The Textiles Ministry has collected information, including Aadhaar card details, of close to 50 lakh weavers and artisans and is working to help them target a larger consumer base by collaborating with the Government’s e-Market portal and the National Informatics Centre, Textiles Minister Smriti Irani said. “We are in the process of ensuring that the 50 lakh weavers and artisans now migrate to the GeM portal where governments across the country can procure directly from them,” Irani said at an interactive virtual session organised by FICCI Ladies Organisation on Tuesday. GeM is the national public procurement portal for efficient and transparent procurement of goods and services by Central and State government organisations and has over 44,000 registered buyers. Additionally, in the Ministry “we are working in collaboration with NIC to ensure that we have a platform which can help commercialise the potential of our artisans and weavers and there can be a direct sale to the citizens,” the Minister said. “They will be authenticated in terms of the output that they have of skill and craft by the Ministry of Textiles,” she added. Irani said the Covid-19 crisis demonstrated the technological and entrepreneurial skills of the textiles industry where the taskforce constituted about 70 per cent women. She said while India was not manufacturing PPE (Personal Protective Equipment) suits at all before March this year, in the past two months it became the second largest manufacturer in the world. “The fact that the turnaround time and adaptation of technology was done in record speed is a testimony not only to Indian entrepreneurial skills but also technological skills,” she said. To check the migration of workers from rural to urban areas, entrepreneurial abilities have to be generated at the grass root level, the Minister said. “We have to create economic opportunities and infrastructure in the rural belt,” she added.
Source: The Hindu Business Line
Finance Minister Nirmala Sitharaman told state-owned banks on Tuesday to hold board-level talks and go for further cuts in interest rates on loans in a bid to spur economic activity. “The FM told bankers that interest rate transmission is not happening as expected, and asked them to take up the matter at board level. The government was sceptical about a slower monetary rate transmission by public sector banks (PSBs) till now,” a person who was present in the meeting said, requesting anonymity. In the meeting with PSB chief executives, the FM also asked them to expedite the sanctioning of loans under the Emergency Credit Line Guarantee Scheme (ECLGS) to provide additional funding to firms to the tune of Rs 3 trillion. Banks expect to sanction the fully-guaranteed emergency credit line to firms by the end of August. Since February 2019, the RBI has reduced the repo rate (the interest rate at which commercial banks borrow from the central bank) by 185 basis points, which now stands at 4 per cent. A top PSB executive said the bank had transmitted 120-140 basis points till date, and expressed concern that a further cut in interest rates would impact its finances. “Banks have to be viable and look at their own profit margins. The depositors’ needs have to be kept in mind too. Bringing down the interest rate on loans without reducing the deposit interest rate wouldn’t make sense. By trying to bring down the rate, banks cannot kill the depositors’ franchise,” the bank executive said. The executive pointed out that the coupon rate for the government paper was 6 per cent and often banks were offering loans to top-rated firms below this rate. “It’s not as if transmission is not taking place. Even the RBI admits it’s happening, but there is a lag in the monetary rate transmission as deposits are for a longer tenure,” the executive said. On ECLGS, the FM told PSB executives to quickly sanction loans. “Even though we sanction loans, the disbursements are taking place slowly and will pick up only by the end of this month or in July with more economic activities,” the bank executive said. Till June 5, PSBs have sanctioned loans worth Rs 17,705 crore under the scheme, out of which Rs 8,320 crore has been disbursed.
Source: Business Standard
These industrial clusters have become first among others to promise revival of the economy by putting in additional investmentsTextile, engineering, leather and infrastructure clusters of Tirupur, Coimbatore, Kanpur and Durgapur have emerged as the torch bearers for government's initiative to improve investment climate in the country amidst COVID-19 pandemic. These industrial clusters have become first among others to promise revival of the economy by putting in additional investments into their respective businesses taking advantage of the Rs 3 lakh crore Emergency Credit Line Guarantee Scheme (ECLGS) announced by the government for meeting the liquidity needs of the sector in the present crisis. Of the Rs 599.12 crore loans disbursed by public sector banks to MSMEs under the scheme, the four industrial clusters have taken the lions share of the money at about Rs 360 crore. Among the four, with Rs 143.76 crore sanctioned to 1,758 accounts, the engineering industrial cluster of Coimbatore had taken the maximum sanctions from banks. In a tweet, the office of Finance Minister Nirmala Sitharaman said: "As of June 8 2020, #PSBs have sanctioned loans worth Rs 1,109.03 cr for #MSME hubs in 12 States under the 100% Emergency Credit Line Guarantee Scheme, of which Rs 599.12 cr has already been disbursed to 17,904 accounts." In terms of sanctions, gems and jewellery cluster of Surat, and industrial clusters at Tumkur in Karnataka, Rajkot, Durg in Chhattisgarh, Medak in Telangana, Kanpur, Coimbatore, Tirupur have also emerged as destinations that hav e most accounts and amounts for getting bank money under ECLGS. Surprisingly, industrial cluster of Jalandhar has maximum 3,388 accounts that had got loan sanctions from banks but the amount is a meagre Rs 25 lakh. On the other hand with over 2,000 accounts, Durgapur has taken a lions share o f bank loan sanctions at over Rs 61 crore. The clusters in Nashik, Nagpur, Tumkur, Surat, Rajkot, Durg, Rourkela, Medak , Aligarh are other centres that have got major portion of bank loans under the scheme. As most of these are industrial clusters, the indications suggest that businesses here are looking to come out from the present crisis and grow. The ECLGS scheme is the biggest fiscal component of the Rs 20-lakh crore 'Aatm Nirbhar Bharat' package announced by The Finance Minister last month.
