Call for calculating rates at broader four-digit classification level instead of eight-digit Exporters have asked the government to allow more flexible fixation of refund rates under the Remission of Duties and Taxes on Exported Products (RoDTEP) scheme, that is scheduled to replace the popular Merchandise Export from India Scheme (MEIS) at the end of December 2020, so that certain sectors are not worse off after the switch.
Source: The Hindu Business Line
Union Minister Nitin Gadkari at the Atmanirbhar Bharat web dialogue on Saturday said that India's government is pro-development and pro-industry and wants to create more employment potential and eradicate poverty. "India has got a huge market, skilled manpower, availability of raw materials and the government too is pro-development and pro-industry because we want to create more employment potential and eradicate poverty," said Gadkari here. "Four days ago Phillip Capital organised a programme for investors in the United States. About 10,000 investors were with me in that webinar. They want to invest in India as returns are good & it's now a safe destination for investment," he added. The Minister said that foreign direct investments in micro, small and medium enterprises is being encouraged as well. "We are trying to take in more investment for MSMEs and we are also trying to change the definition of MSMEs as well. The manufacturing sector and the service sector were classified separately but now they have been merged and we name it 'Manufacturing and Services' sector," he said. For the micro-industry, the limit of investment in plant, machinery, and equipment was of Rs 25 lakh, now has been amped up to Rs 1 crore. "The turnover was previously 10 lakh, now we have taken it to Rs 5 crore," he said. With regard to small industries, the investment was previously Rs 5 crores now has been increased to Rs 10 crores, informed Gadkari, and added that the turnover has increased from Rs 2 crores to Rs 50 crores. Speaking about the medium-scale industries, the investment has increased from 10 crores to Rs 50 crores. The turnover increased from Rs 5 crores to Rs 250 crores excluding export turnover.
Source: Economic Times
The Minister of Commerce and Industry Shri Piyush Goyal today held meeting, through Video conference, with Office-bearers of Export Promotion Councils (EPCs), to discuss and address the issues of exporters, due to Covid-19. Addressing the EPCs, Shri Goyal said that the Exports, after setbacks in first two months of this financial year, due to Covid-19, are recovering fast, as the Unlock process gains and the Economic activity makes a revival. He said that the data of June, 2020 will reflect the gains, with the merchandise export figures touching almost 88% of the corresponding period last year. He lauded the role of exporters for attaining the feat in such a short time. The Minister said that their hardwork, self-confidence and determination really paid off. He said that the achievement is all the more laudable because many of the areas in the country are still under containment zones and having restrictions. Most of the markets abroad have not been able to make such a remarkable comeback, he added. On the issue of imports, the Minister said that they are still far behind and this is a good thing. Shri Piyush Goyal said that as the Unlock 2.0 has come with more permission, it is expected that things will further improve in the future. Talking about the Aatamnirbhar Bharat, he said that it implies engagement with the world, a self-reliant and strong India, a confident and vibrant nation, an India where everyone has the courage of conviction; everyone gets ample and fair opportunities to grow and prosper, where even a poor man lives a respectable life. He called upon the industry to shun from over-dependence on imports and certain geographies, as this leads to long-term dire consequences. He exhorted them to make in India, use indigenous resources and skilled manpower, produce quality products, and use the economies of scale to deliver affordable products. The Minister exhorted the exporters to be more competitive, be focused and play on their strengths. Talking about the spirit of partnership and cooperation, the Minister assured the exporters and the industry of full support from the Government. He announced that action is being taken on the Baba Kalyani committee recommendations of the Special Economic Zones(SEZ). The participants thanked the minister and Officers for playing a pro-active role and whole-hearted support during the pandemic time, which helped them make a turnaround in shortest possible time. However, many of them said that there are still certain issues, requiring intervention and support of the Government. They expressed their full support to the Government’s Aatamnirbhar Bharat Abhiyan. The meeting was attended by representatives of FIEO, APEC, SRTEPC, GJEPC, CLE, CEPC, Shefexil, Pharmexil, ECSEPC, ISEPC, SEPC, EEPC, EPCH, PEPC, TEXPROCIL, Telecom EPC, Cashew EPC, Chemexcil, CEPEXIL, IOPEPC, PLEXCONCIL.
Source: PIB
The commerce and industry ministry has sought stricter scrutiny of goods coming from Bangladesh, Sri Lanka, South Korea and the Asean bloc, amid fears of Chinese imports increasingly being routed through these countries. It has pushed for fast tracking amendments to the customs law to tighten the rules to claim concessional benefits under India’s free trade pacts, in line with the changes proposed in the budget this year. The ministry has requested the finance ministry to introduce stringent provisions related to rules of origin, to empower customs officers for checking the abuse of FTAs. In the budget, the government had inserted a new chapter in the Customs Act on the administration of rules of origin under trade agreements, giving it the power to suspend and refuse preferential tariff treatment in case of incomplete information or verification and noncompliance, respectively. Moreover, an importer cannot avail of concessional benefits by merely providing a certificate of origin. These amendments aren't yet notified. “We will scrutinise imports coming from third countries and not clear suspicious consignments. There is complete sync in the government at top levels that unnecessary imports need to be blocked,” said a senior official. As per the proposed rules, where the preferential rate of duty is suspended, the officer, on the request of the importer, can release the goods if the importer pays a security amount equal to the difference between the duty provisionally assessed and the preferential duty claimed. The move comes on heels of India imposing 100% physical checks of shipments from China. “The process of notifying the new rules has begun,” said another person in the know.
Source: Economic Times
Tough talk on Chinese goods in FY20 leads to lower imports, narrowing trade gap Even as shipments of high-value manufactured goods to China saw an uptick in the fiscal year 2019-20 (FY20), raw materials continue to dominate India’s top exports to the neighbouring country. Though the government has been pushing for exports of high-value manufactured goods across major markets in place of raw materials and input goods, India’s top exports to China remain in the raw materials category, shows the latest data released by the commerce department for FY20. Apart from organic chemicals and processed petroleum, most of the top shipments to China.
