MARKET WATCH 19 MAY, 2020

NATIONAL

INTERNATIONAL

FM Nirmala Sitharaman clears the decks for Indian companies to directly list overseas

Start-ups and complex conglomerates and their holding companies, along with new-age technology companies, can now look at an overseas listing without listing in India first. A host of Indian companies can now tap foreign capital by directly listing overseas. Start-ups and complex conglomerates and their holding companies, along with new-age technology companies, can now look at an overseas listing without listing in India first. Finance minister Nirmala Sitharaman on Sunday cleared the decks for Indian companies to directly list overseas. The move will allow Indian start-ups and other specialised sectors to list overseas, where investors are sophisticated enough to take bets on new sectors. Vishesh C Chandiok, CEO, Grant Thornton India, said: “Direct listing overseas without the need to list in India is a massive benefit for start-ups, companies in high-tech and biotech, metals and minerals, etc. which are better understood by investors in specific markets overseas.” Other than start-ups, holding companies, banks and select technology companies may find better valuations while listing overseas. For instance, conglomerates and holding companies trade at a discount due to the complexity of the business, but the same may enjoy a better valuation overseas. This move would also allow Indian companies to raise foreign capital through direct overseas listing. Market experts believe the move is positive as foreign listing gives Indian companies better visibility too. Rusmik Oza, executive vice president – head of fundamental – research, Kotak Securities, said, “A foreign listing would give access to overseas capital, better visibility and allows foreign investors to directly invest in those companies rather than coming through the foreign portfolio route. Additionally, foreign investors can avoid INR currency risk by investing in them directly overseas.”Investing in Indian equities comes with not only the asset class, but also carries a currency risk. A depreciating currency tends to impact dollar returns for foreign portfolio investors. With this move, a foreign listing would cut the foreign currency risk for this class of investors. Deven Choksey, managing director, KRChoksey Investment Managers, said: “This is a big move where global investors could continue to trade their funds in global currency without converting them into rupee. Companies that are listing abroad may find better valuations.”

Source: Financial Express

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Footwear, textiles, pharma, electronics in Centre’s list of sectors to push self reliance

The government, which identified these industries and several others as having “unnecessary” imports, plans to improve the quality of domestically made products and discourage these imports “as fast as possible”. Prime Minister Narendra Modi’s push for self-reliance last week has brought back the government’s focus on improving quality and increasing production in sectors like footwear, capital goods, textiles, pharmaceuticals and electronics. The government, which identified these industries and several others as having “unnecessary” imports, plans to improve the quality of domestically made products and discourage these imports “as fast as possible”. “There are areas where India can get that strength (of self reliance) because of a lot of natural factors. There are certain sectors which have been identified by various ministries where there are a lot of unnecessary imports, where India can manufacture itself,” said Department for Promotion of Industry and Internal Trade (DPIIT) Secretary Guruprasad Mohapatra. “We have to emphasise Indian production of a certain scale, certain quality and certain standards. Then only can your product match up to the best in the world,” he said. Footwear and non footwear leather, furniture, gems and jewellery, capital goods and machinery, mobile and electronics, pharmaceuticals, textiles, garments and manmade fibres are some of the sectors where India has a natural advantage and potential to be a strength for the country, said Mohapatra. “Those are the areas we will be focussing on,” he said. This can be done through discouraging activities like imports and providing more incentives, focus and handholding for these sectors.

As per data by the Commerce Ministry, India imported $467.2 billion worth of commodities between April and March 2019-2020. India also imported electronic goods worth $54.5 billion and medicinal or pharmaceutical products worth $6.7 billion. In crucial sectors like pharmaceuticals, industry executives previously told The Indian Express that India used to be self-sufficient in producing the key bulk drug ingredients used to make important medicines in the country around 30 years ago. However, the ability of Chinese manufacturers to provide these bulk drugs at a cheaper rate to drug makers led to several units here shutting shop. “In the last two years, there have been incentive policies for sectors like medical devices, for APIs and for electronics. We want leadership status in sectors where we have an advantage,” said Mohapatra. “The bottom line is that you have to create conditions for domestic producers to manufacture efficiently so that they can be competitive. This is possible only through a well articulated industrial policy framework that provides at least a medium-term perspective for the manufacturing sector. The government has been promising an industrial policy for the past three years, but it has still to see the light of the day,” said Biswajit Dhar, professor at JNU’s Centre for Economic Studies and Planning.

Source: Indian Express

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Anybody can start business in any sector, compete with PSEs in strategic ones: FM

Five back-to-back press conferences did not seem to have slowed finance minister Nirmala Sitharaman as she spoke at length on the Rs 20 lakh crore stimulus to counter the Covid-19 pandemic and rebutted criticism that the government should have opted for more cash support to the poor. Excerpts of a conversation with Rajeev Deshpande, Sidhartha and Surojit Gupta.

