NATIONAL

• Punjab yarn industry seeking reduction in VAT rate on yarn on priority basis
• Indian, Israeli officials to meet next week on free trade pact
• New GDP numbers don't change India's lowest grade, says ARC Ratings
• Global crude oil price of Indian Basket was US$ 52.89 per bbl on 05.02.2015

INTERNATIONAL

• Nepal’s wide trade gap with India hurting Indians
• US trade deficit widens
• Thailand should negotiate FTA with Europe
• Pakistan cotton market witnessed improvement in cotton trade
• Pakistan value added sector against additional duty on import of cotton yarn

Textile Raw Material Price 2015-02-05

SOURCE: Global Textiles

Note: The above prices are Chinese Price (1US$=0.16232 CNY dtd. 05/02/2015)

Punjab yarn industry seeking reduction in VAT rate on yarn on priority basis

Punjab yarn industry is losing out to cheap yarn coming from other states, making a serious dent on their business volume. After state government rolled back controversial E-Trip system, yarn makers in the state have now pitched for reducing VAT on yarn in order to compete with the commodity from other states. Punjab levies 6.6 per cent VAT on yarn while some states like Gujarat, Uttar Pradesh, Rajasthan do not impose any tax on it, resulting into “dumping” of yarn into Punjab.

Punjab Spinners Association President M M Vyas said that they want the state government should reduce VAT on yarn which has been a long pending demand of the industry in order to provide them level playing field. The state government had abolished anti-tax evasion measure e-trip system on cotton and yarn on January 30 due to which yarn traders claimed that they suffered considerable drop in business because of the anti-tax evasion measure. They welcome Punjab government’s step of rolling back e-trip.

Now they want government to look at addressing VAT issue on yarn on priority basis because of high VAT rate, neighbouring states are dumping yarn in Punjab at a cheaper rate which is hitting their business, said Punjab Yarn Dealers Association President Radhey Sham. Industry has suggested the state government to bring down VAT rate to 2 per cent and impose one per cent turnover tax on yarn which will not only increase tax revenue to the state exchequer but will also curb corrupt practices.

A high powered six-member committee, including representatives of trade and industry set up by Punjab government to resolve industry’s issues has already taken up the matter with the concerned authorities to resolve the issue at the earliest. Punjab produces almost 500 tonne of yarn including cotton, acrylic per day with maximum concentration of business being in Ludhiana.

SOURCE: Yarns&Fibers

Indian, Israeli officials to meet next week on free trade pact

Officials of India and Israel would discuss next week issues related to the proposed free trade agreement between the countries, which are aimed at further strengthening economic ties between the countries. Israel's Director General of the Ministry of Economy Amit Lang will be visiting the national capital on February 9-10. He will be accompanied by other officials from the Ministry of Economy, including Ohad Cohen, Head of the Foreign Trade Administration and Hanan Carmeli, Israel's Deputy Chief Scientist. "They will meet relevant Indian authorities regarding the negotiations on the FTA between India and Israel, seeking to provide fresh momentum to the economic cooperation between both the countries," Embassy of Israel said in a statement.

During the visit, Lang will also participate in the OECD conference where he will speak about cooperation between the countries in fields such as water management, distribution of water and treatment. Israeli water companies would share expertise on water purification and waste water treatment. The proposed free trade pact if implemented would help in enlarging the trade basket and volume between the countries. Bilateral trade stood at USD 6 billion in 2013-14.

SOURCE: The Economic Times

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New GDP numbers don't change India's lowest grade, says ARC Ratings

ARC Ratings, one of the agencies that have given India the lowest investment grade, says the country's higher economic growth — as revealed by the new gross domestic product (GDP) methodology — will not alter its ratings for the economy. The agency, however, says it has high hopes from the Indian economy's performance. ARC had in December assigned its first ever rating to India, of BBB+, a notch above the junk grade. The ratings also reflected weaknesses in government finance, including a large debt level and constrained revenue base, the agency said in a statement in New Delhi.    