Source: Business Standard
Maharashtra Industrial Development Corporation (MIDC) in its efforts to ensure the state continues to be the flagship investment destination, held a virtual roundtable discussion together with the UK-India Business Council (UKIBC). The ongoing COVID-19 pandemic has greatly impacted daily lives and the economy at large owing to the global lockdown and physical distancing measures in place. While globally and in Maharashtra, the healthcare systems have scaled up to meet this unprecedented challenge, the economic response will determine the long-term effects of this pandemic. Maharashtra Industrial Development Corporation (MIDC) in its efforts to ensure the state continues to be the flagship investment destination, held a virtual roundtable discussion together with the UK-India Business Council (UKIBC) today in the presence of senior delegates of the government of Maharashtra, the government of United Kingdom, MIDC, UKIBC and industry leaders. The agenda of this roundtable was to reiterate Maharashtra’s commitment towards India UK relations and also to appraise the delegates of the various policy interventions and initiatives undertaken by the state such as creation of plug and play infrastructure with ready to use factory spaces, land parcels earmarked for industries, an accelerated permissions model ‘Maha Parwana’ which grants permissions as quickly as 48 hours, a state operated job portal – ‘Maha Jobs’, a unified search platform, dedicated country desks and many more. A Memorandum of Understanding (MoU) between the MIDC and the UKIBC was also signed today to collaborate and share information that can help improve connections between UK businesses and the state of Maharashtra, including by facilitating investor interactions in the UK and in Maharashtra, which will include a dialogue on the ease of doing business. The MoU establishes a broad-based understanding between the MIDC and UKIBC on the areas of collaboration and mutual interest. B Venugopal Reddy, Principal Secretary (Industries) government of Maharashtra said “Maharashtra state looks forward to further strengthen its business relations with the United Kingdom by diversifying and expanding the activities and with a thrust on manufacture of engineering components, capital goods and industry 4.0. Dr P Anbalagan, Chief Executive Officer, MIDC said “MIDC reiterates its determination towards the sustenance of our enhanced relations between Maharashtra and the United Kingdom. The MoU with UKIBC reflects our enduring support the UK business showcasing their commitment towards intensifying strategic investment plans in Maharashtra.” Speaking on the occasion, Kevin McCole, Managing Director of the UKIBC said “I’m really pleased to be enhancing our already strong relationships with the government of one of the most business-friendly states in India. We have already achieved a great deal together and today’s signing of this MoU will take our partnership to the next level. This, I think, is vitally important because as our economies and societies recover from the COVID-19 pandemic the need for expanded trade, investment and collaboration between the UK and India will only increase”. Alan Gemmell, Trade Commissioner of South Asia, Department for International Trade and British Deputy High Commissioner for Western India was also present at this event to represent the United Kingdom. Other key participants of the event included representatives of British Deputy High Commission, British Standards Institution (BSI) BAE Systems, Barclays Bank, HSBC, JCB, Arup Group, Perkins Engines, Rolls-Royce, Sheffield City Region and West Midlands Growth Company
Source: Financial Express
As India considers steps to curtail cheap and substandard imports from China, it is set to start with raising basic customs duties on dozens of products. As India considers steps to curtail cheap and substandard imports from China, it is set to start with raising basic customs duties on dozens of products. This would be followed up with non-tariff measures, such as standard specifications for hundreds of items, in the medium term, sources told FE. Though the move is not patently China-specific and will apply to imports of the specified items from any country, the brunt of the decisions will be borne by China. The government is considering a list of 1,173 items — ranging from auto parts, compressors for AC and refrigerators to select steel and aluminium products and electrical machinery — to zero in on products/ sub-products on which the import duties can be hiked. These items are mostly imported from China and can be substituted with local production without much hassle, one of the sources said. Imports of these 1,173 items from China were worth $11.98 billion in FY19, making up for just 2.3% of India’s total imports that year but 17% of New Delhi’s purchases from Beijing. However, imports of only 47 of these products/sub-products from China were worth over $50 million each in FY19, totalling $5.82 billion. The idea is not just to punish China for its latest border misadventures but also boost local output and substitute imports, in sync with Prime Minister Narendra Modi’s push for Aatmanirbhar Bharat. While any such duty hike is unlikely to be Beijing-specific, the move will hurt China the most, as it’ is the biggest supplier of such cheap and low-grade products to India. Nevertheless, analysts have questioned the efficacy of any such duty hikes, saying that targeting mostly small products will hardly yield anything. Beijing can always raise subsidies on these items, which can blunt the Indian tariff hike. However, an official source argued that “every great journey starts with a single step” and Beijing must know that “its action carries a cost”. “Not taking any retaliatory step will only embolden China. We are not saying any one of these moves will hit China hard. For this to happen, a comprehensive strategy will have to be devised, and it’s being devised to substitute imports, wherever possible,” the source said. Even before the Budget for FY21 was tabled, the commerce and industry ministry had suggested that customs duties on as many as 300 products, including footwear, furniture, TV parts, chemicals and toys, be raised, as part of a broader crackdown on what it considered “non-essential” imports. However, the latest border clash with China only hardened India’s resolve to target the neighbour economically and move towards self-reliance with a renewed sense of urgency. 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 rest of the items would be made soon. As for non-tariff measures, as FE has reported, standards for 371 products, with total imports of as much as $128 billion in FY19, are being firmed up or reviewed urgently. 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, too, was part of the instruction by commerce and industry minister Piyush Goyal to the Bureau Of Indian Standards (BIS) in December 2019 to develop standards for over 4,500 products (HS lines).
Source: Financial Express
As the call grows for an ''Aatma Nirbhar Bharat'' (self-reliant India) in terms of manufacturing of goods and lower dependence on imports, industry body Assocham has suggested that the country should focus on at least major 15 imported goods to achieve import substitution and become self-reliant in the next two to three years. In a statement, it said that the analysis, based on the latest data, shows that the electronics goods are the largest non-oil import items. Despite the country being under partial lockdown, India imported electronic goods worth $2.8 billion only in May 2020, it said. "In the circumstance of the industry operating in a normal way, these imports are near about $5 billion a month, a huge drain on the forex which needs to be curtailed," the ASSOCHAM statement said. The Chamber''s Secretary General Deepak Sood said: "While we need to work on a longterm strategy to reduce our dependence on crude oil, in the short to medium term, we must move in a mission mode to be Aatma Nirbhar in at least 15 of the critical sectors. We should work on a twin track of not only investing more to ramp up capacity, but also ensure that the end-consumers get the best of the quality products at internationally competitive prices." Self-reliance in the real sense would mean an aggressive production and pricing strategy involving scale and speed of execution, he added. Sood noted that the recent schemes of production-linked incentives for electronics manufacturing and encouraging champions can be a game-changer if pursued vigorously. Both domestic and FDIshould be encouraged in the endeavour, he said. Other major items of large imports include pharmaceuticals intermediates, textile yarn, fertilisers, wood and wood products, transport equipment, machine tools, electrical and non-electrical machinery. "The country is capable of becoming self-reliant in all these sectors in the next few years," said the statement. It noted that the recent reform of allowing commercial mining by the private sector would help lower the import dependence for coal. "The entire metal pack - iron & steel, non-ferrous - account for a monthly imports of around $3 billion and can be substantially reduced, leveraging domestic capacity and coming harsh on dumping," it said. A similar scenario can be seen in chemicals, artificial resins and plastics, all accounting for an average monthly import of about $3.5 billion, according to the Assocham statement. It noted that in terms of agriculture products, imports of vegetable oils, fruits and vegetables alone account for over $1 billion a month. "These imports can be substantially reduced in a matter of few crop seasons, by incentivising production of oilseeds and motivating farmers to reduce over-dependence on wheat and rice," it said.
