The Synthetic & Rayon Textiles Export Promotion Council

MARKET WATCH 30 MAY, 2020

NATIONAL

INTERNATIONAL

Shri Piyush Goyal calls upon the Exporters to be more competitive and provide quality products to the world

Shri Piyush Goyal, Union Minister for Commerce & Industry and Railways, today, through Video Conference, participated in the Digital Summit on Exports organized by the Confederation of Indian Industry (CII). EXIM Bank of India was the Institutional Partner for the Summit. Addressing the Summit, Shri Goyalsaid that the future of growth lay with industry and the private sector, with the government having a lesser role to play. The minister identified three important ways to increase India’s exports: reviving manufacturing, diversifying the exports basket, and finding newer and more accepting markets. He emphasised that the diversification of exports, in addition to consolidating current areas of strength, is necessary for our economy to grow. He stated that India has a huge opportunity to promote indigenous production in auto component sector, furniture, air conditioners, and others. He said that MeitY is promoting electronics production, in pharma we are encouraging API manufacturing, and in the agri export sector the opportunity is huge. He said that in the IT related service, the world recognizes the Indian expertise and prowess, and hence we have asked the NASSCOM to target for $500 billion export in the sector in next five years. AatmaNirbhar Bharat, he said, is not just about greater self-reliance, but also engaging with the world from a position of strength. He said that India should be seen as a dependable partner and reliable friend in the world market, particularly when the global supply chains are undergoing rejig. Talking about the Prime Minister’s vision to make India self-reliant, Shri Goyal said that we should talk from the position of strength, be competitive, and provide quality products to the world. There should be killer instinct in us to succeed. No crisis can stop our march, if there is willingness to take on the challenges head-on. Shri Goyal congratulated CII on completing 125 years and the launch of the Taskforce on Enhancing Exports through integration into the Global Value Chains (GVCs). He committed to working closely with the Taskforce and take action where necessary for the benefit of industry, and the country.He assured the exporting community that the Government, whether the union or states, are there to provide full support and are willing to work in partnership. He said that the country has skilled workforce, and world class institutions like Universities and research labs, and let us work for the well-being of 130 crore people of India. Mr. Chandrajit Banerjee, Director General, CII, said that we must carry out all reforms necessary to overhaul our exports and this is the right time to roll them out. Trade logistics, compliance with quality standards, seamless functioning of GVCs, and a robust strategy to leverage FTAs would be key, he said.

Source: PIB

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Smt. Nirmala Sitharaman chairs 22nd Meeting of the Financial Stability and Development Council (FSDC)

Union Minister for Finance & Corporate Affairs Smt. Nirmala Sitharaman chaired the 22nd Meeting of the Financial Stability and Development Council (FSDC) here today. The meeting was attended by Minister of State for Finance & Corporate Affairs Shri Anurag Thakur, Shri Shaktikanta Das, Governor, Reserve Bank of India; Shri Ajay Bhushan Pandey, Finance Secretary/Secretary, Department of Revenue; Shri Tarun Bajaj, Secretary, Department of Economic Affairs; Shri Debasish Panda, Secretary, Department of Financial Services; Shri Ajay Prakash Sawhney, Secretary, Ministry of Electronics and Information Technology; Shri Injeti Srinivas, Secretary, Ministry of Corporate Affairs; Dr. Krishnamurthy V. Subramanian, Chief Economic Adviser; Shri Ajay Tyagi, Chairperson, Securities and Exchange Board of India (SEBI); Shri Subhash Chandra Khuntia, Chairperson, Insurance Regulatory and Development Authority of India (IRDAI); Shri Supratim Bandyopadhyay, Chairperson, Pension Fund Regulatory and Development Authority (PFRDA); and Dr. M. S. Sahoo, Chairperson, Insolvency and Bankruptcy Board of India (IBBI) and other senior officers of the Government of India and Financial Sector Regulators. The meeting reviewed the current global and domestic macro-economic situation, financial stability and vulnerabilities issues, major issues likely to be faced by banks and other financial institutions as also regulatory and policy responses, Liquidity / Solvency of NBFCs/HFCs/MFIs and other related issues. Besides, market volatility, domestic resource mobilisation and capital flows issues were also discussed by the Council. The Council noted that the COVID-19 Pandemic crisis poses a serious threat to the stability of the global financial system as the ultimate impact of the crisis and the timing of recovery, is uncertain at this point of time. While, decisive monetary and fiscal policy actions aimed at containing the fallout from the pandemic, have stabilised investor sentiment in the short-run, there is a need to keep a continuous vigil by Government and all regulators on the financial conditions that could expose financial vulnerabilities in the medium and long-term. The efforts of the Government and regulators are focused on avoiding a prolonged period of dislocation in financial markets. The Council took note of the initiatives taken by the Government and the regulators in the recent months to help revive the economy. Government and the RBI have announced various fiscal and monetary measures to pre-emptively limit the economic damage and would continue to address the liquidity and capital requirements of the financial institutions. The Council also reviewed the action taken by members on the decision taken by FSDC earlier.

