“The principals also conversed on the ongoing India-USA trade discussions and appreciated the substantial progress made by both sides on most of the outstanding issues,” the ministry said. India and the US are close to concluding an initial limited trade package followed by a possible bilateral free trade agreement (FTA), New Delhi said on Thursday. “There was a desire expressed to conclude this initial limited trade package and recognising the complementarities of the India-USA bilateral trade, discussed the possibility of an FTA,” the commerce and industry ministry said in a release on Thursday, after an informal discussion between commerce and industry minister Piyush Goyal and US secretary of commerce wilbur Ross. “The principals also conversed on the ongoing India-USA trade discussions and appreciated the substantial progress made by both sides on most of the outstanding issues,” the ministry said. The informal tele-conversation took place on July 16. The two sides have been trying to thrash out a trade package with limited scope with the long term aim of an FTA since last year amid a plethora of unresolved trade issues. Business leaders from both sides also pitched for an FTA at the India-US CEO Forum on Tuesday. The forum coincided with the India-US Commercial Dialogue which is co-chaired by Goyal and Ross. Goyal had told Parliament in February that at that point, India was not negotiating a comprehensive FTA with the US. “No, Sir. Presently, India is not negotiating a comprehensive FTA with the US,” he had said in a written reply to the Rajya Sabha in February. The US is keen on a deal ahead of its presidential elections in November and had indicated that an initial deal could include restoration of the Generalised System of Preferences (GSP) benets to India and market access for each other’s agricultural products with a long-term view of a broader trade agreement. New Delhi has demanded exemption from high duties imposed by the US on certain steel and aluminium products and market access for its farm products, while the US has sought market access for its farm and manufacturing and products, medical devices, and lower duties for certain ICT products. It had also sought data-related relaxations, including in the ecommerce policy that India is working on. The latest draft of the policy says companies that store or mirror Indian users’ data overseas will be subject to periodic audits and also make available any data the government seeks within 72 hours or pay a penalty. People issues Also, in a possible move towards a totalisation agreement that would help Indian professionals avoid making social security contributions which are not refunded, the US has said that its statutory requirements would have to be fullled by India. On the issue of the pending US-India Social Security Totalisation Agreement, Ross mentioned that the statutory requirements of the US have to be fullled by India. Most countries require that workers have at least one year of domestic coverage to be entitled to totalization benets, and their combined US and domestic periods of coverage must equal or exceed the statutory minimum in eect in that country. “He oered to arrange a meeting between US Social Security Administrator and concerned Indian oicials to discuss and nd a possible solution,” the ministry said. India also raised the issue of Washington denying New Delhi the opportunity to become a supplier in its government contracts as 24 products such as footwear as they are designated as “child labour sectors’. “In response to minister Goyal’s concern on US keeping certain Indian products (24 items) under TVPRA (Traicking Victims Protection Reauthorization Act)’ list and designating them as ‘child labour sectors’; thereby denying them the opportunity to participate in supply contracts of US government agencies, Secretary Ross oered to set up a meeting between the labour department officials of both sides,” the ministry said in the release. Animal protection On the agenda was also the US ban on import of wild catch shrimp from India on the premise that shing practices followed in India were non-compliant with US regulations to protect sea turtles. Goyal shared the various conservation measures taken by Indian maritime states in protecting the sea turtles. Secretary Ross appreciated India’s concerns and agreed to facilitate a discussion between the oicials of US state department and Oice of Marine Conservation with the Indian Department of Fisheries and Ministry of Forest and Environment, in this regard, according to the statement.
Source: Economic Times
There was an informal tele-conversation between Mr. Piyush Goyal, Minister of Commerce & Industry and Railways and Mr. Wilbur Ross, U.S. Secretary of Commerce on 16 July 2020, a day after the India-U.S. CEO Forum which was held on15 July 2020. At the outset, both the principals exchanged pleasantries, and discussed the Covid-19 situation in both the countries and appreciated the cooperation between India and the USA, the largest and oldest democracies of the world, in fighting the pandemic. The principals also conversed on the ongoing India-USA trade discussions and appreciated the substantial progress made by both sides on most of the outstanding issues. There was a desire expressed to conclude this initial limited trade package and recognising the complementarities of the India-USA bilateral trade, discussed the possibility of an FTA. In response to Minister Goyal’s concern on USA keeping certain Indian products (24 items) under TVPRA (Trafficking Victims Protection Reauthorization Act)’ list and designating them as ‘child labour sectors’; thereby denying them the opportunity to participate in supply contracts of U.S. government agencies, Secretary Ross offered to set up a meeting between the labour department officials of both sides. Minister Goyal also flagged the pending ‘US-India Social Security Totalisation Agreement’, which had been also discussed during the visit of President Trump to India in February 2020. While appreciating India’s concern, Secretary Ross mentioned that the statutory requirements of U.S. have to be fulfilled by India in this regard. He offered to arrange a meeting between U.S. Social Security Administrator and concerned Indian officials to discuss and find a possible solution. Minister Goyal also raised a concern on ‘U.S. ban on import of wild catch shrimp from India’ on the premise that fishing practices followed in India were non-compliant with US regulations to protect sea turtles. He mentioned the various conservation measures taken by Indian maritime states in protecting the sea turtles. Secretary Ross appreciated India’s concerns and agreed to facilitate a discussion between the officials of U.S state department and Office of Marine Conservation with the Indian Department of Fisheries and Ministry of Forest and Environment, in this regard. At conclusion, Minister Goyal and Secretary Ross thanked each other and expressed their resolve to work together to further strengthen the Trade and economic ties between India and USA.