Source: Outlook India
As the call grows for an ''Aatma Nirbhar Bharat'' (self-reliant India) in terms of manufacturing of goods and lower dependence on imports, industry body Assocham has suggested that the country should focus on at least major 15 imported goods to achieve import substitution and become self-reliant in the next two to three years. In a statement, it said that the analysis, based on the latest data, shows that the electronics goods are the largest non-oil import items. Despite the country being under partial lockdown, India imported electronic goods worth $2.8 billion only in May 2020, it said. "In the circumstance of the industry operating in a normal way, these imports are near about $5 billion a month, a huge drain on the forex which needs to be curtailed," the ASSOCHAM statement said. The Chamber''s Secretary General Deepak Sood said: "While we need to work on a longterm strategy to reduce our dependence on crude oil, in the short to medium term, we must move in a mission mode to be Aatma Nirbhar in at least 15 of the critical sectors. We should work on a twin track of not only investing more to ramp up capacity, but also ensure that the end-consumers get the best of the quality products at internationally competitive prices." Self-reliance in the real sense would mean an aggressive production and pricing strategy involving scale and speed of execution, he added. Sood noted that the recent schemes of production-linked incentives for electronics manufacturing and encouraging champions can be a game-changer if pursued vigorously. Both domestic and FDIshould be encouraged in the endeavour, he said. Other major items of large imports include pharmaceuticals intermediates, textile yarn, fertilisers, wood and wood products, transport equipment, machine tools, electrical and non-electrical machinery. "The country is capable of becoming self-reliant in all these sectors in the next few years," said the statement. It noted that the recent reform of allowing commercial mining by the private sector would help lower the import dependence for coal. "The entire metal pack - iron & steel, non-ferrous - account for a monthly imports of around $3 billion and can be substantially reduced, leveraging domestic capacity and coming harsh on dumping," it said. A similar scenario can be seen in chemicals, artificial resins and plastics, all accounting for an average monthly import of about $3.5 billion, according to the Assocham statement. It noted that in terms of agriculture products, imports of vegetable oils, fruits and vegetables alone account for over $1 billion a month. "These imports can be substantially reduced in a matter of few crop seasons, by incentivising production of oilseeds and motivating farmers to reduce over-dependence on wheat and rice," it said.
Source: Outlook India
In a major relief to GST taxpayers, the government has decided to cap the maximum late fee for Form GSTR-3B at Rs 500 per return for the tax period July 2017 to July 2020. The reduced fee will be levied only if returns are filed before September 30, 2020, the Central Board of Indirect taxes and Customs (CBIC) said Friday. It has also notified that there will be nil late fees if there is no tax liability, and took the decision after various representations were received to give further relief in late fee charged for the tax periods of May 2020 to July 2020, in addition to earlier provided relief for February 2020 to April 2020 and relief provided for cleaning up past pendency of returns from July, 2017 to January, 2020. Also, a uniform late fee is simpler in design and easier to implement on automated common portal, the Board said.
Source: Economic Times
The government will ease financial and technical conditions for Indian companies to bid for roads and highways, to help them meet the guidelines without any support from Chinese investors, said Union minister Nitin Gadkari, in an interview to ET Now. Gadkari’s statement assumes significance after India said that it will not allow Chinese companies to participate in highways projects, including those through joint ventures, amid the stand-off with China at the line of actual control in Ladakh. “We have taken a decision and we will formulating a policy soon. We will relax the conditions for the technical and financial qualifications for the infra projects,” said the minister. Gadkari also allayed fears that infrastructure sector will see a funding crunch if Chinese investments are not allowed. “Indian infrastructure is not dependent upon Chinese investments. We are getting investments from the whole world. Nobody wants to deal with China globally. The reluctance of nations to deal with China can benefit India immensely” the minister said. Gadkari made a case for Industry to reduce excessive reliance on imports and focus on Atmanirbhar Bharat. “Indian companies are fully capable and they don’t need China or Chinese investments. There’s no rocket science. We need to find a way out without compromising quality. Our Indian industry should use this time to update their technology and increase cost competitiveness”, the union minister added. The union minister pledged support to the Indian automobile industry and said the government will give necessary support for Make-inIndia mission. “Bajaj and TVS are exporting 50% of their products. We expect the same from the auto industry. Initially, Indian products may not be competitive but slowly when they standardize their production and increase productivity, we will increase competitiveness. It is time for Indian industries to find a way out in terms of all products we are importing from China” Gadkari added. Batting for scrappage policy in the automotive sector, the road transport minister, said the policy will be cleared soon, “We are in the final stages of rolling out scrappage policy. Scrappage policy will improve the availability of raw material, recycling. Scrappage policy will help the automobile industry reduce the cost”.
Source: Economic Times
A section within the government is of the view that the Centre must adopt tough measures against China over the border standoff and act against Beijing’s interests in areas that do not add value to India’s economy, but ensure that investments critical for accelerating growth should not be derailed. The view is amplified by the fact that growth concerns remain a top priority for the economy and any move that affects investments would hamper recovery from the devastating impact of the lockdown imposed to stem the spread of the coronavirus pandemic. Chinese companies have heavily invested in multiple sectors of the economy and shedding the linkages overnight would be a tough job. “We need to think strategically and also send a tough message,” said a source. The Centre had on Monday banned 59 Chinese apps for “engaging in activities which are prejudicial to the sovereignty and integrity of India, defence of India, security of state and public order”. Union minister Nitin Gadkari has said that Chinese companies won’t be allowed to participate in highway projects and Chinese investors will be kept out in sectors such as “We need to be tough on areas where there is no value addition for our economy. We need to ensure that they are kept out of such areas,” said the source. Apprehensions have also been triggered by the fact that several companies source raw materials from China and any disruption, particularly in the critical pharmaceutical sector, may impact manufacturing of drugs. India depends on China for 70% of bulk drugs and drug intermediates requirements, according to industry estimates. “In greenfield investments and capital invested in acquiring or expanding existing facilities in India, Chinese companies have invested at least $4.4 billion. Chinese companies have also invested in acquiring stakes in Indian companies, mostly in pharmaceutical and technology sectors, and participated in numerous funding rounds of Indian startups in the technology space. Another $15 billion approximately is pledged by Chinese companies in investment plans or in bids for major infrastructure projects that are unapproved as yet,” according to a Brookings India paper released in March this year.
