The Synthetic & Rayon Textiles Export Promotion Council

MARKET WATCH 09 MAY, 2020

 

NATIONAL

INTERNATIONAL

Industries Should Take Positive Approach and Tap the Opportunities Created After Covid-19 Crisis Gets Over: Shri Gadkari

Union Minister for MSME and Road Transport and Highways Shri Nitin Gadkari has said that industries should keep a positive outlook and tap the opportunities that may arise after COVID pandemic is over. He was addressing a webinar on "MSME and Infrastructure, Post COVID-19: Life of these two lifelines of the Indian Economy”, organized today by Indore Management Association. Shri Gadkari called upon the industry that it is needed to be ensured by industries that necessary preventive measures are taken to prevent the spread of COVID-19. He emphasized that organizations should ensure that their workers and executives are taken care of - by providing food, shelter and maintaining social distancing norms. He emphasized that industry should take a positive approach and tap the opportunities that will be created when the COVID-19 crisis gets over. He stated that all the stakeholders must adopt an integrated approach to come over the crisis while ensuring the lives and livelihood of the people. Shri Gadkari also urged the industry to have a positive attitude during this time to tide over this crisis. The Union Minister emphasized that special focus towards export enhancement is the need of the hour. Further, he mentioned that there is also need to focus on import substitution to replace imports with domestic production. The Minister recalled that Government of Japan has offered special package to its industries for taking out Japanese investments from China and move elsewhere. He opined that it is an opportunity for India which should be grabbed. Some of the major issues highlighted and the suggestions given included: Increasing provision of 10% of working capital limit as additional funds to 30%, relaxation in Companies Act so that liquidity can be arranged from social circle, benefit for labourers infected by COVID-19, relaxation in labour laws, relaxation in electricity bills during the lockdown, deferring GST and advance tax, introducing a scheme for COVID-19 similar to Voluntary Disclosure of Income scheme, etc. Shri Gadkari responded to the questions from representatives and assured all possible help from the government. He informed that he would take up the issues with related departments.

Source: PIB

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Govt announces financial package to ramp up coir usage; signs MoU with IIT Madras

Credit and Finance for MSMEs: MSME Ministry on Thursday announced an MoU between the Coir Board and IIT Madras for setting up a Centre of Excellence to boost the use of coir “exclusively or in combination with other natural fibres". Credit and Finance for MSMEs: MSME Ministry on Thursday announced the signing of a memorandum of understanding (MoU) between the Coir Board and IIT Madras for setting up a Centre of Excellence to boost the use of coir “exclusively or in combination with other natural fibres,” it said in a statement. The institute had validated the research studies conducted by the Coir Board and other agencies on Coir Geo-Textiles (CGT) and recommended that CGT can be used to prevent soil erosion in slopes/embankments, river embankments, mine slope dumps stabilization etc. CGT are permeable natural fibres made from Coconut husk and is used in road construction, for checking soil erosion, riverbank protection etc. MSME Ministry said that the Coir Board will also provide Rs 5 crores in financial assistance initially for two years for setting up and operating the Centre of Excellence, the ministry said. The centre of Excellence (CoE) will also aid the development of relevant technology and improve production and processing standards through specific projects and monitor research projects, the ministry said. The centre will also support in the creation of the intellectual property rights and technology transfer. So far, the board has identified 27 areas of research and development for the needs of the Coir industry to be led by the Centre of Excellence. There are additional 10 in-house projects of IIT Madras in machinery development and road projects. The share of coir geotextiles in India’s domestic geotextile market of Rs 1,200 crore is below 40 per cent. India’s exports coir and coir products export during FY20 was reportedly worth Rs 2,272 crore while Kerala accounts for around 80-90 per cent of the exports. Meanwhile, the government had recently announced plans to set-up an import substitution policy to ‘replace foreign imports’ and boost domestic manufacturing in the wake of the current economic scenario due to Covid-19. MSME Minister Nitin Gadkari in a webinar on Tuesday had said that there is a need to focus on import substitution to replace foreign imports with domestic production.

Source: Financial Express

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Economic Relief Package 2.0 soon, possible to raise $60 billion by listing govt bonds overseas: CEA KV Subramanian