Source: PIB
Commerce and industry minister Piyush Goyal on Thursday said that India is not “crazy” about the issue of local content in manufacturing but will take a practical and balanced view of doing it “sensibly without compromising on quality and modern technology”. “We are not crazy about it but we have to become self-suicient,” he said at a CII virtual event on being asked about the country’s emphasis on local content requirements. “We will take a practical and balanced view and do it sensibly without compromising on quality and modern technology…We can’t import entire equipment if only one component can’t be made here,” he said. On being asked if Atmanirbhar Bharat is about India being protectionist, Goyal said: “Whatever we have to import and is high quality, we will import. All countries in the world are balancing their trade.” The minister emphasised that India wants fair, balanced and transparent trade.
Source: Economic Times
India and the US have signed an MoU to develop a strategic petroleum reserve in America and the two countries are in advanced stage of discussion to store crude oil in America to increase India's stockpile, Union Minister of Petroleum and Natural Gas Dharmendra Pradhan said on Friday. Pradhan co-chaired with his American counterpart Energy Secretary Dan Brouillette a virtual US-India Strategic Energy Partnership Ministerial."We have signed a memorandum of understanding (MoU) to begin co-operation on strategic petroleum reserve. We are also in advanced phase of discussing of storing crude oil in US strategic reserve to increase India's strategic oil stockpile," Pradhan told reporters in a joint telephonic press conference. Responding to a question, the minister said the memorandum on cooperation in the field of strategic petroleum reserve was based on a proposal from the US after the recent historic drop in oil prices during coronavirus pandemic. Following the historic drop in global crude oil process, the Indian government actively considered increasing its oil stockpile both inside the country and also overseas in countries like the US, he said. Very soon the government will be coming out with a concrete road map and proposal on how it can be unfolded, Pradhan said, adding that this would also include that New Delhi can invest in an American storage facility for India's requirement. Co-operation in Strategic Petroleum Reserves Programme will further strengthen India's energy security and pave the way for greater US investments and collaborations in India's future SPR programmes, the minister said. Brouillette said the MoU signed Friday will establish the process of moving forward. "What we would like to do is to begin the process of sharing with India, the establishment of a strategic reserve. And then accordingly, how does our SPR or Strategic Petroleum Reserve work here?" he said. "It could ultimately look similar to what we've done with Australia, but there's no predetermined outcome as to where this conversation is going to grow into. We're excited to begin the conversation with India. We do think it's important for both of our nations said the US Energy Secretary in response to a question. The State Department said that the MoU on Strategic Petroleum Reserve will ensure a consistent energy supply, protects national security, and promote regional and global stability. "The US-India Strategic Energy Partnership works to support sustainable energy development, in the 21st century and beyond. We collaborate on renewable energy, smart grids, and unconventional & clean energy sources research for the benefit of our people, now and in the future," South and Central Asia Bureau of the State Department said in a tweet. Substantive wide-ranging conversation on the different pillars of India-US energy partnership took place during the India US Strategic Energy Partnership Ministerial, said India's Ambassador to the US Taranjit Singh Sandhu. Minister Pradhan said that during the meeting, he expressed his keenness to work closely with the US government to realise the "full potential of our Strategic Energy Partnership and also invited the US Government and companies to join our initiatives under the Atmanirbhar Mission to further strengthen the strategic energy partnership".Asserting that India-US relationship has witnessed significant growth and expansion in the last few years, especially through the energy component, the minister said that the Strategic Energy Partnership, was now recognised as a key constituent of this bilateral engagement. "Our meeting today reflects both our Govt's commitment in further invigorating this partnership. It is, indeed, welcome that despite the challenges of the COVID-19 situation, we are committed to strengthen our energy linkages and work together on mutually-aligned priorities," he said. India and the United States have made rapid strides in increasing bilateral hydrocarbon trade during the last three years, he said. "Our bilateral hydrocarbons trade has touched USD 9.2 billion during 2019-20, a 93 per cent increase when compared to 2017-18 figures," Pradhan said. The Indian government is committed to transform India into a gas-based economy and universalise power supply to all households, he said. "Teams from both our countries are working to develop high-efficiency technologies with low to zero emissions through carbon capture, utilisation and storage," he said. Established in April 2018 at the direction of President Donald Trump and Prime Minister Narendra Modi, recognising the strategic importance of energy to the US-India bilateral relationship, the SEP builds upon the two countries longstanding energy partnership and sets the stage for meaningful engagements through robust government-to-government cooperation and industry engagement.
Source: Business Standard
Union Minister Piyush Goyal on Friday clarified that India is not closing its doors under Atmanirbhar Bharat, asserting that the country wants to be a part of the global supply chain and trusted partner of international economic activity. "When we talk of Aatmanirbhar Bharat, India isn't closing its doors. India, on the contrary, is opening the door to wider engagement, deeper trade relationships, we want to be part of global supply chains and we want to be a trusted partner of international economic activity," Goyal said at the webinar 'Business continuity between India and France during Covid'. "We believe France and India are really not in competition but complement each other. France brings very high-technology products to the table, items of great need, and interest. India brings several products that today would be almost impossible to be manufactured in France. We have a lot to offer on the services side, pharmaceuticals, automobile, etc," he added. He said that the bilateral trade between the two countries had crossed the $10 billion mark last year. "We have a target of $15 billion which was set sometime back, but it is too modest. We can work in several areas and complement each other," he said. The Union Minister further said that the Covid-19 pandemic has given an opportunity to everyone to be more "bold, innovative, prudent, efficient, and to re-engineer our business processes.
