While some industries in south Gujarat may resume manufacturing activities with the Central government giving partial relaxation starting April 20, the units in country’s largest man-made fabric (MMF) centre in Surat will continue to remain under lockodown till May 3. The powerloom weaving and textile processing units located outside the city limits have unanimously decided to continue with the shutdown till May 3. Reason: the textile markets, key component in the entire value chain, are located in the coronavirus hotspot areas including Ring Road, Salabatpura, Saroli and Sahara Darwaja, and won’t get permission to start operations soon. Out of the total 6.5 lakh powerloom machines in the city, about 3.5 lakh are installed outside the city limits at Palsana, Kadodara, Sachin, Kim-Pipodara, Sayan, Laskana etc. Even majority of the textile processing units are in the outskirts like Palsana, Sachin and Jolva. None of the weaving or textile processing units have come forward with the application to the district administration to resume manufacturing activity from April 20. “We have about 2,000 powerloom units at the Anjani industrial estate on Sayan-Hazira road and not a single weaver has sent us the application for resuming operations,” said Vijay Mangukiya, president of Anjani Industrial Estate. “The weaving sector will remain shut until the textile markets, which are in the coronavirus hotspots, are not made operational.” President of South Gujarat Textile Processors Association (SGTPA), Jitendra Vakharia said, “Even if the textile processors wish to start their units, they can’t do it. Processors get their job work from the textile traders. On the other hand, the migrant workers want to go back to their native and they are not in the mood to work.” “The sanitisation, insurance and other guidelines issued by the government are stringent and can’t be followed in the unorganised textile sector. Without the textile markets, powerloom units can’t operate. However, the powerloom weavers in Sachin GIDC decided unanimously to start operations after May 3,” said Mahendra Ramoliya, chairman of Sachin GIDC.
Source: Times of India
As per the notification released by DPIIT, Government nod is a must for all FDI from neighbouring nations, including China. The Government of India has amended existing consolidated FDI (Foreign Direct Investment) policy for curbing opportunistic takeovers/acquisition of Indian companies from neighbouring nations due to the COVID-19 pandemic, according to a notice released by the Ministry of Commerce and Industry. As per the Press Note 3 issued by the Department for Promotion of Industry and Internal Trade (DPIIT) on Saturday, the government has said that an entity of a country which shares a land border with India or where the beneficial owner of investment into India is situated in any such country, can invest only after receiving government approval. The new rules will also be applicable to 'the transfer of ownership of any existing or future FDI in an entity in India, directly or indirectly, the DPIIT has said. However, the investment rules for Pakistan remain unchanged. The notification stated, "A citizen or an entity incorporated in Pakistan can invest in sectors other than defense, space, atomic, energy and sectors prohibited for foreign investment, upon government approval." The new rules will take effect from the date of FEMA (Foreign Exchange Management Act) notification, it added. The change in rule was necessary in the light of investments by foreign companies amid weak markets and company valuations. In recent times China's central bank had bought 1.01 percent stake in HDFC. News reports suggest that People's Bank of China held 1.75 crore shares of India's biggest housing mortgage lender which has raised eyebrows over the move. Also many countries have brought in legislation to save hostile takeover by Chinese companies. Australia was the first to make a move in this direction, followed by Germany and many more countries to avoid takeover of their entities by various Chinese companies scouting for transcontinental takeovers.
Source: Economic Times
The Union power ministry has come out with fourth draft of the Electricity (Amendment) Bill since 2014, which seeks to set up an Electricity Contract Enforcement Authority (ECEA) having power of a civil court to settle disputes related to power purchase agreement between discoms and gencos. The draft provides that the ECEA will have sole authority to adjudicate matters related to specific performance of contracts related to purchase or sale of power, between power generation companies (gencos) and distribution companies (discoms). The decision of the ECEA can be challenged at the Appellate Tribunal For Electricity (APTEL) and, subsequently, at the Supreme Court. The ministry has sought the comments of the stakeholders on the Bill with three weeks from April 17. Commenting on the Bill, All India Power Engineers' Federation (AIPEF) V K Gupta told , "The setting up of ECEA would dilute the power of the state and central regulatory commissions to settle matters related to PPAs (power purchase agreements) between discoms and gencos." Currently, state electricity regulatory commissions and Central Electricity Regulatory Commission settle state-level and inter-state PPA disputes, respectively. He also said, "AIPEF strongly condemned the timings of the power ministry's move to bring back the Electricity Amendment Bill 2020 when the whole country is fighting against the COVID-19 pandemic." He was of the view that the bad experience from the COVID-19 crisis should have led to nationalise all sectors, including power, across India. "At this juncture, the Government of India's step of privatization of the power sector through the proposed amendments in the Electricity Act 2003 is "ill-timed and ill-intentioned", he added. The ministry had brought first draft in 2014 that was introduced in the Lok Sabha seeking separate carriage and contend electricity distribution business. The Bill could have given option to consumers to change their service providers like they do for their mobile phone service. But, unfortunately, that Bill lapsed after dissolution of the Lok Sabha. The second and third drafts were circulated in 2018 and 2019. The AIPEF has demanded to put the bill on hold saying, "While the economy of the whole nation is paralysed and administration is in doldrums, the timing is not suitable for introducing the enactment of amendments to any law under such conditions and thus Electricity Amendment Bill 2020 be put on hold." The body has also shot off a letter to Power Minister R K Singh demanding that the proposed date of receipt of comments should be extended to September 30 as no discussion can take place due to the lockdown. It also urged all state governments to seek extension in time for giving their proper reply. At first glance, Gupta said, "The purpose of the Bill seems to be to privatise discoms and ensure payment to private generators. The introduction of distribution sub-licensee and franchisee without separate licenses for them and no schedule or dispatch of electricity without the security of payment clearly points towards the intentions of the power ministry." The body is of the view that the central government is out to destroy state sector despite the fact that during the COVID-19 crisis, only the state sector companies stood by the government, while private entities were nowhere visible in this bad time on the country. "The proposed amendments in the Electricity Act will increase the electricity tariff exponentially. Already due to private generators, average tariff across India is Rs 8 and with these proposals, it will rise to Rs 10," said Padamjit Singh, chief patron, AIPEF. The Bill also provides that the Electricity Act would be applicable to the entire country, including the Union Territories of Jammu and Kashmir and Ladakh. It also provides that the cross (power) border trade shall cover import or export of electricity from India and any other country. The transaction related to passage of electricity through India would be treated as transit between two other countries. The draft law provides for introduction of power distribution sub-licensee or franchisee, which would not require a separate licence from state commission and providing information about them would sufficient. It also calls for creating National Renewable Energy Policy by the central government in consultation with state governments. It also provides additional roles to the National Load Desptach Centre that include scheduling and dispatch of power across the country in accordance with contracts. The bill says that there would no schedule or despatch of electricity unless there is adequate security of payment as per the contract. The bill enables state as well as central power regulators to specify transmission charges under open access. Earlier, both functions were with the central commission.
