A report by the B20, which represents private industry across member nations also pushed for less restrictions on exports, migration As countries impose restrictions on travel and trade to contain the spread of coronavirus, the G20’s official business voice has warned against such regulations becoming permanent in the post-Covid world. In a special report on the Covid-19 crisis, the Business Twenty (B20), which acts as the official G20 dialogue with the business community, also urged governments to reduce export restrictions on pharmaceutical products, ramp up export credit and end selective biases towards movement of people across borders. The report said the move to adopt strict policies, keeping in mind national needs, may backfire if not coordinated properly. The B20 pushed for greater international cooperation, warning that “any primacy of ‘nation first’ policies instead of globally coordinated approaches will almost certainly lead to greater economic costs for all”. It also pointed out that governments are increasingly encroaching onto the turf of private business through regulations. “There might be room for a broader consideration regarding the role and the weight of the state in national economies and, most of all, in corporate governance. However, such support and emergency regulation should not turn to interfering in or disorienting market-place forces,” it said. As the voice of the private sector to the G20, it represents the global business community across all G20 member states and all economic sectors. Currently it is chaired by Saudi Arabia. The Fifteenth G20 Summit is still set to be held in Riyadh on November 21-22, 2020. Calling for increasing multilateral lending to developing countries (both to middle- and low-income economies), the B20 said this was needed to ensure risk mitigation and improve debt sustainability in the medium term. It suggested that coordinated intervention may be needed if there is further appreciation of the US dollar, which is impacting developing and low-income countries. With regards to global trade, the body pushed for reducing the capital treatment for MSME exposures for lending to a risk weight between 75 and 85 per cent in line with the Basel III regulations. Removing procedural delays at the points of loading and impediments to cargo transportation and addressing tariff and non-tariff barriers to facilitate agricultural trade also ranks high on its agenda. Calls have again been made for expediting the implementation of the World Trade Organization (WTO) Trade Facilitation agreements. The body also suggested the Financial Stability Board monitor the risks to financial stability among those lending institutions that bear the burden of rolling over temporarily the global economy’s debts. “As credit standards are relaxed in response to the crisis, the build-up of positions must be tracked and communicated to regulators,” it said. The B20 also batted for nations renewing the current moratorium on Customs duties on electronic transmissions enforced by the WTO, something India is opposed to. Collectively, the G20 economies account for around 90 per cent of the gross world product, 80 per cent of world trade, two-thirds of the world population, and approximately half of the world’s land area.
Source: Business Standard
While revenue constraints led to a slowing of capital expenditure by state governments in FY20, the CPSEs owned by it largely held the fort, preventing public expenditure from losing its share in the gross domestic product (GDP). With cash-strapped states cutting down on their capital expenditure, finance minister Nirmala Sitharaman on Tuesday impressed upon central public sector enterprises (CPSEs) to stick to their capex targets, in order to help the economy recover from adverse impact of Covid-19. In a video conference with CMDs of 23 CPSEs, Sitharaman reviewed Rs 1.65-lakh-crore capex plan of these select CPSEs for this fiscal. Public capex has been a key driver of economic activities in the past few years in the absence of strong private support. In recent years, the ratio of public capex has been roughly in the 5:5.5:3.5 ratio among the CPSEs, states (budget) and the Centre (budget). While revenue constraints led to a slowing of capital expenditure by state governments in FY20, the CPSEs owned by it largely held the fort, preventing public expenditure from losing its share in the gross domestic product (GDP). The Centre has maintained a brisk pace in its capex in April-May and intends to achieve the target of Rs 4.12 lakh crore for FY21 compared with Rs 3.37 lakh crore in FY20. States, which together invested Rs 4.5 lakh crore in FY19 and were estimated to spend Rs 5.8 lakh crore in FY20 (actual to be a bit lower), have virtually halted capex so far in FY21 due to cash crunch as tax revenues have slowed down significantly after outbreak of Covid-19. Many including IMF and rating agencies project India’s GDP to shrink by 4-5% or more in FY21. The country’s GDP growth slowed to an 11-year low of 4.2% in FY20 and the Centre’s fiscal deficit in FY20 was revealed to be 4.6% of GDP, the highest level since FY13. The meeting with CPSE chiefs was held as part of the series of meetings that the finance minister is having with various stakeholders to accelerate the economic growth, the finance ministry tweeted. She encouraged CPSEs to perform better with timely achievement of targets. Better performance of CPSEs can help the economy in a big way to recover from the impact of Covid-19, Sitharaman said. The combined capital expenditure by the CPSEs and departmental undertakings like NHAI and Indian Railways with annual capex budgets above Rs 500 crore, turned out to be Rs 4.41 lakh crore in FY20. This was 90% of the Rs 4.9-lakh-crore target for the year and 1.1% higher than the capital spending by these entities in the previous year. In FY20, state governments developed cold feet in sustaining the capex tempo, but CPSEs, despite an erosion of their cash surplus and profits in a slowing economy, acquitted themselves. The CPSEs’ creditable capex achievement was despite their being used as a milch cow by the revenue hungry Centre over the last few years in the wake of sluggishness in the private sector — they have had to fork out huge and extra sums as dividends to their principal owner and often come to its aid to bail out disinvestment plans. The CPSEs (excluding FCI but including departmental arms) are estmated to invest about Rs 4.49 lakh crore from their internal accrual and borrowings in FY21, down from about Rs 5 lakh crore in FY20RE (actual to be a little lower).