Source: Times of India
The impasse on the Indo-Bangladesh border trade through Petrapole-Benapole has finally been resolved with the first truck from Bangladesh entering India on Sunday since March restoring two-way bilateral trade following the Central government's franctic efforts led by MEA. ET has learnt that this has been made possible following herculean efforts by MEA, MHA and Commerce as well as Indian High Commission in Dhaka. The West Bengal government had refused entry of trucks following fears of the spread of Covid. India-Bangladesh trade has remained disrupted since March 23 due to restrictions at Integrated Check Post (ICP) Petrapole- Benapole imposed by the Govt of West Bengal. The trade resumed at ICP Petrapole on April 29 but was soon halted on May 2, owing to some local protests at Petrapole. Trade at the ICP again resumed on the ICP Petrapole –Benapole on June 7 and gradually the truck movement increased from 24 trucks/day to around 250 trucks per day. However, West Bengal Govt permitted only one way trade from India (Petrapole) to Bangladesh (Benapole). No exports from Bangladesh to India have been allowed by the West Bengal Govt since March 2020, while Bangladesh has allowed Indian trucks to move into Bangladesh from all border points in West Bengal. "There has been some discontent brewing in Bangladesh on the decision of the government of West Bengal to not allow the Bangladeshi trucks to come on the Indian side. This has led to some protests at the ICP on July 1 and blocking of Indian trucks moving towards Bangladesh.Some partial trade resumed in the evening 106 trucks crossed from Indian side. But it was again disrupted," a person familiar with the issue told ET. The Home Ministry had in April taken up the issue of cessation of permission by the government of West Bengal for trucks and goods vehicles along India’s border with Nepal, Bhutan and Bangladesh. The Home Ministry on the advice of MEA had mentioned that closure of trading points particularly for the landlocked neighbors was an international issue and called into question India’s implementation of legally binding international agreements. It had also stated that the act of the West Bengal government was in clear violation of orders issued by MHA under the Disaster Management Act 2005 as well as well as Articles 253, 256 and 257 of the constitution. Some 70 percent of India Bangladesh land trade takes place through the ICP Petropole-Benaople. The disruption of trade through this ICP and the inflexibility of the state government to allow trucks from Bangladesh has had a negative impact on bilateral trade. The bilateral trade for the period April-May 2020 was $ 424 million. In contrast, in April-June 2019 bilateral trade was nearly $ 2bn. Meanwhile, Bangladesh exports to Tripura have more or less remained uninterrupted during the lockdown period.
Source: Economic Times
India's aim is to build an all-encompassing ties with Uzbekistan, which covers all areas of India's national endeavours for further progress and prosperity, Ambassador of India to Uzbekistan, Shri Santosh Jha told Trend . "We are seeing a growing interest from Indian businesses in a wide range of sectors in Uzbekistan. This is directly related to ongoing reforms and opening of the economy that is happening in Uzbekistan. Obviously these create new opportunities and as a close partner of Uzbekistan, we are helping promote Indian companies to invest and build capacities in a wide range of sectors,"said Santosh Jha. According to the ambassador, over the last year, the sides have seen proposals in areas such as pharmaceuticals, hospitals and healthcare; development and management of airports and cargo complexes; clean energy including solar power generation; information and communication technology; agriculture and food processing; and in the education sector in Uzbekistan. "Indian pharmaceutical company, Cadila, has announced an investment of $50 million in a pharmaceutical plant in Andijan region of Uzbekistan, among other such proposals. Last year, prestigious Indian educational institutions such as Amity and Sharda universities have opened campuses in Tashkent and Andijan respectively. Following the visit of a large business delegation from Gujarat last year, investment and cooperation proposals have emerged in a wide variety of sectors, including agriculture and food processing; automotive parts and textiles, pharmaceuticals and healthcare; IT and innovation; education and capacity building; hotels, tourism and hospitality; construction and real estate; and energy. Both sides are actively pursuing these proposals," stated Santosh Jha. The ambassador said, that both governments are working to expand bilateral trade, which through growing at a rapid pace is still far below potential at $325 million. "Our leadership has set the target for $1 billion and this is quite achievable. We need to tap into the right sectors and facilitate businesses on both sides. Conclusion of a Preferential Trade Agreement at an early date can help in this regard. Both sides are also working closely to increase market access for agricultural products. Some areas have been opened and others are under negotiation. Similarly, continued reform and active efforts can promote investment relationship in areas mentioned above. India has offered grant assistance and concessional credit to promote development cooperation the two countries with emphasis on social and economic infrastructure," said Santosh Jha. As he said, establishment of direct connectivity through Afghanistan and Iran, absence of which for various reasons is currently a significant constraint in promotion of bilateral trade, could be another area for future development.
Source: MENAFN
The textile industry captains have decided that they will not shut down the businesses, but take all precautions to stop the spread of Covid-19. The Federation Of Surat Textile Traders Association (FOSTA) held a meeting with Navsari MP CR Paatil on Sunday to decide whether to shut shops or continue business. Over 700 people associated with textile business have tested positive so far. “The traders agreed to continue business with precautions and no textile business will be shut. Everyone agreed to download Arogya Setu App,’‘ Patil said. Diamond industry leaders also held a meeting with state minister Kumar Kanani and said guidelines for the operations are being prepared. “Just because some people are violating the rules, the entire industry should not be closed,” said Babu Kathiria, [resident, Surat Diamond Association.
