Prime Minister Narendra Modi on Thursday reviewed the impact of COVID19 on the Indian economy and a possible second stimulus to boost sectors hit hard by the pandemic.Modi held discussions with Finance Minister Nirmala Sitharaman as the pandemic hit sectors from small industries to the aviation sector hard with millions of jobs at stake. The meeting comes amid drastic reduction in GDP growth forecast by various multi-lateral funding agencies for the current fiscal due to the impact of COVID-19 and consequent lockdown. State of the economy was discussed in details during the meeting, sources said, adding resource mobilisation for taking on the future challenges was also highlighted. As per the World Bank's latest assessment, India is expected to grow 1.5 per cent to 2.8 per cent. Similarly, the IMF on Tuesday projected a GDP growth of 1.9 per cent for India in 2020, as the global economy hits the worst recession since the Great Depression in 1930s. The pandemic and consequent lockdown have hit various sectors, including MSME, hospitality, civil aviation, agriculture and allied sector. The government constituted an empowered group - headed by Economic Affairs Secretary Atanu Chakraborty - which is entrusted with the task of suggesting measures that can bring back economy back on track quickly post the lockdown. Besides, it was also asked to work on relief and welfare measures for various sectors of the economy as well as for the poor and needy. In his address to the nation, the Prime Minister had expressed concern over problems being faced by poor and daily wagers and farmers. "The government has made every possible effort to help them through Pradhan Mantri Gareeb Kalyan Yojana. Their interests have also been taken care of while making the new guidelines," he had said. To ease the pain and misery, the Finance Minister last month announced a Rs 1.7 lakh crore stimulus that included free foodgrains and cooking gas to poor for three months, and cash doles to women and poor senior citizens as it looked to ease the economic impact of the nationwide lockdown. As per the announcement, 80 crore poor ration card holders will each get 5 kg of wheat or rice and one kg of preferred pulses free of cost every month for the next three months, while, 20.4 crore women having Jan Dhan bank accounts would get cash help of Rs 1,500 spread over three months. Over 8.3 crore poor women, who were handed out free cooking gas connections since 2016, will get free LPG refills for the next three months, while poor senior citizens, widows and disabled will get an ex-gratia cash of Rs 1,000. Sitharaman had hinted at more announcements if need arises. In a bid to save resources, the government has already put restrictions on expenditure and funds are being diverted towards the fight against COVID-19. Besides, the Union Cabinet approved a 30 per cent reduction in salary and allowances of Members of Parliament for one year. President, Vice President and Governors voluntarily decided to take a pay cut as a gesture towards concerted effort to contain the spread of the deadly virus. At the same time, the government has decided to suspend MPLADS and funds would be directed towards improving medical infrastructure. An MP gets Rs 5 crore every year as part of the Members of Parliament Local Area Development Scheme (MPLADS).
Source: Economic Times
The commerce ministry has clarified that export incentives under Merchandise Export Incentive Scheme (MEIS) will be available to exporters only up to December 31 this year. The government after approving a new scheme - remission of duties and taxes on export products (RoDTEP) - in March this year has stated that MEIS will be phased out after rolling out of this new scheme. Under MEIS, the government provides duty benefits depending on product and country. Rewards under the scheme are payable as percentage of realised free-on-board value and MEIS duty credit scrip can be transferred or used for payment of a number of duties including the basic customs duty. In a trade notice, the Directorate General of Foreign Trade (DGFT) has said, "it is clarified, without prejudice and subject to changes that may be deemed necessary in public interest from time to time that: benefits under MEIS for any item/tariff line/HS Code currently listed...will be available only up to December 31, this year". It said that RoDTEP scheme was approved by the cabinet to replace the ongoing MEIS. After this decision, the directorate said it had been receiving queries from the members of the trade, "as to in what manner benefits under MEIS will be available under the FTP (foreign trade policy) beyond March 31, 2020" as this policy was extended for one more year till March 31 , 2021. It also said that if rates for any item or product will be fixed under RoDTEP before December 31, 2020, those goods will not get MEIS benefits. "Detailed operational framework for the RoDTEP will be notified separately in consultation with Department of Revenue," it added.
This trade notice was addressed to all export promotion councils/Federation of Indian Export Organisations (FIEO), all regional authorities of DGFT and all customs authorities. Commenting on this, FIEO Director General Ajay Sahai said: "It has to put an end to validity of MEIS to December 31 this year. I am not sure whether government will be able to fix RoDTEP rate for all products by said date. A good option could be to fix rates at four digits HS code, like duty drawback, so that the fixation work is reduced and some flexibility is available at the same time". In trade parlance, every product is categorised under an HSN code (Harmonised System of Nomenclature). It helps in systematic classification of goods across the globe. India's exports dipped by a record 24.57 per cent in March. It contracted by 4.78 per cent to USD 314,31 billion in 2019-20.
