Finance minister Nirmala Sitharaman says learnings from the experiences of 2009-13 have prompted the government to be responsible while announcing the 20 lakh crore stimulus package and not splurge. In an interview with Deepshikha Sikarwar and Vinay Pandey, Sitharaman says boxing the measures unveiled as supply-side would not be right as the government has done a mix and match, including putting money directly into people’s hands by increasing the allocation towards the rural employment guarantee scheme. Edited excerpts: The entire package has big-ticket reforms and means to address the supply side. Businesses say even if they open, there is not much demand … When banks are giving additional term loans or working capital, what are they going for? They are actually going for pending wage payments, procurement of raw materials, electricity bills which are due — all these fixed charges. And, then when they start buying raw materials, they start the production process, it will start the economic activity in a little way for each resource. What does this entail? That money obviously is being spent for the initial starting exercise because it’s a restarting process. And, that is actually going to generate demand, that is actually going to put money in the hands of people who will in turn spend. So, strictly supply-side measures also have a demand-side component. And the ripple effect is something that will touch at the ground level, so many segments of society. So, strictly boxing it and saying it’s supply side and you have not done anything for the demand side is not right. We have had a mix and match. The increase in MGNREGA (allocation) is directly putting money in people’s hands. You said we are not splurging; we are being responsible. Were you trying to avoid a repeat of what happened after the 2008 stimulus? Mostly I would say coming from the learnings, based on the experiences of 2008-13. That’s one of the reasons why we have taken this course. Also, we looked at various countries’ responses. They have looked at tax deferment and also immediate cash outgo from the government. So, everyone has done a basket which consists of some proportion of this and some other proportion of that, and a very small proportion of the third and so on. So, it’s a mix and match of various things, each according to the state’s availability. There is no specific intervention for more stressed sectors like hotels, airlines… The way in which we have given out the package, when we deal with banks extending assistance to businesses, in our understanding it certainly covers or touches most sectors. This, of course, is on the assumption that nobody has put 100% their money to start a business. It’s their money plus some kind of borrowing. Somewhere every sector, even though I have not named each one, will be touched by what the banks are being able to extend without additional collateral. So, in a way that formula, that I am not going to ask you to give more to get a little more assistance, is designed with everybody in mind. Therefore, sectors will benefit from what we are doing. Economists say the size of the stimulus in the package is about 1% of GDP. Industry was asking for as much as 10% as direct fiscal stimulus. Did we consider monetisation of deficit to give a bigger stimulus are, therefore, being re-employed? So, these are all very relevant questions that you are asking me. But I would think that some of them have to be answered only as we go along. I can’t really today say yes this is it, as though this is the end of the story. And, second, do you now only want to focus all your attention on that rather than see where it’s going? It is important for us to monitor its implementation at the earliest without faltering and making sure all the targeted audience is reached. Many economists said we could consider monetisation of the debt. Is that something which is there on the table? We have heard, reviewed, assessed and discussed at various steps… finance ministry, PMO and with industry, not just us. Every suggestion which we get — sometimes in videoconference with industry, with captains of industry, with economists, with associations and so on — has honestly been gone through. I have spent time with my secretaries on a daily basis. So yes, as much as you are saying even I can say some economists have said this; some have said something else. All of which are very good, considered options. And, having gone through all that, we have taken this call. At the social level, there is a very large stressed population in terms of informal workers, migrant labourers. Should there be more direct support to them because right now the lockdown is still in place? I wish we had enough data to assess that and be able to assign something to them. The motive is not to exclude. Tell me (does) anybody — state governments, the Central government, local bodies, universities, think tanks, institutions which monitor our economy — have a comprehensive database on migrant workers? I am not blaming anybody. For me to say, that is the prototype, that is the state where this many migrants are there, they spend across the state, they may be from xyz sectors and if that’s the