Source : PIB

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Goyal expects better exports performance in May, June

The performance of the country''s exports is expected to be better in May and June as compared to the steep fall recorded in April, when the shipments contracted to an all-time high of 60.28 per cent, Commerce and Industry Minister Piyush Goyal said on Thursday. He said that while April was quite a "washout with 60 per cent fall, my sense is that in May, it will grow significantly and the reduction will be around 30-35 per cent. We have to wait for the numbers," Goyal said while addressing CII''s Export Summit organised through video-conferencing. In June, he said, exports will either be at par with June 2019 or at most 10 per cent down. Going forward, the three factors that would drive the economy would be the revival of manufacturing, diversification of export basket and focussing on newer and "more accepting" markets, Goyal said. Goyal added that three main things -- reviving manufacturing, diversifying export basket, focusing on newer and accepting markets -- will drive the economy going forward. Further, he said Indian industries, entrepreneurs and start-ups should see what new markets have opened up domestically for them and work on those. "Our agriculture export potential is huge. Rice, including Basmati, animal husbandry products and organic products, among many others, we have an opportunity to work together as partners and expand India'' ''s footprint," he said adding that diversification along with consolidation will help grow product basket and expand India's presence horizontally across the world. He said building upon the domestic demands, with surplus going to export, will push India to newer heights. The minister emphasised that the diversification of exports, in addition to consolidating current areas of strength, is necessary for the Indian economy to grow. The ministry, he said, is working on identifying several sectors that holds potential for the domestic industry. He added that the sectors include auto components, furniture, air conditioners (ACs), set-top boxes, pharma, organic products, agri-chemicals, textiles, toys and lithium-ion batteries. "Why we should be importing auto components. That needs to be changed. Why we should import USD 2 billion worth of furniture. Why we are importing ACs and components like compressors... We are looking at promoting APIs (active pharmaceutical ingredients) in India," Goyal said. The ministry has asked Nasscom to look at strategy for USD 500-billion IT services exports in the next five years, he said. Contracting for the second straight month, India''s exports shrank by a record 60.28 per cent in April to USD 10.36 billion, mainly on account of the coronavirus lockdown. Imports also plunged by 58.65 per cent to USD 17.12 billion in April, leaving a trade deficit of USD 6.76 billion as against USD 15.33 billion in April 2019. Earlier, Director General of Foreign Trade Amit Yadav said exports to China have grown and imports have reduced in May. He also said there is a need to address hidden cost associated with exports and ensure that no taxes are added to outbound shipments. "We have misaligned our export priorities, where 70 per cent of India''s exports are in raw materials that is only 30 per cent of global product demand. Only 30 per cent of our exports are in electronics which make 70 per cent of global demand. India''s share in this is 0.7 per cent," he said. P Harish, additional secretary, Ministry of External Affairs, said that the Indian industry should focus on areas like standards and quality of products.

Source: OutlookIndia

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Need to look at building economy with local skills: Suresh Prabhu

The country needs to go back to the basics and look at building an economy based on local skills and naturally available resources, Rajya Sabha MP and former Union minister Suresh Prabhu said on Thursday as he emphasised the importance of Atma Nirbhar Bharat. The five pillars of Atma Nirbhar Bharat (Self-reliant India) are economy, infrastructure, system, vibrant demography and demand. Speaking at a webinar organised by the Institute of Cost Accountants of India, Prabhu said there is a need to work in a way that people's needs are adequately taken care of and demand of the world is also catered to. Noting that each district has unique traditional characteristics, he said that if a proper study and documentation are done to make the districts self sufficient, then it would have a transformative effect on rural India. "In ancient times, India ws a large economy and its products were sought after. It didn't produce steel, cement or automobiles at that time but it produced things based on local skills. We again need to go back to the basics," Prabhu said. Prabhu is also India's Sherpa for G20 nations. Speaking at the webinar, BJP National General Secretary Ram Madhav said Prime Minister Narendra Modi gave a categorical call for Atma Nirbhar Bharat amid the COVID-19 pandemic and that the government's motto has been self reliance for the last six years. He said India has managed the COVID-19 crisis well compared to many other countries and attributed it to three factors. Prime minister who has taken right decisions at the right time, an efficient administrative machinery and the 1.3 billion people of the country who have shown great unity and discipline in handling the situation, he noted. Talking about post COVID-19 world, Madhav called upon people all over the country to show greater unity.

Source: Economic Times

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India urges for wider information sharing under tax treaties within BRICS

New Delhi: India pitched for wider sharing of information exchanged under tax treaties among BRICS countries – Brazil, Russia, India, China and South Africa – for countering corruption, money laundering and terrorist financing, at the meeting of tax heads held on Friday. India batted for adopting a “whole of government approach” in dealing with crossborder financial crimes, as they have ramifications in respect of various statutes, not only taxation, said finance secretary Ajay Bhushan Pandey, who represented India via video conferencing. India also asked for sharing of Covid-19 related tax measures taken by respective tax administrations to enhance the country’s understanding of fiscal and economic impact of the pandemic.

Source: Economic Times

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EPCES seeks nationwide stable policy

New Delhi: The Export Promotion Council for EOUs and SEZs (EPCES) on Friday wrote to Prime Minister Narendra Modi seeking a uniform policy nationwide for businesses to operate including for movement of personnel. “We request that either a nationwide stable policy may be issued, applicable in all the states of India for running the business or don’t put any operative guidelines and compliances for trade and industry and not to press upon payment of salaries to workers without any business,” EPCES vice chairman Bhuvnesh Seth wrote in the letter to PM. Referring to the unplanned sealing of state borders around Delhi NCR, he said the move was leading to losses and posed difficulties to exporters in fulfilling their export commitments. In the letter, Seth said: “Due to uncertain sudden sealing of state borders, it is very difficult to operate the business”.

