MARKET WATCH 23 JUNE, 2020

NATIONAL

INTERNATIONAL

Use technology to explore possibilities, Smriti Irani tells Karur textile exporters

‘Government wants to partner with you to find solutions’ Union Textiles Minister Smriti Irani on Monday assured handloom textile exporters of Karur that the Centre would support all sections of the textile industry in finding solutions to surmount challenges. “We have faced challenges time and again. The government wants to partner with you to find solutions for every issue,” she said during an online interaction with handloom textile exporters of Karur here on Monday. Referring to certain issues raised by the exporters, Ms.Irani urged them to be specific so that she can help find solutions or follow up with the Ministries concerned. Responding to an issued flagged by an industry representatives, Ms. Irani urged the exporters to come up with a base paper detailing specific problems faced by the exporters, country-wise so that holistic and long-term solutions could be found. The industry representative had observed that small exporters were trying to find buyers in the United States and Europe but face a lot of certification and compliance issues. “The process is very expensive, which small exporters cannot afford,” he said. To a plea for establishing a design development centre and fashion institute in Karur, Ms.Irani urged the industry to explore ways to collaborate with the nearest National Institute of Fashion Technology, by going digital. “It is time to look at new possibilities, leveraging technology,” she observed. Convention centre Responding to request for support to establish a convention centre in Karur, Ms.Irani suggested that the industry in South India could come together to create such a facility. The Karur handlooms home textiles and made-ups exporters are free to form any organisation of their own, she said while responding to a complaint that Karur exporter’s voice often went unheard. “We will engage with all sections of the textile industry,” she assured. When her support was sought in exploring possibilities for supplying to the Defence sector, she urged the industry representatives to identify specific products. She also requested the industry to identify the skill-level that would be required for its workforce,   especially in comparison to their competitors from other countries, when a suggestion was aired to set up a skill development centre in the town to train unskilled workers. ‘Atlas’ M. Nachimuthu, president, Karur Exporters Association, said the Karur handloom home textile and made-ups industry has evolved into a modern textile cluster, with over 750 MSME units, from being just a cottage industry. Exports from Karur, mostly to the USA and the Europe, were valued at ₹5000 crore a year. The integrated textile park was among the best and accounted for exports worth around ₹600 crore, he said and called for the Centre’s support to the industry so that the town could move to the “next level”.

Source: The Hindu

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Higher exports, attracting investment focus areas for PM

Prime Minister Narendra Modi on Saturday met with the ministers and top officials from infrastructure and commerce ministries, to discuss ways to boost local manufacturing and exports amid continuing tensions with China, officials familiar with the matter said. “Various presentations were made in the meeting where issues discussed were primarily around improving ease of doing business, an export-focused manufacturing policy and how to encourage states to compete with each other to attract investment,” one of the officials privy to discussions at the two-and-a-half-hour meeting told ET. “The meeting was a continuation of the series of meetings which have been chaired by the PM in the last several days,” another senior government official said. As India tries to reassess its trade ties with China, the government is reassessing ways and means to encourage substitution of goods imported from the neighbour. As reported by ET on June 20, the government has asked industry to submit a detailed list of imports from China across essential and non-essential categories. India has barred Chinese firms from supplying critical communications infrastructure such as 4G equipment to state-run telecom companies and could even extend that to cover private telecom players. Saturday’s meeting came after an informal group of ministers comprising textiles minister Smriti Irani, minister of state for shipping and chemicals Mansukh Mandaviya and power minister RK Singh met with the industry on Friday to take feedback on non-fiscal measures that could be undertaken to give an impetus to manufacturing and exports, including reducing turnaround time at ports, roping states to improve infrastructure, self-certification and power, among others. There is a broader emphasis to reach out to people at the grass-roots level through official and informal groups such as this and to listen to everyone as the country finalises its manufacturing and industrial policy,” a third official said. Among the non-fiscal measures being discussed right now are labour, ease of doing business, cost of doing business and coordinating the efforts of the Centre and states in a bid to attract more investment. The industry has highlighted that as the government tries to make India a global manufacturing and exports hub, logistical and infrastructure bottlenecks remain, and   hold back India’s progress. “Turnaround time at ports is a major issue, especially for industries such as textiles, but the recent Covid-crisis has given a major fillip to the process of digitisation and has helped reduce the face time between people, showing us how to save on time,” the third official said.

Source:   Economic Times

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Govt to curb low-grade imports, opportunistic takeover of firms: Piyush Goyal

Several FDI proposals from the Chinese investors are also reportedly awaiting the home ministry’s security clearance. Over 90% of the country’s FDI comes through the automatic route. Commerce and industry minister Piyush Goyal on Monday highlighted the government’s resolve to curb sub-standard imports and “opportunistic” takeover of domestic firms following a sharp drop in their valuation during the pandemic. While the minister didn’t name any country, China is the biggest source of sub-stabndard supplies to India. New Delhi also tightened its foreign direct investment (FDI) policy in April to curb “opportunistic takeovers/acquisitions” of Indian companies, mainly by cashrich Chinese, by stipulating that all such proposals from bordering nations would require government clearance. Several FDI proposals from the Chinese investors are also reportedly awaiting the home ministry’s security clearance. Over 90% of the country’s FDI comes through the automatic route.   Goyal also said merchandise exports had started to improve in June, having recorded a fall of only 10-12% in the first two weeks of this month, as lockdown curbs were eased to facilitate resumption of operations by businesses. Exports had contracted by a record 60% in April and 36.5% in May when a Covid-induced lockdown was in force, resulting in a massive cancellation of orders. Speaking at a CII event, Goyal said the government has to balance its security concerns with liberalising the FDI regime. “FDI is welcome, but we certainly have to take precautions that we do not get the wrong type of capital which is opportunist and which is not really good for the nation.” The minister also said the government is giving special focus to high quality standard products. “I think a lot of people have not appreciated that our government is giving priority to high quality standards….(But) India has finally evolved and has made up its mind that we are going to only accept good quality products,” he said. He made a case for purchase of quality domestic products even if they are a bit more expensive than the low-grade imported ones. Else, in the long run, people have to pay a “terrible price” if they don’t buy quality Indian goods. The minister reiterated that subsidies are never good for businesses and don’t usually benefit them in the long term. So the government’s focus is to ensure sustainable growth in outbound shipments and not just giving “hand out” to exporters. On FDI, the minister said while almost all sectors are open for overseas investors, he is open to fresh ideas for making it even easier to draw FDI. “We have some constraints in multi-brand retail because we have a large part of Indians dependent on small mom-and pop stores,” he said. These shops also played a key role in ensuring that essential supplies are available to people during the current Covid-19 pandemic. “In insurance, our expectations from insurance companies were much more and deeper, sadly we feel let down…,” he added.