proportion, I might be able to do a model of xyz or abc states. And numbers, at least approximate numbers, and their spread and their instrumentality through which I can reach them. Jan Dhan account for instance. Because I had Jan Dhan account and because it was Aadhaar-seeded, most of the times, at least 99% of the times, I would be able to make sure money will go into their accounts. Now if I had a rough surety that many of the migrant workers are also covered by this, yes get it. But where is it, where is the data, who is there as a migrant? Without that however much relief and however much you want to give, I don’t even have a basis and won’t know how to reach them, institutionally. And therefore, it’s a problem which all of us equally intensely feel about. And, I hope at least this would give us all, inclusive of local bodies, to at least maintain some data. We understand money they need, food they need, health (facilities) they need, transportation they need…Is there any thinking that the government will come out with some system or monitoring mechanism to create a registry? I am honestly trying to see how best this can be addressed… sit down with the states, the labour ministry. This is one test that all of us, not just the central government, every state, will have to work on… because we can’t afford not to have this data. Will the Centre take it to the council? Let me see People had a lot of hope with the PM mentioning the middle class in his address. The middle class feels it has been left out and there is nothing for them in the package… Aren’t the MSME families middle class? The credit-linked subsidy scheme not addressed to the middle class? The salaried class, which faced salary cuts, job losses, feels there’s nothing for us? I’ll have to see how I can do it because today, every tax-related decision I take, you are well-aware has a bearing on the revenue of the Union government, but post that, through the devolution, affects the states, too. And, at a time when without me touching the tax, already revenue has come down for the government, states and the Centre. Yes, I have to attend to people who have lost jobs, wages have come down, their profits have been lost. I need to know the depth of this problem. Not that I am unaware that it is going to have serious consequences. But, given my constraints, given my revenue generation issues and given the fact that it (tax concession) will also affect my devolution. When the issue of constraints comes up, the answer we get is why is this government so scared of printing money? That’s fine, as I said, good suggestions. Not one Nirmala Sitharaman, but everyone has applied their mind. We have collectively taken a call. Yes suggestions, we have taken all of them. We have, after that, taken a call. Your budget assumptions, taken in February, now do not stand. So, if you look at the GDP growth and the size, people are expecting about 6-6.5% fiscal deficit. What is the government’s own assessment on this? Consciously we have not made any assessment. As I said I have ten more months to go (in the fiscal year) and I don’t know what proportion, what extent to which this pandemic is going to retract or go away. Without me knowing for sure how long this pandemic is still going to challenge our economic activity, without that how do I make an assessment, even a guesstimate? On every count it’s unfair to ask me to make an assessment, whether it’s two months, ten months… the pandemic has not retreated, economic activity has yet to start because of the lockdown, (even) with all the waivers on. How soon do we expect the measures playing out and aiding economic activity? I don’t have a time frame, and the fact that I don’t have a time frame also influences my decision-making on my borrowing, on the stimulus, on the kind of money that I’m extending. I have to be prepared. And, God forbid, we don’t want anything. Not just this pandemic, any pandemic, ever touching India. We need to be prepared. Given the length and uncertainty of this pandemic, is it likely that you could consider some more measures going forward? As we go forward, we have to keep assessing. We have kept our mind open on this. You said this is not the end of the story. So, is there a broad plan or scenario you have worked out? We will go on assessing as we go on, that’s the thing. On the guarantees, is there any assessment of how much percentage is likely to become a cost? We did work on that. We did take the banks’ usual assessment of how many businesses fail in normal circumstances, but these are extraordinary circumstances. We did have that in focus. Banks, of course, have been exposed to major NPA crisis earlier. So, there are rough estimates which under normal circumstances banks can take. But as I said, keeping that in mind and also factoring in this extraordinary situation, we made some calculations about how businesses would fail; and a year afterwards, when actually the guarantee will be borne, what would be the kind of money that we have to put out. But no model will be 100% fool-proof, given the nature of the crisis. There is no particular number that I can quote because we do not know the nature of this crisis.