Source: Economic Times
A $22bn relief package aimed at the country's poorest and monetary easing measures have already been implemented. With India continuing its nationwide lockdown until at least May 3, there are growing calls for more fiscal stimulus as the economy plunges to its slowest growth in decades. Steps taken so far to ease the economic fallout from the pandemic include a $22 billion relief package rolled out by the government after the stay-at-home directives first came into effect on March 25. Now there is widespread speculation a further stimulus package will be unveiled by India's finance ministry in the coming days, as businesses and economic experts demand more action. “Our analysis shows that a month of lockdown could shave off 10 trillion rupees (Dh480bn) of gross domestic product, or 5.3 per cent,” says Sunil Tirumalai, the head of research and strategist at Emkay Global Financial Services, based in Mumbai. “We believe the required size of the stimulus package should be of this scale, and even then it would still be lower than the packages announced by other infected countries.” There are constraints, however, on how much India, as a developing country, will be able to spend, analysts warn. In reality, Mr Tirumalai says a government stimulus package “is likely to be much lower, in the range of 2tn to 3tn rupees”, as the country tries to keep its fiscal deficit in check. India has one of the strictest stay-at-home regimes in the world, with people largely only permitted to go out for essential supplies. As a result, many businesses have temporarily shut, projects have ground to a halt, jobs are being cut and salaries trimmed, and millions of low-income labourers have been left without work. On Tuesday, Indian prime minister Narendra Modi told the nation the stay-at-home directive was being extended until May 3 as the number of cases of Covid-19 continued to rise in the country, with more than 14,000 confirmed cases and 488 deaths as of Saturday morning, according to Johns Hopkins University. Some relaxation to the measures will be introduced from Monday in areas not considered virus hotspots, with restrictions lifted on the movement of cargo, farming, and the construction of certain infrastructure projects. However, this will only marginally alleviate the economic woes, analysts say. Sectors such as travel and hospitality have been particularly hard hit by the measures. “While we support the extended lockdown, it has further diminished our ability and opportunity to bounce back in the post-covid era, apart from intensifying the risk of massive job loss in the sector,” says Anurag Katriar, the president of the National Restaurant Association of India and the chief executive of deGustibus Hospitality. “We are banking on the government support to tide over this crisis as well as the announcement of a larger stimulus package for the industry post-lockdown.” Although the restrictions are considered essential to combat the spread of the virus and avoid overwhelming the country's already overstretched public healthcare system, the cost to the economy of such a situation is extensive. “The virus has come about at an inopportune moment in India, when the growth rate was already slowing,” says Rukshad Davar, a partner and head of the mergers and acquisitions practice at Indian law firm Majmudar and Partners. “It has accelerated that pace. A broad range of sectors have been impacted, including industrial manufacturing activity, trade, textiles, aviation and hotels.” The International Monetary Fund (IMF) is forecasting India's GDP growth will come in at just 1.9 per cent in the current financial year, which started at the beginning of this month, as the IMF chief economist Gita Gopinath warned “this crisis is like no other”. The impact of India's lockdown along with the global economy being plunged into recession are weighing heavily on the country's growth prospects. These levels are far lower than the annual growth of about 8 per cent India was targeting, as the country strives to become a $5 trillion economy by 2025. The $22 billion relief package unveiled so far was largely aimed at the low-income segment of the population and included food and cash handouts. Last month, the Reserve Bank of India (RBI) eased monetary policy through a 75 basis point emergency interest rate cut and a three month moratorium on loans. The RBI disclosed a new set of measures on Friday aimed at freeing up liquidity in the system. These included a 25 basis point reduction of the reverse repo rate – the rate at which commercial banks lend to the central bank. A $500bn targeted long term repo operation was also announced, designed to get cash flowing to non-banking financial companies (NBFCs), and funds for financial institutions including the National Bank for Agriculture and Rural Development, which could help businesses secure much-needed loans. “Broadly these measures will strengthen the liquidity position of the NBFCs and corporates,” says Vishal Kampani, the managing director at Mumbai-based JM Financial Group, adding that it “signals a strong intent of the RBI to turn the wheel of the economy”. But analysts says the money does not always find its way through banks to those that need it. “Policy transmission remains a key challenge in India as excess liquidity is not benefiting all entities,” says Sonal Varma, the chief India economist at Japanese investment bank Nomura. “Smaller and lower-rated entities continue to see tight credit conditions due to their elevated credit risk premia in an environment of weak growth. Hence, while the RBI’s measures are a nudge to banks to close this gap – between the haves and have-nots – a bigger shove will be necessary to meaningfully reverse banks’ risk aversion.” However, RBI governor Shaktikanta Das has left the door open for further interest rate cuts and more measures to be taken by the central bank to help the economy. “The RBI will monitor the evolving situation continuously and use all its instruments to address the daunting challenges posed by the pandemic,” Mr Das said in a statement on Friday. “The overarching objective is to keep the financial system and financial markets sound, liquid and smoothly functioning so that finance keeps flowing to all stakeholders, especially those that are disadvantaged and vulnerable.” While some investors were disappointed by the RBI's statement on Friday, they have pinned their hopes on a fiscal stimulus package from the finance ministry. Aid for small businesses is expected, as many face dwindling or no revenue during the pandemic. “While the RBI has stepped up, the same cannot be said for the finance ministry,” says Shilan Shah, a senior economist at Capital Economics. “Unless fiscal policy is also loosened aggressively alongside monetary policy, there is a big risk the drastic economic slowdown currently underway morphs into an annual contraction in output and that the recovery is hampered. We fear that the humanitarian cost of the finance ministry’s inaction is also mounting.” To help alleviate the situation for businesses, lobby group the Confederation of Indian Industry is calling for up to $300bn in stimulus from the government over the next 12 to 18 months. But the Indian government needs to keep its fiscal deficit in check. Fitch Solutions estimates the Covid-19 impact could result in the fiscal deficit expanding to 6.2 per cent of GDP in this financial year, from the government's earlier estimate of 3.5 per cent, because of spending on economic stimulus. It says the government may have to resort to additional borrowing to fund the stimulus required. “The trouble here is that India is bound by fiscal responsibility and budget management,” says Karan Mehrishi, the lead economist at Acuité Ratings & Research. “You can throw that concept out of the window given the current circumstances, but then you also have to deal with the situation where you can be downgraded by global ratings agencies.” That would impact India's ability to attract investment going forwards. The government could also consider other initiatives such as tax cuts and providing loans to companies, Mr Davar says. But more broadly, there is still little visibility on the situation, which means it could be a long road ahead. “It's just a guess as to how we would come out of this, given that the a big uncertainty as to when the [coronavirus cases] curve will flatten and ease off,” Mr Davar adds.