In an interview to India Today channel, the CEA said: “About $4 trillion of money tracks these (global) bond indices. India is expected to get a weight of around 1.5-3%. Even if you take 1.5%, that translates into $60 billion.” An economic relief package to fight the Covid-19 crisis will come any time soon, chief economic advisor (CEA) Krishnamurthy V Subramanian said on Thursday and indicated that borrowing of around $60 billion to fund the rising fiscal deficit can theoretically be through listing government bonds on the global bond indices. In an interview to India Today channel, the CEA said: “About $4 trillion of money tracks these (global) bond indices. India is expected to get a weight of around 1.5-3%. Even if you take 1.5%, that translates into $60 billion.” “I recognise that this money can’t come immediately but may come later half of the year or next year. But that gives us the opportunity to structure the borrowing plan in terms of maturity etc to be able to finance the deficit and also do it in a way that the cost of borrowing doesn’t become very large,” he added. In March, the Reserve Bank of India announced the opening up of key government securities to full foreign investment in a bid to find a place in global bond indices. The Centre had budgeted gross market borrowing of Rs 7.8 lakh crore for FY21 and had recently announced its plan to borrow 62.6% of it in the first half itself. However, its plans have gone haywires due to the Covid-19 crisis. While acknowledging the serious challenges being faced by the businesses and even workers in the wake of the Covid crisis, the CEA refuted the notion of a large-scale distress, saying the Jan Dhan deposits have gone up from the level witnessed in the week before the lockdown was imposed from March 25. The economy could grow at 1.5-2% in FY21, with a contraction in the first half. This will be followed by a V-shaped recovery, he said, drawing a parallel with a similar rebound witnessed after the Spanish flu outbreak, which was, in fact, more devastating. Talking about the debt-to-GDP ratio following massive borrowing to fund productive spending, Subramanian said even if the country witnesses 4% real GDP growth for 5-10 years from FY22, the debt levels will come down. The important point is that the rate of borrowing will be far lower than our nominal GDP growth rates. The CEA said while the first package addressed the vulnerable sections (mainly a demand-side measure), the next round of relief could focus on the supply side of the economy, including the ways to boost credit flow or liquidity in the system. Already, the central bank has initiated a raft of steps to improve liquidity in the system. Commenting on the need to have a massive stimulus package, in sync with the ones offered by the developed countries, the CEA said if the loan guarantee is removed from the package extended by the UK, it would be worth only 3.7% of the GDP, and not 15%. Similarly, the US package will be worth 6.5% of its GDP, instead of 10%.

Source: Financial Express

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India looks to lure more than 1,000 American companies out of China

India is seeking to lure U.S. businesses, including medical devices giant Abbott Laboratories, to relocate from China as President Donald Trump’s administration steps up efforts to blame Beijing for its role in the coronavirus pandemic. The government in April reached out to more than 1,000 companies in the U.S. and through overseas missions to offer incentives for manufacturers seeking to move out of China, according to Indian officials who asked not to be identified, citing rules on speaking with the media. India is prioritizing medical equipment suppliers, food processing units, textiles, leather and auto part makers among more than 550 products covered in the discussions, they said. Trump’s move to blame China for its handling of the Covid-19 outbreak, which has killed more than a quarter-million people worldwide, is expected to worsen global trade ties as companies and governments move resources out of the world’s second-largest economy to diversify supply chains. Japan has earmarked $2.2 billion to help shift factories from its neighbor, while European Union members plan to cut dependence on Chinese suppliers. India expects to win over U.S. companies involved in healthcare products and devices, and is in talks with Medtronic Plc and Abbott Laboratories on relocating their units to the country, an official said. Medtronic spokesman Ben Petok and Abbott spokeswoman Darcy Ross didn’t immediately respond to emails seeking comment. Both Medtronic and Abbott have a presence in India, which may make it easier for them to move their China supply chains to the country, according to an official. They’re based out of financial center Mumbai and already work with large Indian hospital groups. Officials have told companies that India is more economical in terms of securing land and affordable skilled labor than if they moved back to the U.S. or Japan, even if overall costs are still higher than China. They have also offered an assurance that India will consider specific requests on changes to labor laws, which have proved a major stumbling block for companies, and said the government is considering a request from e-commerce companies to postpone a tax on digital transactions introduce. India’s trade ministry spokesman didn’t respond to an email seeking comment on the effort to lure U.S. companies. The push by Prime Minister Narendra Modi’s government comes as India tries to regain lost ground after many companies chose countries like Vietnam over India as an alternative destination when Trump started his trade war with China. Modi has tried to shore up U.S. investments and improve ties through corporate tax cuts, two massive public rallies with Trump in Houston and India, and a $3 billion defense deal. Secretary of State Michael Pompeo last month said the U.S. was working with India, Australia, Japan, New Zealand, South Korea and Vietnam on how to “restructure these supply chains to prevent something like this from ever happening again.” The administration was “turbocharging” an initiative to remove global supply chains from China, Reuters reported this week, with one official saying it’s pushing for an “Economic Prosperity Network” of trusted partners. “My read is that the network, if it pans out, will look to India and Vietnam to replace China in the global supply chain network,” said Derek Grossman, researcher at the Washington-based RAND Corporation who held positions in the U.S. Intelligence Community for more than a decade. “This would be a rough fit in terms of replacing China’s immense manufacturing capabilities, but perhaps the U.S. has high hopes that India and Vietnam can quickly ramp up to at least equal Chinese capacity.” India in April partially lifted a ban on the export of hydroxychloroquine and paracetamol following a request from Trump. It also approved 130 billion rupees ($1.7 billion) worth of investments to make more bulk drugs and medical devices, and to boost local manufacturing of drug intermediates and active pharmaceutical ingredients to cut dependence on imports from China.For Modi, a surge in investment would help shore up an economy battered by an eight-week nationwide lockdown to control the Covid-19 outbreak, and help him make up ground hitting a target to grow its manufacturing sector to 25% of gross domestic product by 2022 from 15%. The need to create employment is now even more urgent after the pandemic left 122 million people jobless and forced India to shut down all major cities.It could also present India with a chance to finally push through long-stalled reforms on land, labor and taxes that have hindered investment for years. Modi’s second term has been marred by nationwide protests and slow growth since his party scored a landslide election victory a year ago, presenting a risk for companies planning to move. “There are opportunities for India to try to gain a place in global supply chains, but this will require serious investments in infrastructure and governance,” said Paul Staniland, an associate professor at the University of Chicago who writes about India’s politics and foreign policy. “India faces tough competition from elsewhere in South and Southeast Asia.” India’s trade ministry has sought detailed feedback from U.S. companies on changes needed to make the country’s tax and labor laws more favorable to companies, said one of the officials. Modi’s federal government is working with states to ensure long term solutions, the official added, including developing land banks to ensure a quick start for units. “India is a bigger market than Vietnam or Cambodia so it should be a bigger draw for investors looking to move operations out of China,” said Ajay Sahai, director general and chief executive officer of the Federation of Indian Exporters. “But apart from ensuring land, water and sewerage, the most important change India needs to make is to give a clear guarantee that the government will not introduce retrospective tax amendments.” Some states including Maharashtra have ensured that supply chains for foreign manufacturers remained functional through India’s national virus lockdown. Others like Tamil Nadu in the south and Uttar Pradesh in the north have offered concessions for those planning to move. “There’s abundant capital in the U.S. that’s looking for geographies outside, and we can see India responding,” said Mukesh Aghi, president of the U.S.-India Strategic and Partnership Forum, a Washington-based group that advocates for policies that further business ties between the countries. “Companies realize that while large supply chains in China may have been economical, there’s no point in keeping all your eggs in one basket.”