Source: Economic Times
India on Thursday said the International Monetary Fund (IMF) should continue to play a critical role in maintaining the stability of the global financial architecture at a time when the whole world is grappling with the coronovrius pandemic. Participating in the plenary meeting of the International Monetary and Financial Committee (IMFC) through video conferencing, Finance Minister Nirmala Sitharaman said as a responsible member of the global community, India is providing critical medicines to other nations. The IMFC is the ministerial-level committee of the International Monetary Fund (IMF). She also talked about Prime Minister Narendra Modi's initiative of creating a COVID-19 Emergency Fund for the SAARC region at a video-meeting of the grouping's leaders. While appreciating the IMF's support to member countries in times of the COVID-19 crisis, Sitharaman said the multilateral lending agency has always played a pivotal role in maintaining stability of the international monetary and financial system and it should continue rendering this critical role for the global financial architecture. The discussions at the meeting were based on IMF Managing Director's Global Policy Agenda titled, 'Exceptional Times - Exceptional Action'. The members of the IMFC updated the committee on the actions and measures taken by member countries to combat COVID-19 and the IMF's crisis-response package to address global liquidity problems. Sitharaman, in her intervention, outlined various measures taken by India to deal with the health emergency. In this regard, she mentioned allocation of $2 billion (Rs 15,000 crore) by the Indian government for strengthening the healthcare system. The minister also said the Indian government came up with a $23 billion (Rs 1.70 lakh crore) scheme to alleviate the hardship of the poor and the vulnerable, provided relief to firms in statutory and regulatory compliance matters, eased monetary policy and gave threemonth moratorium on loan repayment. The IMFC meets twice a year, once during the IMF-World Bank Annual Meetings in October and during the Spring Meetings in April. The committee discusses matters of common concern affecting the global economy and advises the IMF on the direction of its work. This year, due to the COVID-19 outbreak, the meeting took place through video-conference.
Source: Economic Times
The Reserve Bank of India on Thursday launched latest round of quarterly order books, inventories and capacity utilisation survey (OBICUS) of manufacturing sector. "The survey provides valuable input for monetary policy formulation," the RBI said as it launched the 49th round of survey for the reference period January-March 2020. The RBI has been conducting the OBICUS of the manufacturing sector on a quarterly basis since 2008. The information collected in the survey includes quantitative data on new orders received during the reference quarter, backlog of orders, pending orders, total inventories with a breakup between work-in-progress (WiP) and finished goods (FG) inventories and itemwise production. The RBI further said that the company level data collected during the survey are treated as confidential and never disclosed. In the 48th round of the OBICUS for the quarter October-December 2019 as many as 704 manufacturing companies were covered. As per the last survey, capacity utilisation (CU) had declined to 68.6 per cent in the third quarter of 2019-20 from 69.1 per cent in the previous quarter. Also, orders received in Q3:2019-20 were lower compared with previous quarter as well as with the level a year ago.
Source: Economic Times
Union Minister for MSME and RT&H, Shri Nitin Gadkari has emphasised that there is also need to focus on import substitution to replace foreign imports with domestic production. He also urged enterprises to make use of technology and mentioned that Research, innovation and quality improvement can play a major role in industrial development. He was addressing meetings held today via video conferencing with the representatives of Young Presidents' Organization (YPO), India SME Forum (ISF) and other enterprises from various sectors from Nagpur. As the lockdown eases out and focus shifts to increasing economic activity, revival of the sector for large scale employment generation and leading the way for sustained economic growth becomes imminent. Regarding revival of MSME sector, Minister mentioned that industry should lay special focus towards export enhancement and necessary practices be adopted to reduce Power cost, Logistics cost and Production cost to become competitive in the global market. Shri Gadkari mentioned that while the Government has allowed certain industry sectors to start functioning, it also need to be ensured by Industries that necessary preventive measured are taken to prevent the spread of COVID-19. He emphasized on usage of PPE (Masks, sanitizer, gloves etc) and advised to maintain social distancing while resuming the offices/business operations. The Minister also underlined that the special package offered by Government of Japan to its industry for taking out Japanese investments from China and move elsewhere. He opined that this is an opportunity for India and which should be grabbed. Shri Gadkari also stated that work on Delhi – Mumbai Express Way has already started and this is an opportunity for industry to make future investments in industrial clusters, industrial parks, smart villages and urged that such proposals be submitted to NHAI. He also requested that all efforts should be made to make payments of MSMEs immediately and all Government Departments have been given such directions. Further, he assured all possible help from the government to tide over the challenges created by the lockdown imposed to curb the spread of COVID-19. During the meeting, the representatives expressed concerns regarding various challenges being faced by MSMEs amid COVID-19 pandemic made suggestions and requested support from the government to keep the MSME sector afloat. Some of the issues pointed out by the representatives and the suggestions given included: extension of moratorium for atleast six months, enhance working capital loan limit for MSMEs, waiver of charges on utility bills, inclusion of certain goods in the category of essential commodities including computer hardware sector, payment of salaries to workers during lockdown from ESI and Provident Fund reserves, make all expenditure incurred on education & health institutions at zero tax etc. Shri Gadkari assured that he would take up these issues with the Union Finance Minister and the Reserve Bank of India (RBI). Shri Gadkari also said that the industry should work together and tap the opportunities that will be created when the COVID-19 crisis gets over.