Source: Economic Times
India is considering a proposal to levy 15% Covid-19 tax on all chemical and petrochemical imports from May 1, 2020 to March 31, 2021 to protect domestic industry. As per the proposal, the provisional duty would also be applicable on all preferential imports under India’s various free trade agreements (FTA), and would cover organic chemicals, inorganic chemicals, plastics, rubber, man-made filaments and man-made staple fibres. “The proposal has been made by a certain section of industry to the department of chemicals and petrochemicals, and the department is still doing stakeholder consultations,” said an official. The 15% tax would be in addition to the lowest tariff called applied most favoured nation (MFN) duty in trade parlance. India imported $86.8.2 billion of these products between April 2019 and January 2020 with almost 14% of the inward shipments coming from China alone.The commerce department is yet to take a stance on the issue and is awaiting a formal proposal by the department of chemicals and petrochemicals. “Several industries, which are dependent on chemicals, raw materials or intermediate goods in these sectors, have opposed the proposal,” the official added. Various industries such as chemicals and plastics have vetoed the proposal, citing similar action by other countries that would harm Indian exports. “Any further burden of additional duty would be a huge burden on industries and will be difficult to sustain. If our country imposes Covid tax on chemicals imported from other countries and if the said countries also start to levy additional duty on exports from our country, it will be disastrous for our chemical exports industry,” said an industry representative.India’s chemical exports fell almost 42% on year in April to $1.2 billion while those of plastics declined 25% to $478.47 million last month.
Source: Economic Times
New Delhi: Businesses facing a cashflow squeeze due to the lockdown are grappling with deficiency memos that have stalled the release of goods and service tax refunds even as the government announced measures to enhance liquidity amid the Covid-19 crisis. Tax authorities have been issuing deficiency memos for some incomplete refund claims beyond the stipulated time of 15 days, forcing taxpayers to refile applications, people familiar with the development said. However, the refiled applications are treated as new and in many cases, the refund amounts end up getting blocked because the deadline has passed. The industry has represented the matter before the Central Board of Indirect Taxes & Customs. “There are bona fide instances wherein the first refund applications were filed within the prescribed time limits but because of the error on the part of authorities, the deficiency memo was not provided within 15 days and when application is filed afresh, the same gets barred by time,” according to the representation to CBIC.
Source: Economics Times
The government is mulling ways to compensate states for the widening goods and services tax (GST) shortfall, which include borrowing from the market and extending the cess repayment period further. Raising GST rates or rationalisation of tax slabs may be discussed by the GST Council in the next meeting to be scheduled early next month. Compensating states has become tough with dwindling cess collection in the compensation fund amid a sharp fall in revenue due to the coronavirus pandemic. Compensation cess is levied on luxury and sin items such as aerated drinks, ...
Source: Business Standard
Furthermore, keeping GST in abeyance would allow imports to gain an unfair advantage over domestically manufactured goods, they felt. The Centre is not inclined to accede to the industry demand for GST waiver at this juncture. Even though a final call on such rate reductions will have to be taken at the GST Council, where the Centre and states follow a democratic voting system, officials are of the view that the industry’s call for a GST waiver for six months to spur demand is misplaced as it doesn’t factor in the adverse impact of such a move. The consequences would be felt not only by the industry itself but also by consumers and states, sources said. Furthermore, keeping GST in abeyance would allow imports to gain an unfair advantage over domestically manufactured goods, they felt. They officials were responding to the demand mooted by some for suspension of GST regime for a certain period in the wake of the economic slump caused by Covid-19 pandemic. The proponents of the idea think the waiver could help as a stimulus measure on the demand side of the economy. An official said that if GST is waived on the final products, it would also block the input tax credit (ITC) which the seller adjusts against the eventual tax liability in normal