Source: The National
India, which was among the last set of nations where the Covid-19 spread its tentacles, has announced a Rs 1.7-lakh-crore (0.8% of GDP) relief package for the poor and the vulnerable and is planning to calibrate its reponses to help the economy over the coming weeks. As Indian exporters await a package from the government to tide over the Covid-19 crisis, a look at the fiscal stimuli extended by its Asian competitors suggest time may be running out for New Delhi for a meaningful intervention. Around a half of outbound shipment orders has already been cancelled and key markets — the US and the EU — are badly bruised by the pandemic. Competitors, including China, Vietnam, Bangladesh, Indonesia Malaysia and even Hong Kong, already announced a series of fiscal packages — some up to 3% of GDP — by the first week of April. Of course, not all measures are meant for exporters but they benefit from accelerated spending to get the economy back on foot at the earliest. Also, enhanced expenditure on social and healthcare sectors has helped the country get its massive pool of workers back to work at the earliest, helping exporters resume shipments swiftly. China has rolled out a massive RMB 2.6 trillion (or 2.5% of GDP) worth fiscal measures or financing plans. China’s fiscal package includes tax relief, increased spending on Covid control, disbursement of unemployment insurance and waiver of social security contributions. Overall, fiscal expansion will be much higher, factoring in proposed additional measures, including an increase in the ceiling for special local government bonds of 1.3% of GDP, according to an IMF assessment. Apart from fiscal stimulus, China central bank injected liquidity into the banking system via open market operations, including RMB 3 trillion (roughly 2.9% of GDP) in the first half of February and another RMB 170 billion in late-March, expansion of subsidised re-lending and re-discounting facilities by RMB 1.8 trillion to support medical device manufacturers, MSME and the farm sector and credit extension to MSMEs (RMB 350 billion). Vietnam, which is emerging as another export hub of Asia, has introduced a fiscal support package of VND 226 trillion (3% of GDP), according to the IMF data. Already a low-tax destination for industries like electronics and garments, it announced tax cuts to the tune of 2.2% of GDP and deferred land rental payment for 5 months to support affected entities. To support firms and households, it also approved temporary cut in electricity tariff by up to 10% for 3 months. Firms and workers are allowed to defer their contribution (up to 12 months) to the pension fund and survivorship fund without interest penalty. Other measures include tax exemptions for medical equipment, first 3-year exemption of business registration tax for SMEs; streamlining of tax and custom audit and inspection at firms and preferential tariffs on key items. In addition, it adopted a cash transfer package worth 0.5% of GDP for affected people and entities for 3 months from April to June. Indonesia has offered stimulus packages totalling 2.8% of GDP. Its support includes a cut in the corporate tax rate from 25% to 22% in FY21 and further to 20% from FY22. It has also extended relief for tourism, among the worst-hit sectors, and increased social and healthcare benefits. Bangladesh, which has emerged as the world’s second-largest garment exporter, beating India, has announced a $588-million package (0.2% of GDP) for exporters. It is also extending subsidised working capital loans of $588 million, apart from offering relief to the social and healthcare sectors. Hong Kong, seen as a proxy for China, has announced fiscal measures worth about 10% of GDP. These include tax and fee reliefs (2.8% of GDP), cash payout to people (2.5%), employment subsidy (2.8%), a new anti-epidemic fund (1%) and sector-specific relief (0.7%) and temporary job creation (0.2%). Malaysia has already declared three packages worth 2.8% of GDP. These include tax relief, enhanced healthcare spending, cash transfer to affected people, temporary pay leave, discounts in electricity tariff. It is also front-loading certain investment spending for this year. The country has also declared grants for MSMEs, higher wage subsidies, and a 25% discount on foreign workers’ fees, which will also help exporters. India, which was among the last set of nations where the Covid-19 spread its tentacles, has announced a Rs 1.7-lakh-crore (0.8% of GDP) relief package for the poor and the vulnerable and is planning to calibrate its reponses to help the economy over the coming weeks. However, more than a half of its last package, announced on March 26, included funds meant for state governments and those available under existing programmes. Separately, it has announced `15,000 crore to boost medical response to the Covid-19 crisis and other healthcare spending over four years. But it’s still preparing an economic package, although the central bank has already initiated a raft of measures to improve liquidity in the system. As for exporters, no meaningful dole-out has been announced so far, apart from the continuation of old schemes and certain procedural relaxations. For instance, the government recently extended the validity of the Foreign Trade Policy (FTP) for 2015-20 by a year to March 2021 and relaxed certain other norms. The FTP extension will enable exporters to continue to get incentives under existing programmes — including the Merchandise Exports From India Scheme (MEIS), interest equalisation scheme and transport subsidy scheme (for farm exports) — without disruption for one more year. However, a decision on extending the Services Exports Promotion Scheme is yet to be made. India’s merchandise exports collapsed by almost 35% year-on-year in March, with exporters warning a further deterioration in April and job losses to the tune of 15 million if the government doesn’t step in swiftly with a package.