Source: Times of India
Without stronger balance sheets, firms will perish in this harsh environment; board, group structure reforms will attract investors. Going by the commentary from corporate chieftains, FY21 is probably going to be the worst year in decades. With its deteriorating debt profile, India Inc remains financially fragile and ill-equipped to take on a recession. Only well-capitalised businesses can hope to survive; over-leveraged players that are unable to generate cash flows will perish. Even getting back to the pre-Covid-19 growth levels isn’t enough because the existing supply of goods and services is way more than the demand. That is clear from the decelerating growth in consumption demand in the last two years. Naturally, new project intentions are crawling; CMIE says they plummeted to about Rs 56,000 crore in the June quarter—a sixteen-year low. But, even in the June 2019 quarter—when there were no shutdowns—they were worth only `1.2 lakh crore, way below the long-term quarterly average. But, it is not just the lack of demand that is holding back businesses from expanding, it is also the lack of financial wherewithal. Indeed, one should expect to see much more wealth destruction than wealth creation in the next couple of years. Brace for bankruptcies, thousands of them, mostly micro and small units. But also be prepared for some not-sosmall companies to go belly-up. As one can see from the rising number of cases in the insolvency courts, the casualties were high even before the pandemic struck. Who would have thought a Jet Airways wouldn’t make it in the world’s fastest-growing aviation market! The responsibility for the many corporate failures of the past 10-12 years lies, for the most part, with the managements or the promoters; they ran businesses that were overleveraged and over-staffed, and indulged in over-priced and unviable acquisitions, and diversified into unsuitable areas. They failed to assess the competition, to anticipate the changes in consumer preferences and tastes and to keep pace with advancements in technology. They ventured into unfamiliar territory, aided and abetted by banks who over-lent, neglected to watch over the money and failed to recover it. If the loan losses of banks over the past decade are any indication, companies have ‘destroyed’ some Rs 20- 25 lakh crore. If the business didn’t sink, its balance sheet remains bloated. Indeed, most balance sheets are over-leveraged. Research from McKinsey published last year showed that companies hold 43 % of India’s long-term debt with an interest coverage ratio (earnings before interest and taxes over interest expense) of less than 1.5 times. This means much of the operating profits will be needed to pay the interest bill. Operating profits last year for a sample of 1,691 companies (excluding banks and financials) were Rs 8.32 lakh crore—about the same levels as in FY17. Net profits in FY20, at Rs 2.64 lakh crore, were the lowest in at least the last five years; excluding TCS and Reliance Industries, the profits were only Rs 1.9 lakh crore. S&P recently wrote that, despite several negative rating actions in the past three months, there could be a further downside for Indian companies; it added that about 35% of credit ratings on Indian corporates have either a negative outlook or are on credit watch with negative implications. In fact, if debt-free IT companies are excluded, the ratio deteriorates to one-in-two ratings. Having funded their expansions and acquisitions largely through debt, most companies today are financially fragile. The number of single ‘B’ ratings, for example, S&P said, increased to about 33% of total ratings at the end of 2019 from 13% in 2016. Since it is going to be hard to generate revenues and profits this year, India Inc’s already anaemic debt profile can only worsen. McKinsey observed that many CEOs had indicated the crisis has knocked back their companies’ revenue levels to those seen three to five years ago. That doesn’t sound unlikely; at around `72 lakh crore in FY20, revenues, for the sample of 1,691 companies, were smaller than in FY19. These numbers could well shrink in FY21, given the prices of commodities are benign, and also because it will be harder to push through volumes at a time when consumer demand is weakening. But, rather than wait, promoters need to raise capital fast. For too long, they have been sourcing their capital contribution from bank funds instead of their resources; one expects banks will be far more cautious and diligent now. Promoters must be willing to dilute their ownership, and while many will not get the price they want, they must realise the dangers of dithering. To attract investors, strategic or financial, they must reform and take the Governance in ESG a lot more seriously, strengthening the boards and cutting out complex group structures that allow them to transfer funds from one company to another. Else, attracting serious investors won’t be easy. Also, the sooner they offload peripheral and unrelated businesses, and plough the cash back into the core companies, the better. There is no glory in running a dozen unviable businesses, and no shame in selling out. The way to a strong P/E multiple and a multi-lakh crore market capitalisation is through a lean, mean and clean business.
Source: Financial Express
Fabric production is a challenge for Vietnam's textile and garment industry when it comes to free trade agreements (FTAs) requirements on product origin. The import value of fabric and sub-material for the textile and garment industry accounts for 40 per cent of garment export revenue. Of which, 70 per cent of imported fabric was for manufacturing export garments. Truong Van Cam, deputy chairman of the Vietnam Textile and Apparel Association (Vitas), said stronger links in the industry are needed. “To take those advantages, the local textile and apparel enterprises must strengthen links among them to focus all sources on manufacturing materials meeting requirements on product origin in FTAs like the EU-Viet Nam Free Trade Agreement (EVFTA), especially fabric for producing export garment products," he told Vietnam News. Enterprises will have to solve difficulties in the development of the production chain, such as differences in terms of quantity, quality and price of products, for long-term cooperation, Cam said. The association also proposed the Ministry of Industry and Trade (MoIT) complete a development strategy for Vietnam's textile and garment industry to submit to the Government for approval, he said. “The strategy needs to focus on the planning of large-scale textile industry. It must have industrial zones with advanced wastewater treatment systems to attract textile and dyeing projects, ” Cam said. "Meanwhile, local authorities should grant investment licences for dyeing and textile projects because current textile and dyeing technologies are not as polluting as they used to be." In the past, many localities did not give investment licences for dyeing and textile projects due to fears they would cause environmental pollution but now, the global textile industry has dyeing technology to lessen pollution. "Therefore, localities need to change the view of textile and dyeing projects to give investment licences for more textile and dyeing projects, supporting the development of the domestic apparel industry," Cam said. The Government should direct localities to focus on solving difficulties of the textile and garment enterprises so Việt Nam could have enough supply of raw materials meeting origin requirements to enjoy tariff preferences in FTAs. In addition, the research and development (R&D) activities of textile and apparel industry are limited. Therefore, the State needs more investment in R&D activities to create good conditions for domestic research institutes to develop new products and equipment, he added. The Mekong-China Strategic Studies Programme (MCSS) report released in Hanoi early this week also pointed out that the domestic textile and garment industry lacks sufficient domestic supply of materials, especially fabric, so it will be difficult to take advantage of tariff cuts in FTAs. Vietnam has signed 13 FTAs, including 12 FTAs that are effective and one FTA waiting for approval. The nation is negotiating three other FTAs. The deals bring many advantages in competitiveness for the textile and apparel industry. For instance, tariff rates are between zero and 5 per cent for textile, garment and raw materials. Meanwhile, according to World Trade Organisation (WTO) regulations, the tariffs are 12 per cent for textile and raw materials and 25 per cent for garment products. However, Vietnam has only taken a third of the advantages of the FTAs, according to the report. Vietnam has not yet exploited potential markets that are members of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) such as Mexico, New Zealand, Canada and Australia. Of which, Australia and Canada are two large textile and garment markets with total value of about $10 billion per year, while the market share of Vietnamese textile and garments products in the two markets is worth only about $500 million per year. The report said Canada is a high potential export market for Vietnam’s garment products. According to the CPTPP, 42.9 per cent of Vietnam garment exports to Canada will enjoy tariffs of zero in the first year and tariffs on the remaining 57.1 per cent will be removed in the fourth year if Vietnamese products meet regulations on the origin of yarn.