course. The seller, then, would have no recourse but to raise the commodity’s price thus defeating the purpose of creating more demand. Further, a GST waiver would lead to a demand of refund of ITC lying in balance with the manufacturers, traders, and service providers, who are already suffering from acute liquidity problems. “However, refund of several lakh crore in the form of ITC, lying utilised with taxpayers, is near impossible,” an official said. Additionally, the states’ finances would suffer from nil GST collection as nearly 70% of this indirect tax revenue goes to the state coffers as a combination of their own share (state GST) and devolution from Centre’s share. “In addition to the collection targets coming under pressure, GST waivers would be difficult to administer as they could lead to divergence of pricing mechanism across sectors and inverted duty structure situations,” MS Mani, partner at Deloitte India, said. A GST waiver would also unwittingly promote imported goods that would not suffer any tax in their domestic jurisdiction, another official said. He added that GST exemption on sanitary napkins in the past and PPE kits more recently showed the adverse impact on prices and domestic manufacturers. However, some experts said that instead of GST waiver across the board, an exemption on certain essential items could be implemented. “Government can make essential commodities zero-rated, including food, housing, public transport, and pharmaceutical products, so that the consumer are freed from the burden of taxes, and businesses have easier compliance,” Rajat Mohan, senior partner at AMRG & Associates, said. Another official said that while a final decision is in the GST Council’s domain, the body may find that the option only brings hardship to the businesses and state finances, while providing virtually no relief to customers. “The government should look at rationalising the tax rates in general which can help to bring down the cost of these mass-market goods. Such concession will not only have a positive impact on public sentiment but will also improve the revenue for exchequer on account of enhanced demand,” Ayush A Mehrotra, partner at Khaitan & Co, said.
Source: Financial Express
Several companies awaiting tax refunds have proposed to the government that it could instead issue certificates for the amount owed, a move that can help businesses get access to liquidity as cash crunch starts hitting operations hard. They also want the government to allow banks to lend at interest rates of 1-2 per cent while keeping these certificates as collateral, or treating then as cheque discounting, people aware of the matter told ET. This comes at a time when several large companies are struggling with cash flows and are exploring all avenues to keep borrowing costs in check. “Many companies are not getting the tax refunds probably because the government too is facing cash crunch. What has been proposed is that instead of actually giving tax refunds, the government can give certificates stating the amount it owes to a company. And banks which are flush with funds should be allowed to take these certificates as collateral and give loans to companies at minimal interest rate, which could be similar to cheque discounting but will resolve working capital problems of many companies, said Dinesh Kanabar, CEO of tax consultancy Dhruva Advisors. The issue of refunds was raised by several business associations earlier, but the government has maintained that there is no problem on that front. Many corporate, however, claim that they are not getting any refunds above Rs 1 crore— whether in direct or indirect taxes. “The CBDT has started issuing tax refunds for smaller amounts below Rs 1 crore, and the delay in refunds could also be due to the fact that tax officers are working from home. However, the government can seriously look at proposal of issuing tax refund encashment certificates, instead of pending refunds in cases where tax assessments are over, say for periods prior to AY 17/18, and also for AY 18/19, as otherwise this will impact cash flows of companies at a time when they are already tackling stress on working capital due to Covid pandemic,” said Hinesh Doshi, managing partner, Hinesh R Doshi and Co LLP. The amount stuck in the form of refunds could be as high as hundreds of crores for large corporates that are struggling to generate revenues and are dealing with working capital issues due to the Covid-19-led lockdown. Many companies claim that while they have to collect money from their clients or large consumers, they are unable to do so due to Covid-19 and the financial stress it has caused. This has also impacted the working capital cycle of most companies, which otherwise could be profitable entities, say industry trackers.