The data revisions do not alter the size of nominal GDP, and revenue yield, a key government debt ratio that the agency looks at, remains low. India's ratio of government revenues to GDP is just about 20 per cent, a level seen as insufficient, given the expenditure demands on the government and massive social and physical infrastructure needs, according to the agency. The recent data revisions reveal much faster growth for the country's economy in the financial year ended March 2014 - at 6.9 per cent, significantly higher than the original figure of 4.7 per cent. Similarly, GDP growth for 2012-13 has been revised from 4.7 per cent to 5.1 per cent.

However, the agency expects India's economy to perform better in the times ahead. "The new data do not change our already positive expectations for the performance of the economy," says Joan Feldbaum-Vidra, head of sovereigns at ARC Ratings. The agency expects the Narendra Modi-led central government to pursue further reforms. "The revisions to GDP do not alter the agency's fundamental view on India which reflects our expectation for faster-paced growth sparked by Prime Minister Narendra Modi's ambitious reform agenda," ARC Ratings said.

Feldbaum-Vidra pinned her hopes on further supply-side reforms in India. "We are optimistic that many supply-side reforms will be implemented, and especially that the goods and services tax, slated to be introduced on April 1, 2016, will open up the internal market without too many exemptions," she said. "Private investment should also pick up in response to India's rosier prospects."

SOURCE: The Business Standard

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Global crude oil price of Indian Basket was US$ 52.89 per bbl on 05.02.2015

The international crude oil price of Indian Basket as computed/published today by Petroleum Planning and Analysis Cell (PPAC) under the Ministry of Petroleum and Natural Gas was US$ 52.89 per barrel (bbl) on 05.02.2015. This was lower than the price of US$ 54.97 per bbl on previous publishing day of 04.02.2015.

In rupee terms, the price of Indian Basket decreased to Rs 3272.30 per bbl on 05.02.2015 as compared to Rs 3390.55 per bbl on 04.02.2015. Rupee closed weaker at Rs 61.87 per US$ on 05.02.2015 as against Rs 61.68 per US$ on 04.02.2015.

 The table below gives details in this regard:

MJPS/Rk/Daily Crude oil price- 05.02.2015      

SOURCE: PIB

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Nepal’s wide trade gap with India hurting Indians

Political crisis, severe energy shortage and lack of financial strength: hit by all these, Nepal is facing a steep decline in its trade with its largest trade partner, India. Though apparently a problem for Nepal, thousands of Indian citizens are also affected by this situation.

A large share of business establishments on Nepal's border with India is directly or indirectly run by Indians. This is legal as under the Indo-Nepal treaty, 1951, citizens of one country can have trade or profession in the other. In addition, India and Nepal enjoy an open border and to travel between the countries, their citizens don't need visas. These Indians are also victims of the situation. "Political stability is a must for any commercial activities. But that is in trouble in Nepal. In addition, oil or electricity, both are in severe shortage making industrial activities tough," said B Jalan, a veteran businessman at Dhulabari, one of the main indo-Nepal trade centers in eastern Nepal, adjacent to West Bengal in India.

For long, industrially backward Nepal remained highly dependent on import from neighbour India. The bilateral trade treaty between the two countries in 1996 resulted in a nine-fold expansion in Nepal's exports and doubled its imports. But the trend has now lost the momentum.

Nepal's rapidly increasing trade deficit with India has already become almost equal to 20% of its gross domestic product. As per official figures, Nepal's imports from India in 2012 totaled Rs 22,500 crore, while exports, Rs 3,200 crore. Despite having 42,000 MW economically viable hydropower potential, Nepal's present production is even bellow 1,000 MW, much less than its need. The situation sometimes compels the country to impose load shedding for as much as 12 hours a day. With Nepal's payment to its only oil supplier, Indian Oil Corp, always under question, fossil fuel also remains in short supply. As a result, over 50% industrial operations are now almost dead, said members of the Federation of Nepalese Chambers of Commerce and Industry. As a new trend, entrepreneurs have started shifting in border adjoining Indian towns like Siliguri. But getting established there is another hardship, they said.  Many new hydropower projects are in pipeline, under active support from India, to develop around total 18,000 MW of power by 2030. "These may revert the scenario, but only if the country finds political stability by then," said P Srestha, a member of the industry federation.