Source: Financial Express
The government is not considering extending the deadline for payment of Equalisation Levy by non-resident e-commerce players, even though a majority of them are yet to deposit the first installment of the tax, an official said. The 2 per cent Equalisation Levy was introduced in the 2020-21 Budget and has come into effect from April 1, 2020. The deadline for payment of first installment of tax for AprilJune is July 7. The tax would be levied on consideration received by e-commerce operators from online supply of goods or services. A government official aware of the development said the government is not considering any extension of the deadline and asserted that the entities liable to pay the levy had ample time to apply for PAN and prepare themselves for the levy. "The scheme was notified in March. The companies liable to pay the levy should have applied for PAN then. When globally digital tax is there to stay, there should be no expectation of a rollback. There would be no extension of the deadline for payment," the official said. As per law, late-payment of Equalisation Levy will attract interest at the rate of 1 per cent per month or part of the month. Non-payment can result in a penalty equal to the amount of Equalisation Levy, along with above interest. Last week, the Income Tax Department brought in changes to the 'challan' for paying Equalisation Levy, by expanding its scope to include non-resident e-commerce players. The amended challan also seeks mandatory PAN of deductor. Further, it provides for 'Outside India' option while seeking address details. Tax experts, however, said there are practical difficulties in getting PAN and many companies are not paying the equalisation levy as there is still considerable confusion and lack of clarity on the applicability of the same. Nangia Andersen LLP Partner Sandeep Jhunjhunwala said the requirement of having a PAN and an Indian bank account could cause administrative delays in remittance by non-residents. "Typically, PAN application for non-residents has attestation requirements which could be done by the Indian Embassy, Apostille Authority or overseas branch of a scheduled Indian Bank. Given the restricted functionality of Embassies and Apostille authorities across the world, obtaining PAN could take much longer than expected. Likewise, opening of a bank account by nonresidents in India could also be a prolonged process in a pandemic struck situation. For non-residents having Indian group entities, discharge of Equalisation Levy by the Indian counterparts could have issues from an Indian exchange control regulations perspective, which needs to be precisely considered," Jhunjhunwala said. Deloitte India Partner Rohinton Sidhwa said "Practically, most foreign companies were expecting the installment to be deferred and FAQs to be issued. Since most have not applied for a PAN there are practical difficulties in making the payment. Application of PAN by foreign companies requires documents to be consularized by the Indian embassy in the foreign country. Given that embassies are also not functioning there are issues in completing the process". Consulting firm AKM Global Tax Partner Amit Maheshwari said many companies are not paying the equalization levy as there is still considerable confusion and lack of clarity on the applicability of the same. "The levy has several issues which primarily include very wide coverage (even non e-commerce companies could be covered), lack of clarity on how consideration needs to be determined especially in cases where the income is minuscule compared to the transactions facilitated by the nonresident e-commerce operators. Another important aspect is that even transactions between non-residents are covered and this seems to be an extra territorial overreach along with practical difficulty in implementation. The industry is grappling with these issues and have caused much uncertainty on how to comply," Maheshwari added. Equalisation Levy was first introduced by Finance Act, 2016, at the rate of 6 per cent on payments for digital advertisement services received by non-resident companies without a permanent establishment (PE) here, if these exceeded Rs 1 lakh a year. The Budget 2020-21 has expanded its scope to include consideration received by non-resident ecommerce operators from e-commerce supply or services. The rate applicable has been set at 2 per cent. PwC India Partner-Tax and Regulatory, Vikram Doshi said given the uncertainty over the last few weeks on the challan to be used for payment and the situation of the current pandemic , there was hope that levy may be deferred. "Therefore many taxpayers have waited till almost the last moment to pay the levy .It will be interesting to watch the collection and compliance levels even though it will not be a true reflection of the potential , given the lower cross border activity over last few months," Doshi added.
Source: Economic Times
India''s Ambassador to the US Taranjit Singh Sandhu held virtual meetings with the governors of Washington and Michigan states as part of a drive to enhance trade and people-to-people ties. With Governor Jay Robert Inslee of Washington State, Sandhu discussed the potential for further cooperation in aerospace, IT, retail, healthcare & pharma, and agricultural sectors. “Wide ranging discussion on the economic partnership btw Washington & India; significant contributions of Indian American community & Indian businesses; & collaborations in health and medicine,” Sandhu said in a tweet. The Indian Embassy said in a statement on Tuesday that they discussed the complementarities, which can lead to job creation and mutual growth. "The discussion also covered the important contributions of Indian and Indian-American companies, professionals and community to the state of Washington.” During the interaction with Governor Gretchen Whitmer of Michigan, they discussed the ways to enhance the mutually beneficial trade and investment partnership in sectors such as automotive, manufacturing, aerospace, services and agriculture sectors. India and Michigan have a robust trade and investment relationship. The total trade between India and Michigan stands at USD 2.49 billion in 2019. Many Indian companies in IT, automotive, design, engineering and construction, life sciences/pharma, manufacturing and energy sectors have invested in Michigan. “The strong people to people ties; especially Indian Americans; Indian businesses and vibrant student community are important links in this partnership,” Sandhu tweeted. As per CII''s 2020 report on Indian investment in the US, 23 Indian companies have invested around USD 453 million in Michigan, thereby creating 3,971 jobs. India is one of the few countries identified by the State of Michigan for business development and mutual investments. Michigan Economic Development Commission regularly conducts investment missions in India. Sandhu and Whitmer also noted the vibrant presence of Indian community in Michigan, including a large number of Indian students in Universities/Colleges, and their contribution in strengthening the partnership between India and the State of Michigan. India and Washington State share a growing trade and investment relationship, which is reflected in the total trade between the two stood at USD 1.23 billion in 2019. Major Indian exports include textiles, metals, computer and electronics, fisheries. Major Indian imports from Washington are transportation equipment (including aerospace), agricultural products, computer and electronics and food and beverages. As per CII''s report on survey of Indian industry''s footprint in the US, 14 Indian companies have invested around USD 143 million in Washington State, creating more than 4,167 jobs. Washington-based companies have also established a strong presence in India''s defense, retail and food and beverages sectors.
Source: Outlook India
Textile companies in India are relying on fretful consumers to revive their hobbled businesses. In recent weeks, several firms, including Aditya Birla Group’s Grasim Industries, Mumbai-based textile company Ruby Mills and suitings brand Donear, among others, have launched fabrics that promise to keep clothes virus-free. On June 19, Grasim Industries launched its “antimicrobial” textile fibre, which it had been developing well before Covid-19 spread in India. “It became more and more clear to us that…perhaps consumers would be looking for this kind of thing now because there is such a pervading fear of catching the disease,” said Rajeev Gopal, chief sales and marketing officer at Grasim Industries. “Antimicrobial” fabric is typically used for making bed covers, curtains, and surgical masks used in hospitals as it contains agents that prevent the growth of bacteria and viruses. These fibres typically also contain an additional layer of protection that stops bacteria and viruses from settling on the cloth. Companies, though, tend to use different techniques to produce such textiles. Grasim, for instance, injects the antimicrobial agent into fibres at the initial stage itself. The agent then becomes an integral part of the textile, Gopal said. This fibre can last up to 50 washes. Ruby Mills, on the other hand, introduces the antimicrobial agent at a later stage. Its “H+ technology” allows it to incorporate antimicrobial properties on a range of textiles like cotton and polyester when their fibres have already been processed. “We had been working on such a product since 2016 to prevent the growth of Middle Eastern Respiratory Syndrome, so this product is not been an overnight development, but a tweak to our existing research,” said Rishabh Shah, managing director of Ruby Mills. Even as the product appears timely, there will be challenges to its success. Pivot to survive One of the many challenges facing India’s textile industry, which contributed 2% to the country’s GDP and employed 45 million people in 2019, is that consumers are afraid to step out and buy clothes. “Consumers don’t want to roam around and shop like they used to before Covid-19,” said Avinash Mane, commercial head South Asia business at Austrian fibre company Lenzing, which has tied up with Ruby Mills to introduce an antimicrobial fabric. Experts, such as Rajat Wahi, partner at Deloitte India, said that the decline in shoppers stepping out has led to a 40% fall in consumption and could cost the textile industry almost Rs1 lakh crore ($13.37 billion) of business this year. “All the inventories of major apparel and textile brands are sitting in the stores,” said Wahi. “These (challenges) will spur innovation.” For companies, it is a question of sink or swim. “You can survive in this situation only if you make something that is sellable,” said Mane. But are antimicrobial materials really the solution to revive these businesses? Many medical professionals concur that it is highly unlikely for the Covid-19 virus to spread through clothes, leaving little room for such products to be useful. “There’s a lot we don’t know about this virus, and we are learning more about it every day. But this is our current understanding: If you are out for a run in your neighbourhood or making a quick visit to the grocery store, it is highly unlikely that you would contract Covid-19 via your clothes or shoes. We don’t believe shoes or clothing are a significant source of transmission,” Dr Vincent Hsu, MPH, a board-certified internal medicine, infectious diseases, and preventive medicine physician at AdventHealth in the US, told Healthline. But Deloitte’s Wahi thinks Indian consumers may get lured because “right now everyone’s scared.” Considering the consumer sentiment, if such a fabric is introduced in the market, many might see it as an essential product,” Wahi said. “If these products are genuine and if they are verified by reputed medical organisations, there will an uptick in terms of its usage.”
