· Govt to hire consultant to improve textile sector soon
· Shri Piyush Goyal meets the representatives of traders associations
· GST Council to meet next month; Finance ministry not for raising rates on non-essential items
· Niti Aayog suggests slew of steps to make India’s exports competitive
· 44% MSMEs feel stimulus package not good enough
· With supply chain yet to recover, mills take a beating
· No decision taken on setting up bad bank: Finance Ministry official
· India, US could strike a 'smaller' trade deal in the coming weeks: Indian envoy
· India GDP growth slows to 3.1% in Q4 as Covid-19 lockdown hits economy
· Open units in Bihar: Minister writes to 24 industrialists
· Singapore top source of FDI in FY20 with investments worth USD 14.67 bn
· Uttar Pradesh govt inks MOUs with industry bodies for 11 lakh jobs to migrant workers
· Globalisation at crossroads! What India needs to do to become globally competitive
· RIL turns Alok Industries facility to PPE manufacturing unit
· Global Textile Raw Material Price 31-05-2020
· Indonesia imposes tariffs on some textile imports until 2022
· Textile and garment supply chains in times of COVID-19: challenges for developing countries
· Vietnam's textile-garment exports drop with few orders
· Western fashion brands that ‘exploit’ Bangladesh suppliers face blacklisting
With India losing its competitive edge in global textile and apparel sector, the government has decided to engage a consultant to improve the county’s performance. The textiles ministry will hire a consulting firm to identify new opportunities for market expansion, maintain a database on international tariffs, trade data, growth trends, impact of international agreements and free trade agreements, installed capacity, production and employment in the sector. It will also provide inputs for promotion of foreign direct investment especially in textile parks, and intellectual property rights issues including geographic indications in textiles and handicrafts. “We want to appoint a consulting company. It will assist the ministry in sensitizing Indian industry of the global market scenario and emerging trends to help identify new opportunities for market expansion,” said an official. The exercise is aimed at providing export intelligence and strategic support to the sector through timely addressal of policy-related issues of all the segments. The development comes in the wake of India’s exports of cotton yarn shrinking 10.7% on year in FY20 while readymade garment exports contracted 4%. The consultant will also be tasked to review India’s existing FTAs, need for new FTAs, data to support trade talks and multilateral arrangements as well as issues pertaining to non-tariff barriers.
Source: Economic Times
Minister of Commerce and industry Shri Piyush Goyal on Thursday met the representatives of traders associations, via video conferencing. He said that during the lockdown period, the nation geared itself to fight against the Covid-19 pandemic and built capacities. The domestic manufacturing of the protection equipment (like masks, sanitizers, gloves, PPE) got a boost, health infrastructure was scaled up, and awareness was generated among the people. He said that people responded to the Prime Minister’s call to work unitedly to face the unprecedented crisis, by adhering to the Government’s guidelines and directions. Aarogya Setu has been developed during the period, which acts as a shield, friend and messenger in such crisis. People changed their lifestyles and adapted quickly to live, work, study differently under the circumstances. Shri Goyal said that timely and correct decisions taken by the Prime Minister, and adhered to by the people, have helped the country, as we are in a better position compared to many other nations of the world, with more resources and lesser population. Regarding some of the hardships being faced by the Retail traders even after the relaxations of the guidelines, the Minister said that a majority of shops have been allowed to be opened, without any distinction of essential and non-essential. The decision to open the remaining shops in the malls, will be taken soon, after taking into account the guidelines of the Health Ministry. He said that Aatmanirbhar package announced by the Union Finance Minister to fight Covid-19 provided for Rs 3 lakh crore credit guarantee for MSME, and it also covers traders. He said that the changes made in the definition of the MSME sector will also help them. He said that the Finance Minister has also indicated that she has an open mind on finding solutions for the problems that may have remained unresolved. Shri Goyal told the retail traders not to feel threatened by the e-commerce juggernaut, as the Common person has now realized that the Brick and Mortar kirana neighbourhood shopkeepers only helped them in their hour of crisis. He said that the Government is working on mechanism to facilitate B2B for the retail traders and providing technical support to them to expand their reach. He said that under the Prime Minister Narendra Modi, the Government has taken transformational initiatives, which will help India become a strong nation. Regarding other problems of the trader community pertaining to term loans, Mudra loans and other issues, Shri Goyal said that the matter will be taken up with the finance ministry to find a solution. The Minister said that several indicators show that the economic recovery is on the anvil. The power consumption this month is almost at par with the corresponding period last year, Oxygen production has come up. The Exports, which went down in April by almost 60%, have started showing upward trend, and the preliminary figures indicate decline this month will be smaller. The Services exports, on the other hand, went up even the last month. He indicated that more than the fall in merchandise exports, the imports showed sharper decline last month, lowering the trade deficit. The Minister said that during the last two months, the government has taken measures to ameliorate the hardships of the traders and Indian manufacturers, and in future also, will support them. He called upon the traders to use, promote and support the Indian goods. The Minister exhorted them to work with confidence, boldness and determination, and the success will be there to achieve.