Source: Financial Express
Under the yojana, the govt’s decision to pay PF contribution, both of employer and the employees (12 per cent each), for the next three months is only applicable to business units with less than 100 employees. The city industrialists have urged the government to relax norms for all establishments and cover all categories of employees under Pradhan Mantri Garib Kalyan Yojana (PMGKY). Under the scheme, the government has decided to pay the employees’ provident fund (EPF) contribution both of employer and the employees (12 per cent each) for the next three months. However, the financial relief measures under PMGKY concerning PF as announced by finance minister Nirmala Sitaraman on March 26 is applicable to the establishments with less than 100 employees. Moreover, an establishment can avail the scheme only if 90% of its employees have an average salary of ₹15,000/ month or below. Ludhiana Punjab Dyers Association that represents around 300 dyeing units in the city has recently written to the ministry of labour and employment urging the latter to relax the norms, so that every unit can avail the benefits at the time of financial crisis. “If the government is keen on helping the establishments during the lockdown, it must extend PF benefits to all the categories of employees irrespective of their salary structure and number of employees in an organisation. Due to the conditions laid down by the ministry, we have not been able to avail the services even though we are in dire need of them,” told Bobby Jindal, president of Punjab Dyers Association. Jindal, whose dyeing unit is on Tajpur Road, said his unit has around 100 employees, out of which 50 are paid above ₹15,000 per month. “Many of our workers, including dyeing master and knitting master, earn above ₹15,000, which is why we will not be able to avail this scheme. We request the ministry to help us. Relaxing norms will help the government save millions of jobs,” told Jindal. Similarly, Bahadur K Textile and Knitwear Association that comprises over 5,500 units in Ludhiana has also asked the ministry to ease the norms and include all establishments. “The provision of employers earning less than ₹15,000 per month will force many business establishments to go for salary cuts. Why the government is laying down such conditions at the time of global health emergency? It is a defunct scheme and will help no one? Did I make a mistake if I employed more than 100 employees in my firm? Bigger units are facing more losses during this lockdown. Government is ignoring our plight” said Tarun Jain Bawa, president of Textile and Knitwear Association. Bawa claimed that presently the employees’ state insurance (ESI) department has surplus of ₹84,000 crore, while there is unclaimed amount of ₹40,000 crore with the provident fund department. “The government should use these surpluses to help both big and small establishments and not burden us with PF deposits right now,” he added.
Source: The Hindustan Times
Coimbatore : South India Spinners Association (SISPA) representing the MSME Spinning industries in Tamil Nadu Monday sought to take some remedial measures to safeguard the industries as well as the livelihood of lakhs of workers in the nation. In a letter to the Tamil Nadu Electricity Minister, K Thangamani, SISPA President, N Murugesan requested to sanction six equal installments for payment of electricity bills for the month of March 2020, irrespective of the consumers (LT, LTCT and HT) without levying Belated Payment Surcharge (BPSC) or any other additional surcharge. Or otherwise it may be deducted from the Additional Current Consumption he said. In view of MSME industries using power only for security and lighting purposes, and not consume entire sanctioned demand, the minister should advice the TANGEDCO to collect the minimum electricity charges for the recorded (actual) demand and not for the sanctioned demand during the lock down period, he said. SISPA also requested the minister to ensure the same procedure for at least six months, since availability of workforce, saleability of finished product is uncertain after the lockdown period, which will help to overcome the financial crisis after also. The 40 day nationwide lockdown, closing of borders between districts and states has affected the highly labour, capital intensive textile spinning sector and has affected the revenue of the entire textile value chain. Considering this SISPA request to support at this critical moment to safeguard the industries and the millions of the workers in the nation and issue suitable orders to TANGEDCO as early as possible, Murugesan said.
Source: Covaipost
Foreign private equity funds with Chinese and other investors based in Hong Kong and with ties to China are scrambling to understand the implications of the change in foreign direct investment policy which did away with automatic approval for investments into India by Chinese companies and individuals. The tweak in the policy could impact billions of dollars of future investment into India and could also impact investment from Hong Kong whose funds and PE investors rely on Chinese capital to make investments around the world. The Department for Promotion of Industry and Internal Trade (DPIIT), under the Ministry of Commerce, revised FDI policy rules on Saturday stating that any nonresident entity of a country which shares land border with India or where the beneficial owner of an investment into India is situated in or is a citizen of any such country can invest only under the government route. In other words, government approval is required for such investments. The previous policy required government approval only for entities and citizens of Bangladesh and Pakistan. Though there are a number of countries that share a land border with India such as Myanmar, Nepal and Bhutan and China, the change is largely aimed at investments from China. “Several private equity funds with even a single Chinese investor will now have to first approach the government for an approval before investing the money,” said Jeenendra Bhandari, partner, MGB & Co. “Since the government press note mentions ‘beneficial ownership’ and not mere ‘ownership’, all ‘direct or indirect’ shareholding is impacted,” Bhandari said. Hong Kong is a special administrative region under China. However, it is treated as a separate jurisdiction for transaction and tax purposes. India has an independent tax treaty with Hong Kong and investments coming from the region are recorded separately from that of China. Experts believe that investments from Hong Kong will not be impacted if the territory is treated separately from China. Hong Kong does not share a land border with India. “Presently, DPIIT tracks FDI inflow from Hong Kong and China separately. However, since the press note is broadly worded, it is unclear if the approval requirement would extend to Hong Kong as well,” said Moin Ladha, partner, Khaitan & Co. “This could have implications on the Hong Kong-based funds investing in India and other funds where beneficial owners have a connection with this jurisdiction.” Hong Kong is also a commercial hub and contributes to far higher investments into India than China. Between 2000 and 2019, Hong Kong accounted forFDI worth 23,000 crore compared to 13,954 crore from China, DPIIT data showed. Tax experts also point out that some of the ongoing investments in Indian startups where Chinese invest directly may have to be put on hold. Many funds want clarity as the ultimate beneficiaries in investments made by companies outside China may have some connection to the main land or may be Chinese citizens. Some of the biggest funds tend to raise capital after setting up funds in tax-friendly jurisdictions that are used for setting up pooling vehicles for money where individual investors or institutional investors tend to invest. A section of market participants also argue that if Hong Kong is excluded from the ambit of curbs, it could defeat the very purpose of the amendment, since Hong Kongbased investors, too, have ample dry powder like their Chinese counterparts to deploy in Indian markets. According to Tejesh Chitlangi, partner, IC Universal Legal, Hong Kong, though a part of the People's Republic of China, operates separately from a political, legal and economic perspective. “India does consider both these separately from tax treaty, investments, FDI computation purposes and hence a view is possible that the restrictions should not extend to Hong Kong SAR.