Source: Ummid
JC Penney of the US and Laura Ashley of the UK among those who have filed for bankruptcy Amid massive cancellation of orders and a demand slump in key markets in the wake of the Covid-19 pandemic, Indian garment exporters are also facing a new threat now: payment defaults by scores of American and European buyers who have shut shop or filed for bankruptcy. Exporters have an exposure of about Rs 100 crore to just two large retail chains – JC Penney of the US and the UK’s Laura Ashley – that have turned insolvent, according to an initial assessment by the state-run Export Credit Guarantee Corporation (ECGC) that extends pre-and-post-shipment cover to exporters. While the Apparel Export Promotion Council (AEPC) is gathering details of its members’ exposure to various bankrupt buyers, exporters told FE that a few thousand crores may be at risk, with potential to hurt their already-depleting cash flow further. “Claims are yet to be filed by the exporters but we have got information that the buyers (JC Penny and Laura Ashley) have gone insolvent,” M Senthilnathan, chairman and managing director of ECGC, told exporters in a webinar organised by the AEPC. Textile player GHCL’s managing director RS Jalan recently said the closure of as many as 150 retail units in the US has dealt a blow to Indian exporters. Where the American buyers, such as JC Penney, have filed for Chapter 11 bankruptcy protection, creditors – including Indian exporters – will get a chance to file their claims there. But the recovery may not be impressive, given that suppliers are typically unsecured lenders and secured creditors will have precedence over them, Gautam Nair, managing director at Matrix Clothing, one of the country’s largest garment exporters, explained. Also, the whole process of filing claims will increase exporters’ costs. The US and Europe (including the UK), which have borne the maximum brunt of the pandemic, together make up for over 60% of India’s garment exports. As such, India’s apparel exports, which had recorded a decline in six of the first 11 months last fiscal, contracted by 35% year-on-year in March and a record 91% in April, thanks to a nation-wide lockdown and a demand slump in key markets. Assuring of all possible help, the ECGC chief has said the agency will clear all pending claims of the exporters in the next four months. “We are working under pandemic-related restrictions. But we are trying our best and we plan to clear all pending claims in four months’ time,” Senthilnathan said in the webinar. Replying to a query by AEPC chairman A Sakthivel on claims, Senthilnathan said the exporters should share their documents and correspondences with their international buyers in one go for quick processing.
Source: Financial Express
Pending payments of the central and state governments are much higher than official estimates, industry bodies representing Micro, Small and Medium Enterprises (MSME) say. While exact figures are difficult to come by, there is a widespread consensus that dues from the government stand at about Rs 2-3 trillion. However, the Narendra Modi government has stuck to its stand that the amount is Rs 12,343 crore, pointing to data from the SAMADHAN portal, the MSME Ministry’s online Delayed Payment Monitoring System. The dues pending with the Centre are divided between central ...
Source: Business Standard
Hiring prospects weakened in all four regions — north, south, east and west — when compared with the previous quarter, including decrease of nine percentage points in two regions, the north and the east. Hit by Covid-19 pandemic and the resultant lockdown-induced disruptions, Indian employers appear to have taken a cautious approach for their hiring plans for third quarter (Q3) or July- September period of 2020. Painting a gloomy picture, the Manpower Group’s Employment Outlook Survey for the July-September quarter revealed that when compared with the Q3 of 2019, the services and manufacturing sectors reported considerable declines of 13 and 10 percentage points, respectively, in hiring intentions while the wholesale and retail trade sector outlooks decreased by seven percentage points. The hiring prospects are likely to be one of the record lows, with only 5% employers anticipating an increase in payrolls, 2% expecting a decrease and 47% forecasting no change, the survey said. The employment outlook in India for Q3 of calendar year (CY) 2020 has hit a 17-year low, with employers in manufacturing, services, and wholesale and retail trade reporting their weakest forecasts since the practice of conducting the survey began in 2005, said the Manpower Group. The survey was conducted on a representative sample of 695 employers from small, medium and large businesses. Sequentially analysing the hiring scenario, the survey said while hiring intentions weakened in all seven industry sectors when compared with the previous quarter, the most noteworthy decline of nine percentage points was reported in the services sector. The outlook was seven percentage points weaker in three sectors — the manufacturing sector, the public administration and education sector, and the wholesale and retail trade sector. In both the mining and construction sector, and the transportation and utilities sector, the outlook decreased by four percentage points. Employers are expected to add to payrolls in all seven industry sectors during the upcoming quarter. The strongest hiring pace is anticipated in the mining and construction sector while finance, insurance and real estate sector employers forecasted modest job gains. Again, in terms of organisation size, the strongest hiring pace was forecasted by medium -size businesses. Hiring prospects declined by nine percentage points for large employers when compared with the previous quarter, while employers in both medium- and small-size categories reported decrease of seven percentage points. In a year-over-year comparison, hiring plans weakened in all three categories in terms of size. While small employers reported a considerable decline of 13 percentage points, outlooks were 10 and eight percentage points weaker for large- and medium-size employers, respectively. Hiring prospects weakened in all four regions — north, south, east and west — when compared with the previous quarter, including decrease of nine percentage points in two regions, the north and the east. In the west, employers reported a decline of eight percentage points, while the outlook for the south was six percentage points weaker. Considerable decrease of 11 percentage points was reported in both the south and the west, while employers reported a decline of eight percentage points in the north. In the east, hiring prospectus was six percentage points weaker, stated the survey.