Source: Quartz Daily Brief
Amidst the multiple challenges thrown up by the Covid-19 pandemic, India will bounce back with a vengeance with green shoots in the economy already being visible, NITI Aayog CEO Amitabh Kant said. According to Kant,every crisis can be turned into an opportunity and India must identify 12-13 sunrise sectors in which it can leapfrog to become global champions to achieve sustainable high growth and create jobs. “Electrical mobility, artificial intelligence, blockchain technology, liberalising clinical trials and moving on to high value products in pharmaceuticals as well as the creative industry are the areas in which we can leapfrog to help country grow at consistently high growth rates,” Kant said while speaking on the “Role of creative economy in nation building” at the Ficci E-Frames 2020 on Tuesday. Commenting on the Atma Nirbhar Bharat, Kant said it is not about protectionism. “Atma Nirbhar Bharat is the ability of Indian companies to develop world-class products to cater to the domestic market and eventually hit the global markets by becoming global champions,” he said. “It has to be a collaborating partnership between the government and private players,”he said, citing the example of development of the Aarogya Setu app which has touched 140 million downloads. “Building of capacity will be critical and backing of the government will help companies get size and scale,” he added. According to Kant, Covid-19 had brought in a new normal and those who survive will be the people who work technology, data and in sunrise sectors. “Indian has traditionally focussed on sunset sectors where it is difficult to get the size and scale,” he added. Talking about the creative industry, Kant said India is emerging as a hub of the creative economy. “The media and entertainment industry is on a fast track to growth and poised to cross $30 billion by 2021 with creative exports likely to double over the next four-five years,” he said, adding a large number of new jobs are likely to be created in the creative industry as well as e-commerce.
Source: Economic Times
With the advancement of the Act East policy, Assam is now the centre of Southeast Asia with access to eight crore people, state industry and commerce minister Chandra Mohan Patowary says The Assam government has invited textile companies to invest in the state, assuring customised support to their business ventures. With the advancement of the Act East policy, Assam is now the centre of Southeast Asia with access to eight crore people, Industry and Commerce Minister Chandra Mohan Patowary said. Participating from Assam in the 'Exclusive Investment Forum' webinar organised by the Union Ministry of Textiles in collaboration with Invest India on Monday, Patowary said the state's robust infrastructure makes it an ideal investment destination for textile and apparel companies. "As per the fourth All India Handloom Census, Assam has the highest number of looms and weavers in India. With 10.9 lakh weaver households and 10.19 lakh looms, the cottage industry provides huge employment opportunities to the people. The state has a textile park and is contemplating to set up another such park," he said. Apart from Assam, representatives of Gujarat, Maharashtra, Madhya Pradesh and Telangana participated in the webinar. Chairing the webinar, Union Minister for Textiles, Smriti Irani, highlighted the centuriesold history of textile in India. She said India has a vast textile market, abundant raw materials and investor-friendly policies. Assam produces 4,650 tonnes of Eri silk, 156.96 tonnes of Muga silk and 59.50 tonnes of mulberry every year, state Industries and Commerce Department Commissioner and Secretary K K Dwivedi said.
Source: Live Mint
Amid a call for boycott of Chinese goods after the Ladakh face-off, a national trading body in a letter to Prime Minister Narendra Modi has said, it should be done in a calibrated way and not until alternatives are in place. The trading body also sought fiscal support from the government to encourage traders to import goods from other countries instead of China. The Federation of All India Vyapar Mandal (FAIVM) said, though they support stopping the import of Chinese goods for creating a roadmap to reduce dependence on Chinese products but any action should not endanger" the ongoing domestic business. China exports products worth USD 74 billion to India annually. Leaders in the trading community are of the opinion that our industries could be endangered due to non-availability of ready stock due to disrupted supply from China for industrial products such as machinery parts, bearings and other parts," FAIVM general secretary V K Bansal said in a letter to the Prime Minister. The traders have also expressed apprehension about the landed cost of imports from other countries as normally Chinese products are cheaper by 30 per cent to 70 per cent as compared to other countries, he mentioned in the letter. The FAIVM claimed to be active in 18 states across the country. A trader dealing with chemicals said, currently the entire requirement of citric acid in the country is met through Chinese imports. "We have written to the Prime Minister highlighting the reality even as we all support reduction of Chinese imports. But that should be in a calibrated way and not until alternatives are in place. Based on feedbacks from our members on July 4, we put forward some of the suggestions," Bansal told . Asked about the demand of some other national trade bodies seeking blanket ban, Bansal said, "we are not in favour of such a ban." In view to reduce India's dependence on Chinese goods, the government should provide some financial support and incentives for imports from other countries instead of China. "Financial support may include import duty exemption, cash subsidy on imports from other countries to maintain the level of cost of Chinese products," the FAIVM suggested in the letter. President of the Confederation of West Bengal Trade Association Sushil Poddar said, "Our own manufacturing may take 1-2 years time to produce goods that can be a substitute for Chinese items. However, during the intervening period we need some other supply source." The Federation of Indian Export Organisations had said, boycotting of Chinese products may not be feasible for India as domestic industry is dependent on input from there. The JSW Group said the conglomerate would stop annual imports from China worth USD 400 million in the next 24 months.
