Mumbai: India’s $108-billion textiles industry, which helps the likes of Gap and Macy’s stock their store shelves, is seeking a bailout package on their foreign exchange liabilities after the lockdown prompted cancellation of orders that were to fetch payments in dollars. Losses in forex contracts could run into crores of rupees for the exporters that had used anticipated dollar receivables to enter into contracts with banks. To cover the hedging liabilities, the industry is seeking benefits similar to the moratorium extended to borrowers, who now have a three-month grace period on repayments. “Export assignments are either getting cancelled or delayed, bringing financial troubles for local manufacturers,” said Sanjay Jain, ICC National Textile Committee chairman. “We have approached the government and the central bank seeking relief measures. Otherwise, it will trigger job losses. We cannot blame banks, which will abide by the guidelines laid out for currency covers.” Textile exporters book forward contracts against overseas receivables to protect their cost or to earn premiums. On shipment, they provide documents to banks booking the contracts. Due to cancellation and delays, they are unable to provide the bill of lading and other documents. If exporters are not able to ship, they do not receive the money from overseas buyers. In such cases, they have to unwind those forwards deals booked up to six months in advance at a loss of 2-4 rupees/unit of dollar, dealers said. “Textile exporters should be given some flexibility to manage their dollar delivery in the form of some extensions so they do not have immediate cash flow problems considering (that the lockdown is) no fault of theirs,” said Abhishek Goenka, CEO, IFA Global. If an exporter booked a contract at 72 and in the absence of dollars delivery in March when the rate is 76, he may have to book a loss at 76 despite the fact that his bookings were based on confirmed orders. “If the rupee maintains its bearish bias due to dollar shortage and heads another 4-5% south, it could accelerate problems for them,” Goenka said. The rupee lost about a percentage point Monday to close at 75.59 per dollar, reflecting the weakness in equities and bonds. The local unit was at 74.85 last Friday. India’s textiles industry provides direct employment to about 50 million people, and indirect jobs to another 60 million people.
Source: Economic Times
After the government postponed deadlines for filing tax and earning returns several companies and stakeholders have sought extension of current financial year to a 15-month one, to end in June 2020. As per the proposal the next financial year would start from July this year and would end in March 2020. According to the people in the know several companies have seen all their ratios—from debt to equity to return on capital—go for a toss in last one month due to Coronavirus and shutdown that followed. The government in last few days reached out to several industry experts to seek their opinion on impact of such a step, say people with direct knowledge of the matter. “For several companies there is a need to extend the financial year to June end as most of their ratios have gone for a toss due to Coronavirus. It’s only fair that companies are given additional time because even when tax deadlines are extended, there is a pressure from revenue department to pay before March end, as that’s the year end for them,” said said Dinesh Kanabar, CEO, Dhruva Advisors. Industry experts point out that for all the companies last one month has hugely impacted cash flows and that has resulted in their mark to market. Extension of the financial year may spread the bad period over more months and could help companies recover a bit say experts. Government recently extended several March end dead lines like filing year end results or tax returns to June. Industry trackers say that the extension of the compliance deadline has provided relief for companies to meet the obligation, but that alone may not be enough. “An extension of the financial year would not only relieve practical challenges around book closures and stock taking during a lock down, but also help in the larger backdrop of closing and reporting when things would hopefully be less unsettled, than doing it now in the midst of significant uncertainty” Gautam Mehra, Leader, tax and regulatory services, PwC India. According to a person with direct knowledge of the matter, this particular proposal is being discussed by the government “at the highest level.” “Whether to extend the current financial year to June, September or December is not so much of an issue, but the government has to know if this is enough. The government may wait for few days before taking a decision to see impact of earlier announcements by the finance minister and the RBI,” he said. The proposal is that current financial year should be a 15-month one and next financial year will be a 9-month one (July-March). However, some industry associations are pushing for a 21-month financial year that will end in December 2020, said people in the know. “The impact of Covid19 is huge and it may disrupt the business and financial of the business for couple of quarters. Government was exploring the change in the financial year and now if the government is able to tweak the financial year, then the effects of Coronavirus on financials could be spread over extended the time frame,” said Paras Savla, partner, KPB & Associates, a tax advisory. The government had earlier toyed with the idea of changing the financial year from April to March to calendar year-- January to December. In July 2016 a committee was constituted to look at the proposal of moving to calendar year. A NITI Aayog discussion note too had mentioned that the current financial year system in India is not aligned to international practices and causes a lot of problem. Insiders say that due to the current situation the government may consider whether to extend the current financial year to June or directly move to calendar year system.