Source: Economic Times
NEW DELHI: With exporters starting operating their manufacturing units with limited workforce, they are gradually getting enquiries from various countries such as the US, France, and Spain for products such as apparel, leather and engineering, amid lockdown on account of the COVID-19 pandemic. Federation of Indian Export Organisations (FIEO) President Shard Kumar Saraf said the order situation is getting better but it will still take at least six more months for the sector to get back on track. "Factories have started but we are facing the problems of workers. We are getting enquiries from the US and European economies," he said. FIEO Director General Ajay Sahai said the situation is better as buyers from the US and Europe have started talking to domestic companies. "We are expecting that the exports will be in negative zone for some more months. In May, it could contract by about 30-40 per cent. We are expecting that from October, we can register some positive growth in exports," Sahai said. Sharing similar views, Ludhiana-based exporter S C Ralhan said engineering exporters are getting enquiries from countries like France, UK, Spain and the US. Apparel Export Promotion Council of India (AEPC) Chairman A Sakthivel said "Europe is getting better than the US in terms of enquiries for the sector. We are getting more orders from online stores as compared to brick-and-mortar shops". He said the coronavirus outbreak has impacted the sector significantly and in such a crisis, the government support is needed on an urgent basis to put the growth trajectory on track. "One thing is encouraging that buyers are asking for samples from India. We expect that the anti-China feeling in the global markets can be converted into opportunity for India. Our factories have also started with 25 per cent capacity," Sakthivel said. Siddh Nath Singh, chairman of the Carpet Export Promotion Council of India (CEPC), said the sector is not getting healthy orders. "Factories have started but adequate labour force is not there. Weavers have migrated to their villages," he said adding the US accounts for over 50 per cent of carpet exports and Europe contributes about 30 per cent. The country's exports contracted by a record 34.5 per cent in March and 60 per cent in April.
Source: Economic Times
The Federation of Indian Export Organisations (FIEO) said on Tuesday that the export from the country is expected to fall by 20 per cent in the current fiscal in the wake of the coronavirus pandemic. The outlook is "extremely negative" at the moment, and fall in export will also be accompanied by a decline in import, an official of the apex exporters' body said. "We expect that export during the current financial year is likely to fall by 20 per cent. In value terms, this will be around USD 50 to 60 billion," FIEO director general and chief executive officer Ajay Sahai said. He, however, said there will be no significant pressure on the balance of trade as both export and import are expected to fall due to the COVID-19 outbreak. "However, this (fall in export) will put a question mark on job creation and also cause loss of jobs," Sahai told . Speaking on the stimulus package announced by the government, he said exporters need more support to improve their competitiveness in the global markets as China has started production. Sahai said, "Personally, I feel there has been not a single word on exports in the economic stimulus announced by the government. Only favour which the government has done is by extending the interest subvention scheme of MSMEs." He said China is also giving rebates to its exporters. "Though the rupee has depreciated, it is not as sharp as what our competitors like South Korea, Turkey, Indonesia or Brazil have witnessed," he said, adding that this is putting pressure on Indian exports. The apex body of exporters has requested the government to provide two per cent additional MEIS (Merchandise Exports from India Scheme) support to all exports and four per cent to labour-intensive sectors like apparel, leather, handicraft, carpets, marine, tea and processed food. "That is what we are looking for at the moment," he said. Merchandise exports constitute roughly 12 per cent of India's GDP, and foreign exchange earning is around USD 320 billion, he said.
Source: Economic Times
Surat city has 165 textile trading markets that houses 65,000 shops, employing lakhs of people. The Federation of Surat Textile Trading Association (FOSTTA) members had few days ago, submitted a memorandum to Surat District Collector requesting permission to open the shops. Even with lockdown relaxations across the state, textile markets in Surat are yet to get relief as 85 per cent of the market falls in cluster zone areas. Only 15 per cent of the markets that are not in containment zones has got green signal to resume functioning. Also, only around half of the powerloom factories in Surat and outskirts resume operations by Tuesday. Surat city has 165 textile trading markets that houses 65,000 shops, employing lakhs of people. The Federation of Surat Textile Trading Association (FOSTTA) members had few days ago, submitted a memorandum to Surat District Collector requesting permission to open the shops. On Tuesday, Collector Dr Dhaval Patel held a meeting with Surat Municipal Commissioner Banchhanidhi Pani and FOSTTA members in which it was decided to keep the markets in the containment zones closed. The officials suggested modalities to open 20 per cent of markets in the containment zones to open with restrictions. FOSTTA president Manoj Agrawal said, “They have suggested opening of 20 per cent the markets in containment zones… We will hold a meeting with the presidents of different markets on Wednesday and will take a decision.” Over a lakh of migrant workers who were working with the textile industry have left Surat to their home states. On Tuesday, around 20 powerloom factories at Anjani Industries on Sayan Olpad road, started operations with limited workers. Around 30 powerloom factories started in Sachin GIDC area and 10 in the Diamond Nagar industrial estate at Laskana. All these are in non-containment zones. Anjani Industrial Estate president Vijay Mangukiya said, “There are 1,000 small and medium units in our industrial estate. In the powerloom segment, over 70 per cent of labourers are from Odisha of which a large number has left for their home. Some of them are staying back. With them, we started the factories. Seeing the positive atmosphere, other workers may also join work. We hope that the situation will be normal soon. We are also trying to convince the dyeing and printing mill owners to start factories.”
