report prepared by İTKİB reveals the point and the potential of the textile and readyto-wear trade between the two countries. In the light of all data, it is clearly seen that Germany is not just an export market, but a partner for the Turkish economy. With its population exceeding 83 million and more than 4 trillion dollars of gross domestic product (GDP), Germany is the biggest economic power of Europe. The country, which achieved an average annual economic growth of between 1.5 and 2 percent, became the third largest importer of the world in 2018 with an import of 1.3 trillion dollars. On the other hand, it is the largest exporter in the world with its 1.55 billion dollars export. Having an advanced industrial structure, financial system and global brands, Germany is among the actors that shape the world economy with this power.

Germany export to USA while import from China

With 134 billion dollars, the USA comes first among the markets that Germany exported most in 2018. The second place go to France with 124 billion dollars. China is the third biggest market with a value of 110 billion dollars. Turkey ranks 18 in total exports of Germany. In 2018, Germany’s export to Turkey was 22.7 billion dollars. Looking at the import figures of Germany in the same period, it is seen that the biggest importer country is China with 125 billion dollars. The second importing country was the Netherlands with 105 billion dollars. Turkey ranks 17 in Germany’s total imports. Turkey has a 1.5% share with 19.3 billion in imports.

Textile exports and imports of Germany increase

In 2018, total textile and raw materials exports of Germany increased by 5.3% to 14.1 billion dollars and imports increased by 4.5% to 14 billion dollars. The country where Germany exports the most textile and raw materials was Poland with a share of 9.3%. The value of exports to Poland was 1.4 billion dollars. Austria is the second most important export market with a share of 6.5% and a value of about 1 billion dollars. Germany’s textile exports in Turkey ranks 15 . In 2018, Germany made 363 million dollars’ worth of textile exports to Turkey. When we look at the textile imports of Germany, it is seen that the biggest supplier in 2018 was China with a share of 17.8% and a size of 2.5 billion dollars. Italy became the second biggest importer with 10.5% share and 1.5 billion dollars. Number 3 in Germany’s textile imports is Turkey with 6.9% share. Turkey increased exports of Germany in 2018 to approximately 1 billion dollars, increasing it by 0.7%.

Trade between Turkey and Germany maintains its vitality

Turkey’s exports to Germany in 2019 was valued at 15 billion dollars, decreasing by 5.4%. Automotive industry ranked first with a share of 29.2% and 4.3 billion dollars in terms of sectors. In the second place, the textile and ready-to-wear sectors are together. The share of these two sectors in exports was 23.1% and the total value was approximately 3.5 billion dollars. Compared to 2018, it is seen that textile and ready-to-wear exports decreased by 5%. In 2019, 856 million dollars of exports were made to Germany, which is our biggest textile and raw materials market. Turkey’s imports from Germany decreased by 13.7% in January-November 2019 and were valued at 16.1 billion dollars. Boilers, machinery, mechanical devices and tools are in the first place (3.3 billion dollars) with 20.3% amongst the imported products. The second imported product group was composed of motor vehicles, tractors, bicycles, motorcycles and other land vehicles and their parts and accessories (2.1 billion dollars).

Textile imports decreased more in 2019 than exports

Turkey’s exports of textiles and raw materials to Germany decreased by 2% and valued at 856 million dollars in 2019. Home textiles and technical textiles make up most of this export. While exports of home textiles increased by 6% to 427 million dollars; exports of technical textiles decreased by 14.4% to 140 million dollars. In addition, 125 million dollars of exports in woven fabric; 79 million dollars in yarn, 48 million dollars in knitted fabric and 44 million dollars in fibre exports were realized. Imports of textiles and raw materials from Germany decreased by 19.5% last year to 277 million dollars. Fibre was the most important product group in imports. Fibre imports decreased by 25.3% to 115 million dollars in the first 11 months of 2019. The value of technical textiles on the second row of imports was 110 million dollars, down by 13.4%.