Source : PIB
According to sources, Labour and Employment Secretary Heeralal Samariya reached out to industry executives, a day after the Home Ministry's revised lockdown guidelines. The Union government has sought views of the industry in formulating a plan to get the workforce back to factories, as the economic activities will begin to re-start in a phased manner from April 20. According to sources, Labour and Employment Secretary Heeralal Samariya reached out to industry executives, a day after the Home Ministry’s revised lockdown guidelines for the period between April 15 and May 3 were made public. The industry executives have sought the help of the government in mobilising the migrant workers from camps. “One of the prime problems that the industry is going to face is the shortage of labour,” a top Confederation of Indian Industry (CII) executive said. “We are in the process of mapping the requirement of workers in the industrial belts and submitting it to the government.” One of the plans the CII is going to suggest to the Union labour and employment ministry is that those workers staying in shelter homes or camps may be mobilised by opening communication channels through the local administration since inter-state movement is not allowed. “In the clusters, the workers can be made aware of the vacancy in the nearby industrial unit or belts and the workers can be channelised there after they are tested for COVID-19 virus,” the executive said. The national lockdown, first imposed on March 25, has trigged reverse migration of workers but those who couldn’t go back to their villages are staying in shelter camps set in various states. There are around 1.4 million workers residing in 26,476 relief camps in various states. Around 1 million migrant workers have already gone back to their villages, either by some mode of transportation or on foot. Companies have also highlighted that bringing migrant workers to the workplace will be a challenge for companies since many of them are staying in the designated ‘red zones’ where movement of vehicles is prohibited, according to an industry executive. On the government’s guidelines to restart work, the CII will ask the government to share the burden of passing on compulsory medical insurance to all workers. Experts have said the government’s guidelines have the potential of increasing the cost of operations for companies. Workers will have to go through a mandatory thermal screening while entering or exiting the workplace and firms will have to make transportation arrangements for workers, along with other measures to ensure a safe workplace. Importantly, medical insurance for all workers will be mandatory. The industry will seek the government’s help in extending the medical insurance cover for workers either through the Employees’ State Insurance scheme or the Pradhan Mantri Jan Arogya Yojana (which provides a cover of up to ~500,000 a family every year).“The micro, small and medium enterprises (MSMEs) will face a challenge in providing medical insurance to its workers, at a time when they are already facing a cash crunch due to the lockdown. And without MSMEs, rebooting the economy will be an uphill task,” the executive said. The CII will further ask the ministry to give an extension of 60 days for depositing the employees’ provident fund (EPF) contribution of workers for March, April, and May each. The Employees’ Provident Fund Organisation (EPFO) had on Wednesday giving companies a grace of 30 days for submitting the PF contribution for March. Companies were supposed to deposit it by April 15, which has been extended till May 15. They are required to make a contribution of 12 per cent each as employers’ and employees’ share towards the EPF scheme. The CII will request the government to allow more companies to take the benefit of the EPF subsidy, under the Pradha Mantri Garib Kalyan Yojana announced by the government last month. Under the scheme, only companies (with a manpower of up to 100 employees) which employ 90 per cent of workers below the monthly wage of Rs 15,000 a month will receive provident fund contribution from the government for 3 months. "The cap of 90 per cent workers earning less than Rs 15,000 a month makes a lot of MSMEs ineligible for the scheme," another industry executive said. According to the Home Ministry's guidelines, industries operating in semi-urban or rural areas, manufacturing units in special economic zones and expert-oriented units will be allowed to resume operations from April 20, provided they follow hygiene and adequate social distancing practices at the workplace.