Source: Economic Times
The world of textiles is well-established, generally sophisticated and expanding globally in recent years. While one side innovations are happening on materials including woven, knitted and nonwoven fabrics in forms from natural, synthetic, inorganic, including biopolymer materials, on the other side, companies are adopting new technologies that are helping the factories smarter, efficient and more productive. Business Standard recently held a webinar ‘New Learnings in Textiles Technology in the post-COVID World’ along with TEXPROCIL. Speakers are of the view it is time to look at new possibilities, leveraging technology. K V Srinivasan, Chairman, TEXPROCIL said that we have come a very long way and many innovations have led to improving efficiency and productivity levels through the years. As we speak today much has been said about how the nation can use the COVID-19 opportunity to redefine its future. The industry needs to join hands to reinvest and modernise to improve efficiency and productivity. It is time for the industry to introspect, move away from the lament-stuck narrative of the textiles sector and bring in scientific temper. It is time to look at new possibilities, leveraging technology. Ashwini K. Agrawal, Institute Chair Professor and Head Department of Textile and Fibre Engineering at IIT Delhi said factors of growth would be fashion and lifestyle, rising demand from new application areas, varying consumer preferences, environment/climate change and global warming. He presented some case studies of Indian and global companies and also said that cotton is going to stay here as it is soft and breathable, safe to wear and easy care. He concluded saying innovation, sustainability, social responsibility, verifiable claims (tracking) and branding should be the new thinking to create a special space. After narrating and giving examples of how AI and IoT can reduce cost and improve efficiency, Prof. Asim Tewari from Department of Mechanical Engineering, Indian Institute of Technology Bombay, Mumbai said AI can provide a decisive business advantage, while IoT is needed to generate data to feed AI Domain knowledge is needed to monetize AI Cheaper, better, faster. MSME is best suited for IoT AI deployment for local customised solutions (supervised learning), cost-effective, technology agile. Rohan Patodia, Co-founder, Ducit Materials said that like every sector and industry globally, the textile sector needs to evolve and move forward with the times, it has done so in the past and will do so in the future. People usually compare India with China, massive capacities and mass production. Barring a few players who have reached that scale in India, the MSME sector can benefit by creating and innovating through technology. This technology can be defined by AI and IOT systems which make factories smarter, more efficient and operationally better. The second is product technology, unique finishes and partnerships can help India use its Raw Material base advantage and promote products in niche markets and niche brands which are starting to dominate the foreign landscape. Customers want smarter clothes, more multi-functional wear. There are more markets than just the fast fashion markets to compete in. "I hope the MSME sector rises to the challenge and create immense value for its customers with the existing infrastructure they have. These value additions will create in the longterm competitive and strategic advantages for the entire value chain from cotton farming to garment making," he said.
Source: Business Standard
All Customs stations would set up Turant Suvidha Kendras (TSKs) by July 15 which will act as the sole physical interface point with Customs officers for physical submission of documents, the CBIC has said. In a communication to all Principal Chief Commissioners of Customs and Central Tax, the Central Board of Indirect Taxes and Customs (CBIC) said the step is being taken ahead of the pan-India roll out of faceless assessment, which will be done in phases. "The Principal Chief Commissioners of Customs/Chief Commissioners of Customs are advised to set up the TSKs in all Customs stations by July 15, 2020," it said. In its efforts to make India enter top 50 rank in World Bank's 'Ease of Doing Business' ranking, the CBIC had last year announced reform measure - Turant Customs - for speedy clearance of goods at air and sea ports. Turant Customs is a comprehensive package which is being implemented in a phased manner. Towards that, the Customs department plans to roll out pan-India faceless assessment by December 31 in a phased manner, and has already started it at Chennai and Bengaluru ports from June 8. Faceless assessment (commonly known as anonymised or virtual assessment) enables an assessing officer, who is physically located in a particular jurisdiction, to assess a 'Bill of Entry' pertaining to imports made at a different Customs station, whenever such a 'Bill of Entry' has been assigned to him in the Customs automated system. "Considering the benefits ushered in by providing single point interface set up in Bengaluru and Chennai Zones for first phase of faceless assessment, CBIC would set up Turant Suvidha Kendra (TSKs) to all the Customs formations w.e.f July 15, 2020," an official statement said. "TSKs will henceforth be the sole physical interface point with Customs formations whenever physical submission of documents is required by Customs such as for defacement of Country of Origin Certificates. This is expected to further ease the Customs clearance process," it added. The statement further said that CBIC Chairman M Ajit Kumar on Monday unveiled several new and modern testing equipment inducted into the Central Revenues Control Laboratory (CRCL) which would significantly enhance the in-house testing capability of Customs, leading to faster import and export clearances. He also launched new IT functionalities for supporting contactless Customs under the CBIC's flagship programme 'Turant Customs'. The IT functionalities empower exporters to self-manage changes in their bank account and AD Code through ICEGATE as well as register on ICEGATE without having to approach a Customs officer. "A major innovation that was announced today is the automated debit of Bonds in the ICES which will dispense with the need for importer to visit Custom Houses to get the debit made manually. "It has also been decided that the balance in the Bond would henceforth be indicated in the import document, which would help importers plan their imports," the statement added.
Source: Economic Times
MSMEs employ 16 crore people. This is excluding the additional 10 crore people that are employed unofficially, stated Chandrakant Salunkhe, founder and president of SME Chamber of India in an interview to FPJ’s Jescilia Karayamparambil. So, to revive a sector, which creates millions of jobs, the state and the central governments will have to devise a strategy that will help the sector to recover, he added. Below given is edited excerpts: How is COVID-19 challenges different or similar from pre-COVID-19 challenges? Pre-COVID-19, there were plenty of issues already, particularly in raising funds, limited access to skilled manpower and other infrastructure issues. In addition, the economic downturn hit the medium, small and micro enterprises (MSMEs). This was followed by many clients cancelling export orders since September last year. Other than this, the taxation issue was also there. Already SMEs were burdened with pre-COVID-19 issues when COVID-19 struck. The biggest issue was migrant labours leaving the city. This reverse migration took place because there was no support for their survival. Due to COVID-19, the supply chain management was completely disturbed, manufacturing came to a standstill, transportation was an issue (at least in the first month of lockdown) and there was no access to skilled manpower. Even minimal machinery work was not possible, due to the lockdown. It was only after the lockdown was lifted partially, companies were able to operate. In Maharashtra alone, there are around 19.5 lakh companies, of which nine lakh are service-oriented companies and around 10 lakh are manufacturing industries. So, the government is claiming that 75,000 companies have started and I do not think that is a big achievement for the government. The government’s effort can only be appreciated if they were able to reopen a few lakh companies. The Maharashtra government has not even announced a package for MSMEs in the state. In the case of the central government, it has announced Rs 3 lakh crore economic package particularly for those MSMEs that are enjoying facilities from banks already. Many MSMEs have approached the bank for working capital needs but no avail and other MSMEs are stuck in paperwork formalities. The factories are allowed to function but there is no transport for workers to travel. Such issues crop up and there are no solutions to them yet. What are the challenges faced by MSMEs in raising capitals? In the last financial year 2019-2020 (since September), the growth in manufacturing activity and exports has been upside down. So, if a company with Rs 100 crore turnover, and annual growth of 20-30 per cent, was not able to achieve its target due to the economic slowdown in the last two quarters of FY 2019-2020, then the banks are not giving the companies the funds that they essentially require. In addition, these companies have lost business in the first quarter of FY 2020-2021. So, it will be further difficult to raise working capital requirements