Source: Business Standard
Economists are not enthused about the trade surplus in June, achieved for the first time in 18 years, as the underlying cause could be an alarming drop in demand — something that’s not good for economic growth. The surplus is “certainly not something to rejoice about. Rather, it signals severe slowdown in economic activity weakening the demand for core imports — that is non-oil non-precious metals imports,” said Rupa Rege Nitsure, chief economist of L&T Finance Group. “One can rejoice about trade surplus only if it is due to exports being higher than imports. In today’s circumstances, it is a negative rather than a positive signal,” Nitsure said. In June, exports fell for the fourth month in a row, albeit at a lower rate. Merchandise exports fell 12.41 per cent in the month, albeit the rate was lower than the 36.47 per cent seen in May and 60.28 per cent in April. Imports fell 47.59 per cent in June, against 51.05 per cent in the previous month, and 58.65 per cent in April. Imports of gold, petroleum products, engineering goods, coal and machinery shrank. A decline of 41.37 per cent in June, against 43.13 per cent in May, indicated that a recovery in industrial production will take time, say economists. Exports of $21.91 billion and imports of $21.11 billion resulted in a surplus of around $800 million in June’s trade balance, the first such instance since January 2002’s surplus of $10 million. Activity and consumer demand has picked up in the US and other major economies over May and June helped by fiscal measures and relaxation of restrictions, which may have supported exports. But, domestic demand has remained depressed on account of a gradual easing of lockdown, according to Gaurav Kapur, chief economist of IndusInd Bank. According to Kapur, exports may stabilise for now, especially following a fresh wave of Covid-19 cases and re-imposition of restrictions in major global economies. Domestic demand on the other hand should gradually pick up in second half. “Any persistence of a trade surplus should, however, be seen as a weak demand signal and a sign of worry,” said Kapur. The surplus took most economists by surprise. “The surprise was mainly due to contraction in non-oil, non gold imports, lower by $3.1 billion month-on-month,” said Indranil Pan, chief economist of IDFC First Bank. The decline indicates that domestic demand weakness persists despite some easing of lockdown restrictions in June, while the faster recovery in exports is likely due to clearing of order backlogs built up during the lockdown as well as improvement in external demand conditions as restrictions in developed economies have been eased, Pan said. The sharp rise in cases in the US, India’s largest export market, could negatively impact exports with several American states re-imposing lockdowns. However, the much sharper contraction in imports versus exports could be good news for the current account being in surplus for the fiscal year 2020-21. This is also because of the flows in the telecom and technology space, economists say. India is likely to post a strong current account surplus in the first quarter of 2020-21. And the trade data indicated that the April-June current account balance could be as much as 3.5 per cent of GDP in surplus, which would be the largest surplus since March 2004, wrote HSBC India’s chief economist Pranjul Bhandari in a note. “The export recovery portends well for the economy, although it will take some time to reach the previous levels of exports, as discretionary spend will increase only gradually. A decline in machinery and metal imports shows that industry is still very sceptical and rightfully so. However, this also does not augur well for the economy,” noted Soumya Kanti Ghosh, group chief economic advisor of State Bank of India group, in a note. Comparatively lower oil prices will keep providing support to the trade balance and the country can witness a current account surplus this fiscal year, Ghosh said, adding with a high foreign exchange reserve ($516 billion) and a high import cover, rupee can see further appreciation.
Source: Business Standard
Over 1,300 exporters who had claimed GST tax refunds of Rs 1,875 crore were untraceable at their principal place of business in a massive verification exercise the government initiated after identifying 7,516 'risky exporters', an official said on Friday. "As many as 1,377 exporters who have fraudulently claimed IGST refund amounting to Rs 1,875 crore have been found untraceable at their principal place of business," the official said, adding this includes seven accredited 'star exporters'. As on date, 7,516 exporters are in the 'risky exporter' list. Out of them, for 2,830 exporters' IGST refund /drawback worth Rs 1,363 crore is suspended. The official further said the government has received adverse reports in respect of 2,197 risky exporters and as many as 10 'star exporters' have claimed Integrated Goods and Services Tax (IGST) refunds amounting to Rs 28.9 crore deceitfully. "The field formations of the Central Board of Indirect Taxes and Customs (CBIC) have detected offence cases amounting to Rs 115 crore against identified risky exporters. "Also, out of the 234 suppliers' verification received so far, 82 suppliers have been found non-existing at their principal place of business," the official said. Exporters are identified as 'risky' on the basis of specific risk indicators based on customs, GST, income tax and DGFT data. The identified risky exporters' information is shared with the CGST formations for physical and financial verification. The supply chain analysis conducted by CBIC's investigation arm DGARM has found that suppliers have availed ineligible Input Tax Credit (ITC) in 695 cases. Out of these, in 461 cases IGST refund /drawback amounting to Rs 273 crore is under suspension. Information on these risky suppliers has been shared with jurisdictional field formations for their physical/financial verification and to verify the ineligible ITC availed by them, the official added. Last year, the CBIC had detected several cases of firms availing credit fraudulently through refund of IGST on export of goods. To mitigate the risk, the CBIC has taken measures to apply stringent risk parameters-based checks, and the consignment of exporters in the risky category are subject to 100 per cent customs examinations and their refunds have been kept in abeyance. In May, the CBIC had asked the GST risk management wing to conduct supply chain analysis to identify the major suppliers to these exporters and share it with jurisdictional field officers.