Source: PIB
The finance ministry is not in favour of increasing goods and services tax rates on non-essential items in the next month's meeting of the GST Council, despite depressed revenue collections due to the nationwide lockdown to contain the spread of COVID-19. If goods and services tax (GST) rates are increased on non-essential items, sources said it will further bring down their demand and impede the overall economic recovery. Post the lockdown, the demand has to be induced and economic activity has to improve on all fronts, not just on essential items side, they said. However, the decision will be taken by the GST Council headed by the finance minister, according to sources. Rates will come up for discussion during the council meeting next month to be attended by state finance ministers, they added. The 39th meeting of GST Council was held in March, which proposed rationalisation of taxes on many items. The nationwide lockdown was announced by Prime Minister Narendra Modi on March 24 for 21 days in the first leg in a bid to contain the spread of novel coronavirus. It was then extended till May 3 and then again till May 17. The fourth phase of lockdown is in place till May 31. The lockdown has led to a major shrinkage in GST collections. The government deferred the release of April GST revenue collection data due to the lockdown. As per convention, the government releases GST revenue collection number on the basis of cash collection in a particular month. However, with the situation arising out of COVID-19, the government has decided to wait till the extended deadline for filing returns before release of the collection figure. Sources further said that the government has not taken any call on monetisation of deficit at this point of time to shore up its resources. Nobody knows how this COVID-19 pandemic pans out, what shape it is going to take, what kind of impact it will have on the Indian economy, and globally also no country knows today what lies three months later, sources said. As of now, the government has increased the borrowing limit from Rs 7.8 lakh crore to Rs 12 lakh crore, which is Rs 4.2 lakh crore higher than the Budget estimate. The RBI's monetisation of the fiscal deficit broadly means the central bank printing currency for the government to take care of any emergency spending and to bridge its fiscal deficit - this action is resorted to under emergency situations. Sources, however said, there is a need to bring down cost of borrowing for the government in the given situation. As a result of this, the government has to withdraw 7.75 per cent Savings (Taxable) Bonds scheme from the close of banking business on Thursday. The scheme, commonly known as RBI Bonds or GOI bonds, is popular among retail investors who look for safety of principal and a regular income. NRIs, however, are not eligible for making investments in these bonds. On issues pertaining to labourers with regard to wages and opportunities, sources said the finance ministry has initiated talks with the Labour Ministry on job losses and salary cuts due to the lockdown. The Labour Ministry will engage in talks with the states on the issue, they added.
Source: Economic Times
The measures include establishment of a national trade network (NTN), improving information flow and making customs processes and IT systems more efficient. The NITI Aayog has proposed 17 measures to improve competitiveness of India’s external trade. The measures include establishment of a national trade network (NTN), improving information flow and making customs processes and IT systems more efficient. The government think-tank said time has come to set up an NTN on the lines of the GSTN (for goods and services tax), integrating all departmental data flows into one integrated system to enable all export-import related compliance online. “It (NTN) will facilitate exports-imports not only by existing firms, but will (also) bring in large number of MSMEs, which today have to export through export houses and third parties on account of complexities of the current system. This will also radically reduce the cost of transactions and make India a highly efficient country,” NITI Aayog CEO Amitabh Kant said in a note to the revenue department. NTN will allow exporters to file all information and documents online at one place. There will be no need to separately deal with customs, directorate general of foreign trade, shipping companies, sea and air ports and banks, NITI said. To improve the information flow, it suggested use of simple language and ensure transparency in issuance of notifications, make past tribunal decisions available online and use of standard codes for the Duty Drawback Scheme. In order to make customs processes more efficient, the think-tank has suggested modifying the risk management system (RMS) to record/reflect actions of field officers as the time taken for removal of goods from factory to final exports has not compressed over the years. “Even in the absence of rent seeking, officers often demand cars/free meals/other personalized services that brokers/CFS operators have to provide to ensure presence of officers on location, and expeditiously undertaking their job. Customs uses a sophisticated risk management system or RMS. But many times, Customs officers have reasons to reject RMS recommendations and go for inspection of the goods,” it said. These reforms could further improve India’s ranking on ‘trading across borders’ parameter in the World Bank’s Ease of Doing Business, at 68 now (from 146 in 2018). Every year, merchandise (export and import) of more than $780 billion or about 27% of the GDP passes through Indian Customs before it could be exported or imported.
Source: Financial Express
Over three-fourths of micro, small and medium enterprises (MSMEs) in the national capital region have cut employee salaries while nearly two-third are resorting to layoffs after seeing no rise in demand, a private survey showed. Forty four per cent of respondents said the relief measures announced by the government earlier this week did not meet expectations and 86% wanted direct cash support from the government. The most immediate challenge for MSMEs remains paying salaries, discharging vendor bills, and meeting other fixed expenses, with around 77% of the surveyed businesses citing need for emergency funds, the survey said. The Survey was conducted by Skoch Consultancy Services in association with Federation of Indian Micro and Small & Medium Enterprises (FISME), Bhartiya Vitta Salahkar Samiti and Tax Law Educare Society. The business sentiment for survival, however, has improved. In May 2020, the number of MSMEs cutting all jobs rose to 6% from 4% in April. Another 30% are planning to cut half the jobs and 26% are planning to reduce a quarter of the jobs. The survey sought response to the Atma Nirbhar Bharat package announced by the Finance minister Nirmala Sitharaman earlier this month. It was conducted among 200 members of FISME in the National Capital Region. On the overall Atma Nirbhar Package cutting across all sectors, 32% respondents found it useful, 44% did not, the survey revealed. “Overall sense is that the package was difficult to understand and not addressing the felt-needs that MSMEs have and therefore the mood overall is grim,” the survey results, accessed exclusively by ET, said. Sector analysts and market watchers too have favoured a direct benefit transfer for MSMEs like was done for Jan Dhan Accounts to take care of immediate expenses that cannot be met due to the loss of income. Though there was a considerable dip in the uncertainty over business sentiment, 59% respondents still feel that their business cannot survive without government help. This is down from 77% in April 2020.
Source: Economic Times
The mill sector, it appears, has been unable to take advantage of the steep slide in the price of cotton……
Source: The Hindu Business Line
The finance ministry on Friday said there is no decision taken on the proposal of setting up of a government-sponsored bad bank to help ease pressure on lenders with regard to non-performing assets (NPAs) which are likely to witness a surge due to the COVID-19 crisis. Even the Economic Survey 2017 had proposed this idea, suggesting the creation of a bad bank called Public Sector Asset Rehabilitation Agency (PARA) to help tide over the problem of stressed assets. Lenders have been making a case for setting up a bad bank to ease out pressure of bad loans on them in these difficult times. According to a senior official of the finance ministry, the proposal was discussed during the Financial Stability and Development Council (FSDC) meeting on Thursday. However, no decision has been taken on the issue, the official added. Currently, banks sell their bad loans to asset reconstruction company (ARC) as per the prudent norms of the Reserve Bank of India. SBI Chairman Rajnish Kumar had said "we believe that this is the right time where a structure along the lines of a bad bank can be worked out because the provisions on the existing NPAs -- most of the banks are holding a very high level of provisions." "So a bad bank 3 years ago was not feasible, because the provisions were inadequate. So at least today we have the adequate provisions and net book value is hardly 10-15 percent of the gross NPAs," he had said. Meanwhile, the finance ministry official while talking about a curb on foreign portfolio investment (FPI) from China said "the government has not taken a call on that". Last month, the government decided to put restriction on foreign direct investment (FDI) to clamp down on the investor from China to buy Indian companies cheap. The amendments to the FDI rules were necessitated by the fear among officials as well as businesses about possible takeover attempts by Chinese companies — sitting on piles of cash — of Indian entities where share prices had fallen after the outbreak of the COVID-19 pandemic.