Source: Economic Times

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FDI in India jumps 13% to record $49.98 billion in 2019-20

Foreign direct investment into India rose 13% to a record $49.97 billion in FY20 from $44.36 billion a year earlier, official data released on Thursday showed. FDI inflows were $13.2 billion in the quarter ended March. Singapore remained the top source of FDI, accounting for $14.67 billion, followed by Mauritius at $8.24 billion, according to the data released by the Department for Promotion of Industry and Internal Trade. India’s FDI inflows had dipped 1% in FY19. Services, computer software and hardware, trading, telecommunications, and hotel & tourism were the top five sectors for FDI. Services garnered FDI worth $7.85 billion while investments in computer software and hardware were $7.67 billion, and in trading were $4.57 billion. Telecommunications drew FDI worth $4.44 billion in FY20, and hotel & tourism attracted $2.93 billion of foreign inflows. January saw the highest inflow of $5.57 billion and February the least at $3.36 billion. Among states, Maharashtra garnered the highest share of FDI at 30% with investments clocking $7.26 billion. Karnataka and Delhi followed with 18% and 17% share, respectively. While FDI through FIPB route/RBI’s Automatic Route/Acquisition Route rose 13% on year, total FDI that also includes equity capital of unincorporated bodies, reinvested earnings and other capital was up 18% on year to $73.45 billion, more than double from $36.04 billion in 2013-14.

Source: Economic Times

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Govt working on National Logistics Policy: Commerce Ministry official

The government is working on National Logistics Policy, which aims to promote seamless movement of goods across the country, a senior Commerce Ministry official said on Thursday. Special Secretary in the logistics division of the ministry, Pawan Agarwal, said the policy will look at several areas such as process re-engineering, digitisation, and focus on multimodal transport. It is also looking at exim trade and improving logistics in core sectors such as coal, fertiliser, cement and steel. "We are working on the policy....The policy attempts to look at many of the issues in a wholistic manner," Agarwal said at CII's digital summit on exports. He said there is a huge opportunity for India to do process re-engineering or streamline processes, and logistics is one area where a lot of processes can be digitised which can hugely enhance efficiency. "The country does not have large number of professional logistic service providers. Lot more attention is required in the area of modern warehouses, where things can be automated for better efficiency in loading and unloading," he said. On February 1, the government, in the Budget, had announced that it will soon release the National Logistics Policy. The move assumes significance as high logistics cost impact competitiveness of domestic goods in international market. Effective implementation of the policy would help provide an impetus to trade, enhance export competitiveness, and improve India's ranking in the Logistics Performance Index. India's logistics sector is highly defragmented and the government aims to reduce the logistics cost from the present 14 per cent of GDP (Gross Domestic Product) to less than 10 per cent by 2022. According to a ministry statement, the sector is very complex with more than 20 government agencies, 40 partnering government agencies, 37 export promotion councils, 500 certifications, and 10,000 commodities. The policy will improve India's trade competitiveness, and performance in global rankings, and pave the way for India to become a logistics hub, it had said.

Source: Economic Time

Surat textile traders included in Rs 3L cr MSME credit scheme

Textile traders in Surat, country’s largest man-made fabric (MMF) wholesale market, are hoping to cope with the liquidity crisis, with the central government including them under the Rs 3 lakh crore MSME credit package. Industry sources said that following the representation by the Confederation of All India Traders (CAIT), the central government has decided to include the traders under the automatic loan facility. However, only the existing borrowers of the banks will be able to take benefit of the scheme. It was a long pending demand of the textile traders to include them in the MSME category to get the benefits of the government schemes. According to the traders, they are merchant-manufacturers as they purchase grey fabric from weavers and get it processed from the textile mills on job work. Manoj Agarwal, president of Federation of Surat Textile Traders’ Association (FOSTTA) told TOI, “There has been zero business in the textile markets for over two months. Payments to the tune of over Rs 5,000 crore is stuck in the pipeline. Traders do not have liquidity to operate the business smoothly.” Agarwal added, “It is a timely decision taken by the central government to include traders in the MSME credit package. Barring small traders, other big traders having bank loan facilities could easily avail the benefit of the automatic loans. Traders who are non-borrowers could also be included in the scheme. FOSTTA office-bearers said that over the past 60 days, the losses in the textile sector has piled up to Rs 15,000 crore, which includes textile processors, traders and powerloom weavers. Devkishan Manghani, chairman of Southern Gujarat Chamber of Commerce and Industry’s (SGCCI) textile committee told TOI, “The government must remove the rule of borrowers and non-borrowers and make the automatic loans available to all the traders. The borrowing limits should be fixed for each trader depending on the annual turnover. Majority of the traders in Surat’s textile market are non-borrowers and they depend on the private financers for doing business.

Source : Times of India

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Banks free to do due diligence on guaranteed MSME loans