from banks and other financial institutions. Other issues that were raised are related to state government. The Maharashtra government had announced on May 1 that there will be an economic package for the industry that are facing challenges and for rural areas. But nothing has happened there. How do you see banning import and export of Chinese products and services hit Indian MSMEs? MSMEs import large electrical equipment, chemicals, machinery etc from China. We are not capable of fighting with Chinese manufacturers. We depend heavily on China for most of the products that we import from China, as against our exports. Our imports are double the exports. Our industry is not an innovative industry (about 75 per cent of MSMEs). The sector only produces products and sells them in the market. MSMEs do not set aside money for research and development. This issue is not limited to MSMEs alone. Despite having funds, large companies do not support research and development units. In China, MSMEs’ productivity is huge which is driven by innovation; also supported by a highlyproductive labour force. What policy level changes are you expecting from the government authorities? The government should empower Indian SMEs by providing a level playing field. Funding should be made available easily and at low cost. There is a need to put more efforts into the export promotion by finding new markets or new supply opportunities. At this time of the pandemic, we should see this as an opportunity. Another policy level change should be to encourage industrialisation that should take place in rural India, rather than limiting these activities to metros. There is a need to encourage entrepreneurship in the manufacturing sector. The government should encourage job creation and get labour forces back. The government should also look at extending ease of doing business not just to foreign players but to India counterparts as well. The government should not provide red carpet treatment to foreign companies and offer red-tapism to Indian companies. Would increasing the working hours of labour and annulling labour laws help MSMEs? People working on the shop floors can hardly work for 10-12 hours. By increasing the working hours, the productivity of the workforce will come down. So instead of quantity, quality work should be the focus. If you make people work for long hours, the health of the people will deteriorate. So, encouraging long working hours is not a feasible option. Would that mean MSMEs will forgo their employees and focus more on automation? This is not possible for SMEs as they lack funds to invest in capital-intensive goods, advance machinery and technology among others. To achieve digitisation and automation, the banks will have to come forward to support MSMEs by offering loans at the rate of six per cent. The Maharashtra government announced the new website to promote local talents. How will it help MSMEs? The website was to help employers and employees find their match, but it will take some time before it becomes smooth. This website will not just help industries in Mumbai but in other parts of Maharashtra. While this project is mainly for bhumiputra (sons of the soil), it has to be noted that these are not the types of jobs that the sons of the soil are looking for. So, we will end up depending on migrant labourers. In the past, there were few programmes that were run to encourage participation from sons of the soil but there is no clarity how much has that helped the state government.
Source: Free Press Journal
In mid-April, stock exchange disclosures revealed that the People’s Bank of China (PBoC) had a holding of over 1% in Indian mortgage finance major HDFC. But the Chinese central bank also holds stakes in several other listed companies. However, these are all below the radar since they are less than the 1% threshold limit for open disclosures by companies (see graphic). Among others, PBoC holds a 0.32% stake in cement sector major Ambuja Cement, and 0.43% in Piramal Enterprises, which has a major presence in the pharma sector. PBoC’s holding in HDFC is currently worth about Rs 3,100 crore, while in Piramal Enterprises around Rs 137 crore, and in Ambuja Cement about Rs 122 crore. Exactly two years ago, the Chinese central bank had received RBI permission to set shop here. Two recent reports on Chinese investments in India have warned that several funds and investment companies, directly controlled or indirectly influenced by its government, have been eyeing stakes in companies that are strategically important to the economy. Till 2019, PBoC also had a small stake in a company that’s a major player in the game of chances, but the bank exited that company some months ago. Market sources said the Chinese central bank also has stakes in several other companies, including in the Indian arm of a German manufacturing major and another domestic fertilisers major. But these are not disclosed publicly since they all are below the 1% limit. Ambuja Cement’s annual report for 2019 showed PBoC held nearly 63 lakh shares in the cement major. Of these, the bank acquired about 16 lakh shares by buying small chunks through 2019. In Piramal Enterprises, PBoC increased its stake early this year to 0.43% when the company went for a rights offer. “This marginal increase in their holding (in terms of number of shares) is largely on account of PBoC’s participation in our rights issue,” a spokesperson for the group said. After PBoC’s stake acquisition in HDFC came to light on April 12, the government, through a press note on April 17, amended foreign investment rules into India. The addition was that any investment from an entity from a country that shares “a land border with India” will require government’s approval. Earlier, such restrictions were applicable to investments from Bangladesh and Pakistan, and the April 17 note included investments from China as well. In the recent past, some developed jurisdictions have amended foreign investment policies to weed out opportunistic takeovers of strategically important and other domestic companies when valuations are low, as Covid-19-related issues are weighing on stock prices. India has not gone as far as these countries, but China-watchers say it should be on guard. According to a leading Sinologist, there is an old Chinese tactic called “loot a burning house”. “The government policymakers should remember this while formulating the FDI policies.” A recent Brookings Institute report also put out caveats along similar lines for Indian policymakers, especially regulators for investments into India. The March 2020 report said that the growth of Chinese investments into India since 2014 has changed the nature of what has been a largely transactional trade relationship. “Chinese companies are emerging as prominent players and investors, in areas ranging from infrastructure and energy to newer sectors of interest such as technology startups and real estate,” Ananth Krishnan, the author of the report, said. Drawing on several sources within India and from China, the report said that the aggregate Chinese investment in India was a staggering $26 billion with a pledge to invest another $15 billion in major infrastructure projects. However, these figures are likely an underestimation since there are several limitations to exactly map Chinese investments in India, especially given the reluctance of the Chinese government to share the data. Another report by Gateway House, a foreign relations think tank, pointed out how Chinese companies were using the startup route to invest in leading players in several sectors in India. The list includes investments by Alibaba in Paytm group, Zomato and others and by Tencent in Byju’s, Ola, Flipkart and others.
Source: Times of India
The industrialists said that the government can impose a ban on the import of finished products, but a ban on the import of raw material would be a bane for the industry Amid rising anti-China sentiment in the country, the textile and dyeing industry has urged the Union government not to ban the import of raw material for dyes and spare parts of machinery from China by stating that it ‘would prove a disaster for the Indian industry’. The industrialists said that around 80% of the textile machinery and its parts are imported from China, while the raw material for dyes also comes from there. The industrialists said that the government can impose a ban on the import of finished products, but a ban on the import of raw material would be a bane for the industry. General Secretary of Punjab Fabric Association, Bobby Jindal said, “The dyes are manufactured in India, but its raw material is imported from China. Similarly, the textile machinery and its parts are imported from China. The government has stopped the clearance of material that is stuck at ports. The textile and dyeing industry would not be able to survive if the imports of raw material are banned.” The industrialists rued that the jacket manufacturing sector and the hosiery industry in the industrial hub would also be badly affected if the imports are banned from China. President of Knitwear and Textile Club, Vinod Thapar said, “All the material for the hosiery industry including buttons, zips, etc are presently imported from China. Around 90% of the fabric used for manufacturing jackets and machinery is imported from China. If the imports are banned from China, then the Union government should provide a financial package to the industry for commencing manufacturing of these items in the country. Otherwise, the industry would collapse.”