What happened in the last few months and what are the choices you considered for the package? From the time the lockdown was announced, it was clear that the government had to come up with something fairly quickly — whether that could be comprehensive enough or not was the first challenge. That is why the initial package was purely on addressing issues facing the poor, marginalised, their requirement for foodgrains so that nobody goes hungry, there is some cash for them and also cooking gas. The PM Garib Kalyan package was immediate and for those who deserved it the most. After that, who did we not get an input from? Every section contacted the PM, the PMO, the FM, FMO and also every department concerned. You have chief ministers, finance ministers also approaching and saying ‘look we have an issue here’. Ministers were given charge of some states and even had to contact the district administration. The PM held large group meetings to hear from everybody. It was a complete thought through process. There have been suggestions to provide direct cash assistance and you have talked about making a distinction between entitlement and empowerment. What was the thinking behind this? To an extent, that was done in PM Garib Kalyan Yojna. We did Rs 500 per month and Rs 1,500. As I said, nothing is going to be adequate. But that was immediate relief with foodgrains lasting for three months and now up to five months. Having heard inputs from so many different segments, we thought it this way: What is that money giving in terms of the argument that demand has to be spurred. So my question as an answer to you is there is one way of doing it by putting money in the hands of the people? But demand spurring is also through various other ways. Now, when I give an SME additional term loans, additional working capital, yes I am giving through the bank, but he is going to spend it buying things. Is that not demand creation? Then, we have also given packages through NBFCs, getting more money in their hands as institutions, MFIs. What is that money going for? They are going to lend and when you lend, what is it that is meant for? The fact is, money in people’s hands can be in several forms and what we have done is to give it through that route of creation of demand for businesses to get triggered. Will these decisions be sufficient get the banks to lend because they have been very reluctant to do so and are parking money with RBI? I can’t fault the banks. I have asked them and in one of the meetings I told them if indeed you are going to keep the money in reverse repo, you may as well give it to me. They (the banks) have come up with letters to prove that they have actually sanctioned these loans and businesses themselves said ‘the moment lockdown is lifted, we will take it’. Politically and in terms of optics, do you think handing over money — as Azim Premji and others have suggested — would have served the purpose better? It is also a question of what you believe in as a philosophy. You want to help the people. That is why I have given additional Rs 40,000 crore to MGNREGA. You want to do that but is it that way or any other way? I did explain the entire philosophy with which BJP, from Jan Sangh days and particularly Prime Minister Modi have clearly built. There is this phrase which says give a man a fish today, his hunger for today is sorted but teach him fishing and it takes care of him for life. I am not saying I am copying that. How much of a constraint was the overall fiscal situation on designing this package? Naturally, that’s not a highly complex matter to understand. My revenues are coming down because of the lockdown and even before that there were just green shoots appearing, indicators were showing that businesses were improving and suddenly this happens. When we sat and planned for the package those factors played a role in designing the package. A lot of sectors such as airlines are seeking a bailout. Tourism, hospitality are such sectors. Is that being considered? Tourism also gets covered in some of the packages that I have announced. You can always go to the bank from where you get loans to run your business and ask for extra terms, extra working capital. It’s possible. On bank loans, there is this three-month moratorium. Will this be extended? I leave it to the RBI governor on that because he has responded quickly, whether LTRO and subsequently TLTRO and also making sure that he had conference with NBFCs to understand their problems and even this moratorium… he came up with it. So, I am sure he will assess the situation. How do you compare the 2008 situation and now? It has taught a lot to me and that is why I don’t mind crediting Congress... handling of the 2008 crisis by UPA government actually taught us a lot. Bank loans were one of the ways, giving liquidity and having made that so-called policy, they kept calling the banks and saying give it to Tom, Dick and Harry and several of them were their relatives who thought they need not return the money. So, at the end of the day, you had a notorious twin balance sheet problem. More so, they didn’t probably assess the progress, assess the health of the economy simultaneously… if they had, they could have stopped that window and restored some order for the banks. Many of the 2008 steps that they took to help the economy, they didn’t wind down and food inflation touched 10%. So, these are some of the examples of what you should not do as an FM. Was the fear of a ratings downgrade or international backlash a constraint in designing the package? It is interesting you are asking that because downgrade is always a relative thing. Even with that said, if India were to be the only one having the problem, the rest of the world ceteris paribus (other things being equal), I would have thought what will happen to India’s sovereign ratings, what will happen to companies and their individual ratings and all that. The whole world is hit by coronavirus, so the ratings agencies will obviously have to see each economy in relation to the other. If my macroeconomic fundamentals are better than many, many other economies, that would come into play. Credit goes to our farmers and many state governments who ensured that even with lockdown in place, Rabi crop came out. MSP reaching them in time is a big deal, the Centre passing the money on time, all this is happening. So in a way, where activity inevitably had to happen is happening. Obviously, with PM Modi’s approach of being a responsible leader... he doesn’t believe in quickly getting into something without assessing how the economy will bear the risk as a result of it. What will be the strategic sectors? Government’s website mentions railways. Today, my announcement was that public sector enterprises will be present only in notified sectors. And every sector in the country will be available for private sector. Even in notified sectors, I will reduce them (PSEs) to four maximum. Where possible, I will merge to scale up. Where not possible, I will obviously privatise. But in every sector, private players can also come. But at least one PSE will be there. There is oil, energy, aviation, also banking... We will see, the notification will tell you. I don’t want to get into it. Is there also some thinking on how public sector companies will be run?

That is right. There is a need for PSEs to function in a more transparent and professional way. A classic example is that of ordnance factories. Its not easy. To corporatise is itself becoming so difficult to explain. It is to bring in transparency and better management. More operational efficiency, like a profit earning company. Many do an honest job, let me concede that. Many are good at performing. But the collective at the end of the day — why is it not matching companies that are run better. So, there will be no sector, strategic or otherwise, where the private sector is kept out? Yes, that is the story. Anybody in India can start a business in the sectors he wants. In strategic sectors, he will compete with PSEs. Are there measures coming on seeking to bring in business that is relocating? Haven’t I announced? I have included it in the five announcements on mobile and electronics for which we have given money. This includes pharma and medical instruments. I have not even included money given for that. Electronics, chip manufacturing and mobiles, all of them got money. How realistic is the possibility of companies trying to shift from China? These are commercial decisions. We can create an environment that can be good, which is tax-friendly, business-friendly and create an ecosystem that can help businesses with the component suppliers, who are integrated in their value chains. So, we have to make an effort to see how best investments come. Simultaneously, we have to spend a lot of time in creating the ecosystem that is necessary for each one. For pharma, the kind of ecosystem is very different from what you would give a chip manufacturer. Ultimately, they all have one common bottomline — what is my profit margin? How much of a compliance burden do I have? Most importantly, what is the policy certainty? These are more critical issues on which you have to build confidence. There is an exodus of migrants. They are gripped with uncertainties. You have announced measures for them but at some point you will need them back. How will the situation be managed? Whenever they want to come back, they will come back. Migrants belong to this country, they may have been born somewhere but they are somewhere else within the country. When they were working, we wanted them and each and every state benefited. A situation demanded that they remain where they are and be attended to. I know many companies which kept them and kept feeding them and kept giving them some money and I know of companies which even today are doing it. You have a lot of NGOs, which are helping out. But somewhere, at some point in time, they were scared — they were not sure about how long the lockdown will be in place and they will be hit by the virus. All of us are in this together. All of us are trying to help them and are trying to see how best it can be sorted out. It is a national issue, every state is trying to help, central government is trying but if we start saying ‘its everybody’s problem and not mine’ — that’s not showing responsibility at a time like this. You have linked states’ borrowing to reforms? Do you expect any backlash from states? I don’t expect that because these are not reforms which I am suggesting. They have been said by the Finance Commission and very many others.

Source: Economic Times

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80% export orders cancelled, textile cos eye govt relief

Closed shutters of major fashion retailers in the United States, European Union countries and other developed countries owing to lockdown has left textile mills baffled with around 80 per cent orders cancelled in last two months. Some orders were almost ready to be shipped while a major chuck is stuck at ports, said leading textile mills of the state claiming around 80 per cent cancellation of export orders for readymade garment and fabrics while yarn shipments have seen 50 per cent cancellation. Akhilesh Rathi, chairman, MP textile mills Association said, “The lockdown has taken a severe toll on textiles, facing high cancellations from across the globe. Demand in apparel segment has shrunk as most front-end retails in developed countries are shut for last eight weeks.” Such a high cancellations for bulk orders have resulted in towering inventories with textile mills. Apparel manufacturers said that with extended lockdown and change in season, fabrics and apparels manufactured in summer months will not find market in winters due to change in preferences resulting in hefty losses to manufacturers. HS Jha, vice chairman, Madhya Pradesh Textile Mills Association said, “Orders scheduled to be dispatched in summers are getting cancelled due to lockdown while new orders are almost negligible in last one and half months. Textile mills are going through one of their worst phases.” Industry experts said sealing of India-Bangladesh borders amid Covid-19 outbreak has restricted movement of woven and knitted fabric resulting in towering inventories. Rathi said, “Woven and knitting fabric from India goes for garment conversion to Bangladesh but as the border is sealed, this has resulted in piling up of huge inventory at India-Bangladesh border causing uncertainty due to LC expiry and order cancellations.” Industry players said government should announce a relief package for the sector as it is the largest employer in the country after agriculture. MC Rawat, secretary, Madhya Pradesh Textile Mills Association said, “Mills are working at 35-40 percent capacity and capacity utilization may grow gradually. State government should extend support to the sector by charging electricity and water at actual consumption and fixed charges be waived.”