Source: Financial Express

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Exports improving, contraction down to just 10-12 per cent: Piyush Goyal

Declining for the third straight month, India's exports dipped 36.47 per cent in May to $19.05 billion   India's exports are showing signs of improvement as the contraction in outbound shipments in June so far has come down to about 10-12 per cent as compared with 60 per cent in April, Commerce and Industry Minister Piyush Goyal said on Monday. Declining for the third straight month, India's exports dipped 36.47 per cent in May to $19.05 billion. "Currently we are about 10-12 per cent down in June. So in a sense, we have reached up to 88-90 per cent of the level of exports that we had in June 2019 in the current month in the first two weeks. I am awaiting the data for third week (of June)," Goyal said at a CII function. The minister said that the focus is on sustainable growth and not on giving "handout" for exports. He said subsidies are never good for businesses and don't help domestic exporters in engaging with the world from a position of strength and power. When asked about foreign direct investment (FDI), he said almost all sectors are open for overseas investors, but the ministry is open to other ideas. "We have some constraints in multi-brand retail because we have a large part of Indians dependent on small mom-and-pop stores," he said, adding that these shops have kept essential supplies available and played a key role during the ongoing coronavirus pandemic. "In insurance, our expectations from insurance companies was much more and deeper, sadly we feel let down. So there are few sectors where we would like all of you tell us," he added. The minister said that the government has to balance security concerns and the opening up of economy. "FDI is welcome, but we certainly have to take precautions that we do not get the wrong type of capital which is opportunist and which is not really good for the nation," Goyal said. The minister also said that the government is giving special focus to high-quality standard products. "I think a lot of people have not appreciated that our government is giving priority to highquality standards....(But) India has finally evolved and has made up its mind that we are going to only accept good quality products," he added. He emphasised the need to bring back quality culture in the country.  Even if a domestic quality product is a bit costlier than imported one, it is sensible to buy Indian item, he said, adding that in the long run people could have to pay a "terrible price" if they would not buy quality Indian goods. Talking about reforms in states, he said 15-17 states have done game-changing labour reforms recently and a lot of it will come in the public domain in the next few days. Further, he said that certain people and eminent economists have expressed their views on television debates about distributing thousands and billions of dollars as a short-term measure, but "I do wish that people should understand that India has to use this crisis to prepare ourselves for a sustainable future". Citing an example, he said if a business is facing tough times, it can start improving its productivity, look at wasteful expenditure, start tightening the belt and do the same things in a better way.

Source: Business Standard

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June exports have reached 80% level of last year: Piyush Goyal

Commerce and industry minister Piyush Goyal on Monday said that India's exports in the first two weeks of June have reached above 80% level of the same period last year and would be only 10-12% lower in the month compared to June 2019. “We have reached 80- 90% of the level of exports of June 2019…(I) will get the third week results by tomorrow,” Goyal said at the Confederation of Indian Industry’s 12th Horasis India Meeting. India’s exports shrank 36.47% to $19.05 billion compared to a 60% contraction in April due to cancellation of orders “India has evolved and made up its mind that we are only going to accept good quality products. Business and government can together work to get the consciousness of quality in the country,” Goyal said, and added that the focus of the government is on sustainable growth and not hand outs. On the issue of foreign direct investment (FDI), he said India has opened up almost everything but there are concerns on opening overseas investment in multi-brand retail. Goyal said the mom and pop stores have ensured that demand for essentials has been met during the ongoing Covid-19 crisis. “We have to balance security concerns with FDI and take precautions that opportunistic capital does not come in,” Goyal said. India has already tightened its FDI norms for countries it shares land borders with after the People’s Bank of China raised its stake in Housing Development Finance Corp (HDFC) to more than 1% from about 0.8%, requiring a declaration by the Indian mortgage lender to stock exchanges.

 Source:   Economic Times

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Eye on China: India plans stricter curbs on low-grade imports