Source: Business Standard
The change by Union government will allow companies to extend the daily shift, from the current accepted norm of 8 hours, six days a week (or 48 hours) to up to 12 hours, six days a week (72 hours). The Union government is considering a change in a 1948 law to allow longer shifts in factories as it works out ways to help factories cope with fewer workers and high demand -- and all against a context where the ongoing nationwide lockdown is likely to continue beyond April 15. The change will allow companies to extend the daily shift, from the current accepted norm of 8 hours, six days a week (or 48 hours) to up to 12 hours, six days a week (72 hours). According to two senior officials in the know of the matter, a proposal is under “active consideration” to amend the Factories Act of 1948. Section 51 of the Act says “No adult worker shall be required or allowed to work in a factory for more than forty-eight hours in any week.” Although there are provisions of overtime in the same act, which has been providing the key legislative framework in Indian industries for the past 72 years, the feeling in the government is that exceptional circumstances call for exceptional provisions. One of the eleven empowered groups of senior bureaucrats, the one on “facilitating supply chain and logistics management for availability of necessary items such as food and medicine” is pushing for the amendments to allow up to 12-hours of daily shifts from the 8-hour schedule in factories making essential goods. An executive at a large consumer products company that also makes essential products said on condition of anonymity that the shortage of workers is a real problem -- not because his company employs contract workers (it doesn’t) but because local administrators have to take a call on how many workers they will allow so-called curfew passes to. In some cases, this person adds, it is 50%. In some, lower. Longer shifts will help in this context -- as long as the workers are paid proportionately more, something that is part of the plan. The proposal is being backed by a bunch of senior officials including consumer affairs secretary Pawan Agarwal and Guruprasad Mohapatra, secretary of Department for Promotion of Industry and Internal Trade, according to the two officials. Both Mohapatra and Agarwal are part of the empowered group mentioned in the first instance, that is headed by drinking water and sanitation secretary Parameswaran Iyer. The first official official, who is directly involved in the discussions said: “It can ensure lesser physical movement of a large number of workers amid restrictions. But longer working hours would also mean restarting production lines to higher capacity. Since workers will get paid extra money it will also solve their liquidity issues.” While a factory worker is already entitled to overtime, the factories act restricts such overtime to a maximum 120 hours over three months. The law also stipulates that for each hour of overtime, a worker is entitled to double the normal rate of wages. “The amendments will ensure higher earnings for a worker and also reduce the requirement of workers by 33%. The entire scheme perfectly fits the current situation when a large number of workers are at home or in the shelters provided by the states,” said the second official. According to the two officials, the government is also aware that only 270 out of 700 districts in India have reported Covid-19 patients. It has already received suggestions, they added, that in the remaining districts, industries should be allowed to reopen . On Friday, union commerce and industry minister Piyush Goyal interacted with industry bodies over their concerns which included shortage of labour, liquidity issues, cancellation of orders and massive losses. Trade union leaders, however, remain unimpressed with the proposal of extending the shift hours. “In some enterprises, workers are already working overtime. This is the government’s long term project to extend working hours and eventually, workers will work more with less payment. Instead of these cheap tactics, the government should look into the large-scale retrenchments that is talking place in industries across India now,” said CITU general secretary Tapan Sen.
Source: Hindustan Times
DELHI - Indian garment manufacturers are seeking permission to follow their counterparts in Bangladesh by reopening factories to avoid economic crisis despite the dangers posed to workers by the ongoing COVID-19 pandemic. India's Apparel Export Promotion Council (AEPC) is seeking permission for export-based factories to reopen from 20th April in line with the Indian government's decision to allow partial industrial activities to resume from that date. AEPC chairman A Sakthivel said such a move would help mitigate economic hardship for workers many of whom have been left destitute.
Source: Eco Textile
Textile and clothing exports have dropped 6% during the 2019-2020 financial year, with a major fall in March. According to data available, textile and clothing exports in 2018-2019 were worth $35.9 billion and from April 2019 to March 2020 it was worth $ 33.8 billion. In March 2020, exports fell 32.2% compared with the same period last year. Apparel exports, which were about $16.1 billion in 2018-19, fell almost 4% to $15.4 billion, with the March exports alone dropping almost 35% compared with the same month last year.
COVID-19 impact
The fall in exports is because of the impact of COVID-19. In April, it is expected to be worse. However, demand is expected to rebound in July, said A. Sakthivel, chairman, Apparel Export Promotion Council. There will be several opportunities then, he said. Apparel exports had grown only during four months during the last financial year and this is because the industry did not get benefits under several schemes meant to promote exports, he said. According to Siddhartha Rajagopal, executive director, Cotton Textiles Export Promotion Council, businesses are expected to be pick up after September. Textile and apparel exports started feeling the impact of COVID-19 in February. Till then, the industry was hopeful that the year would close on a par with the previous financial year. Each country is in different stage of controlling the spread of the virus. Businesses will start getting orders again depending on which country they are supplying to. For instance, nearly 50 % of home textile exports go to the U.S. He also said a special stimulus package was needed from the government to help the industry get back on track, he said.