Source: Economic Times
The Finance Ministry and RBI will hold a meeting on Tuesday to decide on government's borrowing plan for the first half of 2020-21 amid the lockdown to contain the spread of coronavirus. According to sources, the government would resort to front-load its borrowing plan to deal with the challenges posed by COVID-19 on the economy. The meeting between the Finance Ministry and Reserve Bank of India (RBI) will be held through video conferencing for the first time as there is lockdown across the country, the sources said. Post meeting, the borrowing calendar for issuance of dated government securities and short term papers will be announced in the evening. As per the Budget, the government plans to borrow Rs 5.36 lakh crore from the market in 2020-21, higher than the Rs 4.99 lakh crore estimated for the current financial year ending March 2020. The gross borrowing would be Rs 7.8 lakh crore for the next financial year as compared to Rs 7.1 lakh crore estimated for the current financial year. Gross borrowing includes repayments of past loans. Repayment of past loans in the next financial year has been pegged at Rs 2.35 lakh crore. Presenting Budget for 2020-21, Finance Minister Nirmala Sitharaman had said, "Net market borrowings for the year 2019-20 would be Rs 4.99 lakh crore and for the year 2020-21, it would be Rs 5.36 lakh crore". "A good part of the borrowings for the financial year 2020-21 would go towards capital expenditure of the government that has been scaled up by more than 21 per cent. "As I had previously mentioned another about Rs 22,000 crore have been allocated for equity to fund certain specified infrastructure finance companies, who would leverage it manifold and provide much-needed long-term finance to the infrastructure sector. That should spur growth impulses in the economy," she had said. The government raises funds from the market to fund its fiscal deficit through dated securities and treasury bills. The Budget has pegged fiscal deficit at 3.5 per cent for the next fiscal, down from 3.8 per cent of the GDP in the current financial year. The government had earlier estimated the fiscal deficit to be 3.3 per cent of the GDP for the current fiscal but due to revenue shortage, the Centre had to increase it and utilise the 'escape clause' in the Fiscal Responsibility and Budget Management (FRBM) Act. The 'escape clause' allows the government to breach its fiscal deficit target by 0.5 percentage points at times of severe stress in the economy, including periods of structural change and those when growth falls sharply.
Source: Economic Times
India has asked the countries, with which it has free trade agreements (FTAs), to allow imports of goods without certificate of origin for the time being as the domestic authorities are currently not issuing the document on account of lockdown due to COVID19 pandemic. The government has allowed issuing certificates of origin-retrospectively to eligible exports under various India’s trade agreements with other countries as offices temporarily closed and unable to issue the certificate of origin. Certificate of origin is an instrument which establishes evidence o n origin of goods imported into any country. These certificates are essential for exporters to prove where their goods come from and therefore stake their claim to whatever benefits goods of Indian origin may be eligible for in the country of exports. Exporters have to submit a certificate of origin at the landing port of the importing country. “India would also stand ready to honour its preferential trade agreement imports subject to the respective governments also making a formal request or putting up a notice in this regard,” the directorate general of foreign trade (DGFT) said in a circular. The relaxation comes in the wake of a lockdown due to the Covid-19 outbreak. “In view of these exceptional circumstances, the certificates would be issued retrospectively by the concerned Indian agencies after they open their offices,” it said in the circular. India has such trade agreements with ASEAN, Singapore, South Korea, Japan, Sri Lanka, Thailand, and Malaysia, among others. The directorate said that on account of the lockdown/curfew in India due to the COVID-19 pandemic, the Indian agencies authorised to issue the certificate of origin under India’s free trade agreements (FTAs), comprehensive economic cooperation agreements (CECA), comprehensive economic partnership agreements (CEPA) and preferential trade agreements (PTAs) are temporarily closed and unable to issue the certificate of origin. In the interim period, the customs authorities and other competent authorities in the trading partners with whom India has a trade agreement, may kindly allow the eligible imports under preferences on a retrospective basis subject to the subsequent production of the certificates of origin by the Indian exporters. Exports from India touched $292.9 billion in the 11 months to February 2020, while imports were $436.03 billion.