Source: Economic Times
Despite the ongoing disengagement at the India-China border following a tense weekslong faceoff, there seems to be no let-up in calls to ban Chinese goods. Even as concerted efforts from both sides gradually take the edge off the tension at Ladakh, local industry finds itself in considerable dilemma over what happens if/when India actually severs decades-old business linkages with its trans-Himalayan neighbour. In an interview today, senior economy commentator Swaminathan Aiyar put the vexing issue in perspective. Rejecting the popular notion that the China story could be over for India, Aiyar highlighted the dangers of plunging headlong into an import ban. China must be sent a stern message but not in this manner, he insisted. There is a need to draw a clear line between goods that can be banned and the ones that can't be, he said. There is not much downside to banning Chinese apps, kites, candles, clocks or toys, Aiyar explained, because such a move will not increase consumer prices here owing to the fact that India has other options available at roughly similar price points. But if India goes and bans stuff like Chinese machinery or intermediate goods, it will hurt the Indian economy deeply because no other nation can provide us the same stuff at the cost that China does, he cautioned. The bottomline of the argument is that while banning apps or toys won't turn India into a high-cost economy, a ban on machinery or intermediate goods will, to the great detriment of India's interests. If India goes ahead with a ban on such goods, it will then lose out to other countries that continue with Chinese imports, Aiyar reasoned. He cited the example of ASEAN nations to make his point clear: These nations have a long history of bitterness with China but they have never banned Chinese goods. If India goes for a ban, it will simply lose competitiveness, he said. Put checks and balances on finished or consumer goods by all means, but don't touch capital goods or intermediate ones — is what he said India should do at this point. It is okay for the Swadeshi Jagran Manch to push individual consumers to boycott Chinese goods, but at the state level India must not delink from China, especially in case of cap goods or technology, Aiyar said. Talking of Sajjan Jindal's insistence on not importing stuff from China anymore, Aiyar said grandstanding was fine so far as it did not raise the cost of operations. So if you want to do that kind of grandstanding and it makes you feel good without becoming high cost, it is just fine, he said. Putting in safeguards is better than altogether banning Chinese electrical equipment, an area where China supplies goods very cheap; the same goes for solar panels and battery storage, and so it is not possible for India to go big on solar without Chinese imports, he explained. Aiyar underlined the need to be careful in certain areas such as defence production, but he also insisted that India and China are inseparable in many areas of trade and economics. The point is to not overdo it and to always have a calibrated response so that one does not go over the top, he said. There are other countries which have just as much grievance against China as we have, but they are not going over the top and neither should we, Aiyar cautioned.
Source: Economic Times
|
Item |
Price |
Unit |
Fluctuation |
Date |
|
PSF |
790.71 |
USD/Ton |
0% |
08-07-2020 |
|
VSF |
1242.34 |
USD/Ton |
-0.11% |
08-07-2020 |
|
ASF |
1682.57 |
USD/Ton |
0% |
08-07-2020 |
|
Polyester POY |
726.60 |
USD/Ton |
0% |
08-07-2020 |
|
Nylon FDY |
2044.44 |
USD/Ton |
0% |
08-07-2020 |
|
40D Spandex |
3989.16 |
USD/Ton |
0% |
08-07-2020 |
|
Nylon POY |
5128.92 |
USD/Ton |
-1.37% |
08-07-2020 |
|
Acrylic Top 3D |
954.55 |
USD/Ton |
0% |
08-07-2020 |
|
Polyester FDY |
1909.10 |
USD/Ton |
0% |
08-07-2020 |
|
Nylon DTY |
1852.11 |
USD/Ton |
0% |
08-07-2020 |
|
Viscose Long Filament |
904.68 |
USD/Ton |
0% |
08-07-2020 |
|
Polyester DTY |
2300.89 |
USD/Ton |
0% |
08-07-2020 |
|
30S Spun Rayon Yarn |
1723.89 |
USD/Ton |
-0.66% |
08-07-2020 |
|
32S Polyester Yarn |
1396.21 |
USD/Ton |
0% |
08-07-2020 |
|
45S T/C Yarn |
2179.79 |
USD/Ton |
-0.33% |
08-07-2020 |
|
40S Rayon Yarn |
1894.85 |
USD/Ton |
0% |
08-07-2020 |
|
T/R Yarn 65/35 32S |
1666.90 |
USD/Ton |
0% |
08-07-2020 |
|
45S Polyester Yarn |
1567.17 |
USD/Ton |
0% |
08-07-2020 |
|
T/C Yarn 65/35 32S |
2037.32 |
USD/Ton |
0% |
08-07-2020 |
|
10S Denim Fabric |
1.13 |
USD/Meter |
0% |
08-07-2020 |
|
32S Twill Fabric |
0.64 |
USD/Meter |
0% |
08-07-2020 |
|
40S Combed Poplin |
0.93 |
USD/Meter |
0% |
08-07-2020 |
|
30S Rayon Fabric |
0.48 |
USD/Meter |
-0.30% |
08-07-2020 |
|
45S T/C Fabric |
0.64 |
USD/Meter |
0% |
08-07-2020 |
Source: Global Textiles
Note: The above prices are Chinese Price (1 CNY = 0.14247 USD dtd. 08/07/2020). The prices given above are as quoted from Global Textiles.com. SRTEPC is not responsible for the correctness of the same.
Textile and clothing sector leaders demanded allowing four per cent cash incentive to the exporters against their repatriation of export proceeds instead of value addition. Bangladesh Garment Manufacturers and Exporters Association (BGMEA), Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), Bangladesh Textile Mills Association (BTMA) and Exporters Association of Bangladesh (EAB) on Sunday in a joint letter to the finance ministry made the plea. They also urged issuance of a master circular on the cash incentive saying that exporters are being harassed due to the ambiguity in the existing FE circular in this regard. Currently, knitwear exporters get 4.0 per cent alternative cash incentive against value addition to their products produced in the country using local yarn.The four trade bodies in the letter said currently the cash incentive is being calculated on 80 per cent of their repatriated export proceeds and exporters get highest 3.2 per cent incentive."The country's all other export-oriented sectors are getting cash incentive against their repatriation of export proceeds while the incentive for apparel sector is calculating on (value addition) 80 per cent of its repatriation," the letter read.To calculate cash incentive on value addition is a complex process, it added.The central bank issued a number of circulars in different occasions in this regard and all these circulars have created new ambiguity with using complex words, it said.The trade bodies claimed that cash incentive could be given against freight on board instead of value addition saying there was no realistic methodology for determining value addition to products.There are specific guidelines to determine textile and clothing items prices , the trade bodies said adding different methodologies are used in determining product prices based on the variation of their design and quality of fabric.Besides, the issue is very much technical as the charges for knitting and dyeing are not same. Terming the audit system in giving cash incentive 'more complex' they also alleged that they face a wide range of harassment because of the audit system. Exporters need six months to one year, in some cases, more than one year to get incentive certification, they said adding additional six months to one year passed after incentive claims sent to the central bank with certification.