New Delhi's earlier approach was to curb non-essential imports mainly through a hike in tariffs (it had raised duties on a number of electronic and other products in 2018). Amid tension on the borders with China, India is considering hardening a crackdown on sub-standard and “non-essential” imports across several segments, ranging from chemicals, pharmaceuticals and electrical machinery to furniture, toys and steel, sources told FE.   While the government is unlikely to impose China-specific barriers, any such move will likely hit Beijing the most, as the neighbour is the biggest source of sub-standard supplies to India. The curbs could be in the form of both tariff and non-tariff measures. The government is considering a proposal to raise the import duties on dozens of products, where domestic supplies can be ramped up easily and where the inflows of sub-standard products from countries like China are substantial, one of the sources said. India’s trade deficit with China in the first 11 months of FY20 stood at a massive $47 billion. Before the Budget for 2020-21, the commerce ministry had suggested to the finance ministry that customs duties on as many as 300 products, ranging from footwear, furniture and TV parts to chemicals and toys, be raised, as part of a broader crackdown on what it considered “non-essential” imports. The Budget had announced a hike in import duties of over a dozen products, including toys, furniture, footwear, electronic goods and e-vehicles by up to 40%. A decision on raising the duties on rest of the products may be taken soon after due consultations with administrative ministries (looking after various products). As for non-tariff measures, standards for 371 products, with total imports of as much as $128 billion in FY19, are being firmed up or reviewed (wherever necessary) urgently. FE had first reported the plan to do so in December 2019. These items include steel, consumer electronics, heavy machinery, telecom goods, chemicals, pharmaceuticals, paper, rubber articles, glass, industrial machinery, some metal articles, furniture, fertiliser, food and textiles. This is part of the instruction by the commerce and industry minister to the Bureau Of Indian Standards (BIS) in December 2019 to develop standards for over 4,500 products (HS lines), taking the total number of imported items where quality and other parameters would be in place to 5,000. The move marks the beginning of a policy shift in New Delhi from an avowedly proliberalisation approach to external trade to a more discretionary one, where barriers could be erected, if required, to ‘non-essential’ and sub-standard imports that could harm the economy, rather than benefit it. New Delhi’s earlier approach was to curb non-essential imports mainly through a hike in tariffs (it had raised duties on a number of electronic and other products in 2018). But now, analysts say India seems to have taken a cue from China itself, which has effectively employed various non-tariff measures to curb imports while keeping tariff barriers at more reasonable levels to cloak the ferocity of its trade protectionism. For instance, according to an internal analysis of the Indian commerce ministry ahead of the RCEP pullout in November 2019, China has put in place 1,516 notifications that are nothing but technical barriers to trade (TBT), followed by South Korea (1,036) and Japan, while India has initiated only 172 such steps. India’s average applied tariff, however, stood at 17.1%, while China’s was 9.8%, South Korea’s 13.7% and Japan’s 4.4%. Similarly, China has notified 1,332 sanitary and phytosanitary (SPS) measures, while South Korea and Japan have imposed 777 and 754 SPS barriers, respectively. In contrast, India has imposed only 261 SPS measures. Developed countries like the US and those in Europe, too, impose such measures with high frequency. Recently, alarmed by the massive imports of sub-standard toys that pose huge risks for children, the commerce and industry ministry put in place stringent standards through a quality control order. India pulled out of the 16-nation Regional Comprehensive Economic Partnership (RCEP) agreement in November, as its proposals on safeguard measures to deal with any “irrational spike” in imports, among others, weren’t adequately addressed by potential partners, including China. Even without RCEP, India’s merchandise trade deficit with China stood at $53.6 billion in FY19, or nearly a third of its total deficit. Its deficit with potential RCEP members (including China) was as much as $105 billion in FY19.

Source:   Financial Express

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Policy offensive: Time to devise trade policies to effectively counter China

Till the last minute, even as the heads of 16 nations, including Prime Minister Narendra Modi, landed in Bangkok to announce the final mega trade deal, the Indian negotiators waited for their Chinese peers to agree to a provision under which New Delhi would not be obliged to extend duty concessions if the total imports passed a predetermined cap. India’s abrupt exit from a regional trading bloc in the making, the Regional Comprehensive Economic Partnership (RCEP), in November last year was largely driven by China’s volte-face, say officials. Till the last minute, even as the heads of 16 nations, including Prime Minister Narendra Modi, landed in Bangkok to announce the final mega trade deal, the Indian negotiators waited…….

Source:  Economic Times

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Trade pacts under lens as India seeks to check Chinese imports

India is looking to plug loopholes as it seeks to reduce import dependence on China. The routing of Chinese goods to India through their common trade partners, inversion in duty structures and the exploitation of ambiguities in origin rules have all come under the government’s scanner, said people with knowledge of the matter. The commerce and industry ministry is putting together details of the installed capacities of local industry for goods that India trades under free trade and bilateral agreements, and products which face issues related to inverted duty structures. The exercise is to check if these agreements are leading to preferential rates being lower on finished products than the intermediate or raw material. Especially on the radar are the trade arrangements with South Asian countries under the South Asian Free Trade Area (SAFTA), the Asean group, and bilateral pacts with Singapore, Japan, South Korea and Sri Lanka, with a focus to plug gaps that aid imports from China. India suspects China is routing goods through these countries, taking advantage of the trade pacts. The only operational trade agreement linking India and China — the Asia Pacific Trade Agreement, or APTA, (formerly Bangkok Agreement) — is also under scrutiny. South Korea, Bangladesh, Laos and Sri Lanka are also members of this grouping.   “There is a suspicion of circumvention of free trade agreements (FTA) and Chinese goods entering through these routes violating rules of origin norms,” said an official. Under invoiced imports from China too will be scrutinized. There was a sudden spurt in imports from Singapore, Japan and the Asean countries in 2017-18, and inbound shipments have been high since then. India’s trade deficit with China was around $47 billion in the first 11 months of fiscal 2020. “China has been pumping investments in Vietnam and its imports into India are coming unchecked, that too at low duty, through such countries,” said an industry executive. Source Problem Most of India’s exports to China have been of primary goods and raw materials including petroleum products, organic chemicals, iron ore, cotton and plastic raw materials, while imports have been mainly intermediate and finished goods such as telecom instruments, electronic components, consumer electronics, active pharmaceutical ingredients and machinery. While correcting the inverted duty structure in dual-use products such as steel may be difficult, experts suggested empowering customs officials to detain unnecessary imports but paying demurrage in cases where import substitution is key, could be helpful. “We are looking at ways to curb the import surge as this cripples the domestic installed production capacity,” the official said, adding that this would be done using all kinds of tariff and nontariff instruments such as antidumping duty, countervailing duty, safeguard duty and quality control measures. The issue has compounded as China has granted deeper duty cuts to India’s competitors including Peru, Pakistan, Australia, South Korea and Asean in its FTAs with them, which has displaced some of India’s exports. “One can only imagine the plight of our domestic industry had India joined the Regional Comprehensive Economic Partnership. Even thinking of these measures would not have been possible in that case,” said a Delhi-based expert on trade issues.