Source: Financial Express
Sources in the central government said that market borrowing could be repaid by collection of cess in the sixth year or subsequent years, according to discussions within the ministry. The Good and Services Tax (GST) Council on Friday may consider the option of borrowing from the market to bridge the compensation cess fund deficit, and ensure states’ revenue is protected under GST regime. The Council would also resume discussions on ways to shore up revenue which includes moving some items to higher slabs or raising the existing slabs. Sources in the central government said that market borrowing could be repaid by collection of cess in the sixth year or subsequent years, according to discussions within the ministry. However, a senior state government official said that the option would be hard to implement because of operational issues such as the legality of GST Council as a borrower and ambiguity about the guarantor. Another top state official said that many states have come to accept that only available resources in compensation cess fund would come to states as other options, including rate hikes, might not be practical. “Rate hike would make sense only if some slabs are done away with and a simpler structure emerges, otherwise it would be an exercise of two steps forward and one back,” he said. The total GST collection in FY20 grew by just 3.8% to Rs 12.2 lakh crore. This has meant that the compensation cess fund — which is used to prop up states’ revenue to achieve 14% growth year-on-year — has proved to be inadequate due to higher revenue demands. This is likely to be a bigger problem in the current fiscal as states’ protected revenue jumps to Rs 63,720 crore per month from Rs 55,900 crore in FY20. This prompted the GST Council to discuss revenue augmentation measures in the last sitting. These included an option of just having two slabs of 10% and 20%, or moving items from 5%/12% slabs to higher brackets, withdrawing exemptions on certain items, bringing high-end healthcare and education under GST ambit and reversing rate cut on certain items that were brought down to 18% from 28% earlier. However, the consensus was elusive on these proposals as states sought time to study the implications of some of these measures. Another proposal to simply impose cess on more items was rejected as the move would only result in additional revenue of Rs 2,000-3,000 crore/a year, not enough to bridge the deficit. On Monday, finance minister Nirmala Sitharaman said: “With regard to the need for reduction in GST rates in the badly affected sectors, GST rate reduction will go to the Council. But the Council is also looking for revenue.” Last week, in a move that surprised states, the central government released pending compensation payment of Rs 36,400 crore for November-February period of last fiscal. The total compensation paid for the eleven months is over Rs 1.5 lakh crore while collection in the year is Rs 95,000 crore. The central government has mobilised excess compensation funds from pervious fiscals years (FY 18 and FY 19) to pay. The GST law mandates that states be compensated for any shortfall in reaching a 14% revenue growth target, which is calculated on FY16 revenue base from subsumed taxes. The compensation is to come from fund collected through cess imposed on certain luxury/sin items. The compensation is paid bi-monthly, and is to be paid till 2022 — five years of GST regime.
Source: Financial Express
As a comparison, one should bear in mind that 12 million entities are GST-paying businesses, of which not more than 500,000 are registered companies. The Report of the Working Group on Micro, Small and Medium Enterprises (MSMEs) Growth for the 12th Five Year Plan (2012-17) estimated the sector accounts for 45% of the manufacturing output and 40% of total exports of India. As per official estimates, there are 63.05 million micro industries, 0.33 million small, and 5,000 medium enterprises in the country. As a comparison, one should bear in mind that 12 million entities are GST-paying businesses, of which not more than 500,000 are registered companies. The remaining 95% are small businesses, but who also pay almost 30% of India’s GST revenue and an equivalent in direct taxes. The enlightened bureaucracy may be laughed off as an oxymoron and their alignment with the macroeconomic policy can only be wished. This is even more so when it comes to India’s taxmen. When the finance minister announced direct tax concessions for ‘companies’ in 2019 Budget, one wondered about the policy briefing. Why should a government, regarded as MSME and trader friendly, disfranchise 95% of the population (proprietorships and partnerships) and choose to benefit only the corporates? It certainly does not answer to a populist move. Neither does it answer to an economic move of improving liquidity in the hands of small businesses. Nor does it answer to the adage of improving compliance through a tax-less and collect-more philosophy. India’s informal sector is big and the number of MSMEs is very large. Credit availability is a challenge for them in general, working capital availability particularly so, even in the best of times, and especially now in the wake of banks having cut back on lending. Yet the government chose that they pay taxes at higher rates! Let’s move on to exports. The world recognises that e-commerce is the bandwagon that can enable our small businesses to become international brands and reach the more remunerative markets of the world. Appallingly, Indian Customs took seven long years to provision the automated express courier terminals. And having started them, howsoever belatedly, one would think of a rapid proliferation to all cities branded as centres of ‘export excellence’. But no, what started as a pilot continues through three years till date from the airports of Delhi, Mumbai and Bengaluru. That’s a wasted decade. Even more disappointingly, the pilot served the interests of MNC e-commerce companies, the likes of China’s Club Factory, the ‘Gift’ mafia operating out of the Middle East, but not our MSME exporters. It finally took the Confederation of All India Traders (CAIT) to raise a storm against ‘gifts’, forcing the Directorate General of Foreign Trade (DGFT) to prohibit them and the racket to stop. Even today, an Indian MSME cannot export through the automated express courier terminals, adversely affecting their competitiveness and timeliness, so critical to winning the e-commerce race. The DGFT is no better. Responding to a call to encourage e-commerce exports, it notified books, handicrafts, bespoke tailored garments, footwear and toys under the Merchandise Exports from India Scheme. And what do Indian MSMEs export through e-commerce—pharmaceuticals, cosmetics, artificial jewellery, leather handbags and high street fashion garments. One wonders who prepared the policy brief! Export-related subsidies are crucial to the micro, small and medium-sized exporters, as tough competition in terms of price from East Asian countries is their biggest challenge. The competitors enjoy higher subsidy packages from their respective governments as compared to Indian MSMEs. Infrastructure-related problems like setting up factories, capacity, remoteness to airports, accessibility to export destinations, lack of warehouses in foreign markets, etc, pose serious challenge to the Indian small and medium-sized exporters as compared to their East Asian counterparts. Small businesses of India hope that the new secretary of MSMEs, with all the experience in the PMO, will bring tailwinds for them and a broad-based economic revival of India.