Source: Economic Times
India and the US could strike a “smaller” trade deal in the coming weeks, India's ambassador Taranjit Singh Sandhu has said while acknowledging that the unprecedented challenges posed by the COVID-19 pandemic has been a "bit of a setback" in moving ahead as the governments are focused on tackling the health crisis. Addressing the virtual West Coast Summit of US-India Strategic Partnership Forum (USISPF), Sandhu said that India's supply of antimalarial drug hydroxychloroquine (HCQ) to the US has given the two countries enough confidence and have played an important foundation. India, which is one of the major manufacturers of the drug, has sent several million doses of the HCQ to the US as part of its humanitarian gesture. “The top leadership has also been talking about it and I feel that perhaps in the coming few weeks, we should be able to strike the smaller trade deal,” Sandhu said. “I continue to be very optimistic about the trade deal. I must mention that this current unprecedented challenge has given a bit of a setback in the sense that the focus of all the governments got to tackling the health crisis,” Sandhu said. He told the leaders of the top US companies that the trade officials from the two countries have been in constant communication over this issue. The understanding between the leadership of the two countries was that they will go for the smaller one and then immediately start negotiations on the bigger trade deal, he said. The trade deal also relates some of the top sectors for which “it will be a win-win situation” for both sides. “It will help in the overall confidence building because during this particular phase, the United States and India have been reliable partners. And I think that everybody has seen in our case whatever the supply chain at stakes, especially in pharma sector, which we weren't involving whatever the United States requested us, keeping in view our huge domestic requirements, but it was ensured that all those are supplies were supplied and at the same price,” Sandhu said. “I think that has certainly had an impact. That has given them confidence and I feel that will be an important foundation to ensure that this smaller trade gets announced soon enough and then we move ahead,” Sandhu said. Ahead of US President Donald Trump's maiden visit to India in February, there were reports that the two sides would sign the first phase of a mega trade deal. After his talks with Trump on February 25, Prime Minister Modi said, both the sides agreed to start negotiations for a "big trade deal" and hoped that it will yield good results in mutual interest. The two countries have been negotiating a trade package to iron out certain issues and further boost two-way commerce. India is demanding exemption from high duties imposed by the US on certain steel and aluminium products, resumption of export benefits to certain domestic products under their Generalised System of Preferences (GSP), and greater market access for its products from sectors like agriculture, automobile, auto components and engineering. On the other hand, the US wants greater market access for its farm and manufacturing products, dairy items and medical devices, data localisation, and cut on import duties on some information and communication technology (ICT) products. The US has also raised concerns over high trade deficit with India. Keith Krach, Under Secretary of State for Economic Growth, Energy, and the Environment, spoke about the importance of being able to access talent. "Being the former chairman of Purdue University, I attended multiple graduation ceremonies, and probably 35 per cent of the PhDs in Engineering came from India. We would love to be able to stamp that Green Card right to their diplomas. It's a very complex issue that we continue to beat the drum on," he said. Expressing optimism for the US-India ties, Raj Subramaniam of FedEx said that there is absolutely no reason why the US-India trade cannot be five or 10 times of the current levels. “The hope is that a startup like Uniphore, as a part of this community at USISPF, becomes a USD 100 billion entity in the next 5 years,” he said. Speaking about the disruptions caused due to the health crisis, chairman, president and CEO of Adobe Shantanu Narayen said, “from my perspective, unprecedented times are the best times for disruption. We are not going back to the old normal and that represents a very significant and unique opportunity for all startups.” The “Startup Connect Program” at its virtually held West Coast Summit focused on strengthening US-India bilateral ties through startups. The summit brought together over 300 executives including 100 startups, 100 Fortune 500 companies, and senior officials from both governments. USISPF president and CEO Mukesh Aghi shared data on job creation and entrepreneurial immigration between the US and India. “A sample of 12 Indian-born startups shows they have created 634 high-paying jobs in the United States, and over 6,200 jobs worldwide,” he said. “For every H1/ L1 visa issued to these startups, they created 40 jobs in the United States at a median income of USD 175,000, and for each high-paying job in the US, there are 8 jobs that are being created in India. Entrepreneurial immigration in the US-India corridor is creating some true win-win opportunities for both countries,” Aghi said.