Source: Economic Times
India should resist calls for mega relief and stimulus packages that pitch for generous availability of credit to even unviable businesses and focus on a more "measured approach" by limiting interventions to provision for working capital and ensuring basic necessities for all to deal with the impact of the COVID-19, eminent economist Arvind Panagariya has said. The former NITI Aayog Vice Chairman said that India, like nearly all other countries in the world, faced "difficult choices" against the COVID-19 pandemic. "So far, India has walked the tight rope as well as it could have, given its resources and management capabilities," Panagariya told . Elaborating on the path ahead for India as it navigates health and economic concerns in the wake of the COVID-19 pandemic, Panagariya said there have been calls for mega relief and stimulus packages from various quarters. "The scale of some of these packages is so large as to give some sections living standards that exceed what they enjoyed prior to the advent of the coronavirus on Indian soil. "These packages also pitch for such generous availability of credit that businesses that would be unviable in normal times would get a long lifeline in the post-corona world," said the professor of Economics at Columbia University and Director, Raj Center at Columbia's School of International and Public Affairs. He emphasised that the Indian government "needs to resist those calls and take a more measured approach" by limiting interventions to the provision of food, shelter and basic necessities of life for all; forbearance on payments of outstanding loans; and extra provision of working capital including what will be necessary to cover outstanding wages from lockdown period to enterprises." Panagariya noted that future taxpayers will have to pay for the expenditures the government incurs today by either borrowing or printing money. "Printing vast volumes of money may not lead to high inflation immediately because many items of expenditure are simply not available. But we shall not escape such fate once the situation normalises and trillions of rupees worth of extra money in the hands of public converts into effective demand," he said. Finance Minister Nirmala Sitharaman on Friday said India will soon announce fresh relief measures and economic stimulus to help the poor and industry fight the impact of the COVID-19 pandemic. Participating in the 101st meeting of the Development Committee Plenary of the World Bank through video conference, Sitharaman also assured the global community that India would continue to supply critical medicines to needy countries for the treatment of COVID-19 patients. Sharing details of welfare measures announced by the government last month, the finance minister said support measures worth USD 23 billion (Rs 1.70 lakh crore) were provided, comprising free health insurance to health workers; cash transfers, free food and gas distribution; and social security measures for affected workers. According to estimates by the Ministry of Health and Family Welfare, there are 12,289 active coronavirus cases in the country as of April 18 and 488 people have died due to the virus. Panagariya said that it will be a "miracle" if a vaccine can be discovered, licensed, manufactured and made available to 65 per cent or more of India's population in less than one and a half years, underlining the absolute necessity of ensuring that the infection curve remains flat till the time a vaccine is available. "The economy cannot be kept in lockdown for that long. At the same time, left to itself, with its ability to spread at lightning speed and the high kill rate," he said, adding that the novel coronavirus can quickly overwhelm the health system. "Therefore, until a vaccine is available, corona curve must be kept sufficiently flat that the health system can handle the additional emergencies without being crippled. That requires restricting economic activity," he said, adding that such a scenario presents the "dilemma and tight walk for the government." The former NITI Aayog Vice Chairman said in the world's largest and most diverse country "some hiccups" such as coming out of hordes of migrants at a few spots are "inevitable" as India tries to manage the COVID19 crisis. "Moreover, these are amply balanced by numerous unexpected positive surprises such as ability of local administrations to do contact tracing and enforcing strict lockdown such as those observed in Bhilwara in Rajasthan and Sangli in Maharashtra," he said. Globally, 160,721 people have died and over 2.3 million people have been infected by the coronavirus, according to data maintained by Johns Hopkins University.
Source: Economic Times
Even as 700 odd units in the state’s financial capital, Ludhiana, continue to function amid a month-long curfew in Punjab, no other industrial unit opened here on Monday. The Ludhiana deputy commissioner on Monday announced that industrial units in rural areas and designated industrial areas keen to start operations could submit their applications online with the general manager District Industries Centre (GMDIC). The GMDIC will oversee whether guidelines and labour quarantine norms are being followed at the units and then these can be allowed to operate. The guidelines say that the owners should make arrangements for labourers to be given accommodation at the units. About 99% of Ludhiana’s industry, known for manufacturing bicycles, bicycle parts, sewing machines and hosiery, will remain closed until at least May 3.
TEXTILE INDUSTRY MAKING PPE
The silver lining in a grim situation, however, has been some enterprising innovations. A section of Ludhiana’s famed textile industry has diversified to making personal protective equipment (PPE) in bulk. Currently,15 textile firms located in the city have been accorded approval by the Defence Research and Development Organisation (DRDO) to make personal protective equipment (PPEs). District Industry Centre (DIC) general manager Mahesh Khanna told Hindustan Times on Monday that PPE samples from 37 more firms had been forwarded for government approval. “It seems the entire textile industry is keen to manufacture them”, he said. Permission had been accorded for manufacture of essential commodities, including bread, biscuits, packaging, pharmaceuticals and PPEs on a daily basis. There are currently 600 units for manufacturing essential commodities and around 100 units for some non-essential commodities that had been given permission earlier to function. Ludhiana is home to about 95,000 micro, small and medium industrial units (SMEs) and about 250 large scale units.