Source:   Economic Times

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China Pumping Investments in Vietnam

The exercise is to check if these agreements are leading to preferential rates being lower on finished products than the intermediate or raw material. Especially on the radar are the trade arrangements with South Asian countries under the South Asian Free Trade Area (SAFTA), the Asean group, and bilateral pacts with Singapore, Japan, South Korea and Sri Lanka, with a focus to plug gaps that aid imports from China. India suspects China is routing goods through these countries, taking advantage of the trade pacts.   The only operational trade agreement linking India and China — the Asia Pacific Trade Agreement, or APTA, (formerly Bangkok Agreement) — is also under scrutiny. South Korea, Bangladesh, Laos and Sri Lanka are also members of this grouping. “There is a suspicion of circumvention of free trade agreements (FTA) and Chinese goods entering through these routes violating rules of origin norms,” said an official. Underinvoiced imports from China too will be scrutinised. There was a sudden spurt in imports from Singapore, Japan and the Asean countries in 2017-18, and inbound shipments have been high since then. India’s trade deficit with China was around $47 billion in the first 11 months of FY20.“China has been pumping investments in Vietnam and its imports into India are coming unchecked, that too at low duty, through such countries,” said an industry executive. Ways to curb Most of India’s exports to China have been of primary goods and raw materials including petroleum products, organic chemicals, iron ore, cotton and plastic raw materials, while imports have been mainly intermediate and finished goods such as telecom instruments, electronic components, consumer electronics, active pharmaceutical ingredients and machinery. While correcting the inverted duty structure in dual-use products such as steel may be difficult, experts suggested empowering customs officials to detain unnecessary imports but paying demurrage in cases where import substitution is key, could be helpful. “We are looking at ways to curb the import surge as this cripples the domestic installed production capacity,” the official said.

Source: Press Reader

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Galwan stand-off: India takes another shot at free trade deal with US

Officials believe move can lead to an effective trading bloc against China's RCEP; business end of negotiations only by next year As India distances itself from China following the clash in Ladakh between soldiers of the two countries, the Centre is keen to have another go at negotiating the India-US free trade agreement, Business Standard has learnt. This, officials say, can lead to an effective trading bloc against the China-led Regional Comprehensive Economic Partnership.   The same officials, in the finance and commerce ministries, say the government is being realistic, and because of the Covid-19 pandemic and the upcoming US presidential election in November, the business end of the negotiations will happen only next year, though work is likely to begin now. “The current situation is that non-alignment is not an option, and the RCEP is out of the question for us. The recent clashes have given us a clear choice on matters of trade and commerce, and that is to go with the US to counter China,” a senior government official said, adding that discussion on the matter had begun with the US. “We have been here before, and we will not be seen as desperate. We are going back to the negotiating table in good faith,” a second official said. Late on Thursday, the US hinted it was open to restoring trade benefits under its Generalised System of Preferences (GSP) to India if it got a “counterbalancing proposal”. Reinstating GSP benefits has remained a key demand of New Delhi but in February, the US had classified India as a developed economy, ineligible for benefits given to developing countries. Now, US Trade Representative Robert Lighthizer, Trump’s point man on trade, has told members of the US Senate Finance Committee that trade talks with India were on. According to officials, India’s next proposal for trade talks with the US includes a step-by step reduction in import duties on high-value US agricultural products, a trade margin policy for medical devices, and a promise to continue talks on reducing price restrictions on American tech goods. India’s proposal will also be predicated on the US pulling back from its tough stance on taxes on digital services imposed by India. The GSP is America’s oldest preferential trade scheme, which offered Indian exporters tariff-free access to the country until June 2019, when all benefits were suspended. While India earlier stated it would not pursue GSP benefits further, sources say the position is expected to change. India’s benefits from GSP tariff exemptions amounted to $260 million in 2018, according to the data from the Office of the United States Trade Representative. However, this was only a small portion of India’s exports to the US in the same period, which stood at $51.4 billion.  Officials haven’t heard much from Lighthizer since he cancelled his visit to India in February as part of Trump’s team. Now, they say talks are set to begin soon. However, they have cautioned that details will need time to straighten out, given the ongoing pandemic, the upcoming presidential election in the US, and the fact that both nations have been at this particular juncture in talks before as well. The US wants India to slash its tariff rates and further open up its markets to American products. Trade talks have oscillated on these issues over the past two years. The differences had remained too large to bridge despite a push by both leaders. Sources confirmed that talks had started at a frenzied pace just before the Howdy Modi event in Houston, Texas, in September last year as well as the Namaste Trump event in Ahmedabad in February.

Source:   Business Standard

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Indian Apparel Industry Plans to Scale Up PPE Kit Production, Urges Govt To Lift Ban On Export

Indian Apparel export industry is planning to scale up the production of Personal Protective Equipment (PPE) kits and hold the largest share in the $60 billion global markets. It has also requested the government to lift the ban on the export of PPE kits. During the pandemic, the industry began to produce PPE kits and took the market from zero units to 8 lakh per day in less than four months. "We thank Minister of Textiles for motivating the Indian apparel industry to reach production of 8 lakh PPE pieces per day. The entrepreneurial apparel industry under the leadership of Textiles Secretary Ravi Capoor is prepared to play a key role in the global market for PPEs, which is estimated to be more than $60 billion over the next five years," Apparel Export Promotion Council (AEPC) Chairman Dr A Sakthivel said. As the industry is planning to grow further, the AEPC has requested the government to lift the ban on the export of PPE kits. It has sent letters to the Minister of Commerce and Industry and Minister of Textiles. "Countries like Bangladesh, Indonesia, Pakistan and others have lifted the ban on PPE exports and are receiving huge orders. We are afraid to lose export markets to our   competing countries. The production of PPE is more than sufficient to cater to the needs of the country and can be opened up for exports," Dr Sakthivel said, adding that the US and Europe are the largest potential buyers. The industry, which was hit hard after the outbreak of coronavirus pandemic, has demonstrated extraordinary enterprise and nimbleness through its ability to rejig large production facilities to manufacture PPEs by re-purposing their production lines amidst a nationwide lockdown that disrupted material, labour and supply chains, he said. The Embassy of Vietnam in Washington has established a channel of communication with the Centre for Disease Control and Prevention and the US Department of Health and Human Services. The US Federal Emergency Management Agency has created an 'airbridge' to quickly get medical supplies like 2.25 million PPEs exported from Vietnam, he said. "India is also part of the US 'air bridge' initiative. We should not lose out on an attractive global business opportunity and the need of the hour is to initiate PPE exports. India should consider the economic and political dividends that timely PPE exports will generate in the post COVID era," Dr Sakthivel added.