Source: Economic Times
In the services sector, growth in the hotels and financial services sectors fell to 2.6 per cent and 2.4 per cent in the fourth quarter Amid a recessionary outlook for the current fiscal year, economic growth fell to 3.1 per cent — a low not seen in more than 17 years — in the fourth quarter of 2019-20, with private investment and manufacturing hit hard even as there was the Covid-19 lockdown for only few days in March. This pulled down gross domestic product (GDP) growth to an 11-year low of 4.2 per cent in 2019-20. This was lower than the government projection of 5 per cent in both first and second advance estimates. Growth had stood at 6.1 per cent in the previous year. Growth in the January-March quarter slumped against the National Statistical Organisation’s (NSO’s) advance estimate of 4.7 per cent. It came down because of a contraction in the manufacturing and construction sectors. China, with which India is in competition to be the fastest-growing large economy, saw its economy shrinking by 6.8 per cent in January-March 2020. However, if the entire 2019 is taken into account, the Chinese economy grew 6.1 per cent. Former chief statistician Pronab Sen has projected a 10.8 per cent contraction in GDP in the current financial year if no more stimulus is given. He expects a decline in GDP in the first three quarters with a slight recovery in Q4. Aditi Nayar, principal economist, ICRA Ratings, said the further extension of the lockdown, though with graded relaxations, and the expectation of substantial delays in getting the full supply chain operational would further dampen economic activity. “We expect Indian GDP (at constant 2011-12 prices) to contract by 25.0 per cent and 2.1 per cent, respectively, in Q1 FY21 and Q2 FY21, which implies that a recession is underway. Subsequently, we anticipate muted GDP growth of 2.1 per cent and 5.0 per cent, respectively, in Q3 FY21 and Q4 FY21, which still entails a full year contraction of 5.0 per cent in FY21,” said Nayar. Manufacturing contracted 1.4 per cent in Q4 against a 0.8 per cent fall in Q3. It was the third straight quarter of decline in manufacturing gross value added. It expanded by a statistically insignificant 0.03 per cent in 2019-20 compared with 5.7 per cent in the previous fiscal year. Agriculture was the only bright spot in the GDP data. It grew by 5.9 per cent in Q4 against 3.6 per cent in Q3. For a year as a whole, it grew by 4 per cent against 2.4 per cent a year ago. Construction saw a contraction of 2.2 per cent in the fourth quarter against fall of 0.04 per cent in Q3. For FY20, the growth rate here fell to 1.3 cent from 6.1 per cent in the previous year. The current quarter would see the impact of lockdown and in the next one the monsoon will dampen construction further. Hit hard by the crisis in non-banking financial companies, growth in the biggest segment of the Indian economy — financial services, real estate, and others — declined to 2.4 per cent in the fourth quarter against 3.3 per cent in the previous quarter. Growth in this sector moved down to 4.6 per cent in FY20 against 6.8 per cent a year ago. Another services area — trade, hotels, communication and transport — was dampened primarily by the hospitality segment. The segment saw growth coming down to 2.6 per cent in Q4 against 4.3 per cent in the third quarter. The growth rate in the segment more than halved to 3.6 per cent in FY20 against 7.7 per cent a year ago.
Investment, seen from gross fixed capital formation (GFCF), declined for the third straight quarter by 6.4 per cent in Q4. It contracted 2.8 per cent in 2019-20, in contrast to a 9.8 per cent expansion in the previous fiscal year. The share of investment in GDP fell to 26.9 per cent in FY20 from 27.5 per cent, given in the government’s second advance estimates. The government had last year cut the corporation tax rate to 25 per cent to promote private investment. However, not many availed of the option because they would have had to forgo their minimum alternate tax credits. It is government spending that appears to have kept the economy afloat, with government final consumption expenditure growing by 13.6 per cent in the fourth quarter, almost at the same rate of 13.4 per cent in Q3. It rose by 11.8 per cent in 2019-20 as against 10.1 per cent in the previous fiscal year. Domestic demand, denoted by the private final consumption expenditure, on the other hand grew by just 2.7 per cent in Q4 against 6.6 per cent in the previous quarter. It rose 5.3 per cent in FY20 against 7.4 per cent in the previous financial year. The RBI last week said India’s GDP growth will be in negative territory in 2020-21. The Rs 20.97-trillion Covid-19 package does not appear enough to revive the economy with the fiscal impact of the additional stimulus only about 1 per cent of GDP against the claim of 10 per cent. The figures may be revised because the NSO said the data flow had been affected by the pandemic and lockdown.
Source: Business Standard
State industries minister Shyam Rajak has written to 24 leading industrialists in the country, inviting them to set up their units in the state. In his letters, the minister has stated that there is vast scope in Bihar for industrial units in food processing sector, agriculture equipment manufacturing, healthcare, IT & ITes, energy, chemical, leather and textiles. Letters have been sent to Nestle India Ltd, Finolex Industries Ltd, Khadim India Ltd, GRM Overseas Ltd, Hindustan Food Ltd, Relaxo Footwears Ltd, KRBL Ltd, L.T. Food Ltd and Bata India Ltd, among others. The minister has informed industrialists that there is no dearth of land in Bihar for setting up industrial units. “Bihar Industrial Area Development Authority (BIADA), a wing of industries department, was recently transferred 2,484 acres of land from Bihar State Sugar Mills Corporation. Besides, BIADA has 346-acre industrial land in its possession,” Rajak told TOI. He has written in his letters that the state government has started skill mapping of migrant workers at the quarantine centres so that their database could be prepared. “Around 7 lakh migrant workers have already returned to the state and 20 lakh more are expected to follow suit. We have also prepared IT solutions for matching supply side of labour with demand side,” Rajak said. The minister claimed in his letters that Covid-19 has not affected food processing, fast-moving consumer goods (FMCG), healthcare, agriculture, IT, ITes, telecommunication, oil and gas, power, chemical and retail sectors much. “Bihar offers strong opportunities in these sectors,” he said. Rajak said since Bihar is located centrally in eastern India, it can emerge as manufacturing base for markets of eastern Uttar Pradesh, West Bengal, Jharkhand, Odisha and north-eastern states. Emphasizing on food processing sector, Rajak said many major food processing companies, including ITC, Britannia, Coca Cola and Pepsi are running multiple plants in Bihar. Rajak said Bihar has common application form (CAF) and single-window clearance system in place. He added that the state also has separate investment promotion agencies for large industries and micro, small & medium enterprises (MSMEs). The industries minister has invited each industrialist or company to visit Bihar, experience it, and then draw opinion about investing in the state.