Source: The Hindu
Lack of such a package may lead to a far greater damage to livelihoods, economy and financial sector, CEO Kant warns. Estimating the economic cost of the Covid-19 epidemic to be huge, the NITI Aayog has proposed a massive fiscal stimulus of over Rs 10 lakh crore or 5% of the gross domestic product (GDP) to address the situation. The package envisaged by the think tank includes income support to the poor, equity support to corporate India, absorption of a portion of NPAs in MSME sector and additional investments in healthcare. While the potential decrease in GDP size itself will raise the Centre’s fiscal deficit expressed as fraction of it to 4% in FY21 from the budgeted 3.5%, the proposed fiscal stimulus could widen it to an unheard-of 10.5% of GDP. Given that the Centre’s fiscal resources are constrained, the Reserve Bank of India (RBI) may need to finance a portion of this incremental government stimulus, the government think-tank said. The special spending could be ring-fenced within a special Covid-19 budget, rather than as part of the general budget, it added. “Not implementing a concerted stabilisation package in a timely fashion may lead to a far greater damage to livelihoods, the economy and the financial sector, with far worse macro-economic consequences… debt-to-GDP could still rise to 95-100% due to reduced GDP,” the think tank’s CEO Amitabh Kant said in a presentation to the CII.Many global economies have announced much bigger stimulus and stabilisation measures such as Germany and the UK at over 20% of GDP while the US and Singapore packages are 15% of their respective GDPs. China has announced a package worth 9% of GDP. In one scenario seen by the think tank, India’s GDP could decline by 2-3% (y-o-y) in FY21 as restarting supply chains and normalising production and consumption will take 3-4 months. In another potential scenario, the GDP could decline by 8-10% in FY21 if the lockdown continues in Q1 and additional lockdown is imposed in Q2 and Q4 due to virus resurgence (see chart). In the first scenario mentioned above, output decline in Q1FY21 compared with Q4FY20 will be highest in airline and hotels with 70-75% compression, followed by auto and advanced industries (50-60%), construction and real estate (50%), textiles (50%), freight and logistics (40-45%), metals and mining (35-40%) and oil & gas (20-25%). Niti Aayog cautioned that unemployment risk and social unrest could rise materially with possible displacement of over 3 crore workers. It also warned that solvency risk to the financial system is high if the economic impact is not mitigated in the next 2-3 months. With incremental NPA across banks and NBFCs to be Rs 8.1 lakh crore or 7.3% (of advances) if lockdown continues till mid-May (the government has already extended it till May 3), the NITI Aayog said the core Tier 1 capital of banks will be around 12% or only slightly more than net unprovided NPAs of 10.9%. “The inflationary effects of the fiscal stimuli may be low, as lockdown leads to severe demand contraction, and the fiscal support provided would be substitution of expenditure, rather than additional stimulus — without stimulus consumption can contract by about 2%, while with stimulus, consumption can grow at about 5% (in line with historical 6-7% growth), and hence, not inflationary,” the think-tank said. The Centre has already announced Rs 1.7 lakh crore package to address the current situation (the budgetary component of this is seen at about Rs 75,000 crore). While a large part of this is direct benefit transfer (DBT) to the vulnerable sections of population, another package comprising reliefs to the MSMEs and exporters is in the works. The Niti Aayog suggested income support programme of Rs 3.1 lakh crore to 6 crore permanent and contractual workers in the corporate sector and 13.5 crore informal workers and contractors. It also estimated Rs 70,000 crore additional expenditure in healthcare. Among other big fiscal sops, it suggested Rs 2.3 lakh crore capital support (preferably equity) to large corporates in a troubled asset relief programme (TARP) and Rs 1.7 lakh crore credit guarantee fund to absorb likely NPA slippage and credit costs. Certain proposals with no fiscal impact suggested include Rs 2.5 lakh crore RBI forbearance to reduce capital constraints (by rolling back capital conservation buffers) and Rs 1 lakh crore equity support to banks, housing finance companies and NBFCs via a TARP. Besides the fiscal stimulus, shortfall of Rs 2 lakh crore in tax revenues, Rs 1.1 lakh crore in disinvestment receipts and additional stimulus in the form of payment of governments’ unpaid dues, will push the Centre’s fiscal deficit to Rs 21.1 lakh crore in FY21, the Niti Aayog said. With states’ projected fiscal deficit at 2.6% (to rise significantly as they will spend more and revenues will falter), the combined fiscal deficit of the Centre and states would be 13.1% in FY21, it added. The combined deficit should have been less than 6% in business-as-usual scenario.
Source: Financial Express
The biggest worry for home textiles exporters in Karur is cancellation of orders and the prevailing uncertainty, say industry insiders. Stating that order cancellation was affecting a good number of exporters in a big way, a source said: “At this juncture, we are not sure if the orders have been diverted to China or if the importers are sourcing their requirements from Bangladesh. Either way, it is a huge hit for us.”