Source: Economic Times

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Sitharaman launches two exchanges to take on offshore currency market

India is taking its first baby steps to tackle a growing offshore market for its currency. Two exchanges — India International Exchange (IFSC) and NSE IFSC — on Friday began trading foreign-exchange settled rupee derivatives, part of a push to bring the market back home. The launch comes amid the world’s most expansive coronavirus lockdown, which has crippled businesses and hurt trading volumes in the country’s financial markets. The timing may make it harder for the contracts to gain traction even as volumes in rupee trading overseas continue to grow.“Volumes in an exchange typically take time to pick up,” said Abhishek Goenka, chief executive at India Forex Advisors. “The bid-ask spreads have to come down and a lot of market-making has to happen to get decent activity.” India’s policymakers have been increasingly concerned about the growing heft of the rupee trades in venues overseas. The average daily volume for the rupee in London totaled $47 billion in April 2019, according to the Bank for International Settlements. That’s a fivefold jump from 2016, and more than the $34.5 billion of trades executed locally at the time. Finance Minister Nirmala Sitharaman launched trading on the two exchanges, both of which are located at a special hub in the GIFT City in western India, envisioned by then Gujarat chief minister Narendra Modi to rival Singapore as a financial services center. “This new reform will help India to become a net exporter of financial services, presently being lost to other financial centres across the world,” said Tapan Ray, managing director and group chief executive at GIFT City said.

NDF Market

Offering onshore rupee derivatives is similar to what Indonesia attempted in 2018, when it launched non-deliverable forward contracts settled in rupiah. While the forex-settled rupee derivatives may take time to take off, the move will help the Reserve Bank of India get a better grip on the working of the NDF market and help investors get better quotes than the spreads they are charged offshore, India Forex’s Goenka said. INX India, one of the exchanges launching the contract, is looking at positioning itself against venues in Singapore or Dubai offering similar rupee contracts. The lot size for a standard contract on INX is one million rupees while the NSE has it at Rs 20 lakh. “This is a rock star product for us,” said V. Balasubramaniam, chief executive at INX India. “We are looking getting at least 50 per cent of volumes generated by these exchanges in the first quarter of operations.” The RBI has allowed local banks to participate in the offshore currency market from June 1, which could pose another obstacle to onshore contracts from becoming popular, analysts say. NDFs, nominally a tool for hedging, are popular with investors who want to bet on the currency without taking delivery. They’re often used in major financial centers in place of currencies that don’t trade round-the-clock.

Source: Business Standard

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FM to discuss credit flow to NBFCs, businesses with banks on Monday

The FM will take stock of the credit sanction and disbursement by the banks since March 1, 2020, and the Covid-19-related emergency credit lines opened by the lenders. Finance Minister Nirmala Sitharaman is set to hold a review meeting with state-owned banks on Monday (May 11) to take updates on credit flow to industries at a time when economic activities have started to resume. The discussions will focus on banks' reluctance to lend to non-banking financial companies (NBFCs) and to get a sense from the lenders about their decision to park huge surplus funds with the banking regulator. The FM will take stock of the credit sanction and disbursement by the banks since March 1, 2020, and the Covid-19-related emergency credit lines opened by the lenders. Sitharaman will review the credit flow to the NBFCs and “interest rate transmission to borrowers” along with “deployment of funds under reverse repo.” Reverse repo rate is the interest rate that the RBI pays to banks for parking surplus funds with it. Although it has been cut twice, banks have deployed Rs 8.53 trillion at the reverse repo window. The Finance Ministry said on Thursday that state-owned banks sanctioned loans worth Rs 5.66 trillion during March-April this year. ‘Can generate big volumes in currency derivatives ‘Finance Minister Nirmala Sitharaman on Friday expressed hope that trading of rupee-dollar derivatives contracts in India will generate huge volumes, given the world class business environment and competitive tax regime at GIFT-IFSC. The minister on Friday launched INR-USD futures and options contracts on the two international exchanges -- BSE's India INX and NSE's NSE-IFSC, at GIFT-IFSC in Gandhinagar, Gujarat. "Given the world class business environment and competitive tax regime at GIFT-IFSC, it is expected that trading of INR-USD contracts may bring volumes to India," she said. The finance minister opened the trading facility by ringing the bell electronically through video conference. Trading volumes on India INX have been growing phenomenally ever since the exchange commenced trading activities in January 2017, BSE said in a statement. With a cumulative trading volume of $822 billion since launch and international debt medium-term note (MTN) program of about $48 billion, India's INR-USD derivative is expected to attract more participants to the IFSC and make India INX a leading centre for raising capital for issuers across the globe, it said.