Banks and shadow lenders have been given the flexibility to do their own due diligence and restrict advances below the stipulated limit on sound business principles. While the government has pledged full guarantee for up to 20% additional, collateral-free working capital loans under the Rs 3-lakh-crore Emergency Credit Line Guarantee Scheme (ECLGS) for MSMEs, banks and shadow lenders have been given the flexibility to do their own due diligence and restrict advances below the stipulated limit on sound business principles. This leaves the scope for some lenders to exploit the situation, unless the implementation of the scheme is monitored well by the government, according to a senior MSME industry executive. No new MSME borrower will be eligible for the guaranteed loan under this scheme, which is part of the Rs 21-lakh-crore package recently announced by the government to tide over the Covid-19 impact. A set of frequently asked questions (FAQ) released by state-run National Credit Guarantee Trustee Company, which will provide guarantee, says: “Under ECLGS, banks/ NBFCs are to offer loans up to 20%. Actual loan extended can, therefore, be less than 20%.” While the bank/ NBFC is expected to be liberal in sanctioning such loans, it is also expected to evaluate credit proposals by using prudent banking judgement and use business discretion/due diligence in selecting commercially-viable proposals and conduct the account(s) of the borrowers with normal banking prudence,” said the FAQ. The government has earmarked a corpus of Rs 41,600 crore over the current and the next three financial years to implement this scheme. Borrowers with up to Rs 25-crore outstanding as of February 29 and Rs 100-crore annual turnover will be eligible. Such loans will have four-year tenure with a moratorium of 12 months on repayment of the principal amount. The interest rate will be capped at 9.25% a year for banks and financial institutions and 14% for non-financial banking companies. The scheme can be tapped until October 31, or until the Rs 3-lakh-crore limit is exhausted, whichever is earlier. As many as 45 lakh units can resume business activity and safeguard jobs, the government recently announced. The scheme also aims at supporting stressed MSME borrowers who are not in default. So, borrowers with standard accounts (with timely repayment), SMA-0 (with overdue of up to 30 days) and SMA-1 (with overdues of up to 60 days) can also take advantage of this scheme. Interested borrowers under the Mudra scheme, which supports budding entrepreneurs from vulnerable sections of the society, will also be covered under the guaranteed emergency credit line. The reliefs come at a critical juncture for MSMEs. In a recent report (before the announcement of the Rs 21-lakh-crore package), Kotak Institutional Equities said only 7% of SMEs surveyed thought they would be able to survive for more than three months if their business remained closed. While about 97% of the firms surveyed have paid their employees salary for March, as many as 34% of the SMEs say they won’t be able to pay April and May salaries (in the absence of government intervention).

Source: Financial Express

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Indian clothing manufactures demand tax on Bangladeshi RMG imports

Clothing manufacturers in India have asked the government to impose more duty on import of clothing items, especially from Bangladesh, to save their domestic industry. Rakesh Biyani, president of the Clothing Manufacturers Association of India (CMAI), said in a letter to Indian Textile Minister Smriti Zubin Irani on May 22 that the country's domestic clothing industry is under threat because of duty-free import from different countries including Bangladesh. Due to the duty-free trade benefit, Bangladeshi garments now account for 34 percent of the total imported garments despite having 12.50 percent countervailing and provincial duty. Between the fiscal years 2016-17 and 2019-2020, garment import from Bangladesh to India registered 192 percent growth, Biyani mentioned in the CMAI letter. The Daily Star has obtained a copy of the letter. Bangladesh has been enjoying duty-free trade benefit to Indian markets from 2011 under the South Asian Free Trade Area (SAFTA) on export of all goods including apparel products, except 25 alcoholic and beverage items.

THE RISE IN BANGLADESHI EXPORTS

Bangladesh's share of the imported garments market in India rose 34 percent in the fiscal 2019-20 from 26 percent in the fiscal 2017-18, the letter said. It was 33 percent last year. Recently, garment exports from Bangladesh began increasing due to the stimulus packages, higher demand of Bangladeshi garments and for operations of foreign retailers and brands in Indian markets, according to industry insiders. Global retail giants like H&M and Walmart have opened outlets in India and started sourcing from Bangladesh, causing a spike in exports. Moreover, the demand for Bangladeshi apparel items has been rising among the Indian middle-income consumers because of competitive prices. The shuttering of a horde of small and medium factories all over India for their failure to maintain strict compliance requirements and pay higher wages over the last two years also played a part in the surge in shipments from Bangladesh, insiders said. Furthermore, the Bangladesh government has been paying four percent cash incentive to garment exporters since 2009 for increasing garment export to non- traditional markets including India. As a result, garment exports to such markets have since risen to nearly $6 billion from few hundred million dollars in 2008. Bangladesh considers all countries as non-traditional ones except the EU, the US and Canada. "You are aware that CMAI has for long been drawing the government's attention to the dangers posed by the duty-free imports of garments from Bangladesh, and with it the back-door entry of Chinese fabrics into India -- and its consequent impact on the micro small and medium enterprises…," Biyani said in the letter. "The significant rate of growth of these imports is well documented, and needs no repetition, except to state that the surge continues unabated..." he also said.

DRAMATIC CIRCUMSTANCES

The CMAI president also said the government has in several times pointed out the various treaties signed with Bangladesh and other SAFTA countries, and that it would be difficult, if not impossible, to dilute the agreements."However, we would like to urge you to consider the dramatically changed circumstances prevailing today, in the aftermath of the Covid-19 disaster," Biyani said. Based on a recent study done by CMAI, it is estimated that the Indian textile industry will see more than 40 percent drop in domestic demand of apparel due to the lockdown as a result of Covid-19, leading to possible downsizing of operations, closure of units and job losses. In this crisis, it is important to think of innovative ideas and policies to support the industry, the letter said. Some media reports have appeared suggesting that the Indian government is considering levying an additional Covid-19 Import Duty on certain products. "We believe that this is an excellent move by the Government, and we urge textiles ministry to extend such an Import Duty on imports of garments and fabrics from all countries, including those with whom we have free trade agreement or zero duty agreements," Biyani added. This will enable the government to collect approximately $100 – $150 million for its fight against Covid-19 (depending on the quantum of Duty imposed), the CMAI president said in the letter. "CMAI suggests that such a measure may be undertaken only for a limited period of time of 12 months, after which we can go back to our current agreements in force," Biyani added.