Source: Financial Express
A grim economic outlook amid an ever-growing spread of the Covid-19 pandemic has turned consumers jittery. A latest survey, covering over 4,200 people across all key cities (from Metros to tier-III) by the Retailers Association of India (RAI), throws up data points that show shoppers would cut down expenditure post-lockdown, while many are unwilling to shop outside as safety and hygiene concerns take priority. This, according to RAI, further strengthens the need to ramp up necessary safeguards to win back
Source: Business Standard
Amazon's Global Selling programme is clocking more than $1 bn in cumulative exports currently, is expected to generate $10 bn in cumulative sales by 2025 for Indian exporters. Amazon is helping small enterprises tap global markets and open new revenue streams, at a time when the pandemic has severely impacted the ability of such firms to sell products in the country. The e-commerce giant said thousands of micro, small and medium enterprises (MSMEs) have been able to sell their products globally, on the Amazon Global Selling platform. The number of people staying at home has led to a spike in products from across categories such as textiles, organic foods, nutritional supplements, and toys. “These are unprecedented times, and it is heartening to see Indian MSMEs stepping up to help customers across the world stay safe. At the same time, this is helping them provide livelihood to their employees,” said Abhijit Kamra, director (global trade), Amazon India. “While we play the role of an enabler for brands to reach customers globally, it is the high quality and innovation of these entrepreneurs that is helping them win customers in international markets, which is truly helping local go global,” said Kamra. One such seller, Deep Bajaj, said his exports business has been extremely crucial during these times. Bajaj is the founder of personal care products firm Sirona Hygiene. “It has helped us balance the disruption caused by the lockdown and on-ground restrictions,” said Bajaj. He said his company saw 4x growth in the last few months, compared to the same time last year, thanks to people staying home, globally. “We are now looking to expand our offerings beyond our regular line of products, in global markets, to include multi-purpose disinfectant sprays and hand sanitizers,” said Bajaj. Sirona’s focus has been to break the stigma around intimate hygiene and create products like pain relief patches and bio-degradable sanitary bags. The firm, which has been selling on Amazon since the last few years and now has customers in the US, Canada, Europe and West Asia. Maharashtra-based NMK Textiles, which sells products under the brand ‘California Design Den’, has witnessed growth in its business even during the pandemic, as it was able to serve customers globally through Amazon. It has not only sustained during the pandemic by selling on Amazon but the firm has also contributed at a time when personal protective equipment was in short supply. This is because customers are using products like bedsheets and pillow cases, to create do-it-yourself face masks. “Selling to international customers with Amazon Global Selling has helped us serve customers and support over 400 people and families dependent on our business,” said Deepak Mehrotra, co-founder of California Design Den. The firm had joined Amazon’s programme three years ago. With the pandemic spreading fast, consumers are also looking to boost their immunity. Maharashtra-based Naturevibe Botanicals said it was seeing a steep rise in demand for its products. On the Amazon US marketplace, consumers turned to Naturevibe’s product range, which includes health supplements, Ayurveda items, capsules, and essential oils. “In present times, with people more focused on health, we have seen an increasing number of customers buying immunity-boosting herbs and spices, like turmeric and cloves,” said Rishabh Chokhani, founder and CEO of Naturevibe Botanicals. The company said it saw nearly 3x growth in April 2020, compared to April 2019, with 337.2 per cent growth coming from spices and seasonings. Amazon unveiled its Global Selling Programme in India in May 2015. It has clocked more than $1 billion dollars in cumulative exports. The platform is expected to generate $10 billion in cumulative export sales by 2025 for Indian exporters enrolled in this programme. At present, over 60,000 Indian sellers use this platform to sell items in 15 Amazon marketplaces such as Amazon. com and Amazon.co.uk.
Source: Business Standard
|
Item |
Price |
Unit |
Fluctuation |
Date |
|
PSF |
834.67 |
USD/Ton |
0% |
10-06-2020 |
|
VSF |
1279.54 |
USD/Ton |
-0.44% |
10-06-2020 |
|
ASF |
1639.68 |
USD/Ton |
2.07% |
10-06-2020 |
|
Polyester POY |
812.07 |
USD/Ton |
3.42% |
10-06-2020 |
|
Nylon FDY |
2005.47 |
USD/Ton |
1.43% |
10-06-2020 |
|
40D Spandex |
3996.81 |
USD/Ton |
0% |
10-06-2020 |
|
Nylon POY |
5197.26 |
USD/Ton |
0% |
10-06-2020 |
|
Acrylic Top 3D |
1023.92 |
USD/Ton |
1.40% |
10-06-2020 |
|
Polyester FDY |
1920.73 |
USD/Ton |
2.64% |
10-06-2020 |
|
Nylon DTY |
1779.50 |
USD/Ton |
0% |
10-06-2020 |
|
Viscose Long Filament |
1002.73 |
USD/Ton |
1.43% |
10-06-2020 |
|
Polyester DTY |
2330.30 |
USD/Ton |
1.85% |
10-06-2020 |
|
30S Spun Rayon Yarn |
1737.13 |
USD/Ton |
0% |
10-06-2020 |
|
32S Polyester Yarn |
1412.30 |
USD/Ton |
0.50% |
10-06-2020 |
|
45S T/C Yarn |
2174.94 |
USD/Ton |
0% |
10-06-2020 |
|
40S Rayon Yarn |
1906.61 |
USD/Ton |
0% |
10-06-2020 |
|
T/R Yarn 65/35 32S |
1680.64 |
USD/Ton |
0% |
10-06-2020 |
|
45S Polyester Yarn |
1595.90 |
USD/Ton |
0.89% |
10-06-2020 |
|
T/C Yarn 65/35 32S |
2019.59 |
USD/Ton |
0% |
10-06-2020 |
|
10S Denim Fabric |
1.12 |
USD/Meter |
-0.38% |
10-06-2020 |
|
32S Twill Fabric |
0.64 |
USD/Meter |
-0.44% |
10-06-2020 |
|
40S Combed Poplin |
0.93 |
USD/Meter |
-0.60% |
10-06-2020 |
|
30S Rayon Fabric |
0.48 |
USD/Meter |
0% |
10-06-2020 |
|
45S T/C Fabric |
0.64 |
USD/Meter |
0% |
10-06-2020 |
Source: Global Textiles
Note: The above prices are Chinese Price (1 CNY = 0.14123USD dtd. 10/06/2020). The prices given above are as quoted from Global Textiles.com. SRTEPC is not responsible for the correctness of the same.