Source: Business Standard

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India prepares targeted investment pitch for foreign investors

A list of close to 1,000 global companies has been prepared by Invest India for investment pitches India has stepped up its game to attract investments from companies looking for newer avenues and those considering shifting from China amid the coronavirus pandemic. A list of close to 1,000 global companies has been prepared by Invest India for investment pitches, CNBC-TV18 reported. Invest India is a government arm under DPIIT to promote and facilitate global investment in the country. The companies targeted for investment pitches cover 10 sectors – electronics systems design & manufacturing, auto, capital goods, textiles, mining, renewables, metal, pharma, medical equipment, and oil & gas. The countries being targeted include the United States, Japan, Germany, Taiwan, France and the Middle East. Foreign companies based in China, with a strong focus on exports, will also be approached, as per the report. The companies were shortlisted based on 28-30 parameters such as balance sheet, supply chain expansion plans, presence of competitors in India and G2G relationship, sources told the channel. The source added that COVID-19 could be a catalyst for global companies to set up alternate and resilient supply chains.

Source: Money Control

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MSMEs need govt push to benefit from comparative advantage over China-made consumer goods: Report

The government needs to give direct push to MSMEs to ramp up export of consumer goods to reap the benefits of India''s comparative advantage over products made in China in the post-pandemic world, a report said. India can look in the range of incremental exports growing by USD 20 billion (in the least favourable outcome) to a significant USD 193 billion jump in the five-year horizon, only if it builds its capabilities and captures share from China, according to SBI’s Ecowrap report released on Thirsday. “Although, the revealed comparative advantage (RCA) for India is lower than China as far as capital goods exports are concerned, India can still capitalise on this opportunity to push its capital goods exports. “However, the bigger opportunity right now is in the consumer goods sector, in which India has an RCA greater than China,” said the report. Looking at the micro, small and medium enterprise (MSME) profile of the country in terms of the consumer goods sector, the biggest concentration is in the textile and clothing sector (17.30 per cent), food products (12.30 per cent) and crop and animal production (10.0 per cent). “Although we do have a comparative advantage in textiles and animal goods, in food products we are not competitive. The government can give a direct push to this sector, so that MSME firms involved in food products manufacturing get benefitted,” the report said. It further said that although 2020 is a lost year, in terms of trade, India can think long-term and build relations so that it can occupy the space vacated by China. "When we look at the value of merchandise exports, for 2019, China exported USD 2.5 trillion worth of goods, while India exported USD 0.3 billion worth of merchandise. This means that China exports 7 times the amount of goods India exports in a year," it said. Taking a look at Vietnam, which has rapidly captured merchandise exports, it is also touted that a fair number of the factories being rapidly put up in Vietnam are owned and financed by the same Chinese companies being dislodged in their home country, the report said. However, it added that there is no denying the fact that Vietnam has gained in this trade war, with its cheap labour and cheap currency. "How India maneuvers the geopolitical space will clearly determine how successful it is in becoming an export behemoth. With just 1.7 per cent in world''s merchandise exports, India has a long road ahead to catch up with China. But it must be now...," it asserted. As per the report, India is one country that can fulfill global demands with its sizeable population. However, India will have to take a hard look at its labour reforms and currency outlook to gain market share. Although COVID-19 can dampen demand for the coming years, it does provide an opportunity for global trade rebalancing, and India needs to play its cards right to gain something out of this catastrophe, said the SBI Ecowrap report.