Source: Times of India
Singapore was the top source of foreign direct investment into India for the second consecutive financial year, accounting for about 30 per cent of FDI inflows in 2019-20. In the past two financial years, FDI from Singapore has surpassed that from Mauritius. In the last financial year, India attracted USD 14.67 billion in FDI from Singapore, whereas it was USD 8.24 billion from Mauritius, according to the data of the Department for Promotion of Industry and Internal Trade (DPIIT). In 2018-19, Singapore's FDI aggregated at USD 16.22 billion, while that from Mauritius it was USD 8.08 billion. According to experts, Singapore has been able to outpace Mauritius with its ease of doing business policies, simplified tax regime and a large number of private investors. "Mauritius was once seen as a tax haven making it the most favoured nation for routing investments in India. April 2017 brought key amendments to the bilateral treaties with Mauritius and Singapore which neutralized the tax benefits available in Mauritius. "Singapore with its ease of business policies, simplified tax regime and large number of private investors has been able to outrun Mauritius," Sandeep Jhunjhunwala, Partner, Nangia Andersen LLP said. He said attractive corporate tax rates, swift response in combating the COVID-19 pandemic, impressive mobile and internet penetration, and technology uptake are making India a primary destination to invest. "While countries are battling the COVID-19 pandemic and the world economy is headed into recession, India received a mammoth investment from stake sale of Jio Platforms. Economists and investors are now closely watching India as it is headed towards becoming a digital giant," Jhunjhunwala added. Biswajit Dhar, a professor of economics at Jawaharlal Nehru University, said significant FDI is coming from Singapore because of "round tripping" . "Inflows from Mauritius have been affected after the agreement on double taxation avoidance," Dhar said adding future FDI inflows into India would also depend on the state of global FDI flows. In 2017-18, FDI inflows from Mauritius stood at USD 15.94 billion and from Singapore, it was USD 12.18 billion. FDI in India rose by 13 per cent - the sharpest pace in the last four fiscals - to a record USD 49.97 billion in 2019-20, according to the data. In 2017-18, FDI inflows from Mauritius stood at USD 62 billion in 2018-19. When asked whether high FDI growth trend will continue in India, Rajat Wahi, Partner, Deloitte India, said: "Yes, but probably not as much as in the last three years due to three months getting wiped out (due to COVID-19 pandemic) . But given the funds available globally and our strength in tech-enabled businesses, FDI will flow again post lockdown". This growth in FDI in 2019-20, he said, was in line with the growth of e-commerce, fintech and startups, that was continuing for the last five years, especially last year. "Given the amount of money that is being pumped in by various governments to revive their respective economies, the expectation is that we will again see a major increase in investments into startups and new tech-enabled businesses post the lockdown," Wahi added. Foreign investments are considered crucial for India as it needs huge investments for overhauling the infrastructure sector such as ports, airports and highways to boost growth. FDI helps in improving the country's balance of payments and strengthen the rupee value against other global currencies, especially the US dollar.
Source: Economic Times
The Uttar Pradesh government on Friday signed initial agreements with various industry bodies to help in providing 11 lakh jobs to migrant labourers who have returned to the state in the wake of the coronavirus pandemic. The Federation of Indian Chamber of Commerce and Industry (FICCI) and Indian Industries Association (IIA) accounted for three lakh jobs each, while NARDECO and Laghu Udyog Bharati accounted for 2.5 lakh jobs each, UP MSME minister Sidharth Nath Singh told PTI. He said memoranda of understanding (MoUs) were signed in the presence of Chief Minister Yogi Adityanath, whose promise to provide jobs to migrants returning to the state was fulfilled by the MSME department of the UP government. "To those who had raised questions as to how the state government will carry out the gigantic task of providing 11 lakh jobs to skilled and semi-skilled labourers, the MSME department has given the answer," Singh asserted. The minister pointed out that certain states had considered UP labourers as liability, "but, Adityanath converted them into assets". Singh said his department has set up a control room for migrant labourers and has so far ensured payment of Rs 1,700 crore dues to workers in 75,000 units.
Source: Economic Times
Isolation under no circumstance is the prescription to economic resilience. Instead, countries, including India, need to make concerted efforts to improve efficiencies at all levels, be it sourcing, logistics, manufacturing, policy provisions and implementation. Over the years, globalisation was a buzzword that significantly impacted human lives. Conceptually, ‘globalisation’ means integration of all sorts, economic, socio-cultural, financial, technical, etc, among nations across the world. The word ‘globalisation’ has not only been used too frequently by all sorts of people across societies ranging from hard-core academicians and theorists to corporates and politicians, but it has also been widely misused, both knowingly and unknowingly. To be a world leader, one has to develop a ‘global understanding’, travel ‘globally’ and promulgate one’s ‘global vision’. Many a times, it appeared that overuse of ‘global’ in one’s discourse evoked mass appeals and became crucial to success. The word was oft-repeated to rise up the ladder and gain mass acceptance. On the one hand, politicians across the world rampantly promulgate ‘global approach’, but they have not spared any opportunity to blame forces of globalisation for failures such as country’s economic chaos, the poor performance of trade, unemployment, even terrorism. Erudite economists across the world are never tired of carrying out path-breaking research and developing innovative techniques to show integration among nations to promote efficiency and growth. Over the years, traditional economic theories such as comparative advantage, factor endowment, competitive advantage have been extensively researched, and this has led to the evolution of a globalised system of manufacturing and marketing. Consequently, economic activities worldwide transformed to establish globally integrated value and supply chains systems. A large number of emerging economies, especially China and some of its South-East Asian