Source: Economic Times
The groups will consult frequently over video conferencing or meetings to provide suggestions to the government. The National Democratic Alliance (NDA) government on Sunday formed 10 empowered groups and a strategic task force comprising senior civil servants to deal with the Covid-19 outbreak and its aftermath. The setting up of the groups and the task force, which together have 68 bureaucrats, is an attempt to forge a planning and implementation machinery that acts in concert to minimise the impact of the disease the World Health Organization (WHO) has declared a global pandemic. It underlines the recognition by the Narendra Modi government of the need for a more comprehensive approach towards tackling the outbreak, which has posed an unprecedented public health crisis, and its aftermath, expected to bring wide-ranging social and economic consequences. The groups will consult frequently over video conferencing or meetings to provide suggestions to the government. They will also monitor their areas of ambit daily and are empowered to take decisions, indicating the pace with which the Centre wants these groups to act. The six-member strategic task force will deal exclusively with issues related to the lockdown announced by Prime Minister Narendra Modi for three weeks starting March 25. Dr. VK Paul, a member of the policy think tank Niti Aayog; home secretary Ajay Kumar Valla; secretary (coordination) VP Joy and three officials from the Prime Minister’s Office —AK Sharma, Arvind Srivastava and Abhishek Shukla —will be part of the team. The first empowered group will oversee “the medical emergency management plan” and is headed by VK Paul. It also has four other members—representatives of the health ministry, the National Disaster Management Authority and the department overseeing direct benefit transfer. The second group will look into “availability of hospitals, isolation and quarantine facilities, disease surveillance and testing and critical care training”. Headed by CK Mishra, secretary of the ministry of environment, forests and climate change, the panel comprises Vinod Yadav, chairman of the Railway Board; Dr. Randeep Guleria, director of the All India Institute of Medical Sciences, New Delhi; and one senior official each from the defence and health ministries. All the 10 empowered groups have a representative each from the cabinet secretariat as a member. The biggest group will deal with “facilitating supply chain and logistics management for availability of necessary items such as food and medicine”, indicating the importance of the supply chains in making the lockdown successful. Headed by Parameswaran Iyer, secretary of the department of drinking water and sanitation, the panel has 10 other members including consumer affairs secretary Pawan Agarwal; Guruprasad Mohapatra, secretary of the department for promotion of industry and internal trade; textiles secretary Rajeev Kapoor and senior officials from the Prime Minister’s Office, Central Board of Indirect Taxes and Customs, the ministry of external affairs,ministry of health and department of health research. With a large section of the political establishment worried about the social and economic fallout of Covid-19 —as evident from tens of thousands of migrant workers heading home from the cities and the shutdown of commercial and industrial establishments —the government has also formed a separate group on “economic and welfare measures.” It is headed by Atanu Chakraborty, secretary of the department of economic affairs. Expenditure secretary TV Somnath, labour secretary Heeralal Samariya and rural development secretary Rajesh Bhushan are its members along with officials from the PMO and the financial services department. Ministry of micro, small and medium enterprises Arun Panda will head a panel on “augmenting human resources and capacity building” and information and broadcasting secretary Ravi Mittal will preside over a group on “information communication and public awareness”. Ministry of electronics and information technology secretary Ajay Sawhneyleads the panel on technology and data management and Amit Khare, secretary of the human resources development, the panel on public grievances and suggestions. Achiransu Acharyya, economist with Viswa-Bharati, said, “The government forming so many empowered group of secretaries indicate that they want a more coordinated approach among different ministries on issues to tackle. I must say this could have happened earlier and also a mechanism should be set up with the states.”
Source: Hindustan Times
FIEO asked for extension in pre- and post-shipment credit by a minimum of 180-270 days, waiver of PF/ESI charges for all industry from March to June 2020 as industry will bear the wage cost during the period of lockdown with no or less business affecting their liquidity. Exporters are asking for a host of steps such as allowing them to operate their factories with minimum workforce, subsidy on interest rates, and extension of incentive schemes in order to deal with the coronavirus crisis. These demands were raised during a video conference meeting called by Piyush Goyal, minister, commerce and industry. The minister spoke with representatives from various export promotion councils (EPCs) from across the country, to assess the impact of coronavirus and lockdown in the country. The councils apprised the impact of the pandemic on their activities and businesses, and made a range of suggestions to overcome the hardships. “Export-import is an important activity of the country, and