Source: Outlook India

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In Modi’s quest to woo foreign companies into India from China, these products may be flag bearers

As Prime Minister Narendra Modi urges states to make efforts to attract foreign companies willing to shift base from China, the country can focus on one sector which has a comparative advantage over China. Amid capital, consumer, and intermediate goods and raw materials, the bigger opportunity right now is in the consumer goods sector, SBI research said in the recent Ecowrap report. In the consumer goods, the textile and clothing sectors; food products; and crop and animal production have the highest scope. However, although India has a comparative advantage in textiles and animal goods, it is not competitive in food products, the report said. Thus, the government can give a direct push to this sector, so that the small and medium-sized firms involved in food product manufacture get benefitted, the report added. State governments along with the PSU companies are on a constant watch on how to tap the opportunity to attract the global firms coming out of China. Recently, Yogi Adityanath-led UP government held a video conference with giant US-based companies and offered the roadmap and perks they can offer. On the other hand, PSU manufacturing giant BHEL also offered the global companies to partner with it and use its manufacturing facilities and work in harmony. However, India has a long way to go to replace China in becoming an exporter to the world. Even amid the US-China trade war and increasing protectionism in the last two years, China has gained market share from 2018 and currently holds 13.2 per cent share in world merchandise exports and is still the world’s biggest goods exporter. To bring this in perspective, India holds a mere 1.7 per cent share in world merchandise exports. In the last two years, Vietnam has expanded the most with its electrical machinery, furniture, clothing, footwear and leather industries, while India gained in organic chemicals and iron & steel. Meanwhile, in apparels, Vietnam, Cambodia, and Bangladesh gained a much larger share than India. India also lost in leather exports to Cambodia and Indonesia that were diverted from China.

Source : Financial Express

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Indian Textiles Industry Wants Government To Meet These Five Demands To Cash In On Anti-Chinese Sentiments Post-Covid-19

The Indian textiles industry, valued around $150 billion, requires the Union Government to meet five of its primary demands to make good of the opportunity that is arising due to the anti-Chinese sentiments in the global community post-Coronavirus. If the Government can help in meeting these five demands, the industry, whose exports have been hovering a tad below $40 billion, hopes to double textile products shipments from the country and filling the void that China has been creating in the global market over the last few years.

The first demand of the industry is with regard to funding by banks. “Banks have not been helpful to the industry, be it in the current situation or other ones,” said K Selvaraju, Secretary-General, Southern India Mills Association (SIMA). The association is the representative body of the entire link chain of the textile industry in the south. “For example, the Reserve Bank of India (RBI) announced a package for the industry on 27 March but banks have not decided on it still. Their credit rating of industrial units is ad hoc. The interest rate cut is yet to be passed on to the industry. We are still paying a high interest of 11-12 per cent,” said Selvaraju. Banks are trying to play safe with regard to their clients. They should not be looking only at corporates, particularly with regard to the textile industry, where many small and large family holdings have good track records, said industry experts. In the current crisis created by Coronavirus situation, the RBI should consider providing a two-year moratorium for funds provided to the industry, said Selvaraju, pointing out to the Government’s action during the 2008-09 financial crisis. Then, the Centre came up with a stimulus package offering 12 per cent export incentive and three per cent interest subvention. The industry would need a better package now what with some of them facing problems of cash flow, said experts.“The RBI should tell the Indian Banks Association to ensure that all its members implement a uniform policy. Any banks defaulting on implementing the policies uniformly should be black-listed. Banks have to hand-hold the industry to tide over the crisis,” said the SIMA official. “Right now, the Government will have to help the industry tide over the fund crunch, asking the banks to raise our credit limits,” said A Sakthivel, Chairman, Apparel Export Promotion Council (APEC). Sakthivel said this is necessary right now as many units in the industry lack cash flow, have outstanding receivables and require to pay their suppliers. “Funding to the textiles industry at a lower interest rate is a must,” said Anand Popat, a Gujarat-based raw cotton and cotton yarn trader.

The industry’s second demand is the need for improvement in the country’s export and import policies. “Incentives for textiles exports should continue,” said Popat. “India should focus on taking over the markets that the Chinese are vacating. Trends show that such a thing is not happening. Even under free-trade agreements, like the one we have with Japan, our garment exports are not showing any significant rise. We have look for better options through policies,” said D K Nair, an industry expert who had served the Indian Cotton Mills Federation (now, Confederation of Indian Textiles Industry (CITI)) during the 2000s.

“There are other issues. Today, a garment maker doing a contract job for a foreign company is left waiting for over a month to get the fabric sent by the company to his/her factory gate. Export policies should try and address these issues,” said Nair. Industry experts said that India will have to revisit various free trade agreements (FTA) it has signed since irregularities are being committed under the pacts. “Bangladesh uses its FTA with us to push its products made of Chinese imported materials. We must have provisions for protecting our industries. We cannot become a dumping ground for Chinese products,” said SIMA’s Selvaraju. In the case of textiles, the FTA can specify that special access or privileges for textile products made in Bangladesh would be extended only if its producers import yarn and fabric from India, experts argue. The export and import policies should be framed to provide a level-playing ground for the industry, particularly textiles. For example, a higher duty is imposed import of raw materials to produce synthetic textiles. Then some of the Indian industries got anti-dumping duty imposed on raw materials for synthetic textiles. They had complained that the raw material imports were affecting them. However, the anti-dumping duty on these raw materials were dropped by the Centre earlier this year. Synthetic textiles dominate the global textile scenario with over 75 per cent share and the Indian industry sees synthetic textiles as a solution to better prospects. “Duty on synthetic raw materials will have to be lowered to ensure the textile industry gets a level-playing field,” said the SIMA official.