Source: The Star
Vietnam is positioned to stand out among Asia’s frontier and emerging markets this year in terms of its economic resilience and success in bringing the coronavirus outbreak under control, says Fitch Ratings. These factors should support Vietnam’s ‘BB’ rating, which we affirmed in April 2020 while revising the Outlook to Stable from Positive. Nevertheless, the country faces a number of challenges, including contingent liability risks from stateowned enterprises and structural weaknesses in the banking sector. Vietnam is one of only four Fitch-rated sovereigns in the Asia Pacific (APAC) that we expect to post positive economic growth in 2020. Official data show the economy expanded by 0.4% yoy in 2Q20, despite the impact of the coronavirus pandemic on tourism and export demand, in line with our full-year 2.8% growth projection. Fitch forecasts that the pace of expansion will accelerate in 2021, as external demand, including tourism exports, recovers. The relative strength of Vietnam’s growth momentum owes much to its success in curbing the pandemic. Vietnam had no reported deaths from COVID-19 as of end-June, according to the World Health Organisation. This could reflect a variety of factors, including the effectiveness of the official health policy response. Vietnam has introduced fiscal stimulus of around VND271 trillion (3.4% of GDP) to help offset the effects of the pandemic. This includes tax deferrals, cuts and exemptions, as well as cash transfers to affected workers and households, the latter being worth 0.4% of GDP. We expect the general government debt-to-GDP ratio to rise to around 42% in 2020, from 37% in 2019, based on Fitch estimates, but this still below the 59% median for ‘BB’ rated sovereigns. The State Bank of Vietnam has also loosened monetary policy to support the economy, but the lower interest-rate environment and state pressure on banks to ease lending terms will weigh on bank profitability. Meanwhile, slower economic growth and loan forbearance will add to asset quality problems. These factors will aggravate the structural weaknesses in the banking sector, such as low capital buffers and under reporting of problem loans, which have already dragged on the sovereign rating. Slower credit growth may, however, provide some relief on capital. Vietnam’s economic outlook remains vulnerable to shifts in external demand. The country has benefitted from trade diversion associated with rising costs in China and the US-China trade war, and early data suggest it made further gains as China’s exports were disrupted by the coronavirus. Vietnam’s share of US apparel and textile imports rose to 15.5% in 4M20, from 12.9% in 4M19, according to the US Office of Textiles and Apparel. The country also attracted a healthy USD8.7 billion in realised capital investment from overseas in 1H20. Nonetheless, both textile and apparel exports to the US and realised capital investment were lower yoy, illustrating Vietnam’s vulnerability to the evolution and impact of the pandemic. As elsewhere, restrictions remain on inbound tourism and remittances are declining. Tourism directly accounts for about 10% of GDP, with a higher contribution if indirect spillover effects are considered, while remittances were worth over 6% of GDP in 2019. Vietnam is also susceptible to policy action by its main trade partners. Its National Assembly ratified the EU-Vietnam Free Trade Agreement on 8 June, which should underpin stable trade relations with the EU. However, Vietnam is on the US Treasury’s watchlist of potential currency manipulators, and relations with China are complicated by clashing territorial claims in the South China Sea. Nonetheless, our base assumption is that trade ties with both countries will remain stable.
Source: Fitch Ratings
There is no single definition for the creative economy. It is a concept evolving based on the interaction between human creativity, ideas, intellectual property, knowledge and technology. Essentially it is knowledge-based economic activity based on creative industries. Creative industries can be identified as advertising, architecture, design, fashion, film, video, photography, music, theatre, publishing, research and development, software, computer games, arts and crafts, electronic publishing, television and radio. They are also an important source of commercial and cultural values of this sector. On the other hand, the creative economy is the sum of all segments of the creative industry, including trade, labour and production. John Hawkins, in his 2001 book ‘creative economy’ shows how creativity and innovation are about how people make money from ideas. According to Hawkins, “creative economy” refers to the socioeconomic potential of trading activities with creativity, knowledge and information. The creative industry Today, the creative industry is one of the most dynamic sectors of the world economy and offers new opportunities for leaps and bounds in the emerging economies of the world. Creative industries in the international market have witnessed sustained growth over the past decade. It represents a 7% growth in global trade. The global market for traded creative goods and services has expanded. Europe is the largest exporting of creative goods among countries in the developed region. Germany, France, Switzerland, the Netherlands and Belgium are among the top five creative products exporters. Among countries in the Asian region, China is the largest exporter of creative goods. The top five exporters in the region were China, Hong Kong, India, Turkey and South Korea. Developing countries seem to play an important role in the international trade of creative industries. The creative economy is the engine of growth and employment growth in many countries. It extends to the areas of advertising, broadcasting, architecture, arts, crafts, design, fashion, gastronomy, music, publishing, drama and technology. These have been a major force of entrepreneurship and innovation and have helped to increase social development and employment. As agriculture and manufacturing economies grow, many are building new clusters of creative and artistic activities. These have been regarded in the past as branches of economic activity. On the other hand, leisure mediums are more than just working forms. They are not only substantial and profitable industries, but also well-paid and satisfactory jobs. In the past, these sources were not financially viable but have become very good income sources in the 21st century. Creative services Creative services is a sub-sector of the creative industry that is part of the revenue generating economy by providing creativity to other businesses. Creative services is a department within a company that does creative work, such as writing, designing and producing. It is often a sub-department of the marketing department of a company or organisation. The market in today’s world has been created with the help of these creative services. It covers all aspects of commercial art, industrial design, branding, and advertising. The UNCTAD report explains the shift in the trend of world trade from creative goods to creative services as industrial and agricultural output drops. Sri Lanka’s creative economy. This is a good time to think about Sri Lanka’s economy. It is time to look at new avenues that can contribute to the economic growth of Sri Lanka. On the other hand, it is time to introduce new reforms within the economic structure of Sri Lanka. We have traditionally taught about an export economy of tea, rubber and coconut. But with the introduction of garment manufacturing in the country during the eighties, garment products became the main stream of exports. Therefore, this decade is a time for search new economic opportunities. In the face of the current crisis in the economy of Sri Lanka, the contribution of the creative and economic sectors will be an important factor in the future. Sri Lanka’s creative economy is stable. Growth has increased from $ 433.62 million in 2010 to 2014 to $ 845.41 million. Contribution to GDP is 5.3%. The contribution to employment in Sri Lanka exceeds 3%. A survey by the British Council in Sri Lanka identifies three main areas of the creative economy in Sri Lanka. According to art and culture, design