neighbours, got their manufacturing activities integrated with Global Value Chains (GVCs) to achieve efficiencies of scale and reap its benefits. Such an approach to integrate Global Value Chains and become an integral part of the Global Supply Chain significantly helped China to become the ‘factory of the world’ and transform itself into a formidable economic giant. But China, due to the pandemic, has witnessed an economic slump, with a fall in its GDP growth to 6.8% in the first quarter of 2020. This is further expected to tumble in the second quarter. IMF estimates the world economy to fall by 3% in 2020, the Euro area (-7.5%) and the US (-5.9%) are likely to be the worst-hit whereas it has estimated growth of 1.2% and 0.5% for China and India, respectively. However, these economic predictions now seem too optimistic, as India’s real GDP is now estimated to decline to 5-6% in FY21, and is liable to fluctuations depending upon government actions to contain the virus, and duration and severity of lockdown measures. India witnessed a steep fall in its composite IHS Markit PMI, that measures both manufacturing and services to 7.2 in April, from 50.6 in March 2020. Manufacturing PMI declined from 51.8 to 27.4 and services from 49.3 to merely 5.4; whereas the during the same period, the composite PMI for France was 13.6, UK 13.8, Germany 17.4, Japan 25.8, Brazil 26.5, US 27%, and China 47.6%. This reveals that India was worst hit primarily due to its rigorous lockdown compared to other major economies due to its rigorous countrywide implementation of lockdown. China, with exports of over $2.5 trillion, has emerged as the largest supplier in the world. Most of the importers are becoming increasingly wary of their burgeoning trade deficit with China. The countries with the highest trade deficit with China in 2019 were the US ($295 billion), the Netherlands ($63 billion), India ($ 57 billion) and the UK ($ 38 billion). Disruptions of global supply chains consequent to the worldwide lockdowns and overdependence on China has led to increasing concerns of the entire system of global production networks based on efficiency in supply chain systems. Countries around the world are facing difficulties in making medical equipment and medicines for their citizens. Most countries are helpless and do not have the means to deal with such massive economic calamity coupled with health emergencies. Lack of transparency on the part of China raised the levels of distrust among a large number of its trading partners. And, this has led to a realisation of ‘self-sufficiency’ doctrine, that was long forgotten. Isolation under no circumstance is the prescription to economic resilience. Instead, countries, including India, need to make concerted efforts to improve efficiencies at all levels, be it sourcing, logistics, manufacturing, policy provisions and implementation. There are no shortcuts to becoming globally competitive. The author is Professor and chairperson (research), Indian Institute of Foreign Trade, New Delhi
Source: Business Standard
Reliance Industries Ltd, which acquired textile manufacturer Alok Industries last year, has redeployed the manufacturing capacities of the company in Silvassa, Gujarat to exclusively manufacturing Personal Protective Equipment (PPE) for medical professionals treating covid-19 patients. "RIL has re-engineered the plant and processes to enable manufacturing of PPE material and has deployed fresh technical tailoring resources of nearly 10,000 people for assembling the PPE suits," said an official aware of the development. Production of PPEs started mid-April and has been ramped up to produce more than 100,000 PPE per day now. Currently India is manufacturing around 50 lakh PPEs which will be increased to 2 crore by the end of June. The facility at Silvassa is manufacturing PPE coverall suits which are single piece zip-up suits and give complete over protection. The coverall hems are closed with anti-microbial tape. Reliance is selling the PPEs to the government at around ₹650 per piece. This is a significant drop from the nearly ₹2,000 per piece import cost that the nation was incurring earlier. RIL is using high grade polypropylene to produce the equipment lending it more opacity while keeping it light weight. In addition, Ethylene Oxide is added to the material for improved sterilization. The material and manufacturing processes follow the ISO and BIS standards acceptable in India. Reliance Industries this February had acquired 37.7% stake in Alok Industries Ltd for Rs. 250 crore. It had along with JM Financial Asset Reconstruction Co Ltd, bid for acquiring Alok Industries that was auctioned under the insolvency and bankruptcy law by lenders to recover their unpaid loans. The Ahmedabad bench of the National Company Law Tribunal (NCLT) had last year approved the joint bid. Alok Industries, incorporated in 1986, is an integrated textile manufacturer headquartered in Mumbai with interests in the polyester and cotton segments. It has a product suite comprising of cotton yarn, apparel fabrics, bed linen, terry towels, embroidery, garments and polyester yarn.
Source: Live Mint
|
Item |
Price |
Unit |
Fluctuation |
Date |
|
PSF |
813.22 |
USD/Ton |
-0.17% |
31-05-2020 |
|
VSF |
1232.79 |
USD/Ton |
0% |
31-05-2020 |
|
ASF |
1593.52 |
USD/Ton |
0% |
31-05-2020 |
|
Polyester POY |
749.48 |
USD/Ton |
0.94% |
31-05-2020 |
|
Nylon FDY |
1961.26 |
USD/Ton |
0% |
31-05-2020 |
|
40D Spandex |
3992.57 |
USD/Ton |
0% |
31-05-2020 |
|
Nylon POY |
1765.13 |
USD/Ton |
0% |
31-05-2020 |
|
Acrylic Top 3D |
966.62 |
USD/Ton |
0% |
31-05-2020 |
|
Polyester FDY |
2269.46 |
USD/Ton |
0% |
31-05-2020 |
|
Nylon DTY |
5155.31 |
USD/Ton |
0% |
31-05-2020 |
|
Viscose Long Filament |
994.64 |
USD/Ton |
0% |
31-05-2020 |
|
Polyester DTY |
1835.18 |
USD/Ton |
0% |
31-05-2020 |
|
30S Spun Rayon Yarn |
1723.11 |
USD/Ton |
0% |
31-05-2020 |
|
32S Polyester Yarn |
1386.89 |
USD/Ton |
0% |
31-05-2020 |
|
45S T/C Yarn |
2143.38 |
USD/Ton |
0.66% |
31-05-2020 |
|
40S Rayon Yarn |
1891.22 |
USD/Ton |
0% |
31-05-2020 |
|
T/R Yarn 65/35 32S |
1639.05 |
USD/Ton |
0% |
31-05-2020 |
|
45S Polyester Yarn |
1569.01 |
USD/Ton |
0% |
31-05-2020 |
|
T/C Yarn 65/35 32S |
2003.29 |
USD/Ton |
0% |
31-05-2020 |
|
10S Denim Fabric |
1.12 |
USD/Meter |
0% |
31-05-2020 |
|
32S Twill Fabric |
0.64 |
USD/Meter |
0% |
31-05-2020 |
|
40S Combed Poplin |
0.94 |
USD/Meter |
0% |
31-05-2020 |
|
30S Rayon Fabric |
0.48 |
USD/Meter |
0% |
31-05-2020 |
|
45S T/C Fabric |
0.63 |
USD/Meter |
0% |
31-05-2020 |
Source: Global Textiles
Note: The above prices are Chinese Price (1 CNY = 0.14009 USD dtd. 31/05/2020). The prices given above are as quoted from Global Textiles.com. SRTEPC is not responsible for the correctness of the same.