Third, the textiles industry wants labour laws to be amended to help it function smoothly. Industry experts said that the industry is labour-intensive and relies heavily on migrant workers. “Our labour laws have to be changed to ensure that our productivity increases at par with countries such as Bangladesh and China,” said Nair. Lower productivity is a bane of the sector, which is unable to speed up its product delivery. “The turnaround time for the Indian textiles industry is longer. It has to be made short to become competitive in the export market,” said Nair. Labour law doesn’t mean easy hire and fire, experts said. “It takes at least three months to train an employee on his job in the industry. It is not easy to dismiss an employee. But the industry would need some protection against trade unionism, which is affecting production and productivity,” said an expert, not wishing to be identified.

Fourth, the industry wants the definition for Micro, Small and Medium enterprises (MSME), which form the backbone of the textiles industry, changed. “A bill was introduced in Parliament last year to change the definition of MSMEs. It is still pending and we hope it will be passed soon,” said Selvaraju. The Bill on MSMEs got held up due to Parliament’s functioning being affected by Opposition parties’ protests for one reason or the other. The bill is being opposed by some MSMEs themselves. The Swadeshi Jagran Manch, an economic wing of the Rashtriya Swayamsevak Sangh, has also opposed the classification of units based on their turnovers. The amendment proposes to allow units to invest without any limit in modernising their plants and fearing being denied incentives for their efforts. Industry experts said Textiles Minister Smriti Irani is trying her best to explain to the Centre why the bill should be taken up urgently.

The fifth demand of the industry is to speed up and implement the Textile Ministry’s special fund for the sector. This fund will likely be part of the New Textiles Policy 2020. SIMA’s Selvaraju said the fund would ensure that the Ministry would provide credit guarantee to banks for the funds the units avail. It would help in expanding their capacity and extend the tenure of credit repayment. In the Budget for the current fiscal, Finance Minister Nirmala Sitharaman proposed a National Technical Textiles Mission from 2020-21 to 2023-24 with an estimated outlay of Rs 1,480 crore. The Textile Ministry, according to industry experts, is taking several initiatives, including an Amended Technology Upgradation Fund Scheme that can create employment for 3.5 million people, besides enabling Rs 95,000 crore investments by 2022. The Cabinet has cleared a new skill development scheme for capacity building in the textile sector with an outlay of Rs 1,300 crore. In turn, the Textiles Ministry has signed an agreement with the States for skill development in the sector. Besides, the Centre would have to consider various pleas made by representative organisations such as CITI, APEC, SIMA, Cotton Textiles Export Promotion Council and Indian Textiles Accessories and Machinery Manufacturers’ Association, said Nair. The Textiles Industry sees not just good prospects in the export market but also in the domestic market with expanding income and people spending more on clothing.

Source: Swarajyamag

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Apparel Resources steps in to assist coverall manufacturers with a comprehensive online ‘Resource Guide’

A lot is expected from the apparel and textile industry in a short duration and it is high time the industry joins hands to collaboratively find a solution. We believe this ‘Resource Guide’ will assist the industry finding the right resources.

Owing to the ongoing COVID-19 pandemic and its severe impacts on various businesses, PPE has been raised as a whole industry in India in a matter of just 2 months. Ever since the Indian Government has appealed to the manufacturers to produce body coveralls so that there is no dearth in supply of the same to the medical industry, hundreds of manufacturers located in different part of the country have shown their commitment towards the appeal. However, the textile and apparel industry is uncertain as to how a technical product like body coverall, a part of PPE kit, should be treated while manufacturing. It’s a matter of immense efforts that go into fabric engineering, manufacturing process, seam sealing and taping technology, and even the dispatch zone that needs a lot of awareness. Failing in any of these processes might put lives of first responders in danger who are fighting against the pandemic. Apart from these efforts, there is a lack of proper knowledge of the right raw materials, production techniques and testing protocols across the supply chain including raw material suppliers, fabricators, Government procurement agencies and even with the end-user, frontline teams.

Apparel Resources, as a responsible media and knowledge-sharing platform, is cognizant that a lot is expected from the apparel and textile industry in a short duration and it is high time the industry joins hands to collaboratively find a solution. Henceforth, our team has created a comprehensive data in the form of a ‘Resource Guide’ to eliminate pertaining challenges in the body coverall manufacturing process.

The ‘Resource Guide’ includes the following information:

1. Data of all approved fabric manufacturers

2. The Government agencies which are responsible to approve and certify the raw materials to be used in coveralls

3. Certification process and the Government documents for new entrants

4. Information of seam sealing machine suppliers and tape providers

5. A list of coverall manufacturers located all across India

6. Design and pattern making software providers

7. A list of buyers of coveralls

In these challenging times of business, it requires a great deal of motivation and support from each other to let businesses become self-sufficient and competitive at the same time while catering to a complex product category like body coverall.

Apparel Resources also requests the industry to share their interests in getting listed in this ‘Resource Guide’ and we would be glad to assist you. Furthermore, we would like to share with you all that the ‘Resource Guide’ – providing an opportunity to know the right people, sources and processes to stay active in the coverall manufacturing business – will be launched next week on 12 May 2020.