SOURCE: The Economic Times

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US trade deficit widens

The US trade deficit in December widened sharply to its highest level since 2012 as a stronger dollar appeared to suck in imports and weigh on exports, which could see the fourth-quarter economic growth estimate revised lower. The Commerce Department said on Thursday the trade deficit jumped 17.1 per cent to $46.6 billion, the largest since November 2012. It was the biggest percentage increase since July 2009 and also reflected a sputtering global economy. Initial claims for state unemployment benefits increased 11,000 to a seasonally adjusted 278,000 for the week ended January 31, the Labor Department said in a separate report.

SOURCE: The Business Standard

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Thailand should negotiate FTA with Europe

Thailand should quickly negotiate and conclude a Free Trade Area agreement with Europe in the absence of a Generalized System of Preferences offered by the European Union, said Suttinee Poopaka, executive director of the Thailand Textile Institute. The EU has cut GSP privileges to several countries, including Thailand, since January 1 after the World Bank redefined them as upper-middle income countries from 2011 to 2013.

Suttinee told a seminar in Bangkok that Thailand must pay duty as high as 12 percent now for products exported to the EU, impacting the country’s competitiveness with countries such as Indonesia, Vietnam, Cambodia, Laos and Myanmar which still enjoy GSP privileges.

Vietnam currently holds an economic strategic partnership under the Trans-Pacific pact with the US and is opening an FTA with the EU. If it succeeds, Vietnam would enjoy a zero duty on its goods exported to the US and to the EU, she said. Suttinee advised that Thailand should conclude an FTA agreement with Europe as soon as possible as well as boost its production competitiveness in its textiles and garments.

Several Thai manufacturers of brand name products have now relocated their production bases to neighboring countries, including Cambodia which still enjoys GSP privileges, she said. The producers have also been impacted from a hike of daily minimum wage to Bt 300 in the country.

SOURCE: The Pattaya Mail

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Pakistan cotton market witnessed improvement in cotton trade

Pakistan cotton market witnessed improvement in the trade of cotton to 4,349 bales as the mill owners were back to the local markets purchasing cotton to keep their regular production operations going. In fact, the mill owners resumed buying when their cotton inventories reduce next to nil, or they receive new sales orders.

According to the Karachi Cotton Association (KCA), traders bought a total of 4,349 bales at Rs3,450 to Rs4,950/maund (37.324 kilograms)as compared to 2,200 bales bought at Rs4,950/maund a day ago. The KCA kept its official rate for cotton unchanged for the second working day at Rs4,750/maund.

In the ready session, trading activity improved slightly, as about 5000 bales of cotton changed hands between Rs 3450 and Rs 4950. While, the seed cotton rates in Sindh at Rs 1600 and Rs 2300, in Punjab prices were at Rs 1700 and Rs 2500. But it was noticed that many of the financially strong textile mills preferred buying Indian cotton to locally produced as they were better in quality.

SOURCE: Yarns&Fibers

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Pakistan value added sector against additional duty on import of cotton yarn

Pakistan already has 5 percent import duty on import of cotton yarn with the government’s proposal of additional import duty the value added textile sector will be unable to import cotton yarn from India, as it will greatly increase their cost of doing business.

Textile value added sector flayed government’s proposal imposing additional duty on import of cotton yarn from India. Value added textile sector would find it expensive to import yarn from India, which otherwise they could import if there was absolutely no duty imposed by the government thereby greatly enhancing their exports.

Value added textile export sector contributing more than 80 percent of total textile exports of country and generates employment around 38 percent of the total employment of industries needs protection.

Chairman of Pakistan Apparel Forum Jawed Bilwani said that already 5 percent import duty on import of cotton yarn, which should be withdrawn and this proposal on the behest of some large spinners having integrated units would greatly hamper cost of doing business of value added textile sector, the sector exports earnings stood at $11.49 billion yearly more than that of these spinners. Spinners lobby always voiced vociferous support for free market mechanism and neither rein on imports of cotton yarn nor any duty on import of cotton yarn. All over the world export of raw material is greatly discouraged and restricted however import of raw material is always allowed for value addition and earning more foreign exchange.

SOURCE: YarnsandFibers

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