Source: Times of India

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CBIC amends rules to disallow transitional credit claims retrospectively

The Central Board of Indirect Taxes and Customs (CBIC) notified retrospective amendments to section 140 of CGST Act, granting it power to prescribe a time limit for availing transitioning credit – the credit from pre-goods and services tax (GST) regime which was moved to the GST regime as input tax credit from July 1, 2017. “The Central Government hereby appoints the 18th day of May, 2020, as the date on which the provisions of Section 128 of the Finance Act, 2020, shall come into force,” the notification issued on Saturday said. The notification could well negate the benefit granted by the Delhi High Court to all assessees of availing pending input tax credit till June 30, 2020, through an order passed on May 5. The High Court had ruled that time limit for transitional credit was only ‘directory’ in nature and not ‘mandatory’, allowed a three year time limit from July 1, 2017 to claim the credits. “Tax benefit given by Delhi High Court to all the taxpayers in the landmark case would now have a restricted application, post retroactive amendment of transitional provisions,” said Rajat Mohan, senior partner at AMRG Associates. Aggrieved taxpayers who were unable to claim the transitional credit would have to approach the judiciary once again for a fresh interpretation of new law, he added. The revenue department is likely to appeal against the Delhi HC order.  “Litigation on other grounds of credit being substantive right and procedural timelines or lapses cannot restrict a company to claim the credit and as well overall Limitation Act being applicable to such cases will continue to be played,” said Jigar Doshi, founding partner at tax technology firm TMSL.

Source: Economic Times

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Govt allows private players to participate in all sectors, but 51% CPSEs are in services

There were 17 CPSEs under the chemicals and pharmaceuticals industry and around 13 CPSEs each belonged to industrial & consumer goods, power generation and power transmission. Unveiling the fifth and last tranche of the economic package, Finance Minister Nirmala Sitharaman announced a major public sector enterprise (PSE) policy for "a new, self-reliant India", under which private players will be allowed entry in strategic sectors. "List of strategic sectors requiring the presence of PSEs in the public interest will be notified," she said. In strategic sectors, at least one enterprise will remain in the public sector but the private sector will also be allowed. In other sectors, public sector enterprises will be privatised, the timing for which will be based on feasibility. To minimise wasteful administrative costs, the number of enterprises in strategic sectors will ordinarily be only one to four; others will be privatised or merged or will be brought under holding companies. Dhiraj Relli, MD & CEO, HDFC Securities feels this is a welcome announcement. "If this bold announcement is quickly transmitted into action, then it could unlock a lot of value," Relli said. While the FM said that a detailed policy for the same would soon be issued, a look at the current sectoral classification of the Central Public Sector Enterprises (CPSEs) in India will help you understand better. The latest public enterprise survey showed there were 348 CPSEs as on March 31, 2019, out of which 249 are operating CPSEs and 86 are under construction. The remaining 13 CPSEs were under closure or liquidation. These were diverse companies categorised into five sectors (including enterprises under construction and 21 cognate groups, as per their core line of activities fulfilling various macroeconomic activities). Based on the broad categorisation, a lion's share of CPSEs, close to 51 per cent, belongs to the services sector, followed by 101 falling under the manufacturing, processing and generation, which had a share of nearly 39 per cent. The balance of 9.2 per cent CPSEs belonged to the mining and exploration sectors and only three were from agriculture. A detailed break-up exhibited that contract and construction and technical consultancy services, heavy & medium engineering, transport & logistic services, trading & marketing and financial services had 20 or more CPSEs under them. There were 17 CPSEs under the chemicals and pharmaceuticals industry and around 13 CPSEs each belonged to industrial & consumer goods, power generation and power transmission. While sectors such as coal, telecommunication and information technology and petroleum (refinery and marketing) had less than 10 CPSE under them, five CPSEs were from the crude-oil sector and four each from steel and textiles.

Source: Business Today

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Exporters seek extension of moratorium on loan

May 19, 2020, 04.46 AM IST

Coimbatore: Textile exporters from Tirupur have sought extension of loan moratoriums from the Centre, as the sector has still not got back on its feet. Representatives of Tiruppur Exporters Association (TEA) have written to Prime Minister Narendra Modi seeking extension for loan moratoriums. Raja M Shanmugam, president of TEA, in a communication on Monday, said the Centre had announced a three-month moratorium for outstanding loans and working capital credit on March 24. He said the deferment period would get over on May 31 and they would have to pay the accumulated interest after that time. The commencement of repayment starts by June 1, including the compounded interest calculated for the moratorium period, he said. With zero industrial activity, MSMEs cannot repay interests, said Shanmugam.

Source: Times of India

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CAIT urges govt to reconsider economic package, says traders let down by exclusion

Noida (UP), May 18 (PTI) Industry body CAIT has urged the government to reconsider the economic package and announce measures to support traders, saying the community feels let down for exclusion from the Rs 20 lakh crore stimulus to aid the economy reeling from the COVID-19 crisis. However, the Confederation of All India Traders (CAIT), which has 40,000 trade associations and seven crore members across India, said the trading community will continue to fulfil its obligations towards the nation during the coronavirus pandemic. The traders'' body "resented with deep regret" that one of the largest and most committed segments of the trading community has not found a place in the wide-reaching announcements of the economic package, according to a statement. CAIT has shot off a communication to Finance Minister Nirmala Sitharaman, requesting her to reconsider the economic package. It has sent similar communication to Union Home Minister Amit Shah, Defence Minister Rajnath Singh, Commerce Minister Piyush Goyal and Textile Minister Smriti Irani. CAIT''s Delhi NCR unit convenor Sushil Kumar Jain lamented that while announcing the economic package, the government has “ignored” the traders. "The trading community is deeply agitated and having gross resentment for its exclusion from the economic package at a time when it was direly needed since traders of the country will be forced to face serious challenges of financial crisis,” Jain said. "The traders of India have stood firmly with the government and the people of India in these troubled times to ensure continuous supply of essential commodities so that every citizen had substantial supplies during lockdown,” he said. "The traders feel that the government has let them down, by non- inclusion in the much awaited economic package,” he added.CAIT said seven crore traders in the country are carrying out business activities in urban, rural and semi rural areas, and many of them with very limited resources and fear being hit by the lockdown further.“It is reiterated that at the time of lifting of lockdown, the traders will have to meet various financial obligations like payment of salary to employees, payment of GST, income tax and other government payment, EMIs, bank interest on loans taken by the traders and various other incidental expenses,” the traders'' body said.“On the other hand, normal credit extended by traders in B2B transactions will likely accrue back not before 60-75 days from the day of opening the markets. All such circumstances will land the traders in turbulent time of financial crisis," according to CAIT. It is expected that in absence of any hand-holding of the traders, about 20 per cent marginal traders will have no other option but to close down their business establishments and rest of the traders will have to do great struggle for reviving their businesses, it said.