Source: Business World

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Friction with India: China lures Bangladesh, Nepal with trade sops

However, Indian exporters feel it will be tough for Bangladesh to ramp up supplies to China and improve trade balance, given Beijing’s typical use of non-tariff barriers to scuttle tariff concessions to trading partners. Even as it clashes with India on the border, China has stepped up trade diplomacy with two of New Delhi’s traditionally close allies — Dhaka and Kathmandu – by wooing them through greater trade concessions. Beijing has now widened the scope of an existing trade agreement with Dhaka to allow about 97% of Bangladeshi goods at concessional duties. Bangladesh’s foreign ministry said on June 19 that while the country already received tariff-exemption for 3,095 items under the Asia Pacific Trade Agreement (APTA), thanks to the latest announcement, a total of 8,256 goods would be exempted from the Chinese tariffs. Similarly, China is also reportedly planning to lay a strategic railway network connecting Kathmandu and Shigatse in Tibet where it would join an existing railway line to Tibet’s capital Lhasa. It has also offered Nepal four ports for supply of goods to reduce reliance on India. Since India has been a larger importer from both Bangladesh and Nepal than China, Beijing’s quiet trade diplomacy with these nations seems aimed at gradually undermining New Delhi’s ties with its allies to bolster its own strategic goals. Already, Nepal has ratified a new map, claiming certain Indian territories as its own by unilaterally changing the status-quo, thus, adding to New Delhi’s discomfiture when it’s engaged in a bitter border dispute with Beijing. Many have interpreted Nepal’s latest action as the direct fall-out of growing Chinese clout in the KP Sharma Oli administration. However, Indian exporters feel it will be tough for Bangladesh to ramp up supplies to China and improve trade balance, given Beijing’s typical use of non-tariff barriers to scuttle tariff concessions to trading partners. “For some time, maybe as long as the latest India-China border dispute stretches on, Bangladesh will have easier access to the Chinese market. However, they know how to control imports once political gains start to diminish,” said a garment exporter, who didn’t want to be named. China exported goods worth $17.8 billion to Bangladesh in 2018 while its imports stood at less than $1 billion. Indian imports from Bangladesh stood at over $1.2 billion in the first 11 months of FY20, while exports touched $7.5 billion. So while the China Bangaldesh trade is already heavily tilted in favour of Beijing, New Delhi’s trade ties with Dhaka are much more balanced.   In late 2018, India had proposed to Bangladesh to weigh a free trade agreement with it covering goods, services and investment. Currently, Bangladesh enjoys duty-free access to the Indian market on most goods under the SAFTA (South Asia Free Trade Agreement). India is also part of the APTA, under which it had extended tariff concessions on 3,142 items to members, including Bangladesh, in 2018. Moreover, several Indian textile and garment companies, including Arvind Mills, have also heavily invested in Bangladesh. As for Nepal, the trade ties with India have been much stronger traditionally. Nepal exports 55-60% of its goods to India and only 3% to China, but 90% of its imports are from India and only a negligible amount from China.

Source:   Financial Express

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Maharashtra govt to maintain status quo on MoUs with Chinese firms

There will be status quo with regard to the MoUs, worth more than Rs 5,000 crore, the Maharashtra government had signed with three Chinese companies on June 15, Industries Minister Subhash Desai on Monday, a move that comes in the backdrop of the Ladakh clash. Desai, however, clarified that the status quo does not mean cancellation of the MoUs relating to projects worth Rs 5,020 crore. According to an official statement, Desai said the state government is awaiting clear policy decision regarding the projects in the present condition. The relationship between India and China has come under severe strain following a violent face-off between the troops of the two countries in the Galwan Valley in Ladakh, in which 20 Indian Army personnel were martyred. The MoUs were signed last Monday under the Magnetic Maharashtra 2.0 investor summit, hours before the face-off took place. There will be status quo with regard to the MoUs signed with Hengli Engineering, PMI Electro Mobility Solutions JV with Photon and Great Wall Motors on June 15, 2020, Desai said, according to the statement. The three Chinese companies were to invest in projects in Talegaon, an industrial hub in Pune district, an official statement had said earlier.   According to the statement, Hengli Engineering was to invest Rs 250 crore and PMI Rs 1,000 crore in the auto sector. The Great Wall Motors was to set up an automobile company with an investment of Rs 3,770 crore. The central governments clear policy (decision) is awaited in the present condition in connection with the projects worth Rs 5,020 crore, the minister said.

Source: Economic Times

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China Loses WTO Dispute to EU over Market Economy Status

The development comes after four years of battle for the market-economy status by China. The designation would have put the country in a stronger position in respect of its commercial and trade partners. In a landmark development, China has lost a dispute to the European Union at the World Trade Organization (WTO) for a market economy status, as the former allowed the dispute to lapse. The development comes after four years of battle for the market economy status by China. The designation would have put the country in a stronger position in respect of its commercial and trade partners. A note by the WTO Secretariat said China allowed the dispute to lapse. "At the request of China, the panel suspended its work on 14 June 2019 (WT/DS516/13). Since the panel has not been requested to resume its work, pursuant to Article 12.12 of the DSU, the authority for establishment of the panel lapsed as of 15 June 2020," read the Secretariat's note. According to the EU, China subsidises its industries to a great extent, particularly steel and aluminium, making their sales prices in the international market unfair. After the latest development, to protect their industries, the EU and the United States will be able to apply high anti-dumping tariffs on goods from China. Similar issues have also been faced by India in terms of "dumping" of low-cost products by China. India has imposed anti-dumping duties on several occasions on several items. Further, amid the ongoing border tussle, India may impose higher tariffs on products that are mostly imported from China.