at the same time, lockdown was necessary for the safety and health of 130 crore Indians. So a fine balance has to be maintained and solutions found to reduce the difficulties,” said Goyal. He said the suggestions made in the conference will be taken up in right earnest and action will be taken soon. He assured the councils that the government will try to be accommodative with their reasonable demands, and come out with practical outcomes. During the meeting, the Federation of Indian Export Organisations (FIEO) suggested that, all manufacturing companies in exports should be allowed to operate with 50 per cent of the manpower with full sanitation and safety with social distancing norms as loss in exports will result in market loss which will be extremely difficult to recover. Ajay Sahai, director general, FIEO, said, “Our loss will be China’s gain which is using all means to gain greater market access with increased incentives.” The other recommendations made by them include extension of the Foreign Trade Policy 2015-2020 by one year, extension of interest subsidy scheme for 2020-25 with effect from April 1, 2020, amnesty scheme for regularisation of default by payment of only customs duty without interest and penalty to lessen the burden on industry. Sahai also said that, all agencies involved in exports and imports including customs, freight forwarders, transporters, shipping lines, courier companies, plant quarantine, certificate of origin issuing agencies should function with minimal staff, since if one of them is not functioning, the export-import chain is broken. FIEO asked for extension in pre- and post-shipment credit by a minimum of 180-270 days, waiver of PF/ESI charges for all industry from March to June 2020 as industry will bear the wage cost during the period of lockdown with no or less business affecting their liquidity. Ludhiana-based exporter S C Ralhan suggested that, fixed charges levied may be waived and industry may be charged only on the actual consumption of electricity and immediate refund of IGST will help exporter in dealing with liquidity issues. “These measures are important for the export sector as it contributes significantly in the country’s economic growth. Without these measures, the sector will face major problems,” said leading footwear exporter and chairman of Chennai-based Farida Group, Rafeeq Ahmed. Export Promotion Council for SEZs and EOUs, vice chairman, Bhuvnesh Seth said that, steps need to be taken for special economic zones and export oriented units (EOUs). He pitched for extension of income tax benefits and other incentives till March next year, continuation of MEIS export incentive scheme and zero rent at least for MSME for lockdown period. “In view of lockdown, we humbly request for extensions of sunset clause for SEZs till March 31, 2021, direction should be given to clear import containers or demur-rages applicable of shipping companies or ICD (Inland Container Depot) to be waived off during the lockdown period. Units export consignments worth crores are palletised ready to stuff in containers for dispatch with time-bound delivery. Request to issue instructions to MHA (Ministry of Home Affairs), state governments and customs to move such containers for dispatch,” he added. The organisations that took part in the video conference included from sectors such as leather, apparel, sports, electronics, telecom, silk, gems and jewellery, cashew, and plastics. Despite exports and imports growing at the same rate of 9 per cent, India’s trade deficit reached a record high of US $176 billion in 2018-19. According to data released by the commerce and industry ministry on Monday, exports stood at US $32.55 billion in March, taking the total tally in 2018-19 to US $331 billion. Major group of exports are organic and inorganic chemicals, engineering goods, textiles, drugs and pharmaceuticals and petroleum products.
Source: The Navhind Times
The textile industry, reeling under a severe financial crunch, has suffered another massive blow due to the lockout declared by the Centre to check the spread of COVID-19. The textile industry is heavily dependent on orders for yarn from the USA and Europe and the lockout of 120 spinning mills from March 23 has hit the sector hard. “As a result, the industry will not be able to recover at least for the next one to two years. Yarn orders are being cancelled by corporate buyers who are dependent on orders from the US and Europe. If US doesn’t recover fast, it will lead to the closure of a lot of textile mills in our State and also across the country,” said secretary of AP Textile Mills’ Association Lanka Raghurami Reddy.
Payments stopped
The textile sector has been facing losses as payments have been stopped by buyers due to the coronavirus impact, and the industry is facing severe pressure from banks. As a result more mills could be declared as Non-Performing Assets. The APTMA has requested Chief Minister Y.S. Jagan Mohan Reddy to understand the crisis situation and help the units overcome it by announcing immediate relief measures like releasing of outstanding subsidies which were not paid by the previous government for the last four years, deferment of payment of power bills to A.P. DISCOMS for three months without interest and exemption from payment of minimum consumption units and minimum MD charges. Further, Mr. Reddy urged the CM to recommend to the Union government for waiver of interest payment on all the loans of textile units, including CC limits for six months and moratorium of two years for the existing term loans.