Source: Outlook India

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The economy needs more stimuli

The stimulus measures announced by the government in five tranches are a mix of immediate relief, regulatory changes and some structural change. These are welcome as they are. However, the economy needs something more: a big step-up in demand. What is the point of throwing a lifeline to a drowning man, if he is to be left tottering on the edge again? The government has left room for more expenditure, making much of the stimulus announced so far by means of leveraging of bank finance through strategic guarantees and subsidies from the exchequer, rather than straight away through budgetary subventions. That room must be used to invest in large measure —in a massive expansion of the healthcare infrastructure, in building, perhaps, a new town or two. Also developing a corporate bond market brooks no delay. Even before the COVID pandemic hit us and the lockdown killed economic activity, the economy had been slowing, suffering from low levels of capital formation. Also, the banking sector had ceased to mediate capital, constrained by both a pile-up of bad loans and a penal culture attending on banking risk with minimal confidence in GoI’s reported assurances of a cultural change. The stimulus does not address these problems directly. True, the provisions for guaranteed investment in investment-grade bonds of finance companies, and partially guaranteed investments in sub-prime debt instruments of finance companies and small business has a limited potential to create some tradable debt. But this is not nearly enough. An RBI-funded, state-sponsored vehicle must pick up debt issued by AA- or BBB-rated companies, to create volumes and create a culture of trading, instead of holding the debt to maturity, as happens now. Inviting Indian industry into flights to outer space will not create tangible investment in the short term. That calls for determined completion of stalled real estate and infrastructure projects, and new large projects. Such investment will create the demand that all levels of industry need, to create jobs, income, taxes and investor confidence.

Source: The Economic Times

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Govt notifies GST law changes, lack of clarity on transitional claims

With the government notifying the GST-related changes made in the Finance Act, 2020, the recent Delhi high court judgment allowing taxpayers till June 30 to claim the transitional credit would be nullified. With the government notifying the GST-related changes made in the Finance Act, 2020, the recent Delhi high court judgment allowing taxpayers till June 30 to claim the transitional credit would be nullified. The Finance Act, earlier this year, had amended relevant sections of the CGST Act, which would come into effect from Monday. Earlier this month, the Delhi high court had allowed taxpayers registered under GST to claim accumulated CENVAT credit from pre-GST regime till June 30, 2020, and noted that the benefit of transitional credit will be applicable for three years (since launch of GST on July 1, 2017) which is the period mentioned in the limitation Act. Under the GST Act, taxpayers were allowed to carry forward input tax credits from excise and service tax regime by filing TRAN-1 form. Although, the original deadline expired in September 2017, the government granted several extensions till December 27, 2017. Further, taxpayers who couldn’t file the claim due to technical glitch in the system were allowed to do so till March 31, 2020. “This retrospective amendment needs to be challenged at appropriate time. There is no stay on the Delhi high court order and hence the taxpayers who have taken the benefit of the court’s order before the date of the notification are in clear safe zone,” said Abhishek A Rastogi, partner at Khaitan & Co, who argued for the the lead petition on this issue. He added that the amendment will have to be tested on the constitutional validity as any retrospective amendment is after the court order. While the rule 117 under the GST Act mandated a deadline for claiming the credit, taxpayers have argued in court that input tax credit was a right and not a taxpayer concession, which made a deadline ultra vires. Rajat Mohan, senior partner at AMRG & Associates said that the high court’s decision was based on the fact the deadline for claiming transitional credit is derived from rules but had no standing in the law as such. He added that with this amendment that particular ground for ruling has been diluted. Jigar Doshi, founding partner at TMSL said: “The amendment may bring the time-limit issue for claiming CENVAT credit to rest from GST law perspective. However, legal challenges on the other grounds of credit being substantive right and procedural timelines or lapses cannot restrict a company to claim the credit and as well overall Limitation Act being applicable to such cases will continue.” Since the early days of GST, the government has suspected that large amount of transitional credit was being availed illegally. The indirect tax department had also conducted an analysis on nearly Rs 2 lakh crore of transitional credit claimed till the original deadline.

Source: Financial Express

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India opposes permanent tariff cuts at WTO to deal with pandemic

Crisis shouldn’t be used to gain market access, says New Delhi at General Council meet India has refused to agree to permanent tariff concessions on health and farm products at the World Trade Organisation as an answer to Covid-19 trade disruptions proposed by some member countries, mostly rich. Further, it has argued that the proposal may be a ploy to gain additional market access. At a recent meeting of the WTO’s General Council to exchange views on the economic and trade impact of the pandemic, New Delhi argued that developing countries needed to continue protecting their nascent industries. “...the narrative-push by some WTO members to seek permanent tariff liberalisation on a range of products in response to a temporary crisis appears to be a thinly veiled bid to use the crisis as an opportunity to gain market access for their exporters,” said India’s statement at the meeting. Australia, New Zealand, Singapore, Canada, Chile and Brunei had come up with a joint statement a few weeks earlier against the imposition of export controls, or tariff and non-tariff barriers. They also opposed the removing of any existing trade restrictive measures on essential goods, especially medical supplies, amid the battle against Covid-19. “Developing countries seeking to shore up manufacturing capacity in medical products will require tariff protection for their nascent domestic industry. Further, job losses in many service sectors have to be compensated elsewhere. Therefore, India, like many other developing countries, cannot agree to permanent tariff concessions, and a dilution of the tariff bindings that we have paid for in the Uruguay Round,” said India’s statement. Members are free to reduce customs duties on imports of certain medical or agricultural products to zero if it serves their health and food security objectives, but it has to be on a voluntary basis, it added.

Uneven impact

In formulating a response to the Covid-19 disruptions, it is critical to bear in mind that the impact of the pandemic will be felt unevenly, though widely, the statement pointed out. “The strain on economic, food and livelihood security will disproportionately impact developing countries and LDCs (least developed countries) with large populations and limited resources. Therefore, they need special treatment,” India said in the statement. However, India also acknowledges the importance of coordinating the global response to avoid disruptions in the flow of vital medical supplies, food and other goods and services across borders, and has been playing a proactive role in ensuring the availability of vital drugs such as hydroxychloroquine and paracetamol across the globe, it added.