Production issues
With order cancellation on one side and calls from agents on the other — seeking confirmation on timeline for shipments — the production manager of a home textiles company, preferring anonymity, said: “Things are very uncertain at this juncture. We depend on Erode for fabric processing; now with Erode being categorised as a red zone, we are not sure when it will open up. How do we confirm the timeline as the product specifications differ from one buyer to another?” “If an order is cancelled, we cannot send the stuff to another importer who is in need of the product range, because of the specification issue,” the source said. A cross-section of entrepreneurs that BusinessLine spoke to said that the goods were in different stages of production at the time of announcement of lockdown 1.0. “It is three weeks now and we have not commenced completion operations as some orders have been cancelled, and we understand that some buyers have gone bankrupt. It’s proving to be a testing time for buyers and sellers,” said an exporter. Exporters, however, point out that movement of containers to the port was never an issue, except for tiny players. “The uncertainty is killing us,” they said.
Source: The Hindu Business Line
ISLAMABAD: Pakistan’s textile and clothing exports declined 4.5 per cent year-on-year in March owing to order cancellations and delays amid coronavirus-led global lockdowns, showed Pakistan Bureau of Statistics data issued on Friday. The Karachi Port, which handles around 76pc of the country’s total trade cargo, has seen a significant decline in trade shipments after March 15 — the date since coronavirus cases spiked in major export destinations especially in Europe and North America. The primary reason for order cancellations is the demand contraction in major export destinations leading to lesser number of orders and unavailability of cargo ships. Trade through the eastern border is almost zero as Pakistan had already suspended economic relations with India. On the other side, the western borders including Chaman and Torkham with Afghanistan, central Asian states and Taftan border stations with Iran have all seen no movement of goods since the last three to four weeks. It was only in February when the textile and clothing exports jumped nearly 17pc on a year-on-year basis. This growth was reported a long time as the past few years had been marred by single-digit increases. Details showed exports of ready-made garments dipped by 2.43pc in value and drifted much lower in quantity by 34.83pc during March while those of knitwear dipped 2.63pc in value but posted 7.14pc growth in quantity, bed wear posted negative growth of 13.58pc in value and 10.78pc in quantity. Towel exports fell 5.72pc in value and 26.23pc in quantity, whereas those of cotton cloth dipped by 8.84pc in value and 41.25pc in quantity. Exporters are reportedly resuming production and are seeking permission from provincial and federal governments to allow workers to reach factories. With these developments, exports are likely to revive partially in April. Among primary commodities, cotton yarn exports dipped by 10.36pc while yarn other than cotton by 20.95pc, made-up articles — excluding towels — by 6.77pc, and raw cotton 52.4pc. Exports of tents, canvas and tarpaulin increased by phenomenal 104pc during the month under review. Between July-March FY20, textile and clothing exports grew 4.2pc to $10.4 billion, from $9.98bn over the corresponding period last year. In rupee terms, the proceeds of the sector jumped 23.03pc.
Source: Dawn
Sri Lanka’s manufacturing and service sectors hit all-time lows in March due to COVID-19, the central bank said Thursday, forecasting negative growth in manufacturing for the next three months. The central bank, in a statement, noted that manufacturing had recorded an index value of 30.0 in the Purchasing Managers Index (PMI) last month, a reduction of 23.6 points from February. “The significant decline in production was due to the closure of manufacturing companies due to curfew since mid-March 2020,” the central bank observed. New orders and purchasing of stocks too had declined following the closure of companies and the suspension of the production process. “The orders received at the beginning of March from USA and Europe markets, particularly textile and wearing apparel orders, were subsequently cancelled with the spread of the virus in those countries,” the statement read. According to government statistics, textile and garment exports contributed 474 million US dollars to the country’s economy in January. Meanwhile, the services sector has dwindled drastically to 32.0 on the PMI in March, the lowest since May 2015. “New businesses and business Activities declined mainly in services related to tourism industry such as hotels, travel agents, and recreation activities,” the central bank further observed. It also attributed this situation to domestic travel restrictions, a slowdown in cargo handling, and failure to cater to market demands due to the issues with staff availability and delivery networks. Employment too had declined due to the discontinuation of contractual and casual employees and the freeze in recruitments.