Indonesia has imposed tariffs on imports of some textile products for the period until November 2022, according to a finance ministry regulation, in a bid to protect local producers from a surge of imports of fabrics, curtains and yarn. “Safeguard duties” of up to 11,426 rupiah ($0.7799) per metre have been imposed for textile fabrics in three stages, and the tariff will be gradually lowered by Nov. 8, 2022, said the regulation signed on May 27 and made public on Friday. Indonesia will also start imposing tariffs on imports of curtains and yarn during the same period. The Southeast Asian country started an investigation in September last year on the request of the Indonesia Textile Association (API) after a surge in imports of woven fabrics, yarn and curtains. Imports of textile fabrics rose by 74% between 2016 and 2018, the Trade Ministry said when launching the investigation. Indonesia imported 413,813 tonnes of fabrics in 2018, it said. Imports of other textile products, such as some types of synthetic yarn doubled in three years to 2018, the ministry said. A number of countries are exempted from the safeguard measures, including imports from South Korea and Hong Kong for synthetic yarn and curtains, as well as India and Vietnam for fabrics. Reporting by Bernadette Christina Munthe; Editing by Fransiska Nangoy and Ed Davies
Source: Reuters
In the first quarter of 2020, the coronavirus pandemic led to a 3% drop in global trade values. COVID-19 could trigger the biggest economic contraction since World War II, affecting all industries from finance to hospitality. As there is significant uncertainty about how the epidemiological and economic situation will evolve, assessing the duration and the gravity of the pandemic seems like an impossible task. However, recent forecasts suggest: trade volumes decreasing between 13% and 32% in 2020 (WTO, 2020), global growth falling to -3% (IMF, 2020) and different maritime seaborne scenarios ranging from a return to sector average (around 3% p.a.) after 2022 to growth rates falling by 17% by 2024 (Stopford,2020)[i]. Industries whose operations are more globalized (and particularly those that rely on Chinese inputs for production) were most exposed to initial supply chain disruption due to COVID-19. This was the case for precision instruments, machinery, automotive and communication equipment (UNCTAD, 2020). Given its non-essential nature, the fashion industry faces significant risks. Indeed, in times of COVID-19, as consumers around the world remain in lockdown, they no longer need new products. This industry is characterised by a highly integrated global supply chain. In it, many developing countries play the role of the supplier of low-cost inputs. This article highlights some of challenges and concerns that some of these countries face, many of which are dependent on textile and garment exports. The textile industry supply chains, trade logistics and developing countries. The accession of China to the WTO (2001) and the expiry of the WTO Agreement on Textiles and Clothing (which ended a 10-year trade regime managed through quotas) on 1st January 2005 contributed to making China an important centre of textile and clothing global value chains (GVCs). These two developments led to shift apparel production and sourcing (by globalized retailers and producers) to China and other Asian countries because of low labour costs (UNCTAD, 2005), following the cost-reducing logic of GVCs. As wages gradually rose in China and Chinese plants moved to produce higher-value goods, countries like Bangladesh, Pakistan and Vietnam, with lower wages costs started attracting factories to relocate their production from China. At the global level, China remains an important supplier of fashion goods (as shown in Figure 1) but has also become an important consumer of this industry. Major exporters of fashion goods for whom exports in the sector represent a significant share of export earnings are shown in Figure 2. Consequently, the Asian country most badly affected by the disease outbreak could be Bangladesh where circa 85% of its exports include fashion goods, as shown in Figure 2. Given the globalized nature of the industry, companies and retailers must transport their goods and raw materials across many countries. Besides China, other countries play an important role as key hubs around which trade of fashion products takes place. This is the case for the United States (as the most important retail market), and some European countries (such as Belgium, Germany, France and UK), with ports such as Rotterdam and Antwerp featuring prominently in this trade. (CO, 2018). From a logistics point of view, the textile, apparel and garments industry is considered a time-sensitive industry. Irregularities in making goods reach a particular place at a specified location on time can lead to reduced (or no) profits for the textile owner. In addition, clothing collections change quickly: their lifecycle is short (as perishable products) and their commercialization is characterized by strong seasonal peaks. In this sense, textile logistics are characterized by small stocks and short delivery times. These goods and raw materials are usually transported using a combination of land, sea, and air. Within this trade logistics context, strong multimodal interlinkages are key to ensure Just in Time delivery. E-commerce developments have further accentuated time-related logistics requirements, such as next day delivery, as well as the capacity of handling a large volume of returns and offering the possibility for manufacturers and dealers to check the location of their articles at any time. Emerging concerns related to COVID19 from the perspective of developing countries
Supply chain disruption: the reduced demand perspective
The COVID-19 outbreak led to production stops in China first, followed by closures of shops elsewhere around the world. For the moment, European and American retailers, the two destination markets for this sector, are still cancelling their orders. Cancelled orders are a cause for concern in many sourcing countries. As shippers are increasingly invoking ‘force majeure’ clauses within their contracts to halt their payments, on 8 April, the Sustainable Textile of Asian Region (STAR) Network, the body, which brings together representatives of the producing associations from Bangladesh, Cambodia, China, Myanmar, Pakistan and Vietnam, released a joint statement on the issue. It urged brands and retailers to consider the impact that their purchasing decisions during the coronavirus pandemic could have on workers and small businesses in the supply chain and, therefore, to honour their contracts with their suppliers. In their statement, the STAR Network invited global businesses to “support business partners in the supply chain as much as possible, and aim at a long-term strategy of business continuity, supply chain unity and social sustainability.”
Supply chain disruption: the reduced production perspective the evolution of local epidemiologic situation in key sourcing countries, has impacted workforce availability and production, as well as multimodal logistics underpinning global value chains. One of the concerns in this respect is that production of fashion goods could be moved away to other sourcing countries that are resuming activities faster in the Asian region or that are closer to retailers to diversify their supply chain risk. Governments in developed countries around the world are implementing unprecedented actions to ease the effect on their economies from measures put in place to limit the spread of the pandemic. Most developing countries do not have similar financial means, health systems or social safety nets to respond to the COVID-19 pandemic crisis and its economic impacts. In this context, various assistance packages have been announced by IMF, the World Bank and others with a view to supporting economies, including emerging market economies.