Source: Hindu Businessline

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Govt to bring Ordinance to amend companies law to decriminalise various provisions

The government will promulgate an Ordinance to amend the companies law to decriminalise various provisions, permit direct overseas listing for Indian corporates and changes to further improve the ease of doing business. Addressing a press conference here on Sunday, Finance Minister Nirmala Sitharaman said companies can list their securities directly in foreign jurisdictions and described it as "one big step for Indian companies". A Bill to amend the Companies Act, 2013 is pending before Parliament. The Act is implemented by the corporate affairs ministry. Announcing measures under the fifth and final tranche of the Rs 20-lakh crore stimulus package for the economy hit hard by the coronavirus pandemic, the minister also said an Ordinance would be promulgated to amend the Act. Sitharaman, who is also the corporate affairs minister, said violations involving minor technical and procedural defaults, including shortcoming in CSR reporting, inadequacies in board report, filing defaults and delay in holding AGM, would be decriminalised. Majority of the compoundable offences sections would be shifted to internal adjudication mechanism. Besides, powers of a regional director for compounding various offences would be enhanced. As many as 58 Sections under the Act would be dealt with under the mechanism compared to 18 earlier. Also, seven compoundable offences would be dropped altogether and five would be dealt under the alternative framework. According to the minister, the amendments would de-clog criminal courts and the National Company Law Tribunal (NCLT). Generally, compoundable offences are those that can be settled by paying certain amount of money. In March, the Union Cabinet approved 72 changes to the companies law with focus on decriminalisation of various provisions and permitting direct overseas listing of Indian corporates. Reduction in penalties for certain offences as well as in timeline for rights issues, relaxation in CSR compliance requirements and creation of separate benches at the National Company Law Appellate Tribunal (NCLAT) were among the raft of other proposed changes in the Companies Act, 2013. As many as 72 changes resulting in amendments to 65 Sections of the Act were approved at that time to ensure greater ease of doing business as well as living. These changes are part of the amendment Bill pending before Parliament. To improve the ease of doing business, the minister said Indian companies would be allowed direct listing of their securities in permissible foreign jurisdictions, and private companies that list their non-convertible debentures (NCDs) on stock exchanges would not be regarded as listed companies. Other proposed measures include creation of additional or specialised benches for NCLAT (National Company Law Appellate Tribunal) and lower penalties for all defaults for small companies, one person companies, producer companies and start-ups. Direct listing of shares of listed and unlisted public companies abroad would be allowed. Amendment would be carried in Section 23 of the Act for including an enabling provision to allow direct listing of securities by Indian public companies in permissible foreign jurisdictions. This would provide alternative source of capital for domestic companies and also broaden their investor base. Currently, quite a few Indian companies have American Depository Receipts (ADRs) that are traded in the US. Some other corporates have their Global Depository Receipts (GDRs). A depository receipt is a foreign currency-denominated instrument, listed on an international exchange, issued by a foreign depository to a domestic custodian and includes GDRs. Listing of Indian companies in foreign stock exchanges is expected to increase the competitiveness of Indian companies in terms of access to capital, broader investor base and better valuations, the corporate affairs ministry had said on March 4. Under the Act, public companies should have at least seven shareholders and have no restriction on transferability of their shares, among other criteria. Among others, the government had proposed permitting eligible companies to claim credit for CSR spend in excess of the 2 per cent obligation in a particular year against its obligation for the subsequent financial years. Further, companies with CSR obligation to spend Rs 50 lakh or less will not be required to constitute a committee in this regard. Under the Act, certain class of profitable companies are required to shell out at least 2 per cent of their three-year annual average net profit towards CSR (Corporate Social Responsibility) activities. Other changes that were proposed include those pertaining to providing adequate remuneration to non-executive directors in case of company having inadequate profit and relaxation in certain compliance requirements for corporates operating in IFSC Gift City, Gujarat.

Source: Economic Times

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Indian creditors nervous as US retail companies struggle

American and European retailers filing for bankruptcies in the wake of Covid-19 has got their Indian creditors worried with their unsecured outstanding dues estimated to be in excess of $50 million. In the past two weeks, leading retailers like JC Penney, J Crew, Neiman Marcus and Stage Stores have filed for Chapter 11 bankruptcy protection in the US. True Religion filed for Chapter 11 protection last month. In Europe, Debenhams, Esprit, Oasis and Warehouse have gone into administration. These companies import about $150-200 million worth of apparels and home furnishing products from India annually, said people in the know. As per industry estimates, the outstanding dues from these companies to Indian suppliers were well over $50 million since the January to March period is the busiest in terms of apparel exports due to high demand for summer collections. These companies outsource their back-end IT operations to Indian firms. J Crews owes over $21 million (159 crore) to three Indian apparel exporters, namely Fashion Accessories, RK Industries and Gaurav International, according to the list of the company’s 30 largest unsecured creditors given in its bankruptcy court filing. The top 30 creditors of True Religion include five Indian firms whom it owes $4.3 million (32.5 crore), as per the US bankruptcy court records. JC Penney owes $6.7 million (50 crore) to Tata Consultancy Services and $3.5 million (26.5 crore) to Elkay Overseas. Neiman Marcus owes TCS over $1.6 million.

Source: Economic Times

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Centre raises borrowing limit of states from 3 pc of GSDP to 5 pc in FY21

The Centre increased the borrowing limit of states to 5% of gross state domestic product (GSDP) in 2020-21 from 3%, a move that will make an additional Rs 4.28 lakh crore available to them. However, incremental borrowing beyond 3.5% of GSDP will be linked to reforms undertaken by the states, including universalisation of ‘One Nation, One Ration card,’ ease of doing business and power distribution reforms, besides steps recommended by the 15th Finance Commission. “To promote state-level reforms, part of the borrowing will be linked to specific reforms like increasing job creation through investment and promo ting urban development, health and sanitation,” finance minister Nirmala Sitharaman said on Sunday, while announcing the higher borrowing for states as the fifth and final tranche of the Centre’s Rs 20 lakh crore economic stimulus package. Total borrowing by states can climb to over Rs 10 lakh crore with net borrowing for 2020- 21 at Rs 6.41 lakh crore, based on 3% of GSDP. Of the additional borrowing, the first 0.5% will be unconditional, while the next 1% will be in four equal tranches, each linked to clearly specified, measurable and feasible reform action. The remaining 0.5% will be given if milestones are achieved in at least three out of four reform areas. A specific scheme will be notified soon on the pattern, she said. "An increase in the states’ borrowing limit will help to absorb the expected plunge in their revenue receipts, and avoid a severe cutback in capital expenditure," said Jayanta Roy, group head -corporate sector rating, ICRA. The Centre has already hiked its planned borrowing for 2020-21 by 54% to Rs 12 lakh crore from Rs 7.8 lakh crore estimated earlier for Covid-19-related emergencies.