Source: Economic Times
‘Levies like electricity duty and mandi tax make Indian firms uncompetitive’ The government is looking at a mechanism to neutralise taxes such as the electricity duty and mandi tax, which make Indian manufacturing uncompetitive, Union Minister of Commerce and Industry Piyush Goyal said. “We are conscious of this problem, particularly because other countries may not be having a coal cess or mandi tax (agriculture market fees) or electricity duty, and therefore our manufacturers do get uncompetitive because of it,” he said at a CII conference responding to a question on industry being held back at times due to various taxes, such as on electricity and fuel. “We have taken it up within the government and we are trying to assess what could be the mechanism... I assure you that my ministry is taking it up at all levels and we will find a solution to this,” he added. Goyal said India was not “crazy” about the issue of local content in manufacturing but will take a practical and balanced view. “We are not crazy about it, but we have to become selfsufficient,” he said, on being asked about India’s emphasis on local content. “We will take a practical and balanced view and do it sensibly without compromising on quality and modern technology…We can’t import the entire equipment if only one component can’t be made here,” he said. On being asked if the government’s Atmanirbhar Bharat initiative was about India being protectionist, Goyal said: “Whatever we have to import and is high quality, we will import. All countries in the world are balancing their trade.” India wants fair, balanced and transparent trade, he said. Goyal said the government was working towards transitioning into the international solar grid. Railways will move to 100% electrification in the next three and a half years, he said. India will house the world’s first largest railway network driven by 100% renewables by 2030, with a neutral net emission rate, he added. “Railways will buy 20 GW of indigenously manufactured solar products in the coming years,” he said, adding that the government was taking various steps to improve renewable energy manufacturing, including addition of 7,000 MW of modules and 2,000 MW of silicon wafers. “I see India becoming self-sufficient in solar cells and modules but it is important that we look at further backward integration so that we have an indigenously manufactured power sector powering not only India but the world,” he said. India wants fair, balanced and transparent trade, he said.
Source: Economic Times
India has defended the 2 per cent equalisation levy on non-resident e-commerce companies, saying it is non-discriminatory in nature and its purpose is to tax businesses that have a close nexus with the country's market through their digital operations. In a six-page written submission to the United States Trade Representative (USTR), India said the levy is applicable only for companies with annual revenues in excess of Rs 20 million (about $ 267,000), which is a low threshold aimed at exempting very small e-commerce operators globally. "It does not discriminate against companies based in the United States as it applies equally to all non-resident e-commerce operators not having permanent establishment in India, irrespective of the origin of such companies," India said. The US had last month decided to start an investigation under Section 301 of the Trade Act, 1974, into the digital services taxes that have been adopted or are being considered by a number of countries, including India, to "unfairly" target American tech companies. It had then invited public comments on the said investigation. "Far from targeting any US company or companies, the purpose of the equalisation levy is to ensure greater competitiveness, fairness, reasonableness and exercise the ability of governments to tax businesses that have a close nexus with the Indian market through their digital operations," India said in its comments. India is ready to engage in bilateral discussions with the US on the matter, it said. The objective of the levy is to provide greater clarity, certainty and predictability in respect of characterisation of payments for digital services and consequent tax liabilities to all stakeholders, so as to minimise costs of compliance and administration as also tax disputes in these matters, it added. Assuring the US that the equalisation levy is entirely consistent with India's commitments under the WTO and international taxation agreements, it said if the US has any specific concerns or clarifications, it can raise these issues at the appropriate forum, in accordance with the provisions for dispute settlement as agreed under the specific international agreements. India said the ongoing multilateral consultations under the aegis of the G-20-OECD due in this regard have not arrived at any consensus even after many years of discussions. The equalisation levy is seen as an additional safeguard against BEPS (Base Erosion and Profit Shifting) and loss of revenue in India due to activities of the e-commerce operators operating in the country. "This has necessitated introduction of 2 per cent Equalisation Levy on e-commerce supply or services. This levy is non-discriminatory as it has uniform applicability," India has said. The concept of equalisation levy in India emerged as a result of the deliberations of the OECD Base Erosion and Profit Shifting Project, which crystallised in the BEPS Project report. Stating that the levy does not discriminate against non-resident e-commerce operators, it said the underlying policy objective is to ensure that neutral and equitable taxation is applicable to e-commerce operators that are resident or have a physical presence in India and those that are not resident in the country. "The purpose is to ensure a level-playing field with regard to e-commerce activities undertaken in India. This, in fact, is the very antithesis of the underlying apprehensions listed out in the USTR's S.301 DST (Digital Service Tax) Initiation," India said. Over two dozen non-resident tech companies would come under the purview of the equalisation levy as introduced in Budget 2020-21. It has come into effect from April 1, 2020. The 2 per cent tax would be levied on consideration received by e-commerce operators from e-commerce supply or services. Meanwhile, Nangia Andersen LLP PartnerSandeep Jhunjhunwala said, "The response filed by the Government of India addressing all aspects of investigation makes it evident that there is no intention to defer or rescind the provisions governing this levy. However, the authorities may provide necessary clarifications and resolve persisting ambiguities.
Source: Business Standard
The paper, titled 'Modelling and Forecasting Currency Demand in India: A Heterodox Approach', has been authored by Janak Raj, Indranil Bhattacharyya, Samir Ranjan Behera, Joice John and Bhimappa Arjun Talwar, who are with the central bank. The currency in circulation is higher in the months of March and April due to the rabi harvest and celebration of Hindu New Year festivals, while it declines in May to July coinciding with the monsoon season, a Reserve Bank paper said. The paper, titled 'Modelling and Forecasting Currency Demand in India: A Heterodox Approach', has been authored by Janak Raj, Indranil Bhattacharyya, Samir Ranjan Behera, Joice John and Bhimappa Arjun Talwar, who are with the central bank. "The increase in currency in circulation (CiC) in March and April can be attributed to the rabi harvest, rice and wheat procurement, marriage season and celebration of Hindu New Year festivals (Gudhi Padwa, Pongal, Baisakhi, Ugadi) across India," the paper said. The decline in CiC during May, June and July roughly coincides with the monsoon season, it said. The paper said it is expected that CiC would be higher during the festive season (October to December) compared with the other months. Cumulatively, CiC increases by around 2.2 per cent during Diwali followed by Dussehra (1.1 per cent) and Eid (0.2 per cent), it showed. The paper also said CiC increases by 0.2 per cent in each week (on average) during the period in which general elections are held. "CiC is expected to increase cumulatively by 1 per cent if the general election phase is held over a ve-week period," it noted. The impact of elections on currency is higher if there are national or bigger state elections and if the duration of the electoral process is longer, it added. Demonetisation has resulted in a permanent downward shift in the trajectory of currency demand, it noted. In the absence of demonetisation, currency demand would have been higher than what it is, the paper said. It also said interest rates have an inverse relationship with currency demand in the long run, which means higher the interest rates in the system, lower is the demand for currency and vice versa. The paper said since digital transactions (especially credit and debit cards) have a dampening impact on currency demand, there is a need to sustain the current thrust on digital transactions if currency growth is to be further moderated.