and media are the disciplines. Under art and culture, photography includes visual arts, performing arts, literary arts, heritage, and crafts. Design includes software design, advertising and branding, architecture, portrait design, industrial design and fashion design. Media includes publication, radio and television, digital media, film and video. The fact that these sectors are still traditional in Sri Lanka indicates that the economy has not yet modernised. In Sri Lanka, there was a negative balance of creative trade during the period 2005- 14.This negative equilibrium has been caused by higher imports than exports. Other countries in the region – India, Pakistan, Thailand and Malaysia – have gained a positive trade balance. Building a creative economy There is little scope for extensive discussion on building a creative economy in Sri Lanka and policy makers are less interested in these areas. Similarly, other countries in the region have shown keen interest in these economic sectors. Accordingly, the contribution of this sector in the economic development of those countries seems substantially increase. It is a matter of concern whether the Government is concerned with the sectors mentioned above. Sri Lanka’s traditional industry has a good market for antiquities in the world market. Sadly, we have not yet been able to identify this market and supply it with demand. Architecture in Sri Lanka has a historical reputation. For example, Geoffrey Bawa and Bevis Bawa are renowned architects in Sri Lanka and internationally. They brought the Sri Lankan architecture into the international arena. A new trend in the world of hotel design is the replacement of traditional architecture. A good market for craftsmen will be created in the future. The textile industry in Sri Lanka had a local market in the past. But gradually the market has fallen due to imports of foreign garments and inputs. Recently there has been a good demand for Sri Lankan textile products locally and internationally. The textile industry, which is built as a cottage industry, is being organised by various organisations to create a market for their products. As a result, a local market is being created. This industry is a mix of modern design and therefore has the potential to create a foreign market. The overseas market for handloom sarees and other products manufactured in Sri Lanka is open. What should happen is that the industry needs assistance and knowledge to help marketers find the market. A new economic sector If creative cities can be created with the creative economy, it can be built as a new economic sector. Activities in the city must be developed extensively. Creative cities can be created as a pilot project especially in Colombo, Galle and Matara. For example, New York has about 50 million visitors a year. Foreigners refer to New York City as the “Big Apple” or “The City That Never Sleeps”. It features historic sites such as Times Square, Empire State Building and Central Park, as well as a large number of entertainment options for tourists, including international theatres that are spectacularly entertaining with modern technology. The new Colombo and Colombo Port City which is under construction will create new economic opportunities through the creation of these international theatre and dance halls. On the other hand, the Colombo city can be transformed into a tourist attraction by connecting the new Port City and the old Colombo city. We need to have a broader vision and strategy. Creative software development Sri Lankan software manufacturers have a good market compared to other countries in the region. Most of the major software development companies in the world have subcontracting companies in Sri Lanka. Mainly software and related services develops software for clients in London, New York, San Francisco and Sydney. In 2018, the IT sector’s export revenue is $ 1 billion. Its revenue target is set to be $ 5 billion by 2022. Accordingly, in the future, the country will have a huge income through creative software development that will transform the industry. The industry can be further expanded by innovations affiliated with foreign companies. In addition to these areas, there are many other areas of concern to the creative economy of Sri Lanka. This should identify the most effective areas and work hard to find new business opportunities. Special attention may be given to establishing a separate institution for this purpose. It is time to rethink the development of creative industries as an investment sector to create a knowledge-based economy in the formulation of Sri Lanka’s economic policy. Creative workers, entrepreneurs, employees, experts, the public and policy makers in this regard can create new economic opportunities in this sector. Thereby the country’s economy can take a big leap forward.
Source: Financial Times
European leaders talk of shortening supply chains and curbing China's "Belt and Road" plan. But on the ground in Italy, Gimmi Baldinini says his designer footwear company is in no position to cut ties with the Chinese. "Chinese workers have a better hand with gym shoes," said the chairman of Baldinini, founded by his family in 1910 in northern Italy, where it still has the main production hub for the top segment of his goods. To produce sports shoes, the company relies on a Chinese plant in the Shenzhen area. "Production costs over there are 75% lower than in Italy. I can't consider cutting them off and reshoring that particular production line," he said. "Simply, there's no other way, unless the Italian government decides to cut tax and labor costs dramatically." Already buffeted by U.S.-China trade tensions, the European Union has stepped efforts to produce closer to home in the wake of the global pandemic, which is causing the steepest recession in almost a century. While drugs and medical gear have been an immediate priority, the initiative is wide-ranging. In an unusual foray into industrial policy, European Central Bank Executive Board member Luis de Guindos and Dutch central bank Gov. Klaas Knot have independently argued that companies should consider moving parts of their supply chains closer to home even if that meant higher costs. While the U.S. voiced its concerns about China's economic rise earlier and more loudly, Europe is seeking to thwart China's expansionist policies, including using tariffs to try to curb the "Belt and Road" infrastructure plan. As part of a proposed $843 billion coronavirus recovery package, the European Commission is talking about ensuring "strategic autonomy" in key sectors and building stronger value chains within the EU. It says a new pharmaceutical strategy will address risks -- such as Europe's limited production capacity -- exposed during the crisis. It won't be an easy task. China manufactures about 40% of all active pharmaceutical ingredients used worldwide, according to Stada Arzneimittel, a German producer of generic and over-the-counter drugs whose manufacturing facilities are mostly located in Europe. While China is an essential part of the supply chain, the company has increased inventories of components with longer shelf lives in recent months and is trying to source supplies from more than one manufacturer and from different countries, a Stada spokesman said. The push isn't just a proposal sitting in Brussels. National governments across the bloc are pushing to source supplies locally, competing for investments in production capacity in the process. Germany plans to present a supply-chain strategy in the next few months as it aims to reduce the vulnerability of core industries to potential disruptions in trade flows. As part of the process, Europe's largest economy is seeking to enforce tighter rules on human rights and environmental protection on incoming goods, a way to help protect local manufacturers. Any rules should be designed in a way that doesn't create an additional burden for companies, Economy Minister Peter Altmaier said in June after meeting industry representatives. Supply-chain resilience is crucial for German industry because 17% of its production relies on global suppliers -- a much bigger share than in other countries. A recent study from the Munich-based Ifo Institute showed that Germany's dependence on