Source: The Financial Express
Turkmenistan presently exports more than 70% of its textile products to foreign markets, Business Turkmenistan reports. The Ministry of Textile Industry of Turkmenistan operates more than 70 enterprises, including for the production of various types of cotton and mixed yarns, fabrics, jeans, knitted fabrics, and finished products from these fabrics. The companies have installed equipment from companies of Japan, Italy, Germany, Belgium and Switzerland. The operation of several large textile industries within the framework of the "raw materials - finished products" principle has shown that this method is more effective, the report said. The Ashgabat Textile Complex (ADT), which is one of largest enterprises in the Central Asian region of its kind, fully supplies the country's domestic markets, producing a variety of export-oriented products. The distinguishing feature of the products manufactured by enterprise is that no chemical additives are used in the dye or softening agent. The enterprise names its company's products "home textiles". ADT specialist Azatdurdy Berjanov said “the products of our textile complex are presented to the public with the trademarks ADT, Goza and Vada. At the beginning of the year, the tailors also started decorating their products with the symbol "Turkmenistan – Home of Neutrality". Last year, the textile complex also set up a department specializing in soft toys production. The range of toys made today is steadily increasing. Soft toys are made from scraps of handkerchiefs.
Source: Aki Press
Rules of origin in international trade is like a passport required for travel overseas. These are used to determine the “nationality” of goods traded in the global market place. Yet, ironically no internationally agreed-upon rules of origin exist. Rules of origin in international trade is like a passport required for travel overseas. These are used to determine the “nationality” of goods traded in the global market place. Yet, ironically no internationally agreed-upon rules of origin exist. Products exported by member states of the World Trade Organization (WTO) generally face lower import barriers in other member states than do the exports of countries that do not qualify for Most Favoured Nation (MFN) treatment. Many bilateral and regional trade agreements exempt the products of member countries from various requirements. Rules of origin are needed in all such cases because the identity of the producing country cannot be reliably inferred from the point of entry. These can also be used to interpret statutes governing labelling requirements, such as “Made in…” stickers, and to assist in compiling bilateral trade statistics. Each country or jurisdiction that administers a regional trade agreement e.g. the USMCA and the EU, has established its own rules of origin. These are divided into two categories: (1) rules relating to preferential treatment and (2) rules relating to non-preferential treatment. The former has two additional subsets: (1) rules on general preferential treatment for developing countries, and (2) rules relating to regional trade agreements. With respect to trade, rules of origin should theoretically play a neutral role. However, they sometimes are used for protectionist ends: origin rules that are too restrictive or that are enforced arbitrarily expand improperly the coverage of trade restrictions. In general, rules of origin have not been adequately addressed at the international level. For many years, the GATT contained no specific provisions on rules of origin other than Article IX, which deals with marking requirements (i.e., “marks of origin”). The Agreement reached in the Uruguay Round provided a programme for harmonizing rules of origin and applying them to all non-preferential commercial policy instruments, including MFN treatment, anti-dumping and countervailing duties. It also established disciplines that individual countries must observe in instituting or operating rules of origin, and provided for the framework for harmonizing rules and dispute settlement procedures. Aside from the GATT, the International Convention on Simplification and Harmonization of Customs Procedures (the Kyoto Convention), concluded under the aegis of the WCO, contains an Annex on rules of origin. In 1999, the WCO amended the Kyoto Convention for the first time in around 25 years. The WTO has sought to render those restrictions more precise and to harmonize rules across countries by building on the Agreement on Rules of Origin adopted by the GATT in 1994. The GATT, which the WTO superseded, required that rules of origin be transparent and administered in a consistent, uniform, impartial, and reasonable manner. Since 1995, the WTO expanded its perspective on rules of origin. In the recent past, when there was an increased push by several countries to pursue Foreign Trade Agreements (FTA) throughout the world, concern mounted over the socalled ¨spaghetti bowl phenomenon¨ where varying rules of origin and varying tariff schedules based on origin around the world as noodles in a bowl. The tariff reductions in several rounds of trade negotiations and strengthening of disciplines in anti-dumping sectors and others, rules of origin could potentially be used as hidden trade-restrictive measures. It raises concern that these are increasingly being formulated and administered in an arbitrary fashion to achieve protectionist policy objectives. The running joke in Geneva was that an entire rainforest in Indonesia could have been saved if it wasn’t for the writing and production of tomes of Rules of Origin negotiations reports!Many accused Customs officials (negotiators) of having a vested interest in continuing these interminable discussions as these provided perks of free travel to Alpine sojourns and would not be surrendered that easily – pure gallivanting. NAFTA was designed primarily to benefit firms and workers in North America, it was clear that goods manufactured elsewhere could not be allowed to circumvent tariffs simply by being trans-shipped through one NAFTA member country on their way to another. In an era of global manufacturing, final products are frequently assembled from components originating in many different countries. Precise legal standards—specific rules of origin—vary widely across countries, but most use an ad valorem criterion based on the percentage of value-added and computed in a prescribed manner. As these became increasingly controversial as the preferential tariff regions and antidumping arrangements that require them mushroomed. This led to specific criteria being negotiated for specific products in trade negotiations. To counter China and EU taking benefits of NAFTA, in the area of textiles the US amended rules of origin and came up with “Fabric Forward Policy” to make clothing eligible under the agreement. As long as the particular goods are originating in the NAFTA territory, the goods were quota-free and duty-free when they entered U.S. customs territory. Under USMCA this provision has been further strengthened, it still adopts the “yarn forward” rules of origin. This means that fibres may be produced anywhere, but each component starting with the yarn used to make the garments must be formed within the free trade area. Further, USMCA now requires that some specific parts of an apparel item (such as pocket bag fabric) need to use inputs made in the USMCA region so that the finished apparel item can qualify for the import duty-free treatment. As far as fabric forward provisions in NAFTA/USMCA are concerned, this is not exclusive to these agreements. In respect of other FTAsAndean Trade Preference Act, African Growth and Opportunity Act, Caribbean Basin Initiative, U.S.