Source: The Hindu
The country’s labour-intensive export sectors such as leather, textiles, gems and jewellery, carpets and handicrafts have borne the brunt of the Covid-19 pandemic with orders getting cancelled, shipments delayed indefinitely, payments missed and consignments stuck at ports. According to sectoral estimates, about ₹7,600 crore of leather export orders have been cancelled, ₹2,000 crore carpet orders are stuck and handicraft sector losses are seen at ₹8,000 crore. “Around 30% of orders of labour-intensive sectors have got cancelled,” said Ajay Sahai, director general of the Federation of Indian Export Organisations (FIEO). The issues are set to be discussed at a meeting that commerce and industry minister Piyush Goyal will hold with the various export promotion councils on Tuesday. India’s exports contracted 1.5% to $292.9 billion in the 11 months to February 2020. The decline is likely to be much sharper going ahead. Export orders worth $1 billion were cancelled in the past 10 days and many customers have stopped payments, said Council for Leather Exports chairman Aqeel Ahmed Panaruna. “Customers are not paying invoices and all new orders are cancelled. Our American clients are not taking products that are ready for them,” Panaruna said. India’s Rs 12,000 crore carpet industry is also in distress with orders worth Rs 2,000 crore stuck and besides it’s running short of workers due to the lockdown. “We do 40% of our business in the January-March period. The lockdown will have long-term consequences,” said Siddh Nath Singh, chairman, Carpet Export Promotion Council. The handloom, handicraft, carpet and cottage sectors employ around two million people. India’s gems and jewellery exports fell 19% in February and are estimated to decline 12% in FY20 to $35.85 billion on year, according to the Gem & Jewellery Export Promotion Council (GJEPC). “In February, when the deadly virus spread in China, Hong Kong and Far East, gems and jewellery exports had plunged by 19.37% in comparison to February 2019,” said Colin Shah, vice chairman, GJEPC, and a leading diamond exporter. “But the situation worsened in March when it spread to Europe and the US.” Cancellation of key trade fairs in the US, Hong Kong and Jaipur also impacted the jewellery business. According to a Delhi-based exporter of garments, around 70% of orders have been postponed or cancelled and since this is a season-dependent sector, apparel meant for export will likely go waste. The handicraft industry fears closure of 60-80% of units in three months if the situation doesn’t improve as buyers are not paying, have cancelled orders already under production or are taking advantage of the situation by negotiating for discounts. “An initial estimate of the impact that the handicraft sector may suffer in wake of the existing crisis is approximately Rs 8,000-10,000 crore,” said Export Promotion Council for Handicrafts (EPCH) director general Rakesh Kumar. Exporters have sought an increase in pre and post-shipment credit duration to 180 days from 90 days now, besides getting international couriers to function, as sending documents has become a challenge given that all flights have been halted. “It is suggested that banks should be advised not to levy any charges on the exporters while cancelling forward contracts in those cases where the export orders are cancelled by the overseas buyers,” textile exporters have written to Goyal. Cancellation of forward contracts involves costs that the banks get from exporters. Exporters want the government to provide freight subsidies for goods that are brought back to the country, compensation in some form if items have to be abandoned or if discounts have to be given to buyers. They have also asked for a delay in declaring loans as non-performing assets for a year owing to the lack of business coupled with fixed costs.
Source : Economic Times
In wake of the coronavirus pandemic, the Maharashtra Electricity Regulatory Commission (MERC) has asked utilities to suspend all non-essential activities related to power supply, including meter-reading and bill-payment at various centers. The Maharashtra State Electricity Distribution Company Limited (MSEDCL) has also stated that due dates of every bill will be accounted only after the 21-day lockdown ends. In a directive issued on Thursday, MERC asked utilities to suspend activities like meter-reading, billing, visiting consumer premises, meeting consumers in person, bill collection at payment centers and release of new connections. The regulatory body has stated that with no meter readings, estimated bills must be computed on an average basis. A source close to the development said that estimated bills as per electricity supply code regulations are taken as the average billing of three months. Officials from the Maharashtra State Electricity Distribution Company Limited (MSEDCL) said that the due date for every bill will be accounted only after the 21-day lockdown period. For instance, if you have to pay your current bill in another seven days, they will be counted only after April 14, after the national lockdown ends. The guidelines further state that utilities should update digital payment modes and also undertake automated meter-reading wherever possible. “While we are promoting digital payment, not many can access online modes of payment. Instead of lining up in front of centres, we have decided to not consider the due dates during the lockdown period,” said Aseem Gupta, managing director, MSEDCL. The MERC directive states, “Considering the critical situation and to ensure full implementation of the government directives to ensure social distancing to control the spread of Covid-19, the commission deems it fit to give certain relaxations in supply code in services not directly linked to supply of power.” It added that electricity is an essential service and utilities must ensure continuity of power. The state discom has a consumer base of 2.20 crore people. Adani Electricity Mumbai Limited, Tata Power and BEST are also encouraging its consumers to switch to digital modes of payment.