Source: The Daily Star

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Assam's Commerce Minister calls upon top global companies to invest in the state

Industries and Commerce Minister Chandra Mohan Patowary interacted with top global companies operating across United States and India and called upon the industries to invest in the Assam and instructed the officials to fast track all investment proposals and assured of customised support with a dedicated team of officers for each company The webinar was facilitated by US-India Business Council (USIBC) and assisted by Invest India. The companies included representatives from General Electric (GE), Hydrocarbon Dynamic (HCD), Pfizer, P&G, John Deere, Mastercard, eBay and Walmart. The Minister called upon the industries to invest in Assam and instructed the officials to fast track all investment proposals and assured of customised support with a dedicated team of officers for each company. Patowary underlined the proactive steps taken not only in the health sector to control COVID-19 pandemic, but also in putting the economy back on track by allowing all its industries to resume work albeit with social distancing and other precautions. Highlighting the advantages of Assam, Minister Patowary said, ‘The strategic geographic location backed by a strong connectivity network makes Assam the ideal staging point for doing business with BBN and ASEAN bloc countries. This opens up $ 800 million market for the industrialists who want to manufacture in Assam for export to the rest of the global market through the ports of Myanmar and Bangladesh. Initiatives like Act East Policy Affairs Department and Assam Skill Development Mission have helped to develop better commercial linkages with the South East Asian countries’, added Patowary. Interacting with Pfizer, Minister Patowary invited the company to set up a plant in Assam as it already has a strong pharmaceutical base for companies like Sun Pharma, Ajanta Pharma, Hetero Healthcare, with export potentialities to Myanmar, Bangladesh and Bhutan. The Minister asked John Deere – manufacturing company in agriculture sector – to explore in agri-entrepreneurship and agrimechanization for employment in the rural areas. He also asked companies like Mastercard, Walmart and e-bay to come forward and support the MSMEs, particularly the rural artisans, handloom and textile entrepreneurs and training in digital payments etc. He asked Hydrocarbon Dynamic (HCD) and GE to work with the State Government in sector like hydrocarbon and power respectively. Dr. KK Dwivedi, Commissioner and Secretary, Industries and Commerce Department, presented Assam’s advantages in terms of robust connectivity, natural resources, skilled workforce, favourable policies like NEIDS and the state’s own Industrial and Investment Policy, ease of business, industrial corridor etc. Ambika Sharma, Managing Director, India, USIBC said, ‘Assam is the fulcrum of India’s Act East Policy and gateway to South East Asia, making it crucial for global companies as they re-work business models, strategies and diversify supply chains. We thank the state leadership and look forward to working with them as strategic partners to promote business, investment and strengthening the policy environment.

Source: Economic Times

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India’s GDP growth in Q4 & FY20 sinks to 11-year low

New Delhi: India’s gross domestic product (GDP) expanded at the slowest pace in 11 years for the fourth quarter and FY20 as the Covid-19 took hold in March, adding to pressures on an already slowing economy. A nationwide lockdown was imposed on March 25 but business activity had begun grinding to a halt a few weeks before that. The core sector contracted by a record 38% in April as the lockdown hit all eight infrastructure sectors, according to data released separately. Cement output fell 86% while fertilisers and crude oil shrank 4.5% and 6.4%, respectively, in April.

 ‘Covid Hit Several Industries’

The decline in electricity generation worsened sharply to 22.8% in April from 8.2% in March. “In view of nationwide lockdown during April 2020 due to Covid-19 pandemic, various industries — coal, cement, steel, natural gas, refinery, crude oil etc — experienced substantial loss of production,” the commerce and industry ministry said in a statement on Friday. Independent economists said worse is to come, flagging a recession with GDP expected to contract in the first two quarters of the financial year, given that the lockdown has been in place for about two months. To be sure, some businesses have resumed functioning but large swathes of the economy are at a standstill.

GDP Growth

GDP expanded 3.1% in the quarter, data released by the government on Friday showed, the slowest since a 0.2% rise in the fourth quarter of FY09. FY20 growth is estimated at 4.2%, the lowest since FY09 when GDP was 3.1% and well below the 5% estimated at the end of February. Growth estimates for the previous three quarters were all revised down — to 4.1% from 4.7% in the December quarter, 4.4% from 5.1% in the July-September period and to 5.2% from 5.6% in the June quarter, implying a deeper slowdown even before Covid-19 hit. In an ET poll this week, independent economists had expected March quarter GDP growth at 0.5-3.6% and that of FY20 at 4-4.7%. That figure is expected to be revised lower as the estimates are based on incomplete data, experts said. “In view of the global Covid-19 pandemic and consequent nationwide lockdown measures implemented since March 2020, the data flow from the economic entities has been impacted,” the National Statistical Office (NSO) said in a statement on Friday, adding that the estimates would be revised going ahead. Full-year nominal GDP growth is estimated at 7.2% in FY20 against 11% the year before.

Broad-based slowdown

Manufacturing shrank 1.4% in the fourth quarter as factories shut toward the end of March. Agriculture and public administration grew 5.9% and 10.1%, respectively. Construction contracted 2.2% while the financial sector, usually one of the fastest-growing, saw only a 2.4% rise. Gross fixed capital formation (GFCF), an indicator of investment, shrank 6.4% on year in the March quarter. “The impact of lockdown for one week in March was clearly sharper than expected, which brought the growth rate down, while for FY20 there were revisions in the nine-month growth numbers, which brought down the number,” said Madan Sabnavis, chief economist at CARE Ratings. As per the official statement, major indicators such as crude oil production, commercial vehicle sales, aggregate bank deposits and cargo handled at airports, contracted in the fourth quarter.