Source: Economic Times
Significant foreign investment has owed into the country in a span of just threeand-a-half months, a period that saw economic activity come to a grinding halt due to the coronavirus pandemic. Top global companies such as Google, Facebook and almart invested in India. In fact, Facebook’s investment in Reliance Industries NSE 0.55 % ’ Jio Platforms is the social media giant’s single-largest investment in another company. FDI by end July likely to be higher this year than corresponding period last year because:
Source: Economic Times
Some of the global supply chains will move out from China and will flow mostly to Asian countries, with India poised to be the top beneficiary The Covid-19 crisis will likely lead to deglobalisation, and a fall in US dollar’s dominance in the world. While global inequality could rise alongside food shortages at the same time, the climate will get a breather and there could be a renaissance in productivity, Japanese bank Nomura said in 16 short essays released on Thursday. Some of the global supply chains will move out from China and will flow mostly to Asian countries, with India poised to be the top beneficiary, it said. The larger points of the essays, collectively put in an anchor report titled ‘The world after Covid-19’, say there could be a vacuum in global leadership, tense US-China relations and deglobalisation might continue, and emerging markets might face a more challenging medium-term outlook. “We see the US dollar following a path of reduced global dominance," the bank said. It also expects inflation to remain low and sees the possibility of an even lower real rate of interest. Unconventional monetary policies would be the new normal, reducing the urgency for fiscal austerity. There is also a danger of moral hazard that could lead to excessive risk taking and asset price bubbles. "Income inequality should worsen substantially, and we flag the danger of a global food crisis in coming years. Conversely, Covid-19 could be a blessing in disguise in uniting efforts to tackle climate change," the report said. The current US-China tensions will most likely compel some multinational companies to diversify part of their production to other emerging market countries such as Vietnam, India and Cambodia because of their much cheaper labour forces. This move was evident even before the Covid-19 crisis, as China’s labour cost was on the rise and the tax sops of the companies were also ending one by one. Such dislocation should help other emerging markets countries, in which Asia stands to gain the most. Eight of the top 10 countries that would potentially benefit from the dislocation from China are situated in Asia, with India topping the list. India, Singapore, Vietnam, Malaysia and Indonesia rank in the top five. “India could benefit from its large market size and potential, while Singapore’s advantage lies in its ease of doing business, economic and political stability and trade openness,” Nomura said. Vietnam, which has already started to benefit from trade diversification from China, is gaining due to its closer proximity to China, trade openness, market potential and low labour costs. The two non-Asian countries in the top 10 are Poland and the Czech Republic, “owing to their favourable investment climate”. However, the top losers due to the dislocation would again be Asian countries, with the top 8 potential losers in the world coming from the continent. “Taiwan (its value addition in China’s gross exports stood at 6.3 per cent of its GDP in 2018), South Korea (3.0 per cent) and Malaysia (2.8 per cent). The value-added by industry across Asian countries shows that computer & electronics, textiles, leather & footwear and machinery & equipment sectors are the most exposed,” said Nomura. However, large emerging markets such as Brazil, India and South Africa have debt ratios that are getting close to, or are already at thresholds that empirical evidence suggests become counter-productive for growth, Nomura said, and these countries must embark on fiscal consolidation and tighter fiscal policies in the coming years. The emerging markets would likely deliver lower growth with interest rates being at near record lows now. "When combined with weak fundamentals such as higher corporate debt (China), weak banking sector (India) and weak fiscal positions (India, Malaysia), EM risk premia may need to rise to compensate investors for higher risks,” Nomura said. The global health crisis and the lack of policy co-operation is compelling governments to better safeguard economic sovereignty, Nomura said, citing the example of India's new “vocal for local” campaign. Relocation of supply chains from China to benefit India the most: Nomura
Source: Business Standard
China can do the same for our exports, but given that we imported around $65 bn and exported around $16-17 bn on an annual basis in FY20, this may not matter in net terms. There is a consensus that India needs to take stern action against China, at least on the economic front. The first action can be to sever diplomatic ties. However, this is more theoretical and not feasible as this is not yet a war-like situation. The second option is to have an Iran-like situation, where we, like the US, get the world to impose sanctions. But the India-China skirmish today is localised, and, hence, cannot be taken to that level. Besides, India does not have such sway over the rest of the world. The third is to directly ban goods from China or impose a prohibitive tariff on imports. We will have to contend with the WTO, but then the organisation does not have the clout to act. China can do the same for our exports, but given that we imported around $65 bn and exported around $16-17 bn on an annual basis in FY20, this may not matter in net terms. Such a decision would have to be taken at the political level and, at present, does not look to be under active consideration. We did have anti-dumping duties some time back on steel imports from China; these, however, were based on an economic and not political rationale. Fourth is all Indian importers boycotting Chinese goods. Of the $ 65bn or so that we import, around $21bn are electronics, $20bn engineering goods and $12bn chemicals. The reason for importing from China is price and quality. These can be sourced from elsewhere, but the cost factor could militate against such a decision. The fifth is a modification of the fourth, where every citizen in the country desists from buying any good which has an element of Chinese inputs. This is probably a theoretical response as a product can be made using different supply chains and networks. Besides, for a consumer, cost and quality considerations trump everything else. The nationalistic tone set by Make in India and the Atmanirbhar campaign is quite appropriate for such action. The question is whether we are willing to do this. There have been relentless moves against the use of plastics, where