Source: Apparel Resources

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UK to review easing of coronavirus lockdown

Prime Minister Boris Johnson meets Cabinet colleagues, with predictions that unlimited exercise and picnics will soon be allowed as part of the first step of easing restrictions. The British government was on Thursday reviewing lockdown measures introduced to combat the coronavirus outbreak, with a partial easing expected to be announced this weekend. Prime Minister Boris Johnson meets Cabinet colleagues, with predictions that unlimited exercise and picnics will soon be allowed as part of the first step of easing restrictions. “We’ll want if we possibly can to get going with some of these measures on Monday. I think it would be a good thing if people had an idea of what is coming,” he said Wednesday. Pubs and cafes with gardens may also be allowed to open but people would be required to remain two metres (six feet) apart. But the government and its scientific advisers have warned not to expect a return to normality for months, with Britain’s mortality figures the highest in Europe. “The messaging will evolve from stay at home to be careful when you’re out,” an unnamed minister told the Daily Telegraph. Offices will have to stagger arrivals and separate staff with screens, while meetings will continue to take place remotely when possible, according to the paper. “In engineering, car manufacturing, textiles and construction, where social distancing can be implemented, then workers will be encouraged back to the factory floor,” a minister told the paper.

- ‘Second spike’ -        

Britain has now recorded 30,076 deaths from coronavirus, the highest in Europe, although each country has a different method of recording its official toll. Broader data, however, puts the number at above 32,000. Johnson said last week that Britain had past the peak of the outbreak, the daily death toll was falling and the infection rate dropping below one -- meaning each person with the disease is passing it on to less than one person. But he also warned against the risk of a “second spike”, and hinted at a gradual rollback of restrictions. Schools will only open “when the time is right”, minister Robert Jenrick said Wednesday, with pupils studying for major exams expected to be the first to return. Families could also be allowed to see each other using “bubble” arrangements, the Telegraph said, under which people would meet with a small number of chosen friends and family. The system has already been floated by Scottish First Minister Nicola Sturgeon, who sits on the emergency contingencies committee that decides country-wide policies. The government has said testing will form a crucial plank of easing lockdown measures but is facing questions after failing to hit its 100,000 a day target for four days in a row. Johnson said on Wednesday that “capacity currently exceeds demand”, and set a new target of 200,000 a day “by the end of this month”.

Source: Agence France-Presse

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More Incentives, Obligations Announced for Businesses in Cambodia in Tourism, Garment Industries

On April 17, 2020, Cambodia’s Ministry of Tourism (MOT) and the Ministry of Labor and Vocational Training (MLVT), issued MOT Letter 11 and Instruction No. 045/20, respectively, which provides additional measures to support businesses and employees in the tourism and garment industry. MOT Letter 11 extends the number of cities in which businesses in the tourism sector can apply for tax exemption, while Instruction No. 045/20 sets out the obligations that businesses must adhere to in order for them to suspend employment contracts. This includes assisting employees in applying for the government monthly allowance. The country previously issued tax breaks and holidays on February 25, 2020, to counter the economic impact of COVID-19. These incentives mainly covered the industries that are vital to the economy, namely garments and textiles, tourism, and agriculture. Investors should seek the assistance of dependable advisors to help them understand how they can benefit from these incentives.

Extension of tax payment exemptions

Prior to MOT Letter 11, hotels and guesthouses located in the city of Siem Reap province were exempted from paying tax from February to May 2020. This has now been extended to include restaurants and travel agents in the cities of Phnom Penh, Siem Reap, Sihanoukville, Kep, Kampot, and Bavet, for three months from March until May 2020. To be eligible, these businesses must be registered with the General Department of Taxation and are still obligated to file their monthly tax returns via the E-VAT system, during the exemption period. The government has also allowed the related tax payments to be paid in monthly installments through to November 2020.

Suspending employment contracts

Companies in the tourism and garment sectors who want to suspend employment contracts must first submit an application to the MLVT. The maximum period for suspension is two months but this can be extended further depending on the circumstances. More information can be found in the MLVT website. Employers need to provide the Cambodian ID card and phone number (or a relative’s) of the employees’ subject to contract suspension to the MLVT. Employers should also take the thumbprint next to the employee details. This will allow the MLVT to verify the eligible candidate for the transfer of monthly allowance subsidies. It is important that the employer tells the employee of the above requirements because failure to obtain the correct information will result in the employer paying the monthly subsidy allowance (max of US$40). Lastly, the employer must attach three copies of their employees’ latest payroll before the suspension, marked with the company’s stamp on all pages, in addition to the company’s certificate of incorporation, relevant licenses (such as tourism licenses), tax certificates, bank details, and their National Security Fund (NSSF) number. The NSSF is a government body responsible for providing social security for workers in the private sector. Once the application is submitted, the MLVT will conduct a review and a labor inspector may visit the business within two days.

How much are suspended employees entitled to?

The period of suspension must follow the dates as approved by the MLVT. The suspended employee will be entitled to the following monthly subsidies, transferred through Wing Specialized Bank:

  • US$15 for 7-10 days of employment suspension;
  • US$30 for 11-20 days of employment suspension; and
  •  US$40 for 21 days to one month of employment suspension.

The funds will be transferred 10 days after the date of suspension. The employee will receive a message on the registered phone number notifying them of the transfer which they must show, as well as their ID, to the nearest Wing Bank branch.

This must be done within the 10-day period otherwise the money will be transferred back to the government.