All Pakistan Textile Mills Association (Aptma) Sindh-Balochistan Region Chairman Zahid Mazhar has urged Prime Minister Imran Khan to reduce gas tariff for the five major export-oriented sectors in line with a sharp reduction in international crude oil prices to help the economy and exports recover from the negative impact of Covid-19. In a statement, Mazhar said in order to offset the devastating impact of the virus on the economy, industry and exports, the rate of natural gas for industries, especially the export-oriented sectors, including their gas-based power generation plants, should be reduced by at least 35-40% as the cost of energy was a major component in the total cost of production. “A drastic fall in international crude oil prices to around $40 a barrel from the previous level of $65 also justifies the reduction in gas prices,” Mazhar added. He stressed that Pakistan needed to capitalise on the post-Covid-19 opportunities by supporting and enhancing textile exports. “Only the textile sector can help to get out of the present crisis and bring massive foreign exchange along with providing employment opportunities to match the targets set by the PM.” Pakistan’s textile sector contributes 8.5% to the gross domestic product (GDP), employs 40% of the national labour force and contributes almost 60% to total exports. “Already in the international export arena, many countries (especially competitors of Pakistan) are going out of the way to grab lost markets and explore new markets,” he added.
Source: The Tribune
Reflecting this downward pressure on incomes, World Bank economists said they expected the number of people in extreme poverty could grow by between 70 million and 100 million this year. The World Bank said Monday the world is facing an unprecedented health and economic crisis that has spread with astonishing speed and will result in the largest shock the global economy has witnessed in more than seven decades. Millions of people are expected to be pushed into extreme poverty. In an updated “Global Economic Prospects,” the World Bank projected that global economic activity will shrink by 5.2% this year, the deepest recession since a 13.8% global contraction in 1945-46 at the end of World War II. The 5.2% downturn this year will be the fourth worst global downturn over the past 150 years, exceeded only by the Great Depression of the 1930s and the periods after World War I and World War II when many the economies of many war-torn countries were devastated and the United States and other nations demobilized after massive defense buildups. Because of the steep contraction, the amount of income per person is expected to fall sharply, with more than 90% of emerging market and developing countries seeing per capita incomes declining. For all countries, the drop in per capital incomes is expected to average 6.2%, much larger than the 2.9% fall during the 2009 financial recession. Reflecting this downward pressure on incomes, World Bank economists said they expected the number of people in extreme poverty could grow by between 70 million and 100 million this year. The 5.2% estimate for a decline in global output is 7.7 percentage-points more severe than the World Bank’s January estimate that the world economy would grow by a modest 2.5% this year. For the United States, the updated World Bank forecast is for GDP to fall 7% this year, before growing 3.9% in 2021. That estimate is similar to top forecasters for the National Association for Business Economics who forecast a 5.9% drop in for the U.S. this year. The International Monetary Fund in April projected a drop in global output of 3% this year but it is expected that figure will be lowered when the IMF releases its forecast update in coming weeks. For China, the world’s second largest economy, the World Bank forecast growth will slow this year to a barely discernible 1% but rebound to 6.9% in 2021. For the 19 European countries who use the euro currency, the World Bank projected a drop of 9.1% this year followed by growth of 4% next year. World Bank economists cautioned that their forecast was based on an assumption that the worst of the coronavirus outbreak was coming to an end and economies would pick up fairly quickly once governments begin to reopen. If there is a second wave of the virus that disrupts economic activity later this year, then growth this year will fall even farther and the rebound next year will be weaker, the World Bank analysts said.
Source: Associated Press
According to a new Textile Exchange Pan-Africa Sourcing Working Group white paper, ‘Cotton in Africa: Sustainability at a Crossroads’, an increasing number of countries in Africa are choosing to adopt genetically modified (GM) cotton, defined as cotton that has had its genetic material (DNA) altered in a manner that does not occur naturally. While seven out of its 54 African countries permit GM cotton production, four have opted out. Many other countries are in the consideration phase. Noting the global sustainable textile cotton industry's increasing demand for organic and GM-free preferred cotton, and given concerns about the environmental and economic ramifications of GM cotton, the Working Group of Textile Exchange has urged policymakers in Africa to support preferred cotton production standards which prohibit genetic modification such as organic, Fairtrade, and Cotton made in Africa (CmiA). The white paper outlines the risks of scaling GM cotton in Africa and the opportunities of organic and GM-free preferred cotton standards. The use of GM cotton was slow to start on the continent, with South Africa being the first country to permit its use in 1997, followed by Burkina Faso 11 years later in 2008 (Burkina Faso has since suspended its approval) and Eswatini and Sudan in 2012. However, in 2018 alone, another four countries – Nigeria, Ethiopia, Kenya, and Malawi – approved the use of GM cotton and Eswatini started growing the crop. In 2020, Kenya planted GM cotton for the first time commercially. In Africa, Algeria, Burkina Faso, Egypt, and Madagascar prohibited or have opted out of genetic modification in general, or GM cotton specifically. “With relatively little penetration of GM cotton, African countries have an opportunity to learn from other countries’ experiences of GM technology and weigh the pros and cons,” said Liesl Truscott, Textile Exchange director of European and Materials Strategy and coordinator of the Working Group. “Demand for organic and other non-GM cotton continues to increase and, keeping in mind the genetic biodiversity and resilience that local seed varieties can offer, we hope this report creates food for thought for decision-makers at all levels. In the journey toward regenerative organic fiber production, it is vital