Outlook

Rating agency ICRA expects a 25% contraction in the June quarter but sees a V-shaped recovery if the lockdown is lifted by the end of June. While the government has gradually eased restrictions, economic activity was muted in April and May, also dented by the flight of migrant labour. The current phase of the lockdown is to end on May 31.

A further wave of infections could derail any recovery.

“If there is a second wave of infections that forces subsequent lockdowns either in India or globally, the ensuing demand uncertainty and supply chain hiccups could result in a W-shaped economic cycle, the inflection points of which can’t be gauged at this stage,” said Aditi Nayar, principal economist, ICRA.

ICRA expects the economy to contract 5% in FY21.

The government has unveiled a Rs 20-lakh crore relief package that includes liquidity measures taken by the Reserve Bank of India (RBI) to counter the impact of the lockdown. The RBI has cut rates twice to record lows besides providing liquidity support and regulatory relief.  Some economists have said these measures won’t do enough to spur demand. In the absence of private demand, India Ratings expects government expenditure to drive growth in FY21. “Weak commodity prices and import demand will also provide some support to growth. Despite this, the economy will contract in FY21 after FY80,” said Devendra Kumar Pant, chief economist at India Ratings.

Source: Economic Times

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Allow personal protection gear exports immediately’

In the last two months, the textile and clothing industry has proven its capabilities in medical textiles with domestic production of personal protection equipment and masks taking off in a big way. The industry is all set to venture into the global market,as a significant player in this segment and wants to be seen as a supplier of high quality products, says Devadas Dhamodharaswamy, chief technology officer of Loyal Textile Mills, which has come out with branded masks and PPEs, Excerpts:

What is behind the sudden surge in local production of masks and coveralls?

In February this year, recognising the threat of COVID-19 and the possibility of a severe spread, the Ministry of Textiles called upon textile units industries to step in and manufacture PPE kits and masks in India. It estimated that the country may need millions of units to fight the virus. This was the first initiative which helped the Indian industry realise the domestic need and the manufacturers saw an opportunity. When the lockdown was announced, commercial and industrial activities came to a stand-still and the regular local orders dried up for textile units. So, they decided to get into masks and PPEs. The Centre set the ball rolling by floating a tender for 20 million PPE sets, through the aggregator HLL Lifecare Limited. The garment units were qualified to take part in the tender if they met just one parameter - Synthetic Blood Penetration Resistance (SBPR) test - for the coveralls. The rates offered were also attractive.

Does India have standards for these products ?

India has adopted BIS Standards for both masks and PPEs. However, except for the bacterial filtration efficiency for masks and SBPR for the PPE fabrics and seam sealing, which have been tested during the past two months, all other parameters for masks and PPEs under the BIS Standards are not being tested, implemented or regulated now. That is mainly because of the immediate need for these products in huge quantities. But some of the manufacturers, such as Loyal Textile Mills, are serious about meeting the global standards for all parameters.

Can they sustain output?

Most of the small-scale textile units that started producing PPEs and masks just to survive a tough situation are likely to go back to production of regular products when the lockdown is lifted. Now, masks and PPEs are included under Medical Devices Rules and in the coming days, all the manufacturers will be necessitated to go through stringent standards checks. This may reduce the number of manufacturers in this segment. Only those with expertise and commitment to technical garments will sustain.

What is the market potential for masks and PPEs?

There is a huge demand in domestic and export markets. World over, there is awareness on the need for these products to stay safe from the spread of COVID-19. Several countries do not want to buy Chinese products as they fear poor quality. The government has brought in Medical Devices Rules to ensure that Indian manufacturers achieve global standards and maintain consistency in quality. Based on WHO modelling, an estimated 89 million medical masks are needed every month globally. The WHO has estimated that manufacturers of masks and PPEs have to ramp up capacities 40% to 50%, which India has achieved already. The global demand for non-medical masks is expected to cross almost three billion a month, excluding China. China can make 14.8 million masks a day, and half of that will be used for local needs. Recognising this potential, the Centre opened up exports of non-medical masks. Over 12 million PPE kits were made in India in the last two to three months and another 15 million are in the pipeline. But, WHO has been able to deliver less than a million of PPE kits to 47 affected countries so far and the supplies are rapidly depleting. It is estimated that to treat one COVID-19 patient, an average of 80 PPE kits are needed. Globally, 5.5 million patients in 213 countries are to be treated and the numbers are growing every day. So, the demand is for over five billion sets. China can meet about 60% of the demand. Thus, the market is huge for Indian manufacturers to tap.

Will the Indian products meet international standards? If yes, what percentage?

Currently, it is estimated that only about 15 % of the Indian products will be able to meet the international standards. The PPE sets made by Loyal Textile Mills have been bench-marked against top MNC products and top Indian products by Tata Motors and have been rated among the top 10-15 % of the Global Brands.

Is the industry talking to the government on ways to meet global standards?

Yes. The ICMED 9000 and ISO 13485 Standards ensure that the products meet Indian and global demands. The government has given 18 months time to manufacturers to apply for these standards. voluntarily. The textile and garment industry associations are talking to the Ministry of Textiles and the Centre about enhancing the testing parameters and fabric specifications so that Indian products meet the global standards. The Government is also talking to the industry to handhold the manufacturers and help them meet international standards to export in the future. It should regulate manufacturing of PPEs in India so that only high quality products are allowed to be marketed. The government should also allow export of PPEs with immediate effect. Indian PPE products are poised to take the world stage and replace Chinese products as global importers are knocking on India’s doors.