Source: Colombo News
Total industrial production declined 5.4% in March as the COVID-19 (coronavirus) pandemic led many factories to suspend operations late in the month, according to the Federal Reserve. Manufacturing output fell 6.3% in March while most major industries reported decreases, with the largest decline in motor vehicles and parts. The Federal Reserve recently released data on industrial production and capacity use for March, and the estimates in the release incorporated data on stay-at-home orders and other information on industrial activity for late in the month. The decreases for total industrial production and manufacturing were the largest since January 1946 and February 1946, respectively. The indexes for utilities and mining fell 3.9% and 2%, respectively. The level of total industrial production, was at 103.7% of its 2012 average, fell 5.5% in March, from the same month in 2019. Capacity use for the industrial sector fell 4.3 percentage points to 72.7% in March, a rate that is 7.1 percentage points below its long-run (1972-2019) average. All major market groups experienced production decreases in March. The index for consumer goods fell 5.9%, with an 18.9% drop in consumer goods, a 5.3% decline in consumer energy products and a 0.9% decrease in consumer non-energy nondurables. A 27.2% decline in automotive products contributed to the weakness in consumer durables, while decreases in fuels and utilities negatively impacted consumer energy products. The production of business equipment decreased by 8.6% as transit equipment fell 22.8%, reflecting cutbacks in the output of motor vehicles and civilian aircraft. The indexes for construction supplies and business supplies fell 5.8% and 6.7%, respectively. The output of materials declined by 4.3%, with a decrease of about 8% for durables and decreases of less than 3% for nondurables and energy. Manufacturing output declined at an annual rate of 7.1% in the first quarter. In March, the index for durable manufacturing declined by 9.1%. Motor vehicles and parts had the largest decline of its components, and output fell 28%. The following durable goods industries had decreases of between 8% and 10%: fabricated metal products, aerospace and miscellaneous transportation equipment, furniture and related products and miscellaneous manufacturing. The index for nondurables declined 3.2%, with larger declines in many industries but smaller decreases of 2% or less in food, beverage and tobacco products, paper and chemicals. The output of other manufacturing, including publishing and logging, fell 5.4%. The output of utilities fell 3.9% in March with similar decreases in electric and natural gas utilities. Mining output fell 2% with the largest decline in crude oil extraction, natural gas liquids extraction, coal mining and non-energy mining. Capacity use for manufacturing was 70.3% in March and 4.7 percentage points lower than in February and 7.9 percentage points below its long-run average. The operating rate for durable manufacturing fell to 67.8% and was about 9 percentage points below its long-run average. The rate was negatively affected by decreases in every major industry group. Capacity use for nondurables decreased 2.5 percentage points to 73.9%, about 6 percentage points below its long-run average. Use rates for printing and support, for textile and product mills and for apparel and leather all had decreases of nearly 10 percentage points or more.
SHIPMENTS DECLINED
The combined value of distributive trade sales and manufacturers’ shipments, adjusted for seasonal and trading-day differences but not for price changes, fell 0.5% to $1.46 trillion in February, from January, according to the U.S. Census Bureau. The Census Bureau recently announced manufacturing and trade inventories and sales for February. Manufacturers’ and trade inventories, adjusted for seasonal variations but not for price changes, decreased 0.4% to $2.01 trillion in February, from January. The inventories declined 0.1% in February, from the same month in 2019. Total business inventories/sales ratio, based on seasonally adjusted data, was 1.37 in February, down from 1.39 in the same month in 2019.
Source: TBP
The government has been too slow to enlist British textile firms to make protective gear for the NHS, according to industry figures, who say they have been desperate to contribute to the “war effort”. Faced with a shortage of personal protective equipment (PPE), the Cabinet Office has only recently begun scrambling to source it from UK suppliers and has now outsourced the process to consultants from accountancy group Deloitte. Industry figures said too much emphasis had been placed on high-profile names such as Burberry, the luxury fashion house that Matt Hancock said on 3 April was producing medical gowns. Kate Hills, the founder of Make It British, which promotes brands that manufacture in the UK, said the government was ignoring less well-known textile specialists in favour of household names that play well with the public. “They’re just picking out brand names,” she said. “The people who can make this PPE are not well-known names, they are contract manufacturers behind the scenes. They’ve filled in the government’s request forms and heard nothing back.”A separate source with knowledge of the fashion industry’s efforts said: “You can’t put all your eggs in that one Burberry basket.”Hills said UK firms had been clamouring to help supply the NHS for more than a month, but that the government had instead focused on brands such as Burberry, as well as sourcing equipment from overseas.“The number one priority was to secure anything already made that they could get on a plane from other countries. We don’t have the capacity and the products ready off the shelf because for years the NHS have been procuring products from cheap overseas suppliers.