Source: Textilegence

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No more textile benefits for Cambodia: EU cuts tariff privileges

As of mid-August, the Asian country will have to apply charges on exports of certain clothing and footwear products. No more textile benefits for Cambodia. The European Commission has decided to partially withdraw tariff preferences to the Asian country. The measure responds to the conclusions of a Brussels delegation sent to the country, that determined that the current ruling party in Cambodia outlawed the opposition just before the celebration of elections. Starting in mid-August, the country will have to pay tariffs on exports of certain types of clothing and footwear. Until now, Cambodia enjoyed a zero tariff under the Everything but Arms (EBA) program. The measure will impact Cambodian exports of one billion euros and will be effective on August 12. Josep Borrell, a high representative of the Commission for foreign policy said that “the duration, scale and impact of violations of rights to political participation and freedom of expression in Cambodia have left the European Union with the only option to partially withdraw the preferences”. “The European Union will not stand still observing how democracy has been corroded, human rights restricted, and free debate silenced; for preferences to be reinstated, Cambodian authorities must take the necessary measures”, he added. The measure impacts exports valued at one billion euros Europe has also considered strikes against labor rights. Earlier this year, companies such as Adidas, Levi Strauss, Ralph Lauren or Under Armor sent a letter to the country’s government to demand the alignment of labor rights with international standards to avoid losing trade preferences. Cambodia’s Prime Minister, Hun Sen, responded by saying that the country will not “bow down” to foreign demands, according to Reuters. “We want to be friends and partners of all the countries in the world but if they don’t understand us and want to force us, we don’t agree”, Hun Sen continued.

Source: MDS

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Vietnam's textile industry urged to source for raw materials from Malaysia and India

Vietnam's textile industry has been urged to source for raw materials from Malaysia and India while its main supplier China rides out the storm created by the outbreak of Covid-19. Phạm Xuân Hồng, president of HCM City’s textile association said textile firms might start experiencing a shortage of raw materials by the second quarter, as Chinese firms have said there would be no outgoing shipments before the end of February. As Vietnamese firms rely on China for 30 to 40 per cent of input materials, production would likely be hampered. Hồng thus advised firms to pool their resources to keep their workshops running through March and April while talking to suppliers in Malaysia and India. “This is, however, is only a temporary solution as it will be extremely difficult to replace China as our main supplier of raw input materials” he said. Industry leaders and economic experts warned that although some firms may still have some breathing space having stocked up before the Lunar New Year holidays, things could get tricky soon. The rubber and plastic industries too will face severe shortages as some 80 per cent of Vietnam's raw materials are imported from China, said president of HCM City’s rubber and plastic association, Nguyễn Quốc Anh. If China’s industries cannot resume operations by the end of February, firms must start looking to alternative sources, possibly South Korea and the EU. Longer transport distances and higher prices, however, would likely result in higher costs and massive disruption to operations. Anh said the outbreak had already started hurting a number of Vietnamese firms such as automakers Hyundai and Kia. Anh said looking for other partners at this point was near impossible as firms would be unable to negotiate new contracts within a short amount of time due to the auto industry’s complexity and numerous technical barriers.

Source: Vietnam News

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World's first C2C Platinum for Rajby Textiles