Source: The Hindu

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Vardhman Textiles board approves amalgamation of two subsidiaries

The Vardhman Textiles board has approved amalgamation of VMT Spinning and Vardhman Nisshinbo Garments within its ambit. The merger deal is subject to the NCLT approval. VMT is a wholly-owned subsidiary of Vardhman Nisshinbo Garments. The amalgamation of the companies mentioned in Vardhman Textiles is seen to provide substantial impetus to growth, enable synergies, reduce operational costs, increase operational efficiencies and enable optimal utilization of various resources as a result of pooling of financial, managerial and technical resources. The scheme will also involve respective shareholders and creditors to become part of Vardhman Textiles. However, there will be no change in the shareholding pattern of Vardhman Nisshinbo. VMT Spinning is engaged in the business of manufacturing cotton and blended yarn. While Vardhman Nisshinbo operates in the business of manufacturing and sale of garments (mainly shirts). Post announcement, Vardhman Textiles share price ended at Rs639.60 per piece on BSE, up 2.12%.

Source: India Infoline News Service

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Global Textile Raw Material Price 30-05-2020

Item

Price

Unit

Fluctuation

Date

PSF

812.70

USD/Ton

-0.17%

30-05-2020

VSF

1232.00

USD/Ton

0%

30-05-2020

ASF

1592.50

USD/Ton

0%

30-05-2020

Polyester    POY

749.00

USD/Ton

0.94%

30-05-2020

Nylon    FDY

1960.00

USD/Ton

0%

30-05-2020

40D    Spandex

3990.00

USD/Ton

0%

30-05-2020

Nylon    POY

1764.00

USD/Ton

0%

30-05-2020

Acrylic    Top 3D

966.00

USD/Ton

0%

30-05-2020

Polyester    FDY

2268.00

USD/Ton

0%

30-05-2020

Nylon    DTY

5152.00

USD/Ton

0%

30-05-2020

Viscose    Long Filament

994.00

USD/Ton

0%

30-05-2020

Polyester    DTY

1834.00

USD/Ton

0%

30-05-2020

30S    Spun Rayon Yarn

1722.00

USD/Ton

0%

30-05-2020

32S    Polyester Yarn

1386.00

USD/Ton

0%

30-05-2020

45S    T/C Yarn

2142.00

USD/Ton

0.66%

30-05-2020

40S    Rayon Yarn

1890.00

USD/Ton

0%

30-05-2020

T/R    Yarn 65/35 32S

1638.00

USD/Ton

0%

30-05-2020

45S    Polyester Yarn

1568.00

USD/Ton

0%

30-05-2020

T/C    Yarn 65/35 32S

2002.00

USD/Ton

0%

30-05-2020

10S    Denim Fabric

1.12

USD/Meter

0%

30-05-2020

32S    Twill Fabric

0.64

USD/Meter

0%

30-05-2020

40S    Combed Poplin

0.94

USD/Meter

0%

30-05-2020

30S    Rayon Fabric

0.48

USD/Meter

0%

30-05-2020

45S    T/C Fabric

0.63

USD/Meter

0%

30-05-2020

Source: Global Textiles

Note: The above prices are Chinese Price (1 CNY = 0.14000 USD dtd. 30/05/2020). 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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Pakistan: Govt focusing on attracting FDI, transfer of technology in SEZs: Razak Dawood

Prime Minister’s adviser on Commerce and Investment Abdul Razak Dawood has said that Pakistan had attained huge space in global rice market for exporting local rice in potential markets of Middle East, North America and African regions to achieve the target of increasing the agricultural exports. He said the government intended to take the exports to the highest level ever and for that purpose it was taking different measures to reclaim traditional markets besides accessing new ones. Talking to the APP here, he informed that rice delegation from Maxico would hopefully arrives to Pakistan in June to appraise various rice exporters for giving them permission for exporting rice to Maxico. The adviser said the all members of Rice Exports Association Pakistan (REAP) should prepare themselves for this opportunity from visiting delegation of Maxico so that maximum members get order approval in their market. He said that during past few years, local rice export to Maxico had been held up for some time and after this “I hope that our rice will be able to enter in Mexican market.” Razak Dawood said that rice was the largest agro-export commodity in the country’s export basket with a total volume of over $2 billion, which would be increased to $5 billion in the next five years. He demanded the local rice exporters to introduce new varieties of rice to enhance production and quality by investing in research and development. Replying to a question, he said that even in current critical situation, the country’s exports increased in food, including meat, poultry, fruits and vegetable, cigarettes especially in Middle Eastern Market as compare to same period of previous year. Replying to another question, he stressed the need for making preparations to exploit the economic and trade opportunities expected in the wake of post COVID-19 pandemic. “We perceive and expect more opportunities to promote bilateral trade and strengthen linkage with potential markets including Central European Union, China, Asian States, Middle East and African region besides promoting regional trade in post pandemic environment,” he said. He said the pandemic would bring a paradigm shift, hence create great opportunities adding the coronavirus had changed the world and now the business processes would be completely different. “Such difficult period always brings out new opportunities, new products, and new ways of thinking,” he opined. Razak Dawood said the government was equally focusing on all sectors of economy including textile, non-textile, and agriculture and engineering sectors to build export potential of the country in coming months. Talking about the external trade situation during the past three months, he said the situation of exports was not good as those had declined in April 2020 by around 54 per cent as compared to the same month of last year and the reason obviously behind the decline was the spread of coronavirus across the world. Replying to another question, he informed that in last 10 months (July-April) of current fiscal year 2019-20, the overall exports were declined by four percent as compared to the corresponding period of last year. He said the exports increased by 13 percent in February, however, started reducing from March which had decline the exports by 6.5 per cent as compared to the last year. However, he said even during the current lockdown situation, in the beginning of COVID- 19 pandemic, Pakistan exported textile and non-textile products while the country’s food exports increased especially in the Middle Eastern market. Likewise, exports in steel articles also increased in the last three months in the critical situation. Razak Dawood said the government was prioritizing to promote ‘Made in Pakistan’ policy to boost local production and reduce dependence on import and enhance exports. While the adviser emphasized the need for exploiting the huge opportunities of increasing exports in the health and safety products like personal protective equipments (PPE) including protective masks, gloves, sanitizers, clothing, helmets, goggles and other garments or equipment designed for protection from COVID -19. He said a summary in that regard had already been forwarded to the cabinet, while the ministry was also negotiating the future strategy for increasing the exports to help export-led economic growth. “We should conclude our all strategy and start manufacturing in different sectors to achieve our exports targets,” he added.