international suppliers could hold back the economy's return to business as usual after the pandemic. Evidence suggests that a massive shift back to Europe is unlikely because of the evergrowing importance of China. The Asian superpower already accounts for about 40% of global vehicle deliveries for leading German carmaker Volkswagen. In May, the German auto giant increased its exposure to the country by buying stakes in battery company Guoxuan High-Tech and in its electric-vehicle partner. "Manufacturers are moving toward more regional sourcing," said Elmar Kades, a consultant at advisory firm AlixPartners. "But there won't be 100% regional sourcing as companies will still need to ship certain raw materials, precious metals or electronics components that are used worldwide." To counter Asian dominance in electric-car batteries, France and Germany have pooled efforts to kick-start a European industry. The bloc plans to invest about 8.2 billion euros in coming years to build champions in battery-cell production, according to Laurent Michel, an official at France's Ministry for the Ecological and Inclusive Transition. Bringing manufacturing closer might not necessarily mean inside the EU. New plants could be located just outside the bloc. While French President Emmanuel Macron has been trying to keep manufacturing at home, the country's carmakers have reduced capacity in France and opened new exportoriented plants in Morocco. Peugeot manufacturer PSA Group opened its largest plant outside Europe and China there last year. Keen to boost exports, Moroccan authorities have managed to draw about 70 manufacturers of automotive components with the help of incentives, including free land plots, tax breaks and massive investment in infrastructure. Bolstered by relatively low wages for an EU country, Portugal was already noting the efforts to shorten supply chains even before the virus outbreak. "We were seeing some moves in this direction about two years ago, in both industrial and services sectors," Luis Castro Henriques, chief executive officer of Portuguese trade and investment agency Aicep, said in an interview. Examples include investments by Japanese automotive textile maker Howa Tramico, German exhaust expert Eberspaecher Gruppe and South Korea's Hanon Systems, which produces compressors for air conditioning in cars. In Eastern Europe, countries such as Poland and Romania are also pitching to attract investment, leveraging their EU membership, existing links to Western companies and labor costs that are a fraction of what employers in Germany pay. "Many entrepreneurs and investors are wondering how to rebuild those damaged supply chains," Polish Prime Minister Mateusz Morawiecki said on June 17 as he announced a plan to waive taxes for companies that plan to reinvest their profits in the country. "We are telling the whole world -- come to us." Romania has been working on a state guarantee program for large companies to boost "greenfield" investments. The disruption in international supply chains caused by the coronavirus crisis has forced companies to give greater weight to the proximity of vendors, ECB's de Guindos said. The former Spanish economy minister's comments were echoed by his colleague. "We relied very heavily on international value chains in recent years and also actually pressed every buffer out of our system in our urge to efficiency," Knot said on Dutch TV last month. Maybe it's time to be less reliant on foreign countries and focus more on supply security, but "that would come at a cost," he said.
Source: Bloomberg News
An Indonesia-Australia deal that eliminates most trade tariffs between the two nations and aims to open up investment, took effect on Sunday, Indonesia's Trade Ministry said. The Indonesia-Australia Comprehensive Economic Partnership Agreement (IA-CEPA), signed last year and ratified by the Indonesia's parliament in February, aims to boost bilateral trade that was worth $7.8 billion in 2019. "COVID-19 has resulted in economic slowdown in nearly all countries," Trade Minister Agus Suparmanto said in a statement. "IA-CEPA momentum can be used to maintaining Indonesian trade and improve competitiveness." In a signing ceremony last year, the two countries said the pact would eliminate all Australian tariffs on imports from Indonesia, while 94% of Indonesian tariffs would be gradually removed. Australia aims to boost exports including wheat, iron ore and dairy, while Indonesia hopes to increase automotive exports, textile and electronics. The deal opens up investment, including for Australian universities in Indonesia.The ministry said in the statement it has issued three regulations to allow for implementation of the deal.
Source: Thompson Reuters
For designers and fashion makers of a smaller scale, a circular approach can only begin with the choice of material. Depending on the type of collection, a circular way of production can be achieved in many ways, according to Benjamin Itter, co-founder and CEO of Lebenskleidung, a Germany-based company that launches two fabric collections a year. "When using materials today, it is most important to use materials and fabrics, best from natural fibres like organic cotton, organic linen, organic wool or the like. If not made from one material already at the design stage it is crucial to think about how the final product can be re-assembled at the end of life," Itter writes in an article in the hard bound fifth edition of the Sustainability Compendium - ‘Going Circular’ brought out by Fibre2Fashion. Giving an example of India in his article 'A question of scale', he says, ancient crafts and the use of handspun and handwoven cotton, known as khadi, which was not been made of GMO or pesticide-poisoned cotton, has been always a circular solution.
Source: Fibre2Fashion
Manufacturing is able to offer great benefits to the Greek economy, as long as the state understands its problems – horizontally and then separately in each domain – and helps in the creation of a friendlier environment, said Michalis Stasinopoulos, head of the Athens-listed Viohalco group and president of Hellenic Production – Industry Roundtable for Growth. “During the decade of the financial crisis, from 2009 to 2019, without any substantial state support and thanks to the struggle of the entrepreneurs themselves and the top standard scientific and technical skills of workers, the exports of manufacturing products increased by 64%, to reach up to almost 20 billion euros last year – i.e. more than tourism,” Stasinopoulos said. The head of Hellenic Production cited the example of the Greek textile industry: “Up until 20 years ago the sector employed some 200,000 workers. Today it has shrunk dramatically and is even threatened with extinction, while Greece is the sole country in Europe to produce cotton. Instead of using this comparative advantage to create a chain of value, to the benefit of the economy and society, we export our cotton to Germany, where it gets processed, and then we reimport it!” Stasinopoulos added that cotton is not the exception: “When we speak of smart specialization, we should bear in mind several examples such as that of the textile industry, which we need to study, understand what went wrong and fix it where possible.” For instance, textiles, as well as Greek manufacturing in general, have a major problem with energy costs, which are much higher than in most other European Union countries, said Stasinopoulos: “We also have particularly high non-salary costs and one of the worst investment amortization systems in Europe,” he argued. For the head of Viohalco, internationalization, innovation and smart specialization are significant factors for strengthening the competitiveness of the Greek manufacturing sector, but in order to avoid “a leap into the unknown,” Greece should first understand the current situation: For decades manufacturing was quite simply absent from the public debate concerning growth strategies, and was forgotten by those making the political decisions; there was this stereotype that Greece is not fit for industry. The practical result was that there were never any political decisions to strengthen the competitiveness of Greek manufacturing, although it is more resistant to external shocks.
Source: Ekathi Merini