Source: Hindustan Times
The ongoing lockdown and a U.S-China trade war have dealt a double whammy to the industry. Over 50,000 migrant daily workers from Tamil Nadu, Odisha and other States are staring at a bleak future, with 120 spinning mills in the district shutting down since March 25 in the wake of an ongoing nationwide lockdown aimed at curbing the spread of COVID-19. The lockdown comes on the back of an unprecedented crisis that has gripped textile mills as they have declared production holidays owing to a hike in minimum support price and the U.S.-China trade war which has affected exports to China. Now, with exports to China coming to a complete halt due to COVID-19, the spinning industry has gone into a tailspin. “China has been a major importer of cotton for several years, and the ban on exports has hit the industry hard. The domestic demand has also slackened due to stiff competition. Moreover, the cost of production is also going up,” said chairman of A.P. Spinning Mills Association, Lanka Raghurami Reddy. Even the prices of candy have gone up by 25% with each candy fetching ₹43,000. The delay in release of power subsidies to the tune of ₹1,200 crore has come as the final nail in the coffin, forcing millers to shut down the mills. The industry has also been hit due to delay in payments from the U.S. and Europe, and many spinning mill managements are not in a position to repay loan instalments and loan interest amounts. The spinning mill associations have urged Chief Minister Y.S Jagan Mohan Reddy to release outstanding subsidies which were not paid by the previous government for the last four years, and have also sought deferment of payment of power bills to discoms for 3 months without interest and suspend the rule of payment for minimum consumption units and minimum MD charges. Further, Mr. Raghurami Reddy has requested the State Government to recommend to the Union government a waiver of interest payment on all loans of textile units, including CC limits, for six months, and a moratorium of two years for the existing term loans. Cotton yarn from A.P. is known for its superior quality, and every day, four million kg of yarn is produced. Indian Cotton, known for its fine texture, used to be exported to China but with the ongoing U.S.-China trade war continuing, the exports have almost come to a standstill.
Source: The Hindu
There is a fake new circulating in some section of media that the Financial Year has been extended. A notification issued by the Government of India on 30th March 2020 with respect to some other amendments done in the Indian Stamp Act is being misquoted. There is no extension of the Financial Year. The Finance ministry said that a notification has been issued by the Department of Revenue, Ministry of Finance on 30th March, 2020 which relates to certain amendments to the Indian Stamp Act. It pertains to putting in place an efficient mechanism for collection of Stamp Duty on Security Market Instruments transactions through Stock Exchanges or Clearing Corporation authorized by Stock Exchanges Depositories. This change was earlier notified to be implemented from 1st April, 2020. However, due to the prevailing situation, it has been decided that the date of implementation will now be postponed to 1st July 2020.
Source: PIB
Textile exporters have appealed to Prime Minister Imran Khan to consider exports on a par with essential services amid the coronavirus pandemic and bind Pakistani missions abroad to help sustain exports orders already in place with foreign buyers. They urged the premier to give special instructions to the Ambassadors, Consul Generals and Trade Officer/Commercial Counsellors designated abroad in friendly countries to immediately approach the concerned ministries/departments/buyers in respective countries with recommendations to maintain business with their Pakistani counterparts. It was further urged to not cancel textile orders given to Pakistani exporters. The appeals came from Pakistan Hosiery Manufacturers and Exporters Association (PHMA) Central Chairman Chaudhry Salamat Ali in a news statement issued on Sunday. Ali, in his letter to the Prime Minister, emphasised the need to use Pakistani foreign missions abroad convincing the buyers to maintain their business with Pakistani counterparts and not to cancel textile orders given to the Pakistani Textile industries. Pakistan’s major textile export destinations are USA, EU, UK, Germany, France, Italy, Spain, Netherlands, Belgium, Canada, and Japan. Reportedly, many foreign buyers have cancelled their orders, several others have asked to slowdown production. PHMA believes that exports, being the highest foreign exchange earner and employment provider, should also be treated on a par with essential services, Ali states in the letter. He lauded the announcement of the federal government to allow the textile export industry to complete its orders in progress in 3 to 5 days while taking all precautionary and preventive measures. Nonetheless, the industries are totally closed in view of complete lockdown, he said. The export orders of many PHMA member exporters are in progress, which will be completed in next few days, provided the government allow to operate the industries. Exporters are highly perturbed and want to complete their pending/in process export orders so that they may complete export consignments and send shipments in next few days to avoid colossal financial losses, the letter further states. The PHMA’s office-bearer requested the Prime Minister to order provincial governments to fully facilitate textile export industries in their respective provinces by giving special permission of transportation of export orders. He said export industries are conscientious of Covid-19 and have taken all special preventive measures before the countrywide lockdown. “Majority of industries have already made special arrangements regarding workers like sensing temperatures, observance of cough or flu condition, installation of sanitisers at time offices, regular fumigation, dedicated private transport for physically fit workers.” the press released quoted Ali as having said.