Source: The Nation

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European Commission Adopts Circular Economy Action Plan

The European Commission has adopted a plan focusing on the design and production for a circular economy, ensuring that resources used stay in the EU economy for as long as possible. The plan aims to reduce the EU’s consumption footprint, double its circular material use rate, and contribute to economic decarbonization by reducing the EU’s carbon and material footprint. The Circular Economy Action Plan for a Cleaner and More Competitive Europe, which is central to the European Green Deal, seeks to ensure that the economy is fit for a green future and strengthen competitiveness while protecting the environment. It introduces legislative and non-legislative measures and target areas where action at the EU level brings added value. More specifically, the Circular Economy Action Plan details measures to:

  • make sustainable products the norm in the EU, including, for example, the restriction of single-use products and ensuring that products on the EU market are designed to last longer, are easier to reuse, repair, and recycle, and incorporate recycled material as much as possible;
  • empower consumers through access to reliable information about products at the point of sale, including on their life span;
  • focus on sectors that use the most resources and have the potential for high circularity, including electronics and information and communications technology (ICT), batteries and vehicles, packaging, plastics, textiles, construction and buildings, and food; and
  • ensure less waste by transforming it into high-quality secondary resources and implementing actions to minimize EU waste exports and tackle illegal shipments.

Applying ambitious circular economy measures in Europe can increase the EU’s gross domestic product (GDP) by an additional 0.5% by 2030, creating around 700,000 new jobs, according to a European Commission press release. The Action Plan includes measures to mobilize private financing in support of the circular economy through EU financial instruments, such as InvestEU. It also proposes the launch of a global circular economy alliance to explore starting a discussion on a possible international agreement on natural resource management. [Questions and Answers on the Action Plan] [New Circular Economy Action Plan Factsheet]

Source: IISD

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Sri Lanka facing worst financial crisis due to COVID-19 induced economic curbs: Minister

Sri Lanka is facing the worst financial crisis in the country’s history due to the economic curbs imposed after the coronavirus outbreak that has killed 10 people and infected 1,453 others, a senior minister said on Thursday. “We are facing the worst foreign exchange crisis in history. The government decision to curb imports imposed since the COVID-19 pandemic was based on reality,” Bandula Gunawardena, who is the minister for Information and Communication and the government’s spokesperson, said. The statement by the minister came as Sri Lanka early this month said it is yet to receive any monetary foreign assistance in its fight against the coronavirus pandemic despite signing an agreement with the World Bank for USD 127 million assistance. Sri Lanka in April restricted imports of non essential goods in its bid to save foreign currency reserves. “Due to COVID-19 many of our exports are down. About 5 billion dollars of exports come from textiles. Tourism revenue is also down. Remittances are also down,” Gunawardena said. He said if the government allowed outward flows of money through imports the local rupee would further fall. The rupee hit a record lowest of 190 plus against the US dollar due to the pandemic. “If it goes to 250 to 350 (to the dollar) we will not be able to live in this country. There will be a cost of living which no one will be able to bear,” Gunawardena said. He said the import controls are needed to keep the rupee afloat, promote import substitution and domestic agriculture. “It is done on the need to stop imports flowing in freely and the need to build a domestic economy,” Gunawardena said. With economic woes in sight, Sri Lanka opted to seek help from India through currency swap arrangements. Sri Lanka had already secured a 400 million dollar swap from India through the SAARC arrangement. This week President Gotabaya Rajapaksa spoke to Indian Prime Minister Narendra Modi over the phone and asked India to provide a special USD 1.1 billion currency swap facility to boost the country''s draining foreign exchange reserves in view of the economic slowdown due to the coronavirus pandemic. To boost the tourism sector, which is among the main sources of revenue for the island nation, Sri Lanka is mulling the idea of opening its airports from August 1. Tourism accounts for about five per cent of the economy, with Britain, India and China the main markets. The number of international tourist arrivals in Sri Lanka declined in March 2020 by 70.8 per cent in comparison to a year ago as the tourism industry has been hit hard by the coronavirus outbreak. The tourism sector of Sri Lanka has been in bad shape since last year when the country was jolted by the Easter Sunday attacks, which killed over 250 people including Indians. Till Thursday, Sri Lanka has reported 10 deaths and 1,453 infections of the coronavirus.

Source: Outlook India

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