for countries to allow for GM-free cotton initiatives based on organic practices and the precautionary principle to flourish.” Prama Bhardwaj, CEO and founder of Mantis World and Chair of the Pan-Africa Sourcing Working Group, has urged African cotton producers to "choose to grow organic cotton which can be integrated into the growing African sustainable textile supply chain or used by manufacturers in Europe and the Middle East", all of which are striving to meet United Nations Sustainable Development Goals addressing responsible production as well as industry commitments. According to Textile Exchange's 2019 Organic Cotton Market Report, global production of organic cotton saw impressive growth between 2016/17 and 2017/18, increasing 56 per cent to 180,971 metric tonnes (831,193 bales). Africa accounted for approximately four per cent of global organic cotton production in 2017/18, experiencing a 20 per cent increase over 2016/17. Approximately 37,000 farmers in eight countries grow organic cotton; Tanzania is by far the largest organic cotton producing country on the continent, followed (in order of volume) by Uganda, Benin, Burkina Faso, Mali, Egypt, Ethiopia, and Senegal. Several Working Group brands source organic cotton from Africa, including Cotonea, Mantis World, and Mayamiko. "Africa is at a crossroads," says La Rhea Pepper, Textile Exchange Managing Director. "It is key for governments, farmers, and other stakeholders to recognize the importance of protecting the right of farmers to grow non-GM crops. Organic agriculture is a proven system for sequestering carbon, building soil health and biodiversity, and increasing food security. Introducing GM agriculture requires the implementation of stringent biosafety regulations as well as investment in non-GM seed and training to ensure coexistence with organic agriculture." Textile Exchange's Pan-Africa Cotton Sourcing Working Group will continue to track policy addressing genetic modification in Africa and advocate for organic and non-GM preferred cotton production standards. Textile Exchange views regenerative organic cotton production systems operating under fairtrade principles as the gold standard. "This white paper is extremely important to promote organic cotton production in African countries. Over the last 25 years, as BioRe Foundation has been working in both Tanzania and India, we have observed the devastating negative impacts of GM-cotton production in countries like India, where the coexistence of organic cotton and GM-cotton is extremely difficult to maintain. While seed is a single factor only, organic agriculture is a holistic approach for healthy soils, balanced pest control, and reliable market access, providing sustainable livelihoods for smallholder farmers," said Christa Suter, CEO, BioRe Foundation. "As a manufacturer of GOTS-certified organic fabrics, Cotonea/Elmer + Zweifel has supported organic cotton production by the Gulu Agricultural Development Company (GADC) in Uganda since 2009. In this poor region wracked by years of civil war, Cotonea/Elmer + Zweifel has helped expand organic production for 12,500 farmers over the years by providing a reliable, transparent, and high-quality value chain linking the farmers with our manufacturing facilities in Germany, Czech Republic, and Switzerland and brands throughout Europe," said Roland Stelzer, managing partner, Cotonea/Elmer + Zweifel. "GM cotton is hardly compatible with agroecologic production and, if done in coexistence with organic cotton, reduces income chances for small-scale farmers due to contamination problems. This white paper sharpens the eyes of the critical readers and explains why preferred cotton, including organic, is the better choice," said Gian Nicolay, Africa coordinator and policy and sector development co-lead, FiBL, Research Institute of Organic Agriculture. "As a B2B supplier of organic apparel, we understand both the brand and supplier needs for the transparent, traceable, and non-GM organic cotton supply chain we have been privileged to have for years in Africa. This paper clearly sets out the opportunities and risks facing African agricultural policymakers as brands look to create more diversified sustainable supply chains post-Covid-19. Africa is at a crossroads when it comes to deciding whether or not to expand GM cotton use; we hope it will choose to turn in the direction of preferred cotton," said Bhardwaj. "Pan-UK and its partners have demonstrated that, with good quality training, organic cotton production can enable smallholder farmers to achieve at least as good financial returns as conventional cotton while also protecting their health and vital ecosystem services," said Dr. Sheila Willis, head of international programmes, Pesticide Action Network - UK. "Many African nations recognize the far-reaching benefits of supporting organic agriculture for the health of their citizens and the long-term viability of their agricultural sector. GM cotton is an expensive distraction at a time when we need to act fast to tackle the climate crisis and protect the livelihoods of those who are most vulnerable to its effects. This important white paper sets out the situation across the continent and makes a clear case for supporting organic and other non-GM cotton. Coupled with the soaring demand from consumers and brands in the West, now is the time to invest in and promote African organic cotton," said Sarah Compson, international development manager, Soil Association. The members of the Textile Exchange Pan-Africa Cotton Sourcing Working Group that contributed to the white paper include Aid by Trade Foundation, Bradan Consulting, BioRe Foundation, Cotonea/Elmer + Zweifel, Ecos, Fairtrade Foundation, FiBL (Research Institute of Organic Agriculture), GIZ, Mantis World, Mayamiko, Organic Cotton Accelerator, Pesticide Action Network-UK, Soil Association, and Textile Exchange. Textile Exchange is a global nonprofit that creates leaders in the sustainable fiber and materials industry. The organization develops, manages, and promotes a suite of leading industry standards and collects and publishes vital industry data and insights that enable brands and retailers to measure, manage, and track their use of preferred fiber and materials. With a membership that represents leading brands, retailers, and suppliers, Textile Exchange has for years been positively impacting climate through accelerating the use of preferred fibres across the global textile industry and is now making it an imperative goal through its 2030 Strategy: Climate+. Under the Climate+ strategic direction, Textile Exchange will be the driving force for urgent climate action with a goal of 35-45 per cent reduced CO2 emissions from textile fibre and material production by 2030.