Source: News 18

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Manufacturing prospects for Bangladesh

Almost every country was struggling to ensure supply of essential products, especially cleaning materials at the beginning of corona outbreak. People hardly found items such as masks, hand gloves, hand sanitisers in grocery stores. Personal protective equipment (PPEs) was not sufficient for medical service providers. For household items, some were ordering online but there was delay in supply due to the lockdown.   Indeed, major portion of supplies came from China. So, the Western countries realised they are dependent on China for manufacturing items even at crucial times, with the 'factory of world' already dominating the world trade. This has not been created in a day; rather China has enjoyed comparative advantage over others for decades. In this context, Bangladesh has the potential to exploit some manufacturing prospects. Before the Industrial Revolution, Asian countries dominated world trade with India and China being two trade giants. India under the Mughal rule accounted for 27 per cent of the word economy (Source: The World Economy: A Millennial Perspective by Angus Maddison). And Bengal had significant contribution to India's exports, especially of textiles products. As the British occupied India, and started deindustrialising, the region's share in the world economy came down to 3.0 per cent when the colonial rulers left India in 1947 ( Source: Inglorious empire: what the British did to India, by Shashi Tharoor). The British shattered the entire socio-economic pattern characterised by thousands of rural industrial units since the Mughal rule. In his monumental work The Capital, Karl Marx wrote, "Those small and extremely ancient Indian communities, some of which have continued down to this day, are based on possession in common of the land, on the blending of agriculture and handicrafts, and on an unalterable division of labour, which serves, whenever a new community is started, as a plan and scheme ready cut and dried." The caste system somehow ensured unalterable division of labour, resulted in sustainability of Indian rural economy for thousands of years. Will Durant, an American historian, who visited India in 1930, wrote, "The British conquest of India was the invasion and destruction of a high civilisation by a trading company (the British East India Company) utterly without scruple or principle, careless of art and greedy of gain, over-running with fire and sword a country temporarily disordered helpless, bribing and murdering, annexing and stealing, and beginning that career of illegal and legal plunder which has now (1930) gone on ruthless for one hundred and seventy-three years (Source: The Story of Civilisation). During the last century, there were some major events that changed the fundamentals of the world economy. In 1917, the Bolshevik Revolution created fears of communist movement in the Western world. The Great Depression in the 1930s created devastating unemployment and showed ineffectiveness of 'supply side doctrine'. John Maynard Keynes' book titled "The General Theory of Employment, Interest and Money," focused on extending budgetary expenses by implementing fiscal policy. Colonial rule came to an end and many independent nations emerged in Asia and Africa. Over the past 50-60 years, the developed countries gradually chose shifting of labour-intensive industries to third world countries, especially in Asia.  Now, importers of manufacturing goods may look for new manufacturing countries once the coronavirus crisis is over. In such a situation, Bangladesh has a great potential. The advantages that China has enjoyed in attracting manufacturing units, as explained by trade economists, may be relevant for Bangladesh in the coming days. Firstly, China has huge labour force with comparably lower wages. Secondly, China's business ecosystem of networked suppliers, component manufacturers, and distributors has evolved to make it a more efficient and cost-effective place to manufacture products. Thirdly, Chinese manufacturers generally operate under a much more permissive regulatory environment in various health, safety, employment, and environmental regulations. And fourthly, China has been accused of artificially depressing the value of its currency in order to keep the price of its goods lower than those produced by western competitors. Bangladesh has a huge workforce and the wages are still low. The regulatory compliance is also more permissive than that of the western countries. The only issues that need to be addressed are that manpower requires to gain higher skills and the government should take proper initiatives. If these are implemented, Bangladesh will be able to grab manufacturing prospect in the post-corona world.

Source:   The Financial Express

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China has key role in industrial chain's evolution