Source: Pakistan Today
A total of 985 factories including readymade garments and textile units that fall under the jurisdiction of Industrial Police remained open until Sunday amid coronavirus outbreak in the country. According to the Industrial Police (IP), there are some 7,408 industrial units in the IP’s six zones including Ashulia in Dhaka, Gazipur, Chattogram, Narayanganj, Mymensingh and Khulna. Out of the 7,408 units, 3,366 are readymade garments and textile factories and the rest are jute mills, cement factories, re-rolling mills and other factories. IP sources said that out of the 985 factories which remained open, 299 were textile and RMG units. The IP data showed that there were 1,887 member factories of the Bangladesh Garment Manufacturers and Exporters Association in the six zones and 183 of them remained open until Sunday. Out of the 1,094 factories registered with the Bangladesh Knitwear Manufacturers and Exporters Association, 35 remained open. A total of 385 factories are registered with the Bangladesh Textile Mills Association and 81 of them remained open until Sunday, the data showed. The rest 4,042 factories belong to other sectors and 686 of them remained open. The IP data also showed that there were 194 factories under the Bangladesh Export Processing Zones Authority and 175 of them remained closed on Sunday. BGMEA officials said that most of the member factories of the trade body announced a closure and a few of the units which were producing personal protection equipment and masks to prevent the coronavirus outbreak in the country remained open. Bangladesh Garment Shramik Sanghati president Taslima Akhter and general secretary Julhasnayeen Babu on Sunday demanded an immediate closure of garment factories with advance pay to protect the workers from the infection of COVID-19. The labour rights organisation said that it was concerning that some of the factories were still open, putting the workers and the other staff at risk of coronavirus infection as social distancing was a must to protect people from the epidemic.
Source: New Age Business
With the price of crude oil falling around $30 per barrel, the National Union of Textile Garment and Tailoring Workers (NUTGTWN) has restated that Nigeria must immediately opt for diversification and industrialisation. This is even as the union urged the Federal Government to institute a structured, consistent and sustained policy framework for accelerated growth in the manufacturing sector. The union also at its 12th Quadrennial Delegates’ Conference held in Abuja last week ratified the retirement of its general secretary, Issa Aremu, as the incumbent president, John Adaji, got another term of four years to lead the union. In his address at the conference, themed, “Labour and Industry (Textile) in the Next Decade,” Aremu, vice president IndustriAll, harped on industrialisation is the key to economic recovery. “The advantages of industrialisation include lessening of dependency on imports, thus saving scarce foreign exchange. “Where the economy is diversified, industrialisation serves as a source of foreign exchange. It also serves as a source of employment for greater number of the population and invariably reduces income poverty,” he said. He opined that textile industry was a strategic non-oil industry, which, in spite of its depressed state, is still largest private sector employer of labour after government. According to him, at a time, when the price of crude oil is falling and there is so much talk about diversification, its time Nigeria revisited basic industries such as textile, adding that textiles has been the cornerstone of economic development of most nations. He said, “The industry has been in steep decline due to lack of electricity, smuggling and lack of patronage. This free fall has been slightly moderated in recent years by series of interventions including the Cotton, Textile and Garment (CTG) intervention fund managed by the Bank of Industry (BOI). It is estimated that Nigeria spends over $2 billion on imported fabrics as the crisis in the industry has been aggravated by high local production cost and cheap import from Asia.” He said the union is demanding massive patronage of locally produced textiles by MDAs and the establishment of the Ministry of Textile as it has been done in India, China and Pakistan. He said the objective of the proposed ministry would be regular upgrading of the textile value chains, improve on labour productivity, maximize value-addition and formulate strategies and programme to enable the textile sector to meet the challenges to attain global competitiveness. Among other things, the foremost labour leader demanded for a strategic action towards combating smuggling and counterfeiting of textile products, setting up of Presidential task-force, improve electricity supply, training and retraining of the Work Force as well as full revival of textile industry for Nigeria to be well positioned to trade in fabrics and benefit from the $3 trillion Africa free trade agreement. “Nigeria needs a radical departure from the age long unhelpful neoliberal economics of liberalization, factory closures and export orientation to urgent diversification, import substitution, re-Industrialization and beneficiation. This is the time to re-inflate the economy as commendably being done by the CBN and not a panicky contraction as wrongly being proposed by the Ministry of Finance,” he stressed. In his address immediately after the election, the President, John Adaji commended the federal government for the commitment to the revival of Textile Industry through its various policy initiatives such as Cotton, Textile and Garment (CTG) Policy, development financing through the Central Bank of Nigeria (CBN) and Bank of Industry (BOI). “We appreciated President Muhammadu Buhari for the signing of the Executive Order 003 on support for local content in procurement, forex ban for textile importers, closure of borders to check smuggling, amongst other important decisions to salvage the industry,” he said.