Source: Fibre2Fashion
In briefing the SA National Editors Forum on May 31, President Cyril Ramaphosa said: “We are resolved to forge a new economy in a new global reality.” He raised ideas such as more localisation, economic patriotism, a strengthened informal sector; an infrastructure and maintenance programme and more and bigger public works programmes. As we look with apprehension at the post-Covid-19 economy we must also look again at labour-intensive, low-technology manufacturing in the private sector, particularly textiles and apparel, as a way to increase localisation and create employment. There is no good reason why we should not focus on creating more jobs by making our own shoes and clothes, jerseys and hats, as a part of the new economy. Labour-intensive manufacturing is the tried and tested method to beat poverty. China focused on this from the early 1990s and produced more than 5.5-million jobs by the mid-2000s. Today, more than 4-million people are employed in the industry in Bangladesh. And the fact is we in SA have also successfully used this method in the past. In the early 1980s, investor-friendly policies were put in place and the Newcastle municipality in KwaZulu-Natal courted textile investors from greater China, mainly Taiwan and Hong Kong, to set up factories as a way to offset the loss of employment at the town’s steel mill. By the early 1990s Newcastle had 1,000 Chinese residents and 54 large Chinese-owned factories providing thousands of jobs, with an estimated R1bn invested in the sector. However, from the 2000s textile centres like Newcastle have seen a significant economic decline, with tens of thousands of jobs lost. On the one hand, there are cheaper imports from China. At the same time, minimum wage requirements made factories unprofitable. Now only those in the niche market of uniforms and specialised clothing can afford to pay the minimum wages and remain viable. Compared to its heydays in the early 1990s, the textile sector was seen as the “ugly little sister” to a government keen to pursue a path to higher-end manufacturing such as the auto industry. Government and the unions wanted SA to move towards highly skilled manufacturing and leave behind “sweat shops” such as the factories run by Chinese owners. The truth is, in towns like Newcastle the combination of Chinese investors and local workers — mainly Zulu women, the mama mabhodini or factory mothers — produced millions of pieces of apparel for domestic consumption and export. Fieldwork research has shown that textile workers’ wages provided black women with a sense of pride as their regular pay packets supported their children’s education and gave them financial independence. That is why when the sheriff came to close down Chinese-owned textile factories for noncompliance with national minimum wage regulations, the mama mabhodinis fought alongside their Asian employers against the unions and the bargaining council to keep the factories open. The promotion of low-tech labour-intensive textile factories is not promoting sweat shops and abusing workers’ rights. Nor does it mean a “race to the bottom”. Just the opposite: regular wages allow the women to join a stokvel savings association so they can practice better financial planning. Women working together every day on the shop floor have the opportunity to support one another, exchange information and provide a sense of identity and pride. They are not glamorous jobs, but they are jobs nevertheless. When Ramaphosa announced that cloth masks were an essential item, the Newcastle cut, make and trim factories sprung into action and ramped up production. You may be wearing one of those masks now. There is no need to wait for imports of cloth masks or warm clothes from China; we are and need to remain capable of producing our own essential goods and services in the post Covid-19 world. With ever-growing uncertainty concerning global supply chains, we owe it to ourselves to revive SA’s ailing textile sector. The truth is that the Chinese textile sector is being battered by the US-China trade war and rising wages. Many factory owners are looking to move excess capacity abroad. Public-private partnerships between the Chinese government and its private companies have resulted in facilities being set up in special economic zones and textile parks in Lesotho, Cambodia and Ethiopia, among other developing countries. As the ANC big shots hustle for mega investments and massive public works, the Asian experience shows that real investment and job creation comes from family firms. A recent study by American consultancy McKinsey & Company of the Chinese experience confirms this, finding that the main thrust of China’s economic investments in Africa is not the headline-grabbing and sometimes controversial infrastructure projects but thousands of family-run firms investing and setting up businesses across the continent. The researchers interviewed 1,000 Chinese companies across Africa and found that 89% of employees are African, 64% of firms provide training and 44% of managers are African. Even more encouraging is that 74% of Chinese managers remain optimistic about their business prospects in Africa. Labour-intensive low-tech textile manufacturing will not solve all of SA’s economic and social woes. But as experience across the developed world shows, it is the most efficient way to produce thousands upon thousands of steady jobs. Kuo is a research associate at the University of Pretoria’s Gordon Institute of Business Science.
Source: Business Live
The trade war amplified calls in the US and elsewhere for reducing dependence on China for strategic goods. Now, the pandemic has politicians vowing to take action. The Trump administration has talked about bringing supply chains home from China, and even publicly floated the need for a group of friendly nations in Asia that could help produce essential goods. President Donald Trump last month even said the U.S. would “save $500 billion” if it cut off ties with China. But interviews with nearly a dozen government officials and analysts in the Asia-Pacific region show that any broader effort to restructure supply chains is little more than wishful thinking so far. While governments are pushing to win investments, such as Taiwan Semiconductor Manufacturing Co.’s planned state-of-the-art semiconductor factory in the U.S., it won’t be simple to dismantle an entrenched system when many companies are struggling to survive. More likely is that the virus will accelerate a change that was already driven by market forces as rising wages and costs in China over the past decade caused an exodus of lower-value manufacturing, much of it to Southeast Asia. That’s despite the desire from some in the Trump administration to start decoupling the world’s biggest economies as the U.S. and China spar over everything from the virus to 5G networks to Hong Kong.