BICYCLE UNITS UNABLE TO RESUME WORK
Ludhiana’s bicycle industry, which forms 80% of India’s bicycle manufacturing and home to giants such as Hero and Avon among others, remained closed as industrialists expressed their inability to start work because of the strict guidelines imposed by the administration. They also said sustaining would be difficult in the absence of demand in these times. “Where are the shops (retailers) to sell bicycles? What will we do even if we start manufacturing cycles?” asked SS Bhogal, managing partner of Bhogal Sales Corporation, a major bicycle manufacturer in the city. Bhogal also said strict safety guidelines imposed by the administration were not feasible. “There are practical problems. It is not possible to house over 100 labourers and also arrange for their medical facilities,” he said. SK Rai, managing director of Hero Cycles, said there is no question of them re-opening their unit before May 3. “There are strict restrictions on transport. Re-opening in these times is just not feasible,” he said. The president of United Cycle and Parts Manufacturers Association (UCPMA), DS Chawla felt it was not possible to function with conditions such as quarantining of the labour imposed by the administration. Likewise, the president of the Chamber of Industrial and Commercial Undertakings (CICU), Upkar Ahuja, said nothing could be gained by opening a certain sector or industry amid a lockdown until the complete chain was permitted to operate. The industry would need raw material and a function market to sell products. The district administration had allowed industrialists with permissions to run factories to operate their respective units. However, Ludhiana deputy commissioner Pradeep Kumar Agrawal said that the decision to recall the order permitting relaxations was taken to keep the situation under control. The district has so far witnessed four Covid -19 deaths, including that of an assistant commissioner of police and a revenue department official. There are currently 15 Covid-19 cases in the district, the state’s largest in terms of both geographical and population (35 lakh) size.
Source: Hindustan Times
About 70,000 suits were made on Friday but the numbers went down over the weekend to around 50,000 a day, a government official with direct knowledge of the matter said. To make the non-woven fabric for these suits, about 40 textile manufacturers have been certified, according to an official with knowledge of the testing process. There were also at least 100 samples pending with testing agencies. Even if 50% of these pass the tests, there should be over 100 certified coverall makers in India by the middle of this week, the official said. Coveralls are worn by healthcare workers to protect themselves while treating Covid-19 infected patients. Other PPE include N-95 masks, gloves, goggles, face shields, and shoe cover. PPE for the central government are procured by HLL Lifecare, which only purchases equipment approved by testing agencies. Four agencies, including South India Textile Research Association (SITRA), Coimbatore and the Defence Research & Development Establishment (DRDE), Gwalior, have been identified for testing PPEs. The number of indigenously made coveralls has reached about 500,000 so far, said the government official requesting not to be named. India has set a cautious target of procuring 20 million suits, this person said, adding import was also an option. “There were no indigenous makers of PPE before. The annual market for coveralls was 50,000 units, all of which were imported. From there, reaching a production of 100,000 suits a day has been nothing short of an achievement, especially during the lockdown when the entire supply chain was disrupted,” said the first person quoted earlier in the story. However, not all companies that have received approvals have started manufacturing since they are waiting machines and workers to arrive, said the second person. Five apparel makers who had started making coveralls told ET that they were producing between 1,500 and 10,000 suits a day, with one even planning to ramp up to 15,000 units a day. “We have five factories in Bangalore where about 750 workers have started making coveralls with all the required permissions,” said Harish Ahuja, the managing director of Shahi Exports. “We are experienced in making water-proof clothing and have started making 8,000-10,000 suits a day.”
Source: Economic Times
|
Item |
Price |
Unit |
Fluctuation |
Date |
|
PSF |
879.07 |
USD/Ton |
-1.74% |
21-04-2020 |
|
VSF |
1283.28 |
USD/Ton |
0% |
21-04-2020 |
|
ASF |
1762.39 |
USD/Ton |
0% |
21-04-2020 |
|
Polyester POY |
685.45 |
USD/Ton |
0% |
21-04-2020 |
|
Nylon FDY |
1907.96 |
USD/Ton |
0% |
21-04-2020 |
|
40D Spandex |
4027.91 |
USD/Ton |
0% |
21-04-2020 |
|
Nylon POY |
5200.94 |
USD/Ton |
0% |
21-04-2020 |
|
Acrylic Top 3D |
946.91 |
USD/Ton |
0% |
21-04-2020 |
|
Polyester FDY |
2049.29 |
USD/Ton |
1.40% |
21-04-2020 |
|
Nylon DTY |
2006.89 |
USD/Ton |
0% |
21-04-2020 |
|
Viscose Long Filament |
862.11 |
USD/Ton |
0% |
21-04-2020 |
|
Polyester DTY |
2558.07 |
USD/Ton |
3.43% |
21-04-2020 |
|
30S Spun Rayon Yarn |
1809.02 |
USD/Ton |
-0.39% |
21-04-2020 |
|
32S Polyester Yarn |
1399.17 |
USD/Ton |
0% |
21-04-2020 |
|
45S T/C Yarn |
2204.75 |
USD/Ton |
0% |
21-04-2020 |
|
40S Rayon Yarn |
1625.30 |
USD/Ton |
0% |
21-04-2020 |
|
T/R Yarn 65/35 32S |
2063.42 |
USD/Ton |
0% |
21-04-2020 |
|
45S Polyester Yarn |
1978.62 |
USD/Ton |
-0.71% |
21-04-2020 |
|
T/C Yarn 65/35 32S |
1752.49 |
USD/Ton |
-1.20% |
21-04-2020 |
|
10S Denim Fabric |
1.17 |
USD/Meter |
-0.36% |
21-04-2020 |
|
32S Twill Fabric |
0.65 |
USD/Meter |
-0.22% |
21-04-2020 |
|
40S Combed Poplin |
0.94 |
USD/Meter |
-0.15% |
21-04-2020 |
|
30S Rayon Fabric |
0.50 |
USD/Meter |
0% |
21-04-2020 |
|
45S T/C Fabric |
0.64 |
USD/Meter |
0% |
21-04-2020 |
Source: Global Textiles
Note: The above prices are Chinese Price (1 CNY = 0.14133 USD dtd. 21/04/2020). The prices given above are as quoted from Global Textiles.com. SRTEPC is not responsible for the correctness of the same.