Monforts customer Rajby Textiles is the first company in world to have finally achieved the Cradle to Cradle (C2C) Platinum Standard for a product. Its Beluga denim fabrics have gained sustainability score in all 5 categories covered by C2C standard, which is acknowledged as involving the toughest and most thorough assessment possible to put a product through. As such, Beluga denim fabric is based on 100 per cent GOTS certified organic cotton and employs no hazardous chemicals in its production. At the same time, it is both recyclable and biodegradable, with 100 per cent of the energy used in its production offset by green energy and involving a closed loop system with no wastewater generated and no material wastage. Until now, no company has been able to achieve a Platinum rating for any product across all ten separate product areas in the C2C programme, which was first introduced in 2005. The C2C Certified Product Standard guides designers and manufacturers through a continual improvement process, aiming to achieve a circular economy approach. The five quality categories on which products are graded are material health, material reutilisation, renewable energy and carbon management, water stewardship and social fairness. A product receives an achievement level in each of these categories – Basic, Bronze, Silver, Gold or Platinum – with the lowest achievement level representing the product’s overall mark. The criteria at each level builds towards the expectation of eliminating all toxic and unidentified chemicals, and the products breaking back down to nutrients after use, top establish a safe, continuous cycle. So far, the C2C Certified Product Registry lists 612 separate products, with 113 being Gold standard. Rajby has already achieved Gold for its Greenmystery and Blue Magic denim fabrics and three other Monforts denim companies based in Pakistan have also achieved Gold to date – Artistic Fabric and Garment Industries for Earthmatics denims, Artistic Milliners for Dylan denim fabrics and Soorty, for both its Pure D and Smart Loop ranges. The new Beluga denim fabrics, however, represent a new zenith in circular denim production. To meet the active cycling requirement, Rajby has committed to using Beluga denim fabric exclusively in apparel products sold by retailers with take back programmes in place and estimated expected cycling rates for such products. Rajby collaborated with C&A, which led the research and quantification for this initial certification through its We Take it Back programme and will track active cycling rates through it. The fabrics range from 4oz to 13oz in weights in a range of different woven constructions. With a 10,000-strong workforce, Karachi-headquartered Rajby Textiles has a monthly production of 3.2 million metres of denim and 1.3 million finished garments and sustainability is at the top of its agenda. Its advanced technology includes a Monforts denim finishing range comprising washing compartments, padder, a weft straightener, cylinder dryers, a levelling field, a compressive shrinking unit, felt calender, inspection table and an outlet combination. With a working width of two metres, the complete installation has a length of 42 metres. “When we started working for C2C Gold certification it wasn’t easy, because the requirements are very tough,” said Safdar Shah, who led the C2C project team at Rajby. “We worked very hard to create a completely green supply chain and we also modified our machines and processes to meet the standard, going beyond what was required and creating a 100 per cent closed loop process, including Zero Waste Water Discharge Dyeing (ZDD) and Zero Waste Water Discharge Finishing (ZDF). “As a result, we have reduced the load of our biological ETP water effluent plant by pproximately 99 per cent, since we are not discharging a single drop of water in the entire process. The fabrics are named after the Beluga whale and dedicated to preserving ocean life.”

Source: Fibre2Fashion

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Asian trade fairs deferred amidst coronavirus outbreak

With Coronavirus spreading its menace both within and outside China, trade fair organisers across Asia have either cancelled or rescheduled the exhibitions to a later date. Organisers cited travel security and well-being of the participants as the prime reason for postponing the fairs that were to be held in Bangladesh, China, Pakistan, India and Japan. Organisers of the 17th Dhaka International Textile & Garment Machinery exhibition (DTG) have rescheduled the fair, which will now be held from June 11-14 at the International Convention City Basundhara (ICCB), Dhaka. CHIC Shanghai March edition which was scheduled from March 11-13 has been postponed. "The decision has been taken keeping the health factor of the people in mind," the organisers said. Messe Frankfurt, which is an active player in China market, announced that its three textile fairs scheduled in Shanghai are postponed for the time being in the midst of Coronavirus outbreak. The fairs postponed by Messe Frankfurt are Intertextile Shanghai Apparel Fabrics-Spring Edition, Yarn Expo Spring and Intertextile Shanghai Home Textiles. Apparel Sourcing Week (ASW), India's premier garment sourcing show, has been rescheduled to June 18-20, 2020. However, the venue for the event will remain unchanged. The first edition of Denimandjeans Japan show is also deferred for the time being, and the rescheduled dates are yet to be announced. However, there is no change as per now for the Vietnam show which is on May 28-29 and the India show which is on July 8-9, 2020. The 13th edition of IGATEX Pakistan, one of the largest garment and textile machinery and accessories exhibitions in South Asia, has also been postponed and the exhibition will now be held from July 1-4, 2020, at Expo Centre, Lahore. The large number of fair cancellations will dent trade prospects of several companies that have been anticipating good business from these shows.

Source: Fibre2Fashion

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