Not Decoupling Yet
“The rhetoric meets the reality, which is that many firms have supply chains set up the way they do for very sensible reasons,” said Deborah Elms of the Asian Trade Centre, which has seen an increase of companies looking for advice on reorganizing to increase competitiveness. “Coming out of Covid, it’s going to be even harder to move supply chains because your cash flow is low, your staff are working from home or coming slowly back into the office, and the business climate has shifted.” While the world trade network mostly held up well amid rolling lockdowns as Covid-19 spread, the economic cost fueled calls among politicians for greater self-sufficiency and alternatives to China. U.S. Secretary of State Mike Pompeo, whose department announced an Economic Security Strategy last year, in April named Australia, New Zealand, Japan, India, and South Korea as countries that the U.S. has been talking to on supply chains. A key plank of the State Department’s new Economic Security Strategy is expanding and diversifying supply chains that protect “people in the free world,” according to Keith Krach, a State Department official who leads efforts to develop international policies related to economic growth. Krach said in April a so-called “Economic Prosperity Network” of like-minded allies would be built for critical products.
‘China Plus One’
Industries would include pharmaceuticals, medical devices, semiconductors, automotive, aerospace, textiles and chemicals, among others. But the idea right now appears to lack any firm foundation. The State Department doesn’t have jurisdiction over trade, and officials in other Asian countries said no formal talks were taking place. A person close to the administration said Krach is prone to pushing grand ideas publicly that haven’t yet become policy. Still, other governments are moving on their own to shift production away from China -- especially since the Covid disruptions. This includes Taiwan and Japan, which were among the biggest investors in China’s manufacturing capacity in the early days. “Many companies have already begun adopting a ‘China plus one’ manufacturing hub strategy since the U.S.-China trade war began in 2018, with Vietnam having been a clear beneficiary,” said Anwita Basu, head of Asia country risk research at Fitch Solutions. While the pandemic will give that another push, “shifts away from China will be slow as that country still boasts an annual manufacturing output that is so large that even a group of countries would struggle to absorb a fraction of it.” In 2019, Taiwanese officials encouraged the island’s firms to build a “non-red supply chain” outside of China, passing a law that promised rent assistance, cheap finance, tax breaks and simplified administration for investments in Taiwan. The move helped the island’s economy weather the trade war last year and led to more than NT$1 trillion ($33.5 billion) pledged or invested domestically, and more overseas. Japan recently started down the same path, with Prime Minister Shinzo Abe’s government budgeting about 220 billion yen ($2 billion) for companies shifting production back home and 23.5 billion yen for those seeking to move production to other countries. “Everyone agrees we really have to reconsider the sustainability of supply chains,” Hiroaki Nakanishi, chairman of Hitachi Ltd. and head of Japan’s biggest business lobby Keidanren, said on television last month. “It’s unrealistic to suddenly return all production to Japan. But if we are totally reliant on one specific country and they have a lockdown, there will be huge consequences.” South Korea has similar plans as part of its economic blueprint for the rest of the year, announced earlier this month. The government said it will provide tax incentives, ease investment-related regulations and expand financial support for companies that ‘u-turn.’ Yet, it hasn’t said how much money will be earmarked for the entire support program. For all that, China retains some key advantages. Last year 38% of Taiwan’s $11 billion of overseas investment still went to the mainland, as did 10% of Japan’s -- despite increased investments in Southeast Asia over the past few decades due to periodic bouts of antiJapanese rioting in China. Young Liu, chairman of Taiwan-based Hon Hai Precision Industry, whose Foxconn unit manufactures iPhone in plants in China, said in mid-May that it’s difficult to move assembly of mobile devices to the U.S due to the sheer number of workers needed. “China remains unmatched as a manufacturing site given its numbers of skilled workers, deep supplier networks and the government’s credible public support for manufacturers and provision of reliable infrastructure,” wrote Gavekal Dragonomics analyst Dan Wang in a report in April. Even if companies find economic alternatives to Chinese factories, or bow to political pressure to increase production in their home markets, there’s another reason why production inside China continues to make sense: the vast and growing Chinese domestic market.
Tesla, Honeywell
Tesla Inc. is now producing cars there for what is now the world’s largest auto market, and last month Chinese Premier Li Keqiang sent Honeywell International Inc. a letter welcoming its new investment in Wuhan, the city where the coronavirus outbreak started. He and other Chinese officials have touted continued economic cooperation with the U.S. and vowed to implement a “phase one” trade deal with the U.S. reached in January. “The formation and development of global industrial and supply chains are determined by market forces and companies’ choices,” Chinese foreign ministry spokesman Geng Shuang said in March. “As such, it is unrealistic and insensible to try to sever them or even trumpet ‘shifting’ or ‘decoupling’ theories as they run counter to economic law.” For all the talk of dependence on China, the pandemic showed that other nations could quickly adapt to meet the need for critical supplies when China’s lockdown halted deliveries of protective clothing, ventilators and medical supplies. Vietnam rapidly ramped up production of face masks, exporting more than 415 million in four months, while the U.S. pushed automakers and other manufacturers to retool plants to make respirators and other critical supplies. Over the long term, however, there are questions of whether those models are sustainable -- and who will pay for new plants outside China.
Waving a Wand
A May 14 executive order from Trump allows the U.S. International Development Finance Corp., America’s development bank for emerging markets, to partner with the Department of Defense in the U.S. to lend money to American companies looking to build out supply chains for critical goods such as ventilators and generic drugs. But with governments already having to fund trillions of dollars in bailout packages for existing businesses and companies going bust in droves, finding the extra capital to restructure global supply chains is a tall order. Andrew Hastie, an Australian lawmaker and chair of the nation’s security and intelligence committee, called in a recent essay for “time limited tax incentives” to build national self-reliance in key pharmaceuticals, medical supplies and other critical goods. In the end, the biggest force diluting China’s position in the global supply chain will likely be the long, slow evolution of global trade, as companies see opportunities that arise from new markets, new technologies and changing patterns of wealth. Why would a firm “say to their staff and their shareholders we have opted for political reasons to change the way that we do things,” said Elms, whose organization helps governments formulate trade policy. “The numbers have to make sense,” she said. “The structure that you have is based on millions of individual company decisions. It’s not so easy to wave a wand and say: Make it so!”
Source: BLOOMBERG