some sections have moved away. There are campaigns against using environment-unfriendly products, which have not quite picked up. The war against colas has not been heard. In such a situation, class action from the masses is unlikely. It has to be done at the level of business, where one is prepared to import from other countries and probably pay a higher cost. There have been some action on this from dispatch agents who have refused to pick up Chinese goods from the ports. But such responses have to become more macro to be effective. It leads to a classical strategy in the realm of ‘game theory’ where no one knows what the other will do and, hence, boycotting Chinese goods could end up with others going ahead and increasing market share in sales of, say, mobile phones. Therefore, it is hard to have strategies here. In this age of globalisation, Chinese goods can be routed through any other jurisdiction like Hong Kong, Taiwan, Korea, and so on, which will be hard to track. Chinese manufacturers are everywhere, and the import label could say Europe, with a Chinese company being the manufacturer. Boycotting Chinese goods may not be feasible. In the medium- to long-term, taking such action against any country may not be prudent as skirmishes on the border do not last forever. Withdrawing economic relations may not be the best practice as it sets precedents. Reviving relations after breaking them is even more difficult. That’s why even globally such actions do not happen too often, and the case of Iran is quite singular. Therefore, letting emotions control policy action is not usually the response of the government and diplomatic channels come into play. It can be assumed that the call for a ban on Chinese goods is more a public outcry than a measure that the government could be considering, as we are nowhere close to the tipping point. Assuming this extreme, how significant will it be for China? In 2019, out of $2.5 trillion (worldstopexports.com) global trade, India was seventh with around $75 bn. The US topped ($419 bn) followed by Hong Kong ($280bn), Japan ($143 bn) and South Korea ($111bn). India’s share is just 3%. However, for India substituting goods worth $65 bn with equivalents could mean ending up with a higher import bill, which translates to higher prices. While at the macro level, the impact may not be very sharp, it would impact product segments such as laptops, mobile phones, drugs and pharma, TVs, plastics, dairy machinery etc. Interestingly, out of the $680 bn of FDI cumulative inflows, China has a share of just 0.5%, and, hence, is not a major player. However, routing through tax havens like Mauritius and Singapore cannot be ruled out which have a share of 50% in total. To conclude, while emotional rhetoric has gained in decibel level, practically speaking, as long as diplomatic relations are open between India and China, taking stringent action is not feasible. Those in favour of a ban argue that we are already less dependent on China for imports. While it may be tempting to conclude that there is a silent withdrawal taking place, overall imports have fallen. The jury is still out on this. The author is Chief Economist, CARE Ratings.
Source: Financial Express
Amazon.com Inc's India unit has told sellers they must provide country of origin information on product listings by August 10, according to an email sent by the ecommerce giant to sellers, against a backdrop of brewing antiChina sentiment. The trade ministry has called for e-commerce sites to name the country of origin beside product listings as Prime Minister Narendra Modi pushes for a self-reliant nation. In addition, trader groups have called for a boycott of Chinese-made products and New Delhi last month banned 59 Chinese-origin apps and held up Chinese-made goods at ports after a violent border clash between India and China. "Failure to provide information in the "country of origin" attribute by August 10, 2020 may lead to enforcement action, including suppression of your listing," Amazon India said in a July 15 email to sellers seen by Reuters. Amazon asked sellers to make sure that such information was accurate and updated, adding that they will be "solely responsible" for accuracy of listing information. Amazon did not respond to an email seeking comment. Following pressure from the government, e-commerce rms such as Amazon and its rival, almart Inc's Flipkart, recently began updating their systems to allow sellers to identify the country of origin on all new product listings. Reuters reported previously. Two-way trade between China and India was worth $88 billion in the scal year to March 2019, with a decit of $53.5 billion in China's favour, India's widest with any country.
Source: Reuters
The Centre's fiscal deficit is expected to touch 7.6 per cent in 2020-21, more than double the Budget Estimate, as the country spends extra to minimise the impact of the Covid-19 pandemic while facing a shortfall in revenues, a report said on Friday. At a combined level, the fiscal deficit of the Centre and states together will come at 12.1 per cent, with the states contributing 4.5 per cent, India Ratings and Research said in the report. It also said the government has already announced a stimulus package damaging the fiscal math by 1.1 per cent. Calls are also going on for a second package. The pandemic has resulted in long lockdowns that chilled all the economic activities. The agency said India's gross domestic product (GDP) will contract by 5.3 per cent, while states like Assam, Goa, Gujarat and Sikkim are expected to witness a double-digit contraction, it said. With the growth and revenues going down, the obvious impact will be on the fiscal deficit, which is considered an important macroeconomic health indicator. "The aggregate central and state fiscal deficit in FY21 will increase to 12.1 per cent of GDP (Centre: 7.6 per cent, states: 4.5 per cent), mainly due to the expected shortfall in revenue collections rather than increased expenditure," it said. India Ratings and Research Chief Economist D K Pant said the pandemic hit at a time when the Indian economy was already experiencing a slowdown due to weakness in consumption demand. "It has severely disrupted the supply side, as production and sale were allowed only in the areas classified as 'essential' during the lockdown." He said the states receiving significant remittances India is the biggest receiver of such fund transfer by any country's diaspora will be impacted because return and/or repatriation of expatriates to India has its own consequences for the Indian economy. The growth slowdown will have a significant impact on the asset quality of the financial sector, and both banks and non-banks would require more capital to continue lending, it said. Reverse migration out of cities and industrial towns to their hometowns will delay the manufacturing sector's recovery and may also translate into elevated wages, it the rating agency said.