Source: Economic Times

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'India has failed to capitalise on its demographic dividend'

During the dream run of the economy, from 2004 to 2012, India was creating 7.5 million new nonagricultural jobs every year (a total of 52 million new jobs over seven years), while just two million people were were entering the labour force each year. The fact that India has done this before means India can do it again, provided the correct policies are followed. The rapid growth of non-agricultural jobs enabled 5 million people to leave agriculture each year, which relieved rural distress somewhat. The share of workers in agriculture had always been falling since 1973, but the absolute numbers had always been increasing, which led to stagnant productivity. For the first time in India's history, the absolute numbers in agriculture fell aer 2004, because nonagricultural jobs were being created fast during a period of unprecedented growth. The period from 2004 to 2012 was one of labour-absorbing, inclusive growth. In real terms, this led to tightening of the rural labour market, raising open market wages; this process was further supplemented by the introduction of MGNREGA and rising MSP. As a ratchet eect, urban wages also rose in real terms (despite the rising inflation). As a result, the elasticity of poverty-reduction to growth increased. Not only was GDP growth the fastest ever (8% per annum between 2004 and 2014), but the rate of poverty reduction improved. The responsiveness of poverty reduction to growth increased. There was an absolute fall in the numbers of the poor by 20 million each year over 2004 to 2012 (calculated according to the Tendulkar poverty line) - an achievement of staggering proportions. While the the share of population below the poverty line had always been falling until 2004, never before had the absolute number of poor fallen since 1973 (by the Lakdwala poverty line). The open unemployment rate of the educated was falling from 2004 to 2012. Contrast this achievement with that of the past seven years. The number of non-agricultural jobs being created has fallen from 7.5 million each year to 2.9 million from 2012 - 2018, based on my analysis of the NSS-PLFS. Total manufacturing jobs have fallen in absolute terms since 2012, though not in organized manufacturing sector. This is the first time in the country that manufacturing jobs have reduced. The sectors in which manufacturing jobs fell were the most labour-intensive ones: leather, textiles, garments, wood and furniture, food processing, gems and jewelry. In these, product groups exports also suered, so merchandise exports fell in dollar terms 2014-2018, something that had not happened since the 1990s. The ban on cow slaughter those transporting the carcass of cattle, destroying jobs related to the leather sector across the country. Open unemployment has risen sharply from 2.2% in 2012 to 3.4% in 2015-16 to 3,7% in 2016-17 to 6.1 % in 2017-18 by the usual principal and subsidiary status of workers over the past year (all Labour Bureau or NSSO data), and 8.3% by the current weekly status. This is a 45-year high in 2018, since India started conducting labour force surveys. Youth (15-29 year olds) unemployment had tripled from 6% in 2012 to 18% in 2018. Rural unemployment has gone to 8.5% by current weekly status (in 2018). The cow slaughter ban became an excuse for unemployed youth to extract money from meat/leather industry/transporters. The lumpenisation of newly educated but unemployed rural youth ensued. The absolute numbers leaving agriculture, has fallen from 5 million every year (2004-11) to 1 million each year (2012-2018). This has compounded the farmer distress in agriculture. It has also stalled the structural transformation of the economy. Post-Covid, the unemployment rate has shot up to 24% in April 2020 (from 8.3% two years earlier), and again youth are biggest suerers. For the first time in 15 years, the numbers in agriculture rose, by 5 mn. Real wage growth has slowed sharply post 2012; in fact it is stagnant until 2018, and will have fallen by 2020 as unemployment shot up. The government is in denial by focusing on MUDRA and Ola-Uber jobs, when those jobs are already captured in the NSSO 2017-18 sample, which is the basis for all data on employment and unemployment above. It captures both unorganized and organized work, rural and urban, casual/regular wage work and also self-employed earnings. It leaves nothing out. The GOI was also in denial when alleging that NSS PLFS 2017-18 was not comparable to 2011-12 NSS data on jobs. No expert believes the two are not comparable. India’s demographic dividend began in the early 1980s; it will end by 2040, when India will become an ageing society. The number of entrants into the labour force will increase at an accelerating pace from now till 2030, the labour force growth decelerating thereafter till 2040. Can India become rich before it grows old? That is the question facing policy-makers. (Santosh Mehrotra is Professor of Economics, JNU, and has just published Reviving Jobs: An Agenda for Growth, Penguin, 2020)

Source: Deccan Heral

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Keeping old shirt on: As buyers turn cautious & stick to past designs, sector sees dip in orders

In the last month, a Delhi NCR-based buying house connecting Indian garment makers with fashion brands in countries like the US witnessed approximately an 80 per cent drop in orders. Newer designs for upcoming seasons by this firm, not named to protect the identities of its employees, have also been scrapped as its international buyers have either shut shops for the next few months or are recycling older designs. “Our clients in the US have been cancelling their orders, even the ones which have been produced, packed and ready to ship,” said one of the employees. “While some have slowly started reinstating their orders, it is less compared to what they’ve cancelled. On top of this, these international brands with several stores have been asking factories in India with liabilities and heavy expenses to give them discounts,” the person added. Despite this, the workload is still the same because the firm is trying to stay relevant in the face of uncertain times. “There is more pressure to stay relevant. Everyone is paranoid and trying to put their best foot forward because we don’t know whether we’ll have a job tomorrow,” said a designer at the firm. The pandemic has dealt a blow to India’s labour-intensive textile and apparel industry across the supply chain during the pandemic, according to experts. Experts say that large brands are struggling with high inventories and are cutting back on plans for the next season. “Large brands have around 80-90 per cent of their stores in malls which are not open. With the overall slowdown, these retailers are also sitting with a lot of inventory for the current season, and are pulling back purchases for their fall collections to help sell current stocks and also expecting demand to be soft,” said Rajat Wahi, partner at Deloitte India. Exports in the textiles sector witnessed a steep drop in April. For instance, shipments from Tirupur plummeted nearly 90 per cent to around Rs 225 crore that month due to a combination of low demand and the nationwide lockdown, according to Tirupur Exporters Association executive secretary S Sakthivel. “The global demand, whether it is the finished product or the raw material, has taken a hit and that demand was determining, to a large extent, our textile exports also,” said Federation of Indian Export Organisations (FIEO) director general Ajay Sahai. Despite an appeal by Textiles Minister Smriti Irani in April to buyers not to cancel “a single order that has been placed”, 60-80 percent of orders placed in textiles and apparels have been cancelled, according to Sahai. Domestic demand, too, is nearly non-existent, according to industry executives. Textile producers in Panipat supplying to India’s domestic market are either shut or operating at output levels of 10-15 percent, according to Federation of Industrial Associations of Panipat (FIAP) general secretary Shree Bhagwan Aggarwal. While the impact may not drastically hurt India’s GDP–textiles contributes to a little over 2 per cent of it — the major “cause of concern” is the potential damage it may cause to livelihoods, according to Sahai. The sector has been the second-largest employer after agriculture, expected to provide jobs to around 55 million people in 2020. However, some producers attribute this to issues with getting access to labour during the lockdown. Textile Association of India president Ashok Juneja said availability of labour was a “big issue” as many workers had gone back to their hometowns during the lockdown. He added manufacturers were now looking to train local women to offset this shortage. “Labour is a major issue. I expect it will take some months for the labour situation to normalise,” said Aggarwal of FIAP. “While it is too early to tell how much labour has gone, one fallout of COVID-19 will be increasing (use of) automation (for reasons like maintaining social distancing)…this is on the cards,” said FIEO’s Sahai.