Source: The Indian Express
Expressing 'cautious optimism' about the country's economic prospects, a Finance Ministry report on Wednesday said actual GDP growth in 2020-21 would be contingent upon the intensity, spread and duration of the Covid-19 pandemic. The report, prepared by the Economic Affairs Division of the Finance Ministry, took comfort from an IMF note which projected a growth rate of 1.9 per cent for the current fiscal. However, it added, "Government is cognizant of the relative severity of lockdown on economic activity in the country and is cautiously optimistic about the signals from Indian benchmark equity indices." Observing that these are still early days and Covid-19 is yet to abate, the report said "the country's actual GDP growth in FY 2020-21 will be contingent upon the intensity, spread and duration of the Covid-19 pandemic within national territory." The report further said that downside risks to India's growth emerge from the high possibility of global slowdown deepening and supply chain disruptions getting exacerbated due to prolonged spread of Covid-19 and lockdowns across countries. India, it added, continues to tackle the health crisis unleashed by the Covid-19 pandemic and the focus has now shifted to revive the economy which has been debilitated by the lockdown. The government and the RBI are working towards implementing substantial targeted fiscal and monetary measures to support affected sectors of the economy, it said.
Source: Business Standard
New Delhi: The commerce ministry has recommended imposition of anti-dumping duty on digital printing plates from China, Japan, Korea, Taiwan and Vietnam with a view to guard domestic manufacturers from cheap imports from these countries. The ministry's investigation arm Directorate General of Trade Remedies (DGTR) has recommended the duty after concluding in its probe that there is a substantial increase in imports of digital offset printing plates from these countries in absolute terms. It has also concluded that the plates have been exported to India from these countries below their normal value, which has resulted in dumping and consequently impacting the domestic industry. The duty recommended was in the range of USD 0.77 per sqm to USD 0.13 per sqm. The finance ministry takes the final decision to impose these duties. "The authority is of the view that imposition of anti-dumping duty is required to offset dumping and injury. Therefore, authority recommends imposition of definitive anti-dumping duty on imports of subject goods from the subject countries," DGTR has said in a notification. The alleged dumping probe was carried out by the DGTR on an application filed by Technova Imaging Systems for imposition of the duty on imports of these plates coming from China, Japan, Korea, Taiwan and Vietnam. The imports of these plates have increased to 16.32 million sqm during the period of investigation covers (July 2018 to March 2019) from 8 million sqm in 2015-16. The product is used in the printing industry for transferring data as an image (dot patterns or text) onto paper or on tin sheets or poly films. In international trade parlance, dumping happens when a firm exports an item to other country at a rate lower than the price of that product in its domestic market. Dumping impacts price of that product in the exporting country, hitting margins and profits of manufacturing firms. According to global trade norms, a country is allowed to impose tariffs on such dumped products to provide a level-playing field to domestic manufacturers. The duty is imposed only after a thorough investigation by a quasi-judicial body, like DGTR in India. In its probe, the directorate has to conclude whether the dumped products are impacting domestic industries. Imposition of anti-dumping duty is permissible under the World Trade Organization (WTO) regime. The duty is aimed at ensuring fair trading practices and creating a level-playing field for domestic producers vis-a-vis foreign producers and exporters. India is one of the most attractive markets for global producers due to its large middle-class population.China, Japan, Korea, Taiwan and Vietnam are key trading partners of India.