Source: Business Standard
|
Item |
Price |
Unit |
Fluctuation |
Date |
|
PSF |
763.85 |
USD/Ton |
-0.19% |
18-07-2020 |
|
VSF |
1214.74 |
USD/Ton |
-1.16% |
18-07-2020 |
|
ASF |
1687.77 |
USD/Ton |
0% |
18-07-2020 |
|
Polyester POY |
703.12 |
USD/Ton |
0% |
18-07-2020 |
|
Nylon FDY |
2000.74 |
USD/Ton |
-0.71% |
18-07-2020 |
|
40D Spandex |
4001.48 |
USD/Ton |
0% |
18-07-2020 |
|
Nylon POY |
1857.83 |
USD/Ton |
0% |
18-07-2020 |
|
Acrylic Top 3D |
886.04 |
USD/Ton |
0% |
18-07-2020 |
|
Polyester FDY |
2236.54 |
USD/Ton |
-0.32% |
18-07-2020 |
|
Nylon DTY |
5144.76 |
USD/Ton |
0% |
18-07-2020 |
|
Viscose Long Filament |
943.21 |
USD/Ton |
0% |
18-07-2020 |
|
Polyester DTY |
1850.68 |
USD/Ton |
-0.38% |
18-07-2020 |
|
30S Spun Rayon Yarn |
1714.92 |
USD/Ton |
-0.17% |
18-07-2020 |
|
32S Polyester Yarn |
1336.21 |
USD/Ton |
0% |
18-07-2020 |
|
45S T/C Yarn |
2172.23 |
USD/Ton |
0% |
18-07-2020 |
|
40S Rayon Yarn |
1529.14 |
USD/Ton |
0% |
18-07-2020 |
|
T/R Yarn 65/35 32S |
2029.32 |
USD/Ton |
0% |
18-07-2020 |
|
45S Polyester Yarn |
1872.12 |
USD/Ton |
0% |
18-07-2020 |
|
T/C Yarn 65/35 32S |
1664.90 |
USD/Ton |
0% |
18-07-2020 |
|
10S Denim Fabric |
1.13 |
USD/Meter |
0% |
18-07-2020 |
|
32S Twill Fabric |
0.64 |
USD/Meter |
0% |
18-07-2020 |
|
40S Combed Poplin |
0.93 |
USD/Meter |
0% |
18-07-2020 |
|
30S Rayon Fabric |
0.48 |
USD/Meter |
0% |
18-07-2020 |
|
45S T/C Fabric |
0.65 |
USD/Meter |
0% |
18-07-2020 |
Source: Global Textiles
Note: The above prices are Chinese Price (1 CNY = 0.14291 USD dtd. 18/07/2020). The prices given above are as quoted from Global Textiles.com. SRTEPC is not responsible for the correctness of the same.
Jakarta (ANTARA) - The Association of Southeast Asian Nations (ASEAN) encouraged Canada to swiftly complete the ASEAN-Canada Free Trade Agreement (ASEAN-Canada FTA) to gain potential addition for the region's gross domestic product (GDP) worth US$39.36 billion. Based on the fact that Canada is a traditional trading partner of the ASEAN, Indonesia has engaged with it to expand the scope of cooperation through the finalization of the ASEAN-Canada FTA, Indonesian Ambassador to Canada Abdul Kadir Jailani noted in a written statement issued by the Indonesian Embassy in Ottawa and received here on Tuesday. The statement was delivered by Ambassador Jailani at a discussion on "ASEAN-Canada Free Trade Agreement: Potential and benefits" held in Ottawa on Monday (March 2). The meeting was attended by 93 invitees from the circles of entrepreneurs, Canadian government officials, academics, and officials from ASEAN member states' embassies in Ottawa.The discussion was held by the Indonesian Embassy in Ottawa in cooperation with Export Development Canada-- a Canadian state-owned enterprise for export credit. The meeting’s attendees also comprised some other speakers: Charge d'Affaire of the Vietnamese Embassy in Ottawa Huong Tra Nguyen, Director of Trade Policy and Negotiations of Canadian Ministry of Foreign Affairs Jay Allen, and Chairman of the Canada–ASEAN Business Council Jean Charest. During the discussion, Charest stressed that Canada has several aspects supporting the utilization of the ASEAN-Canada FTA, and it encompasses a reliable financial and banking system, an economy based on information technology and digital systems, copious pension funds that can be utilized to develop infrastructure, as well as Canada's geographical position as an entry point to the US market. In the meantime, Allen stated that Canada had, in fact, focused on Asian markets, though the approach used is through development cooperation. The Canadian government had also launched various initiatives aimed at establishing market access, including developing training programs, appointing trade commissioner, facilitating exports, and supporting overseas investments. Vietnamese Charge d'Affaire in Ottawa Huong Tra Nguyen reiterated the significance of the ASEAN-Canada FTA as a mechanism for bolstering ASEAN's position in the context of the global supply chain and value chain networks, including Canada. He believed that the ASEAN-Canada FTA is a concrete form of norm establishment in multilateral trade that has been driven by Canada at several global forums. Furthermore, at the discussion, Indonesian Ambassador to Canada Abdul Kadir Jailani showed statistics on the benefits that ASEAN and Canada could derive from the ASEAN-Canada FTA scheme. Jailani expounded that both the ASEAN and Canada can gain additional real GDP from the implementation of an FTA. The ASEAN is projected to gain additional real GDP of $39.36 billion from the FTA if it were to be implemented, while Canada is estimated to score an additional real GDP of some $5.11 billion. Each party is expected to benefit from tariff removals, reduction of Non-tariff Measures (NTMs), and some possible trade facilitation. Ambassador Jailani further expounded that the FTA later on is not only related to goods and services but also to several other matters that concern governance, regulation and culture, as well as social perspectives. At the meeting, he also further explained about the potential gap between the ASEAN and Canada, including in investment, e-commerce, people movement, financial services, intellectual property, environmental issues, and society customs.
Source: Antara News
Jakarta (ANTARA) - The Ministry of Trade, through the Directorate General of National Export Development and the Indonesian Trade Promotion Center (ITPC) in Vancouver, organized a virtual business-matching event for food and beverage products. The food and beverage products that were promoted at the event included coffee, tea, ginger drinks, cooking spices, ready sauces, spices, seafood, crackers, instant noodles, swallow’s nest, and confectionery products.