Crude oil prices plunged on Monday with the West Texas intermediate (WTI) crude in the US falling below the $15 per barrel mark, the lowest level in 21 years. The fall in oil prices comes on the back of weak demand amid the coronavirus crisis. The pandemic has almost brought the global travel industry to a halt, limiting demand for the commodity which has fallen by almost a third this year. Further, concerns regarding storage have also weighed on the markets as global storage is nearly full. Currently, WTI crude is trading at $14.78 per barrel, lower by 19.5 per cent from its previous close. Brent crude was at $27.66, lower by 1.5 per cent from the previous close. The decline comes despite the recent output cut agreement between the Organization of Petroleum Exporting Countries (OPEC) and its allies. There were hopes that agreement would stabilise oil prices, but with Covid-19 pandemic continuing, there has been a large slip in demand that is not letting a pick up in oil prices. The current market is oversupplied on shrinking demand creating a situation of free fall for crude.Soon after the OPEC-Russia talks on production cut failed earlier last month, crude had fallen by more than 25 per cent, the largest fall since the 1991 Gulf War, to $34 per barrel on March 9. The price of oil has now reached a point that it is increasingly becoming difficult for higher cost producers to remain in operation and rather look at declaring bankruptcy. A lot of US shale producers are in deep trouble and analysts expect that low oil price for few more months will result in a spate of bankruptcies in US. With world demand now forecast to plunge by over 20 million barrels per day, a 30 per cent drop from last year, analysts say massive production cuts will be needed beyond just what has been agreed between the Organization of the Petroleum Exporting Countries (OPEC), Russia and other producers. Global markets have been on a bear run including the financial markets for the past few weeks owing to the concerns of a significant impairing of the world economy due to the coronavirus crisis.
Source: Money Life
Leaders of South Asian countries together announced an emergency fund in the middle of March, 2020,to address the Covid-19 impacts. Its objective was to tackle risks associated with the pandemic. India announced US$10 million assistance to the emergency fund, which was worth US$21.8 million with contribution from seven countries. Bangladesh announced its contribution of US$1.5 million. This seems to be a good initiative and an example of regional cooperation. However, after the announcement of the fund, we haven'tseen any further step so far to implement it. All the countries are now busy managing problems of their own, announcing a number of national packages to meet the emergencies. In the meantime, the South Asia Economic Focus, a publication of the WorldBank,made GDP growth forecastsfor South Asian countries; for Bangladesh it is a fall from estimated growth of 8.2 per cent in 2019 to 2.0-3.0 per cent in 2020. In 2021,the growth may go further down to 1.2-2.9 per cent and then in 2022 it may start slightly rebounding to 2.8-3.9 per cent. The GDP growth is forecasted to be minuseach for Pakistan, Sri Lanka, the Maldives and Afghanistan. India's growth rate might be 4.5-5 per cent. Such prediction is givingan early signal to theSouth Asian nations to take preparations for saving economies from further damage. The post-coronavirus economic situation is unpredictable since a complete shift in economic systemincluding regional and bilateral relations is likely. The WB report said the country may be affected by a sharp decline in external demand, shock in supply due to bottleneck in global value chain, impact of lockdown on domestic demand affecting employment, stress on consumer and business sentiment, and deepening inequality. South Asia will need enough preparations. The countries of the region have announced a number of stimulus packages- monetary,financial and fiscal. Some of them are giving direct support for health and safety of the people. Interest rate cut, tax benefits, social benefits, and safety nets are included in the stimulus packages. Increasing liquidity is an important step to increase cash flow for businesses to continue productive activities. Management and distribution of these fundsare critical since efficiency and accountability would play a big role in ensuring utilisation of money and welfare of people. Possible decline in GDP will lead to consumption cut because of income fall and apprehensions of job cut. In South Asian countries, agriculture, servicesand industries especially textiles and readymade garments, will see challenges in retaining employment. Informal Sector Skills Industry Council(ISISC) has said about 20 million people are engaged in jobs in Bangladesh's informal sectors. Because of the fall in demand for daily required services, thesesectors suffer and so does the farm sector. Manufacturing is also disrupted and exports are hard hit for demand shrinkage abroad. The whole world is passing through adifferent kind of transition and a new economic order is knocking at the door of the global community.No matter whether people like it or not, changes will come. However, a combination of temporary work programmes and moratorium on debt servicing and rent payments can help economies prepare for a restart. In the longrun, South Asia can do well by diversifying its international connectionsas there are ample opportunities to expand digital technologies for payment system and distant learning. In the past, developing countries and least developed countries (LDC) received supports from developed countries. But since developed countries arealso sufferers at present and busy protecting themselves, foreign funding may be more conditional in the coming days. In such a context, leaders of the South Asian countries would need to discuss the problems in detail and support each otherwith their own available resources. Digital technologies can be used in creating business opportunities and training technical professionals in the region. The private sector organisations including nongovernmental organisations(NGOs) and civil society organisations can come together for helping in implementing support programmes undertaken by respective governments. They all would need to identify immediately priority projects,supposed to be funded by public money, and impose a ban on luxury and other cosmetic development projects to reduce costs.Budget preparation and implementation would be the most challenging task this year, due largely to disruption to revenue collection, alongside a series of tax cuts and delayed payments. A prolonged lockdown has been affecting all domestic economies in South Asia. So, policy framing needs to be handled by capable hands,utilising collective intelligence,and upholding national interests as the highest priority. FerdausAra Begum is Chief Executive Officer at Business Initiative Leading Development (BUILD).