Transport connectivity impact
Observable changes derived from the pandemic concerning maritime transport networks include, for example a reduction in service frequency (blank sailings and idle fleet) and changes in routing affecting particularly Asia-Northern Europe services, a key axis in the trade of fashion goods. Shipping lines are reducing the number of port calls in the maritime services they offer to adapt to declining demand and cargo imbalances (JOC, 2020). This is likely to affect the liner shipping connectivity of sourcing countries both in terms of intercontinental as well as intra-regional feeder calls and, if this situation persists, could make economic recovery even harder. The fashion industry is undoubtedly under pressure in these uncertain times. Depending on the role that countries play in the supply chain, building resilience could entail different needs and approaches. Prospects appear particularly bleak for low-cost sourcing countries that are highly dependent on textile and garments exports for revenues, concurrently faced with the challenge of limited financial means and less developed health systems and social safety nets to cope with the socio-economic effects of the pandemic. In the short-term, lockdowns around the world have thrown a spotlight on risks associated with high supply chain interconnectedness and challenges associated with global sourcing. This has also had an impact on trade logistics, as the glue that holds global value chains together. Observable changes introduced in maritime transport services to cope with reduced demand and cargo imbalances illustrate this. The key question is what will this mean in the longer term, after surviving this unplanned humanitarian and financial crisis, particularly for the weakest links of the chain? Driven by growing pressure towards more environmentally friendly lifestyles, the fashion industry was already confronted, before the pandemic, with increased concerns regarding its sustainability footprint, particularly consumption patterns associated with ‘fast fashion’ (increasing levels of expenditures and waste disposal) and associated production patterns (workplace conditions, environmental impact of textiles processing). Will the current crisis accelerate a transformation in consumption patterns, inducing structural changes to the industry supply chain? For example, could it lead to generalize new models such as ‘seasonless designs’ or lead to shorter value chains (i.e. increased local or regional sourcing)? Certainly, moving away from the “just in time” or “made- to- order” business models will have an impact on trading and transport patterns.
Source: UNCTAD
Vietnam’s textile and apparel export turnover in 2020 is expected to reduce by a fifth compared to 2019 figures, according to the Vietnam National Textile and Garment Group (Vinatex), which feels the demand will recover from the third quarter. Basic and cheap products will recover first and make up the main sales proportion in the third and fourth quarter of 2020. In the short-term, when the pandemic is under control and the demand for medical products no longer exists, the textile and garment industry will continue to fall short of orders. If the recovery is good in the European Union and the United States, it is possible to expect a recovery in export of high-end items by Christmas this year, according to a report in a Vietnamese newspaper. Along with factors in consumer behaviour, rearranging the supply chain with the ability of developed countries to pull the textile and garment industry into their home, ensuring both the safety rate and non-breaking of the chain and creating domestic jobs may be new trends, said Le Tien Truong, general director of Vinatex. The trend of green products, less consumption after reviewing consumer shopping behavior will be the key factor to lead the world textile market, he said. Vinatex will continue producing masks and medical protective clothing in the second quarter to take advantage of demand in foreign markets. In the first four months of this year, the textile and garment export value reached $10.63 billion, down by 6.6 per cent compared to same period in 2019. The import value reached $6.39 billion, down by 8.76 per cent compared to the same period in 2019. According to the ministry of industry and trade, textile and footwear enterprises have been greatly affected by the COVID-19 pandemic.
Source: Fibre2Fashion
Bangladeshi manufacturers said on Wednesday that they would blacklist Western fashion brands that “exploit” them by failing to pay their bills due to the new coronavirus crisis, days after threatening to sue a major British retailer over its debts. Bangladeshi manufacturers said on Wednesday that they would blacklist Western fashion brands that “exploit” them by failing to pay their bills due to the new coronavirus crisis, days after threatening to sue a major British retailer over its debts. The Bangladesh Garment Manufacturers and Exporters Association (BGMEA) has written to British billionaire Philip Day’s Edinburgh Woollen Mill (EWM) group asking it to pay by Friday for clothes shipped before March 25. “BGMEA has taken the stand of blacklisting specific buyers and have begun with EWM,” said Rubana Huq, president of the BGMEA, the country’s largest trade group for garment factory owners, told the Thomson Reuters Foundation on WhatsApp. “Severing business with them is not the ultimate means we should pursue, however we will definitely take a position where we see buyers willfully attempt to exploit the suppliers.” A spokesman for Edinburgh Woollen Mill, which includes Austin Reed and Jaeger, said that the company had engaged with all of its suppliers with the best of intentions. “We have looked at literally every option on the table and worked hand-in-hand with all our suppliers to find solutions, but we also need to recognise that these are difficult and complicated issues,” he said. Bangladesh, which ranks behind only China as a supplier of clothes to Western countries, relies on the garment industry for more than 80% of its exports and its 4,000 factories employ about 4 million people, mostly women. As the coronavirus has led to global store closures, many Western retailers have put clothing orders on hold, leaving workers across Asia without jobs and raising doubts about the long-term survival of the industry. Bangladesh’s garment exports fell by 84% in the first half of April as $3 billion-worth of orders were cancelled or suspended, according to factory owners. The Bangladeshi factory owners said they had singled out Edinburgh Woollen Mill because it had asked for large discounts which violated local laws, international standards and defied the principles of ethical sourcing. “Certain buyers are taking undue advantage of the COVID-19 situation and demanding unreasonable discounts despite concluded contracts pre COVID-19 and despite continued business activity,” the letter said. “You, the notice recipients, are amongst those who are claiming such discounts,” it said, adding that such demands would be “financially catastrophic” for manufacturers. Kalpona Akter, founder of the Bangladesh Centre for Worker Solidarity, a union, praised the BGMEA’s stance as it could help garment workers, who have been protesting over unpaid wages. “Garment owners keep saying that they are struggling to pay workers because orders are cancelled,” she said. “If brands start paying because of this approach, it will be good for the workers ... it’s time the owners learn to say no.”
Source: Reuters Dhaka