Source: Indian Express

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Global Textile Raw Material Price 19-05-2020

Item

Price

Unit

Fluctuation

Date

PSF

793.10

USD/Ton

0.62%

19-05-2020

VSF

1251.52

USD/Ton

1.14%

19-05-2020

ASF

1578.46

USD/Ton

0%

19-05-2020

Polyester    POY

738.96

USD/Ton

1.06%

19-05-2020

Nylon    FDY

1940.56

USD/Ton

0%

19-05-2020

40D    Spandex

4007.67

USD/Ton

0%

19-05-2020

Nylon    POY

2263.98

USD/Ton

0%

19-05-2020

Acrylic    Top 3D

5174.82

USD/Ton

0%

19-05-2020

Polyester    FDY

970.28

USD/Ton

0.73%

19-05-2020

Nylon    DTY

1828.06

USD/Ton

-0.76%

19-05-2020

Viscose    Long Filament

1743.69

USD/Ton

0%

19-05-2020

Polyester    DTY

935.12

USD/Ton

1.53%

19-05-2020

30S    Spun Rayon Yarn

1729.63

USD/Ton

0%

19-05-2020

32S    Polyester Yarn

1356.98

USD/Ton

0%

19-05-2020

45S    T/C Yarn

2109.30

USD/Ton

0%

19-05-2020

40S    Rayon Yarn

1546.82

USD/Ton

0%

19-05-2020

T/R    Yarn 65/35 32S

2010.87

USD/Ton

0%

19-05-2020

45S    Polyester Yarn

1898.37

USD/Ton

0%

19-05-2020

T/C    Yarn 65/35 32S

1645.25

USD/Ton

0%

19-05-2020

10S    Denim Fabric

1.12

USD/Meter

0%

19-05-2020

32S    Twill Fabric

0.64

USD/Meter

0%

19-05-2020

40S    Combed Poplin

0.93

USD/Meter

0%

19-05-2020

30S    Rayon Fabric

0.48

USD/Meter

0%

19-05-2020

45S    T/C Fabric

0.64

USD/Meter

0%

19-05-2020

Source: Global Textiles

Note: The above prices are Chinese Price (1 CNY = 0.14062USD dtd. 19/05/2020). The prices given above are as quoted from Global Textiles.com.  SRTEPC is not responsible for the correctness of the same.

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Sri Lanka: Merchandise exports earning increases in Feb.

The trade deficit widened in February 2020 compared to February 2019, as expenditure on imports increased at a faster pace than the increase in earnings from exports. The tourism industry, which recovered faster than expected in the aftermath of the Easter Sunday attacks, was affected again with the outbreak of COVID-19 evolving as a pandemic from late February 2020. Significant implications on the external sector performance are expected from the COVID-19 pandemic from March 2020 onwards, particularly in the areas of merchandise trade, tourism, workers’ remittances and foreign investment. The deficit in the trade account widened in February 2020 to US dollars 574 million, from US dollars 451 million in February 2019, as the increase in imports surpassed the increase in exports. However, on a month on month basis, the trade deficit in February 2020 recorded a contraction. On a cumulative basis, the trade deficit widened to US dollars 1,304 million during the first two months of 2020 compared to US dollars 1,069 million in the corresponding period of 2019. Meanwhile, terms of trade, i.e., the ratio of the price of exports to the price of imports, deteriorated by 3.5per cent (year on year) in February 2020, as export prices declined at a faster pace than the decline in import prices. Earnings from merchandise exports increased in February 2020 for the first time since June 2019 by 0.7 per cent to US dollars 988 million, year-on-year, led by the increase in industrial exports though agricultural and mineral exports declined in comparison to February 2019. Earnings from industrial exports increased in February 2020 in comparison to February 2019. Despite the decline in earnings from garment exports from the USA, export earnings from textiles and garments increased, albeit marginally, due to increased exports of textiles and other made up textile articles. Earnings from agricultural exports declined in February 2020, on a year on year basis. Lower volumes exported led earnings from spices and coconut to decline in February 2020, while lower average export prices resulted in earnings from tea exports to decline. Amidst lower demand from the USA and the EU, earnings from seafood exports also declined in February 2020. In contrast, earnings from export of minor agricultural products and natural rubber increased notably during the month. Earnings from mineral exports recorded decline in February 2020, year on year, led by lower earnings from earths and stone exports. The export volume index in February 2020 improved by 5.2per cent, while the export unit value index declined by 4.2 per cent, indicating that the increase in exports was driven entirely by higher volumes when compared to February 2019. Expenditure on merchandise imports increased notably, on a year on year basis, in February 2020 for the third consecutive month, though recorded a decline on month on month basis. Accordingly, expenditure on imports increased by 9.1 per cent to US dollars 1,562 million in February 2020driven by higher consumer and intermediate goods imports partly due to the lower base recorded in February 2019. Expenditure on consumer goods imports increased in February 2020, on a year on year basis. Under food and beverages, dairy products (mainly milk powder), vegetables (mainly big onions and potatoes), sugar, spices (mainly chillies) and beverages (mainly alcoholic beverages) imports increased. Expenditure on imports of intermediate goods also increased in February 2020, from a year earlier. Higher volumes of crude oil, refined petroleum and coal imports led expenditure on fuel to increase during the month, although average import prices remained low compared to February 2019. Expenditure on food preparations (mainly palm oil), rubber and articles thereof, fertiliser (mainly urea), chemical products imports also increased in February 2020. However, textiles and textile articles imports declined significantly, led by lower imports from China due to supply chain disruptions amidsttheCOVID-19 pandemic. Meanwhile, expenditure on investment goods imports declined in February 2020 compared to February 2019. Expenditure on machinery and equipment imports declined, although machinery and equipment parts imports increased notably. Expenditure on transport equipment and building materials also declined. The import volume index increased by 10.0per cent, while the unit value index declined by 0.8per cent in February 2020, indicating that the increase in imports was driven entirely by higher volumes when compared to February 2019. With these developments, earnings from tourism were provisionally estimated to have declined to US dollars 391million in February 2020, in comparison to US dollars 475million in February2019.

Workers’ remittances records growth

Workers’ remittances recorded a growth of 5.4% in February 2020, year on year, amounting to US dollars 527million. On a cumulative basis, workers’ remittances grew by 6.0 per cent to US dollars 1,108 million during the first two months of 2020 in comparison to the corresponding period of 2019. Workers’ remittances are also likely to be affected by the COVID-19 outbreak in the forthcoming months, with key sources of remittances such as Italy, South Korea and the Middle East being affected by the pandemic and the resultant economic slowdown.

Exchange rate stabilizes

The Sri Lankan rupee, which remained stable until mid-March2020,depreciated sharply during the latter part of March up to mid-April 2020, mainly due to adverse speculation in the market with the spread of COVID-19 outbreak. However, the exchange rate gradually stabilized, with a notable appreciation in the first week of May 2020.Accordingly, the rupee recorded a depreciation of 3.4per cent against the US dollar by 15 May 2020. Reflecting cross-currency movements, the rupee depreciated against the Japanese yen while appreciating against the euro, the pound sterling, the Canadian dollar, the Australian dollar and the Indian rupee during the year up to 15May 2020.