“We have to put the supply chain back together from scratch. It’s almost as if there had to be a desperate need before they looked on their own doorstep.” One major clothing supplier, who asked not to be named, said their firm had also struggled to get interest from the government. “The level that we’re scaling up is embarrassing. If the borders shut and we couldn’t bring in masks from China, we’d be screwed.”The source said the process of getting protective clothing out to the NHS was mired in confusion from the government about the regulatory and testing regime for PPE. Officials have been exploring ways to waive the usual regulatory requirements – as has happened with medical ventilators – but the process has been slow to get off the ground. One difficulty with sourcing medical gowns is that they are typically made from fabric known as SMMS that combines two types of non-woven material, called meltblown and spunbond. Amid a global shortage, the Scottish fabric specialist Don & Low received an order last week from the government for a spunbond laminate that would meet the same international standard. Don & Low, which is based in Forfar, will eventually be able to make enough material for up to 1.5m gowns a month, but cannot reach full-scale production until May. The company is supplying the material to Burberry, among other companies, but has sent only trial fabrics to the fashion house so far. Will Campbell, Don & Low’s sales manager, said: “You’re setting up a supply chain from the ground up. If you were doing this without a pandemic, you’d do it over a year or more. The fact that it’s been done in three weeks is fairly admirable. “But you can’t get away from the fact that hospitals are running out of PPE.” One of the few UK fashion houses that has already produced PPE is Barbour, which has delivered disposable gowns and medical scrubs from its South Shields factory to the Royal Victoria Infirmary in Newcastle upon Tyne. Smaller suppliers have also been delivering their own homespun protective equipment to hospitals on a more ad hoc basis. They include the designer Patrick Grant, founder of the Community Clothing initiative, alongside projects called the Emergency Designer Network and ScrubHub.The carmaker Nissan said on on Thursday that its Sunderland car plant, the UK’s largest, will deliver 100,000 face visors per week to the NHS. The government-owned Royal Mint, in Llantrisant, south Wales, has been making medical visors for the NHS after developing a successful prototype to help protect frontline care workers. A host of firms, including chemicals giant Ineos, beer firm Brewdog and several gin distilleries, have been producing hand sanitiser. A government spokesperson said: “We are in discussions with a range of British firms on providing PPE for the NHS as well as sourcing it from abroad. “The Cabinet Office has a dedicated team to help fast-track the regulatory approval process and has published the specifications for a wide range of items to support manufacturers to produce PPE, helping ensure equipment can reach health and social care workers as quickly as possible.” The Guardian has approached Burberry for comment.
Source: The Guardian
COVID-19-hit textile industry in Pakistan is gradually resuming it's export business, says a report published by Gwadar Pro App on Thursday. In recent days, both government and enterprises have implemented relative measures to awake stagnant textile industry. Up to now, domestic textile mills are gradually resuming productivity in accordance with the policies of government. Salim Ghori, the CEO of Elite Demin Mills, who has been working in denim Industry for 25 years said in a interview to Gwadar Pro that “Covid-19 was a black swan event for textile industry which no one could have predicted.” In Pakistan, textile industry accounts for 8% of GDP and over 46% of manufacturing industry. He introduced harsh situation faced by textile industry. “Such a situation has never arisen before. Since 19th March there was rarely production of denim fabric in textile sector. We have conservatively assumed that the production could start after 31st May at least.” Ghori said. Textile export plays an important role for Pakistan economy. “A huge chunk of textile is exported to western countries. due to Covid-19 it will have a huge impact on Pakistan's balance of payment and we will be under huge crisis if this situation extends for a few months,” said Ghori. “Our goods are exported to Western countries such US, UK, Italy, Spain, Germany etc. However, influenced by outbreak, there were plenty of export orders lost and the situation is very serious. There were many returns which led direct los s for our company.” Even though, textile industry is gradually resuming. The government has allowed several companies to resume production with strict guidelines which are in accordance with WHO.
Source: The News
Vietnam’s textile, auto and timber industries are facing challenges with plummeting revenues threatening massive job cuts as the Covid-19 pandemic intensifies. First of all, the number of textile orders in the next two months are set to fall 70 percent as major buyers in the EU and the US have stopped signing new contracts due to lower consumption, according to a recent report by the Ministry of Industry and Trade. The ministry said other markets such as India, South Korea and Japan cannot make up for the reduced demand from the two major markets, which account for over 60 percent of textile exports. First quarter textile exports fell 8.9 percent year-on-year to $6.5 billion. The CEO of Hanoi-based Vietnam National Textile and Garment Group (Vinatex) Le Tien Truong had said earlier that these unprecedented challenges could cost the industry VND11 trillion ($473 million) in revenue, and millions could lose their jobs. The trade ministry said that as China has started resuming production, Vietnamese products will face strong competition, and companies might not have the needed cash flow to pay its employees. Timber manufacturers also face similar challenges, with no new orders since mid-March 2020. The Vietnam Timber and Forest Production Association (Vietfores) anticipates that all production for export orders will cease in the next three or four weeks, and producers for the domestic market will only operate at 10-15 percent of capacity due to low demand. As well as automobile industry, with five major brands – Ford, Toyota, Honda, TC Motor and Nissan – ceasing production for 15 days to limit contagion, the industry has ground to a halt. In the first quarter, auto production fell 10.5 percent year-on-year to 56,200 units, while inventory rose 222 percent, showing a slump in sales. Accoring to VnExpress, the ministry proposed that local banks lower interest rates and prolong debt payment deadlines for these businesses. It has also suggested that the Ministry of Finance delays payment of taxes and fees until the end of the year.
Source: Vietnam News