 The global industrial chain is facing huge uncertainties amid Sino-US trade frictions and the unexpected epidemic. In this context, the global industrial chain layout will give more consideration to the balance between safety and efficiency, and will present new features of diversification and block. Meanwhile, the digital development of the global industrial chain is particularly worthy of attention. In this regard, China can leverage its advantages to seize such historic opportunities. There will be challenges from some attempts to cut dependence on China's supply chain.   The United States continues to tighten restrictions on China in the high-end technology sector. As of May, more than 300 companies and institutions in China had been included in the so-called entity list. At the same time, Chinese companies that want to invest in the US are subject to stringent and harsh scrutiny by the Committee on Foreign Investment in the United States. The US is also exerting pressure on other countries through international networks and tightening its technical restrictions on China. Science and technology cooperation and personnel exchanges between China and the US have also been affected. On the other hand, the country's industrial chain is facing mounting external competition. Owing to the rapid rise of domestic labor costs, the labor-intensive industries represented by the textile and apparel industry continue to move outward. From 2007 to 2018, the clothing exports of Southeast Asian and South Asian countries rose from 2.9 percent to 18.5 percent in the global market share. At the same time, regional trade agreements and bilateral trade agreements increased. Southeast Asian countries are at the intersection of important regional free trade zone agreements such as the CPTPP and the RCEP. In particular, Vietnam reached the EUVietnam Free Trade Agreement; thereby, its competitive advantage has increased significantly. The above two aspects, coupled with the impact of uncertainties including the epidemic, have caused more and more concerns that the long-term diversified development trend of the global industrial chain will weaken China's position in the global industrial chain. However, under the diversified development trend, China itself is also one of the options for the diversified layout of the global industrial chain. At the same time, China is also one of the world's largest consumer markets. Therefore, China will undoubtedly still occupy a very important role in the global industrial chain. Diversification may have a certain impact on China's industrial migration, but it is not equivalent to cutting dependence on China's supply chain. It should also be noted that the transformation from "globalization with a single efficiency orientation" to "globalization with a balance between efficiency and risk" means that we have to withstand a higher cost of globalization and will lead to a slump in global economic growth. A lower global economic growth rate, in turn, will slow down the process of globalization. It's safe to say that the industrial chain will become more digital and capitalized in the medium and long term, and will have an impact on the existing advantage pattern due to the following three reasons:   First, the epidemic will have an impact on production methods in the medium term and increase labor costs. The spread and duration of the epidemic have greatly exceeded previous common expectations, and there are concerns of a possible recurrence. It means that the epidemic will continue to have an impact on existing production methods until a vaccine is successfully developed and popularized. In the manufacturing industry, the cost of daily epidemic prevention for workers will rise significantly. Even if their wages remain unchanged, the cost of using labor will rise. Second, another consequence of the impact of the epidemic is that the capital cost will continue to remain in a low interest rate and stay there over the long term. In order to deal with the epidemic, major developed economies such as Europe, the US and Japan have generally implemented unconventional fiscal policies and cooperated with an unlimited amount of loose monetary policies. As the industrial chain will move toward a balance between efficiency and risk, the potential growth rate of the global economy will also tend to slow down. Against this background, it is difficult for global fiscal situations to have obvious signs of improvement. Third, rising labor costs (unlike rising wages) and capital costs will maintain a low interest rate environment. These two conditions will stimulate digital technology to develop at a faster rate. The epidemic has changed the business model and directly promoted the development of the online economy and digital economy from the demand side. At the same time, the epidemic will also change the relative prices of labor and capital in the medium and long term, and have a profound impact on the global supply chain from the supply side. From a technical perspective, most of the emerging technologies such as artificial intelligence and 3D-printing are skill-based, and it appears low-and medium-skilled labor force may find their current jobs at risk. Together with the marginal changes in the relative prices of labor and capital elements, the proportion of labor input in manufacturing production will decline, while the proportion of capital will increase accordingly. Combining the three factors, the global industrial chain will show a more obvious trend of digitalization and capitalization. The application of emerging technologies will trigger more substitution of capital for labor, thereby changing the existing international comparative advantage pattern. In this process, countries that are catching up with the process will face higher thresholds. Amid all this tumult, China faces opportunities in the digitalization of industrial chain. The digitalization and capitalization of the industrial chain is a medium-to long-term trend in the future. During this process, the comparative advantage pattern of global labor division will be redefined. Although some countries have comparative advantages in labor costs, the development of the digital economy lags behind, or the construction of infrastructure required for the development of the digital economy faces bottlenecks. The comparative advantages of these countries need to be reassessed. For developed countries, the biggest obstacles to the development and realization of the digital economy are as follows: First, their related public infrastructure construction is facing difficulties. Second, the balance between personal privacy protection and business efficiency is facing more difficulties. Third, most developed economies are already facing a certain industry hollowing, which means that they will also face higher costs to realize digital integration on the physical industry chain. In comparison, China has obvious advantages. First, China's digital economy has already achieved a very good foundation. The infrastructure is relatively complete, business innovation is at the forefront globally, and it has certain competitive advantages in emerging technologies. The number of unicorn companies is just behind the US and far ahead of many other countries. Second, China has a complete industrial chain and a suitable production supporting network, which provides a good integrative foundation for the digitalization of the industrial chain. It is undeniable that China's manufacturing sector still has a gap with developed countries, and it still has certain vulnerabilities in certain areas. However, China's current production capacity, transportation and logistics level, production supporting network and many factors all provide a solid foundation for the digitalization and capitalization of the industrial chain. The digitalization of the industrial chain may change or even subvert China's labor cost disadvantage compared with other developing countries. Though China's capital cost is still higher than that in other major developed economies, Chinese companies can enhance their international competitiveness through overseas financing and the use of low-cost funds from overseas capital markets. At the same time, the nation is also actively exploring ways to open up monetary policy transmission mechanisms to reduce corporate financing costs. Overall, the trend of   digitalization and capitalization of the industrial chain is a historic opportunity that China can and must seize. Another problem seemed remote but has to be considered in an early phase. If the digitalization and capitalization of the global industrial chain become a development trend, then the distribution of national income will also be more inclined to capital than laborers. In this context, the income gap and even unemployment will become serious global challenges. China is expected to be at the forefront of the world during this process but will also face such a test first. How to make the digitalization and capitalization of the industrial chain more inclusive? How can the government play a better balancing role in the redistribution process? These issues are worth thinking about.

Source:   China Daily

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UKFT's CCL rebate scheme opens for new entrants

The Climate Change Levy (CCL) rebate scheme for the textile industry has now opened for entrants till September 2020. Spinners, weavers, knitters, dyers, printers, or finishers, are eligible to join the scheme. The scheme can save textile companies an average of £30,000 a year. The CCL rebate scheme has been running very successfully since 2002. Since 2002, the industry has saved over £90 million in the levy and energy saving measures have seen the sector reduce its emissions by over 600,000 tonnes of CO2. The CCL scheme was introduced as an energy tax payable by all business in 2001. However, some industrial sectors were offered a rebate in the levy in return for agreeing to specific energy reduction targets. For the textile industry, there are two separate schemes one covering the wet processing sector (dyeing, printing coating and associated drying and finishing activities) and the other covering spinning, weaving and knitting (and other similar processes), according to a press release by UKFT. Companies joining the UKFT CCL scheme will be eligible for a rebate of some 92 per cent on the CCL on electricity and 81 per cent on the levy on electricity. On average companies are currently saving over £30,000 a year, but for large companies the savings can be over £100,000 a year. In order to maintain the discount, companies must meet set energy reduction targets. New entrants to the scheme will need to demonstrate that by 2022 they will have reduced the amount of energy used by 7 per cent compared to 2018. The CCL rebate scheme for the textile industry is administered by UKFT. UKFT will help companies complete all the necessary paperwork, will submit all necessary registration details to the Environment Agency. UKFT collects and monitors company’s performance every three months and helps companies develop strategies to meet their energy reduction targets. There are costs involved in taking part in the scheme. There is a fee of £185 that is payable to the Environment Agency, a UKFT joining fee of £250, and then an administration fee payable to UKFT of an annual 5 per cent of the savings achieved through the scheme. This figure drops to 3 per cent for those companies that are members of UKFT or are a member of an organisation that in turn is a member of UKFT.