Source: Daily News

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Bangladesh: 1,090 industrial units may face unrest

Industrial Police has identified 1,090 industrial units, including 612 apparel and textile factories across the country, where aggrieved workers may start protests for not getting wages and festival allowances before Eid-ul-Fitr. Out of 612 vulnerable and risk-prone apparel and textile factories, 442 are the members of Bangladesh Garment Manufacturers and Exporters Association, 126 of Bangladesh Knitwear Manufacturers and Exporters Association and 44 of Bangladesh Textile Mills Association. The data prepared by Industrial Police show that unrests may stir up in 41 factories under Bangladesh Export Processing Zones Authority and in 437 non-RMG factories. According to the data, there are 266 factories, which are in risks, are in Ashulia zone, and of which 144 are apparel and textile factories, and out of 514 risky industrial units in Gazipur zone, 307 are garment and textile factories. The data also show that there are 197 factories, including 96 RMG and textile units in Chattogram zone, where workers may become agitated for non-payment of wages and festival allowances while 85 factories, including 57 apparel and textile units, are in risk in Narayanganj. As per the data, 11 factories, including eight RMG and textile units, are vulnerable in Mymensingh zone and 17 factories are in risk of unrest in Khulna zone. ‘We are working on the factories in which problems might arise over the non-payment of wages and festival allowances. We are taking measures to avert any untoward situation in industrial zones,’ Abdus Salam, director general of Industrial Police, told New Age on Sunday. He said that industrial police along with the leaders of BGMEA and BKMEA would take all possible initiatives so that workers were paid their wages and allowances properly.  ‘We are trying to curb the risk of any annoying situation in the industrial belts through discussion with the factory owners,’ Salam said. BKMEA director Fazlee Shamim Ehsan said that problem might take place in the factories which are doing subcontracting over the payment of wages and festival allowances before Eid as they are not getting support from the stimulus package announced by the government. Even, some of the companies which export directly are also not getting loans from the stimulus due to lack of support from banks, he said. One of the BGMEA leaders said that 1,377 member factories of the trade body had applied for loans from stimulus package and 1089 of them paid wages of April until Sunday. Meanwhile, workers of at least 20 factories in Dhaka, Ashulia, Gazipur, Narayanganj and Chattogram on Sunday staged demonstration demanding wages of April and March and festival allowances equivalent to one month’s basic pay. Workers from eight RMG factories in Gazipur, five factories in Ashulia, three factories in Chattogram and workers of Paradise Cables Limited in Narayanganj took to the streets demanding 100 per cent wages of April, dues of March and festival allowances. The IP data show that there are 7,602 industrial units under the jurisdiction of the agency and 2,890 of them paid April wages until Sunday. On the other hand, a total of 332 factories, including 101 RMG units, did not pay wages of March and other allowances until Sunday.

Source: New Age Business

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China: Exporters urged to adjust to global demands

Though China saw its exports recover in April, driven by the surging shipment of electromechanical, textile and plastic products, trade experts urged the country's export-oriented companies to analyze global market demand as early as possible during the post-pandemic period to stay competitive. Global markets' demand for ventilators, face masks, protective clothing and testing kits was the main contributor to the boost in China's exports in the categories of electromechanical, textile and plastic goods last month, said Zhang Yongjun, a researcher at the Beijing-based China Center for International Economic Exchanges. Zhang noted that these are all closely related to other countries' COVID-19 fights. Compared with these three categories, the export volumes of China's regular export items, including household appliances, steel and ceramic products, shoes, smartphones and liquid crystal displays panels, all notably dropped in April, showing the country's foreign trade was still under downward pressure. Because the spread of the pandemic in Europe and the United States has begun to ease, and they have produced and purchased a large amount of anti-epidemic materials in the early stage, the rapid export growth of China's medical supplies will not continue in the long term, said Zhang. Apart from many developed countries' efforts to prevent a recession, the weak goods demand across the globe and the appreciation of the renminbi will create obstacles for Chinese manufacturers in shipping their products in the second half of this year, he added. As the impact of the epidemic has gradually declined and major economies have begun to resume work, exports of China's materials not related to the pandemic are expected to gradually recover. Lu Ming, a researcher at the China Council for the Promotion of International Trade in Beijing, said Chinese companies must follow the actual demand of the international market and adjust their product structure in a timely manner to adapt to the new situation. He added that although China has imported a large quantity of integrated circuit products, including microprocessor chips, chip capacitors and analog-to-digital converters in recent years, the nation, based on Customs data, saw its export value in this category grow by 12 percent year-on-year to 226.45 billion yuan ($31.9 billion) in the first four months of the year. He said this reflected strong growth in domestic production capacity. Chen Bin, executive vice-president of the China Machinery Industry Federation in Beijing, said it is vital for China to boost exports in sectors such as passenger vehicles, electronic products, furniture, clothing and foodstuffs, since these involve large numbers of upstream and downstream industries with millions of industrial workers in the domestic and global markets. For instance, healthy growth of the automobile industry can benefit rubber material providers, refinery companies and glass, tire, steel, sensor, gearbox, battery and lighting manufacturers, as well as road project contractors and insurance, digital map and car washing services, Chen said. After shipping electrified buses and coaches to the United Kingdom, the Netherlands, Belgium, France and Sweden for almost nine years, China's new energy vehicle manufacturer BYD announced earlier this month that it will enter Europe's passenger vehicle market and launch its Tang EV600 electric SUV in Norway later this year. BYD has selected Norway the world's third-largest market for electric vehicles after China and the United States as the first European country in which to sell the Tang because Norway has strong demand for such vehicles and has a large number of charging facilities. In addition, eager to move closer to its customer bases in other parts of the world, Chinese home appliances maker Skyworth Group plans to ramp up its overseas expansion this year with a focus on India, Southeast Asia, Europe and Africa. Liu Tangzhi, CEO of Shenzhen-based Skyworth, said the company will give top priority to the Indian market and Southeast Asia in its global push. The company will not only expand its sales channels abroad, but also prepare to set up manufacturing bases and supply chains in overseas markets. Despite the unexpected public health crisis, China's foreign trade is likely to recover in the second quarter and pick up steadily in the third quarter, said Wei Jianguo, former vice-minister of commerce.

Source: China Daily

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Bangladesh: EDF loan limit for garments, textiles factories raised to $30m

The Bangladesh Bank on Sunday extended the lending limit for garments and textile factories from the export development fund to $30 million from the existing $25 million. Members of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) and the Bangladesh Textiles Mills Association (BTMA) will be enjoy the new facility, the central bank circular issued on the day said. The extended loan facility will remain effective till December 31 of this year depending on the actual needs of the concerned mills. On the other hand, the loan limit for members of the Bangladesh Knitwear Manufacturers and Exporters Association from the fund remains unchanged to $20 million. On April 7 this year, the central bank expanded the size of the EDF to $5 billion from $3.5 billion in line with the government’s efforts to tackle the economic impacts of the coronavirus crisis. The BB also slashed the interest rate for the loans under the EDF to 2 per cent from 2.73 per cent in an effort to support the exporters amid the coronavirus outbreak. The central bank introduced the EDF in 1988 with a size of $30 million which has gradually increased over the years. Banks can borrow funds in US dollars from the EDF against their foreign currency loans.

Source: New Age Business

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