-Singapore Free Trade Agreement, US-Chile Free Trade Agreement have similar provisions. India’s apparel import from Bangladesh in 2016-17 was the US $ 140 million, while in 2018-19 the same was the US $ 365 million – that’s an incredible jump of 161 per cent. The Indian textiles industry has been recently requesting the Government that it is essential to impose necessary safeguard measures like Rules of Origin, Yarn & Fabric Forward Rule to prevent the cheaper imports. Efforts are on explore how India’s fabric export to Bangladesh can be increased as far as import of apparel from there into India under SAFTA is concerned. The USMCA includes important protections and updated rules of origin. In order to qualify for duty-free treatment under the USMCA, goods imported into the United States must conform to the Rules of Origin set forth in Chapter 4 of the USMCA. Imported goods that “originate” in Canada or Mexico and those otherwise meet USMCA requirements are extended preferential treatment. For textiles, under USCMA the Uniform Regulations provide further guidance on the treatment of various textile and apparel products. They establish a de minimis rule for non-originating materials, whereby a good will be treated as originating in the USMCA territory if the total weight (and not value) of the non-originating materials is 10% or less of the total weight of the good and the foreign elastometric content does not exceed 7% of the total weight. USMCA’s textile and apparel rules of origin are some of the most complex. Additionally, USMCA fixes the Kissell Amendment Buy American loophole, ensuring that a significant amount the Department of Homeland Security spends annually on clothing and textiles for the Transportation Security Administration benefits domestically produced products. Welcoming USMCA, Kim Glas, president of the National Council of Textile Organizations (NCTO) said, “Sustaining the $20 billion in apparel and textile trilateral trade between the U.S., Mexico and Canada is absolutely critical at this time. USMCA, which makes several key improvements over the former North American Free Trade Agreement (NAFTA) will go a long way to increasing the textile industry’s exports, as well as investments and capacity in the U.S. We need to maintain and expand a Western Hemisphere supply chain to meet national emergencies head-on in the future.” The requirements for eligibility are very complex and technical. Countries and articles are periodically added to or removed from the eligible countries and products lists. Duty rates and quota limits can change from time to time. However, in an increasingly globalised world, supply and value chains becoming a reality it is often difficult to have precise Rules of Origin. GATT and WTO have long grappled with this issue with limited success. During the Uruguay Round, participating countries recognized the necessity to provide transparency of regulations and practices regarding rules of origin, in order to prevent unnecessary obstacles to the international trade flow.In his keynote speech at the WCO Council in June 2011, Pascal Lamy, then Director-General of the WTO, highlighted preferential rules of origin as an area of critical importance. He noted that as long as the origin of a good has a great impact on the duties to be collected, the door is open to fraud. He added that the solution could be to “kill the rules of origin”. He focused on the WTO initiative “Made in the World” and stated that at present, international trade flows are computed by attributing the full commercial value of a product to the last country of origin. This needs to change as business increasingly locates the different stages of its activities in a way that optimizes its value-added chain. The WTO Agreement on Rules of Origin lays down the work programme to harmonize non-preferential rules of origin within three years from the initiation, i.e. by 20 July 1998. Due to the complexity of many issues raised during the work, the intended time schedule in the agreement was extended several times. The negotiations are still on-going but without a formal deadline or time schedule. In this age of “save paper, save tree & save the world”, unfortunately, many more rainforests of not just Indonesia but elsewhere will be lost too until the cows come home on Rules of Origin!
Source: Financial Express
The Indonesian government and industry players are gearing up to boost export of key products to neighboring Australia, amid slowing trade during the ongoing health crisis, as the trade pact between the two countries took effect on July 5. The Indonesia-Australia Comprehensive Economic Partnership Agreement (IA-CEPA), which was signed last year and ratified by the House of Representatives in February, eliminates trade tariffs between the countries. The Trade Ministry expects a boost in the export of some Indonesian products to Australia, such as textiles, automotive products, electronics, fish products and communication tools, as the trade pact is now in effect. The Indonesian Textile Association (API) expects the IA-CEPA to raise the value of Indonesia’s annual textile export to Australia by 2 to 7 percent from the level before the trade deal, according to Rizal Tanzil Rakhman, the secretary-general of the association. “We welcome the IA-CEPA and hope it can grow our export to Australia,” Rizal told The Jakarta Post via text message on Monday. “Although its population is relatively small, its income per capita is high and it is a potential market for high-end clothing.” As global trade was disrupted by the COVID-19 pandemic, Indonesia’s export fell 28.95 percent year-on-year (yoy) to $10.53 billion in May. However, the country's export to Australia still rose 15.69 percent yoy to $920 million in the January-May period, when export to major trade partners was mostly down. The value of Indonesia’s textile export to Australia was slightly down by 1 percent to $250.9 million in 2019 from a year earlier, according to the API, quoting data from the Australian Bureau of Statistics. The trade deal was expected to help the post-pandemic economic recovery of both countries, in terms of trade and investment. Bilateral trade between the two countries was worth US$7.8 billion in 2019. The government also issued three new regulations this year to support the implementation of the deal, including a finance ministerial regulation on customs tariff, the Trade Ministry stated on July 5. The trade deal is also expected to reduce the input cost of many Indonesian businesses that buy their raw materials or intermediate goods from Australia, such as the food and beverage industry. Australia imported $2.11 billion worth of Indonesian products, 1.36 percent of the latter’s total non-oil-and-gas exports, throughout 2019. On the other hand, Australia shipped $4.67 billion worth of commodities to Indonesia, resulting in a trade deficit of $2.56 billion on Indonesia’s side. Unlike the textile industry, the auto industry may not immediately benefit from the trade deal because it prioritizes trade of electric vehicles (EVs), which Indonesia has not produced, according to Kukuh Kumara, the secretary-general of the Association of Indonesian Automakers (Gaikindo). The Jokowi administration has set a target to start producing EVs in 2021 or 2022. “We do not have the products with a specification that Australian consumers need,” Kukuh told the Post in a phone interview on Monday. Indonesian auto industries mostly produce multi-purpose vehicles (MPV) or sedans like the Toyota Camry, while Australians prefer sport utility vehicles (SUV), Kukuh added. Australian ranchers, among others, also benefit from the trade deal, which guarantees a live male cattle export quota from Australia to Indonesia at 575,000 heads in the first year of the implementation. The quota will grow by 4 percent every year. The trade deal, therefore, solves the uncertainty issue that Australian ranchers face in planning production since they need two to three years to raise cattle until it is ready to be slaughtered, according to Valeska, the country manager of Meat & Livestock Australia’s (MLA) Indonesia office. “An uncertainty, either in the form of regulation or the trade situation, will make it difficult for the ranchers to make a long-term plan,” Valeska said in a virtual discussion on Monday. Australia was Indonesia’s largest source of beef import. The value of Indonesia’s beef import from the country grew 12.5 percent to $362.2 million in 2019 from 2018. Institute for Development of Economics and Finance (Indef) economist Bhīma Yudhistira warned that with Indonesia's past trade pacts, such as the ASEAN-Australian Zealand Free Trade Area (AANZFTA), only around 35 percent of the country’s business players had utilized it to boost their exports. “Has the information been disseminated well? Do small and medium businesses get a chance to export [their products] to Australia?” he told the Post on Tuesday. Bhima said there was also a chance that the trade deal would widen the trade deficit, as Australia seemed to be more ready to export to Indonesia. “Indonesian products that are exported to Australia are still fragmented, unfocused,” he said. “Australia is focused, in livestock and agriculture. I fear that the trade deficit will increase after the IA-CEPA.”
Source: The Jakarta Post