Source: Fibre2Fashion

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Bangladesh rejects criticism of China deal

Indian critics of exports agreement reveal their narrow mindedness: Momen Bangladesh Foreign Minister A.K. Abdul Momen on Monday said that Indian commentators who described the zero-tariff bilateral agreement for 97% of exports to China as “charity” for “least developed” Bangladesh are revealing their   “narrow-mindedness”. This was the Minister’s second comment in two days after certain Indian publications said China was using the deal to get Bangladesh on its side as tension with India simmers along the Line of Actual Control (LAC) near Ladakh. In a set of comments made to a leading online publication, the senior Minister in Prime Minister Sheikh Hasina’s government said that the remarks from sections of the Indian media were “entirely unacceptable”. “News outlets that have used such words have renounced ethical journalism,” Mr. Momen was quoted as saying in Bengali in jagonews24.com. ‘Not welcome’ On Sunday, the Minister had said the portrayal of Bangladesh in a demeaning manner in certain sections of Indian media was “not welcome”. He indicated that Dhaka has taken serious note of the negative Indian media reports on Bangladesh and said, “It appears they [the government] are very upset.” However, he said that Bangladesh would not take it up at an official level despite a social media uproar in the country over the use of the term “khoyraati” (charity) in the reports. “We don’t think there is a need to protest [officially] on these news reports,” said Mr. Momen when asked by presspersons about further action on the matter. However, trade is only one part of Bangladesh-China ties. Both sides have also intensified cooperation in the field of health in recent months. On Monday, a delegation of top-level doctors from China’s National Health Commission, who spent a fortnight assisting the government of Bangladesh in dealing with the COVID-19 pandemic, attended an event held in their honour at Dhaka’s Hazrat Shahjalal International Airport of Dhaka. The farewell event was attended by Bangladesh Health Minister Zahid Hussein, where the Minister urged China to consider Bangladesh on priority basis when it develops the antiCOVID-19 vaccine. In an interaction with foreign correspondents held on Sunday, the visiting medical team announced that they would submit four reports containing recommendations to Bangladesh, which will lay down a specific road map on how Bangladesh can possibly counter the pandemic. The health- and trade-related cooperation was boosted after the May 20 telephone call between Prime Minister Sheikh Hasina and Chinese President Xi Jinping. President Xi described China as the “truest” friend of Bangladesh during the interaction. The June 19 Bangladesh-Beijing trade announcement drew Indian attention, especially as it came against the backdrop of heightened tensions between India and China over the Galwan Valley in eastern Ladakh. The social media uproar over the Indian comments on the deal began after some of the best known Indian TV and online networks used the word “charity” to explain the deal. The public outcry was serious and two senior journalists   reporting for Indian news outlets were compelled to distance themselves from the reports that angered locals.

Source: Pakistan Defence

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RMG makers may see fall in export earnings: WTO

Textile and clothing manufacturers of least-developed countries (LDCs), including Bangladesh, are likely to face a significant fall in export earnings in 2020. The World Trade Organisation (WTO), in a report, made the projection mainly due to the clothing makers' large dependence on limited products and few markets. The ongoing pandemic may affect the near-term prospects for some countries to graduate from their LDC status. Bangladesh, which is on the path to graduation within years, has been experiencing unavoidable declines in economic growth and export earnings, the report cited. The WTO released the latest report styled 'The Covid-19 Pandemic and Trade-related Developments in LDCs' on June 08. The value of LDC exports of goods and services declined by 1.6 per cent in 2019, a greater decline than that of world exports (1.2 per cent). Consequently, the share of LDCs in world exports also registered a marginal drop to 0.91 per cent in 2019. The expected downturn in trade in 2020 may be even more severe for LDCs than at global level, reads the report. Declining demand as well as supply disruptions have weighed significantly on LDC exports, especially exports of textiles and clothing products. "A lack of resources to support an economic rebound is compounded by LDCs' dependence on a limited range of products exported to a few markets, some of which have been worst affected by COVID-19." "The pandemic threatens to derail hard-won development gains in LDCs," highlighted the WTO report. Top destinations for LDCs include those devastated by coronavirus like China, France, Germany, India, Italy, Spain, the United Kingdom and the United States.   For instance, Bangladesh's top five markets France, Germany, Spain, the UK and the US have been severely affected by the super bug. Citing the state-owned Export Promotion Bureau, the report said the country's exports registered an 83-per cent decline in April 2020 than that in April 2019. Reportedly, Bangladesh and Cambodia have received order cancellations worth several billion US dollars. According to the Bangladesh Garment Manufacturers and Exporter Association, some 1,150 member factories had $3.18-billion work orders either cancelled or withheld. Moreover, the report said some retailers in export destinations have started to file for bankruptcy, causing significant worries to suppliers in LDCs as existing contracts risk being cancelled. Citing an example of Ethiopia that lost 80-per cent EU demand for its cut flowers, it said agriculture and horticulture exports from the LDCs are also being significantly affected. The report said the graduating LDCs may also exhibit poor scores in socio-economic indicators which are used as criteria for LDC graduation as governments grapple with competing resources. The looming protracted recession may constrain the graduation prospects of some LDCs in the near term. The WTO report also highlighted the stimulus packages announced in the LDCs and international responses amid the coronavirus pandemic.

Source:   Financial Express

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