Source: Sun News
A Turkish company based in the province of Adana in southern Turkey that produces 700,000 tons of polyester annually, mostly for the health and hygiene sectors, has increased its orders by 20% amid the growing need for its products due to the coronavirus pandemic. Some 60% of the SASA Polyester Industry’s manufactured goods are used in health, hygiene and packaging products. The company’s general manager, İrfan Başkır, told Anadolu Agency (AA) Monday that this rate had increased considerably due to the effect of the recent COVID-19 outbreak. "We have received additional orders due to the pandemic, with an increase of approximately 20% from both our domestic and international customers,” he said. Başkır noted that 2019 had been a year in which previously planned investments had been gradually introduced. With the series of investment moves and the commissioning of polyester fiber facility investments, Başkır said the group's polyester production capacity had already increased from 350,000 tons to 700,000 tons annually. He highlighted that this capacity was set to reach 1.4 million tons in May in line with the second phase of investments and in June with the third phase. Further speaking on the pandemic’s effect on production and economy, Başkır said: "I believe that we will have a period in which we can compensate for a possible loss in use in the textile sector with an increase in other sectors.”
Domestic production important
Referring to the importance of domestic production throughout this process, Başkır noted that the pandemic had presented a strong case to mobilize overall domestic production. “The manufacture of certain health products and packaging across the country has become of utmost importance,” he said, noting that the investments made by SASA were aimed at reducing the current account deficit of the country and allowing for the handling of the current supply.
Source: Daily Sabah
Many US and European Union (EU) partners have sent notices to Vietnamese garment and textile businesses informing they will temporarily stop receiving goods for three to four weeks. According to Ph?m Xuan Hong, chairman of the HCM City Association of Garment Textile Embroidery and Knitting, nearly two-thirds of the garment-textiles market narrowed with this. Half of all textile exports from HCM City go to the United States, while the EU accounts for 15-18 per cent of annual exports. According to chairman of Viet Thang Jean Ph?m Van Viet, the Chinese experience shows it will take at least two months in the United States and EU to control the pandemic. The United States accounts for 30-35 per cent and the EU 20 per cent of the company's total export turnover. About 40 per cent of existing fabrics will be abandoned or sold at low prices, he said. Suddenly stopping imports forced enterprises to store many containers of products that were on the way to US and EU ports, he said, which will increase expenses, according to a Vietnamese media report. The most urgent problem for textile enterprises is not delivery of orders but how to protect workers. Textile enterprises in the country have suggested the government to quickly disburse approved economic stimulus packages and consider partial use of the unemployment insurance fund and social insurance fund to help businesses continue paying their workers. They also hope the ministry of finance and the banking system will lower interest rates or give interest-free loans, which could be used to pay workers until production activities and trade return to normal. However, Vietnamese ambassador to the United States Ha Kim Ngc said the US government has not announced a policy to suspend imports of Vietnamese garment and textile products. Due to complex developments of the COVID-19 pandemic, a decline in trade activities, including the textile sector, was inevitable, he added.
Source: Fibre2fashion
Lack of sufficient electricity supply, counterfeiting and smuggling are some of the biggest problems affecting the Nigerian textile industry, which cannot revive unless the government supports the it using a holistic approach, according to Nigerian Textiles Manufacturers Association (NTMA) president Folorunsho Daniyan, who was elected recently. A major problem for the sector is the cost of energy: cost of gas for those in the south and that of black oil for those in the north that are yet to be connected to the gas pipeline. Government recently approved gas tariff for textiles but that is yet to be implemented, he said. If smuggling is reduced by 20 per cent, about 40 textile firms will come back into operation, he was quoted as saying by Nigerian media reports. He advocated setting up of a textile task force to combat smuggling as was recently done in Ghana. A minimum value should be fixed for textiles coming into Nigeria, as it is ridiculous for textiles, most of which are unsafe for skin, to sell at N700, he said. Daniyan is head of corporate affairs at the United Nigeria Textiles Limited (UNTL), the biggest textiles group in Nigeria.
Source: Fibre2fashion