Source: Economic Times
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Source: Innovation in Textiles
In all 203 fashion and textile tariff lines will drop to zero under the new UK Global Tariff (UKGT) regime announced by the government today. The new tariffs will be applied to products imported into the UK from January 1, 2021, i.e. at the end of the Transition Period. The tariffs will apply to imports from countries where the UK does not have a trade deal. In the vast majority of the 203 fashion and textile products where tariff will be decreased to zero, UK has little or no UK manufacturing e.g. the import duty on silk yarn will fall from 4 per cent to 0 per cent and that on terry towelling fabric will drop from 8 per cent to 0 per cent, the UK Fashion and Textile Association (UKFT) said. Of the nearly 1,200 tariff lines for the fashion and textile sector, 67 per cent will remain unchanged. "Virtually every single fashion line will remain at 12 per cent and the vast majority of yarns and fabrics will continue to attract an import duty of between 4-8 per cent," UKFT said based on the announcement made by the department of international trade. A further 15 per cent of fashion and textile tariff lines have been simplified with, for instance, the import duty on silk ties has been reduced from 6.3 per cent to 6 per cent and the rate on bras has been lowered from 6.5 per cent to 6 per cent.
"UKFT campaigned vigorously against the last proposed UK tariff regime as it failed to provide UK manufacturers with a level playing field and at the same time threatened to increase the amount of very cheap, disposable fashion imported from overseas. "We welcome the new UK Global Tariff regime precisely as it addresses our two fundamental concerns. Our UK manufacturing base has received assurance that it can continue to trade on an equal footing and while consumers will still be able to benefit from the duty free arrangements with countries such as Bangladesh, there is not going to be a huge influx of super cheap fashion with all the environmental damage that could entail," UKFT CEO Adam Mansell said. UKFT has, however, urged the government to reach a positive conclusion to the negotiations with the EU – a market that accounts for 76 per cent of the UK's exports and 35 per cent of its imports.
Source: Fibre2Fashion
The Corona-pandemic has revealed how extended the textile value chain is from producing fibres to the finished consumer products offered by brands and retailers around the world. Brands and retailers and their suppliers should cooperate closely and look for solutions that support each other, the International Textile Manufacturers Federation (ITMF) has said. Fibres can be produced in one country, yarns spun in another; fabrics are woven or knitted yet in another country before the final garment is sewn and shipped across continents. And therefore, the textile value chain is only as strong as the weakest link in it, ITMF said in a statement on the Corona crisis. "It is important to realise that in a situation of global demand and supply disruptions, cooperation and dialogue are paramount for the entire supply chain. Our industry is facing demand shocks due to lockdowns around the world, which have posed enormous challenges to the retail industry. Passing the loss and pain to suppliers by cancelling orders cannot be the answer. To the contrary, cancellations will create even more problems by weakening the supply chain further," said ITMF, whose members are associations and companies in the fibre, textile, apparel, home textile, textile machinery and textile chemical industry in almost 60 countries around the world. "Textile and apparel companies are willing to do their utmost part to overcome this demand shock by delaying shipments or deferring payments, when necessary. But this has to be within reasonable limits. It is imperative that brands and retailers and their suppliers cooperate closely and look for solutions that support each other," the statement added. ITMF and its national textile and apparel associations represent hundreds of thousands of companies and millions of workers across the globe. These companies and workers cannot absorb the burden alone. ITMF’s recent Corona-Surveys have revealed that orders have plummeted by more than 40 per cent globally and that turnover in 2020 is expected to be 33 per cent lower than in 2019. "The most pressing issue for most companies is liquidity. Therefore, it is essential that brands and retailers find solutions with their suppliers that allow them to pay their workers and avoid massive layoffs. "Responsible sourcing practices by brands and retailers are critical preconditions for socially compliant and eco-friendly production. Sustainability is not a one-way street; it can only be achieved, if stakeholders along the supply chain respect and treat each other responsibly," the Switzerland-based organisation said.
Source: Fibre2fashion