Source: Financial Express Bangladesh
A $2 billion trade surplus in March has boosted Vietnam’s first quarter total to almost $3.74 billion, according to the General Department of Vietnam Customs. It said the value of Vietnam's imports and exports in the first quarter reached $122.73 billion, a 5.7 percent increase year-on-year, most of it from the FDI sector. The total foreign trade turnover in March reached $46.28 billion, a 17.4 percent increase over February. Of this, export and import revenues exceeded $24 billion and $22 billion, up 15.7 percent and 19.2 percent year-on-year, respectively. Compared to the General Statistics Office data published last month, the Q1 turnover of $122.73 billion and trade surplus of $3.74 billion are respectively $7.3 billion and nearly $1 billion higher. The higher growth rate and trade surplus, however, was not even among the different sectors of the economy. The trade surplus in the first quarter, while large, was mostly due to the activities of foreign-invested companies. According to the customs department, the total import and export turnover for the FDI sector in the first quarter reached over $77 billion, up 3.8 percent year-on-year. In this sector, export and import turnovers were $42.55 billion and $34.82 billion respectively, sending the trade surplus soaring to $7.7 billion. Asia was the largest market for Vietnam in the first quarter, contributing to nearly 65 percent of the total import and export turnover. The total two-way trade value with the Asian market reached $79.52 billion, up 4 percent year-on-year, with export and import reaching $31.47 billion and over $48 billion respectively. Vietnam's trade turnover with the U.S. reached $24.35 billion, an 18.3 percent increase year-on-year, making it the market with the fastest growth in the first three months of the year. Trade with the European market, on the other hand, went down 2.8 percent year-on-year to $15.16 billion. The country's main export items were still phones, computers, electronic devices and components, footwear, wood, seafood, iron and steel, with phones and electronic components were mostly from FDI companies. The main imports were electronic components, computers and raw materials for textile and footwear industries.
Source: VN Express
Amid the coronavirus pandemic, the Chittagong Port is facing a serious problem with a big stockpile of containers which awaits delivery to their owners. Against the backdrop, the ministry of commerce has asked the garment sector to store their imported goods to their respective bonded warehouses instead of sea and airports in an attempt to accelerate cargo movements from the ports. A letter issued by the textile cell of the ministry of commerce on Friday noted that around 50 per cent containers lie idle at the Chittagong port belongs to the members of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) and the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA). The Chittagong port has over 51,000 TEUs (20-foot equivalent units) imported containers against its capacity of 36,000 TEUs for storage. "Hundred per cent container storage capacity of the port are fulfilled," a port official told the FE. CPA Secretary Omar Faruk said, the CPA chairman has sent a letter to the National Board of Revenue (NBR) for shifting the containers, including ones containing readymade garment (RMG), from the port yards to 'off docks'. "The NBR allowed more six goods for off docks, not the RMG containers. So, we have sent another letter to the NBR for shifting the RMG goods to off docks today (Sunday)," he informed. The NBR on Saturday ordered handling more imported goods by the Chittagong-based 19 off-docks as a strategy for freeing up space. "Additional arrangements have been made to keep several thousand containers at our overflow container yard which is adjacent to Chattogram Port. It can accommodate containers equivalent to 6,000-7,000 TEUs," he stated. The ministry letter also noted the Chittagong port now has been congested and ship entry has been limited following the poor delivery of imported items. It also noted that the same situation prevails in airports, especially the Hazrat Shahjalal International Airport. There are many bonded warehouses belong to clothing manufacturers in Dhaka, Gazipur and Chattogram, according to the letter. Although there are 4,813 active bonded warehouses, but the number of large facilities is around 500. They can store there a large number of containers, people who have direct knowledge of the matter told the FE. But they said that the garment factories will not show the interest as the transportation cost to carry containers from ports is expensive. Besides, they need proper security for the containerised goods. It is believed that garment sector is not getting the delivery as many factories are closed in line with the nationwide shutdown until April 25. Dr. Rubana Huq, president of the BGMEA, the lobby group of around 4,000 woven clothing makers, declined to comment.
Mohammed Hatem, vice president at the BKMEA, briefly spoke on the matter. Mr Hatem said that they have already requested their members to get the quick delivery of imported goods. "This (delivery of imported) is very important as many essential items before the holy month of Ramadan are in the pipeline", he noted. In the meantime, shipping executives, who struggle to discharge their containers at the main sea port, told the FE that the government decision is a positive step since most containers belong to the clothing makers. Captain AS Chowdhury, country head of Seacon, a leading feeder line plying on the Chittagong-Singapore route, said if they get their containers and keep in the bonded warehouses, it will help decongest the port. He said this is a critical time and for this reason they will not show interest in doing this. Contacted, Chairman of Bangladesh Shipping Agents Association (BSAA) Ahasanul Haque Chowdhury said, this was the highest number of containers lying at the port yard in the last five to ten years. He said Chittagong Port used to deliver 6-7 thousand TEUs of containers every day. But, the rate of container delivery now is not more than 6-7 hundred TEUs per day, he said. "CPA yards are already congested with containers. So, stay time of ships has increased to seven to 10 days from two-three days earlier," he added. The Chittagong port has slashed the number of berthing for new arrivals following space crisis, for which some 40 vessels are waiting at the outer anchorage.
Source: Financial Express
Adviser to the Prime Minister on Commerce, Textile, Industry and Investment Abdul Razak Dawood said on Sunday that the government was finalising a scheme to support small and medium enterprises (SMEs) across all sectors. “It is our endeavour to help small businesses as compared to larger ones because of their weaker financial position,” Mr Dawood said in a Twitter posting. Adviser to the PM on Finance Dr Abdul Hafeez Shaikh has already said that Rs100 billion had been allocated for supporting SMEs and the agriculture sector as part of the government’s relief package of Rs1.2 trillion to deal with the impact of Covid-19 on economy. Salient features of the plan would include concessional loans to SMEs and the agriculture sector. SMEs, industry and agriculture will see deferment of loans — both principal and interest. The government will also provide risk guarantee to banks for fresh loans to SMEs, according to a tweet by Minister for Industries and Production Hammad Azhar. SMEs, being one of the largest and the most important sectors of economy, play a key role in shaping national growth strategies, employment generation and social cohesion by improving standard of living of vulnerable segments of society. In most countries, SMEs constitute more than 90 per cent of all enterprises and significantly contribute towards inclusive economic growth. There has been concern that in Pakistan the SME sector has not been able to realise its full potential. The SMEs continue to suffer from a number of weaknesses, which hamper their ability to take full advantage of the opening of economy and the increasingly accessible world markets. The areas of constraints are normally identified as labour, taxation, trade capacity, finance and credit availability, says a document of the Small and Medium Enterprises Development Authority. Home
Source: The Dawn