Suspension of NSSF payments

After the MLVT has approved the suspension of employment application, companies can then suspend their monthly NSSF payments. This is done by writing a formal letter to the NSSF; more information can be found on the MLVT website.

Special requirements for the garment industry

Garment companies who are suspending their employees must also provide allowances in the sum of the following:

  • US$10 for 7-10 days of employment suspension;
  • US$20 for 11-20 days of employment suspension; and
  • US$30 for 21 days to one month of employment suspension.

Businesses and their employees returning to work before the end date of the contract suspension must inform the MLVT at least two working days before the start of operations.

Source: ASEAN Briefing

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Bangladesh: Textile millers missed sales of Tk 20,000cr

Shahid Alam, a yarn manufacturer for the local garment industry, used to sell cotton yarn worth Tk35 crore a month, and more so on the occasions of Pahela Baishakh and Eid-ul-Fitr. But this year has been starkly, depressingly different. His factory in Narayanganj has been bolted shut for the past one-and-a-half month for the countrywide shutdown enforced on March 26 to flatten the curve on coronavirus. Unfortunately, both the mega sales events took place during this time, leaving him and his sector ruing missed sales to the tunes of Tk 20,000 crore. The local millers produce fabrics for salwar kameez, curtains, home textile, sari, lungi, hand towels and so on. With the increase in purchasing power capacity for Bangladesh's tremendous growth momentum, sales of the goods had been increasing on the two occasions. The weavers, dyers, printers and spinners say they were deprived of Tk 5,000 crore in lost revenue during Pahela Baishakh and another Tk 15,000 crore in Eid, which is three weeks away. Every year, almost all the Eid sales would be cleared from factories in the first week of Ramadan. But this time, the factories remain firmly shut in the first week of the fasting month, which began on April 25. The slump in production at the mills has negatively impacted the sales of garment, dress materials, sari and lungi in the country's major wholesale hubs such as Baburhaat, Islampur, Sirajganj and Madhabdi. Subsequently, the Bangladesh Textile Mills Association (BTMA) has called for government support. "There are so many micro, small and medium units serving the local markets, but they are not enjoying the government benefits," said BTMA President Mohammad Ali Khokon. There are about 11,000 micro, small, medium and large spinning, printing, dyeing and weaving mills, according to the association. So far, three members of the BTMA sent letters to the association because the banks are not cooperating with them in availing the fund from bailout package, said Monsoor Ahmed, secretary of the trade body.

Source: The Daily Star

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Gap appoints IMG as exclusive licensing partner for brands

Gap Inc has appointed global licensing leader IMG as its first ever multi-brand, exclusive licensing representative. Through this partnership, IMG will deliver cross-category product extensions that increase existing consumer touch points while engaging with and introducing new audiences around the world to Gap’s beloved and trusted portfolio of brands. IMG will first focus on Gap, Banana Republic and Janie and Jack, extending their reach and helping bring to market complementary products that embody the company’s distinct brand labels: Gap for casual, optimistic American style and expertise in elevated essentials; Janie and Jack’s modern twist on classics for kids and babies; and Banana Republic’s iconic, modern style designed for a life with no boundaries. IMG will also support GapKids and babyGap, leveraging the strong multi-generational trust and emotional connections these brands have developed for quality and practical ‘go-to’ needs when raising children. The companies are exploring categories including baby equipment and baby care, home décor and textiles, and furniture. “Gap Inc operates a portfolio of strong, globally relevant brands that are familiar, trusted and highly marketable across multiple demographics. We are excited to explore new market segments and complementary points of product distribution for Gap, Banana Republic and Janie and Jack in an asset-light way that harnesses their individual strengths,” said Roy Hunt, head of Gap Inc franchise and strategic partnerships. “This partnership with IMG presents a unique opportunity for us to bring our fashion and lifestyle brands to life in new ways for customers around the world, while still maintaining the creative integrity that make each of our brands so distinctive and recognisable in the marketplace.” “Over the past 50 years, Gap Inc has created a portfolio of powerful brands that have established themselves firmly in popular culture and with consumers around the world. These brands are household names that we all trust, and have purchased and lived in,” said Bruno Maglione, president of Licensing, IMG. “Distribution channels and consumer purchasing habits have evolved significantly since Gap’s founding, and never more so than in the last few years. As one of the world’s leading fashion retailers, Gap Inc recognises this omnichannel opportunity and the power of its brands to attract existing and new consumers from more than one angle and via more than one format. We are proud to be partnering with them on this bold new strategic move, which we believe will highlight consumer affection for these brands while showcasing their relevance in everyday life.” Gap Inc is a leading global retailer offering clothing, accessories, and personal care products for men, women, and children under the Old Navy, Gap, Banana Republic, Athleta, Intermix, Janie and Jack, and Hill City brands. IMG is a global leader in sports, fashion, events and media. The company manages some of the world’s greatest athletes and fashion icons; owns and operates hundreds of live events annually; and is a leading independent producer and distributor of sports and entertainment media. IMG also specialises in licensing, sports training and league development. IMG is a subsidiary of Endeavor, a global entertainment, sports and content company.

Source: Fibre2Fashion

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