"The Ministry of Trade will continue to apply export development strategies amid the COVID-19 pandemic. This virtual business-matching has become one of the right steps in the middle of restrictions that do not allow face-to-face meetings," Trade Minister Agus Suparmanto said in a statement received here on Friday. Meanwhile, in his opening address at the event, director general for national export development, Kasan, said the processed food and beverage industry is facing a major export challenge due to the COVID-19 pandemic, which has led to the implementation of social restrictions. Quarantine policies implemented by many export destination countries, including those supplying raw materials, will not diminish the spirit of Indonesia's food and beverage sector to promote exports, he declared. “We are certain that Indonesia's processed food and beverage products are still very much sought after in the global market. The Trade Ministry will continue to support the development of food and beverage exports to maintain export performance, especially amid the COVID-19 pandemic,” he asserted. To prepare for the business-matching, he continued, the ministry has provided profiles of each business, so that both exporters and importers can start establishing communication earlier. "The one step ahead preparation is hoped to lead to larger sums of transactions," he added. Director of market development and export information at the ministry, Iriana Trimurty Ryacudu, said the business-matching event will be held across a number of different locations, including the ITPC Vancouver offices, which will serve as a gathering spot for buyers, and the Trade Ministry's offices in Jakarta, as well as offices of exporters. The themes for the business-matching event have been selected in accordance with the types of products that are ready to be exported, based on both Canada's demand as well as the domestic supply potential. Ryacudu also said the event is scheduled to be held in four rounds, the first one will feature processed food and beverages and will be held in July, 2020. The second will revolve around fashion, footwear, and textiles, and will take place in September. The third round will be held in October this year and will focus on health products, drugs, including natural ones, and chemical and pharmaceutical products. Meanwhile, furniture, including knock-down furniture, home decor, and appliances will be the focus of the fourth round, scheduled for November this year. Indonesia is 31st on the list of Canada's import partner countries. The total trade between the two countries between January and May this year was valued at US$974.65 million. The number showed a decline compared to the same period in 2019 when it had reached US$1.26 billion. The bilateral trade between Indonesia and Canada had amounted to US$2.69 billion in 2019. Indonesia's main exports to Canada include rubber products, sports footwear, cocoa, paper, and tires.
Source: Antara News
After the United States recently ended Hong Kong's preferential trade status and imposed sanctions on officials cracking down on human rights there, China condemned the decision and has vowed to hit back. While President Donald Trump said he was acting as China had taken away Hong Kong's freedom after imposing a new security law, Beijing said it would impose sanctions on relevant US people and entities. China's foreign ministry described the decision as a ‘gross interference’ in its domestic affairs and said the country would impose retaliatory sanctions to ‘safeguard China's legitimate interests’, according to global newswires. "The US attempt to obstruct the implementation of the national security law for Hong Kong will never succeed," the statement said. "We urge the US side to correct its mistakes, refrain from implementing the act and stop interfering in China's internal affairs in any way. China will firmly respond if the US goes ahead," it added. "No special privileges [for Hong Kong], no special economic treatment and no export of sensitive technologies," Trump had said. Trump also criticised China over its handling of the coronavirus pandemic as well as its military build-up in the South China Sea, its treatment of Muslim minorities and massive trade surpluses. Hong Kong's special trade status with the United States started in 1984 when the territory was still a British colony. Hong Kong now is expected to be treated the same as mainland China, meaning its goods could be subjected to additional tariffs. Trump also said he had signed the Hong Kong Autonomy Act, which passed unanimously in Congress earlier this month and penalises banks doing business with Chinese officials who implement the security law. The US government also directed officials to "revoke license exceptions for exports to Hong Kong," and includes revoking special treatment for Hong Kong passport holders.
Source: Fibre2Fashion
Russians' real disposable income plunged the most in 20 years in the second quarter, while the economy shrank by 9.6 per cent year-on-year as the country has been hit by low oil prices and the coronavirus pandemic. Real disposable income has become one of the most socially-sensitive issues in Russia led by President Vladimir Putin, with the economy expected to contract by as much as 6 per cent this year. The income fell 8 per cent in year-on-year terms in April-June, the state statistics service Rosstat said on Friday, adding that Russia's industrial output fell 9.4 per cent in June compared with a year ago. It was the deepest quarterly decline of the income since 1999, according to the data on Rosstat's website. In the second quarter, when health restrictions ravaged economic activity, the Russian economy shrank by 9.6 per cent year-on-year after growing 1.6 per cent in January-March, the economy ministry said separately. The economy, however, was 6.4 per cent smaller in June than a year earlier following a sharper contraction -- revised to 10.7 per cent -- in May, when the country was partially locked-down to combat the spread of the coronavirus. "The main factor for recovering economic activity in June was the continuing removal of quarantine restrictions, which had the most positive effect on the market," Polina Kryuchkova, deputy economy ministry, said in the statement. The Russian central bank has signalled its readiness to cut its key rate, now at 4.5 per cent, for the fourth time this year at its rate-setting meeting next Friday.
Source: Business Standard
A ‘Fit to Trade’ Licensing Scheme will seek to ensure workers are protected from forced labour, debt bondage and mistreatment. The fashion and creative industries had a combined turnover of £84.4bn in 2017 and formed 5.4% of the nation’s GDP, so the value of the UK’s Fashion industry is irrefutable. Fashion is something the UK is particularly renowned for, with nearly 25% of all those surveyed identifying the fashion industry as what made Britain attractive. Cleary, the UK’s fashion industry is invaluable, and as such, it is vital we retain regulated manufacturing operations within our borders. As we have seen in the media over the last month, a concerning number of garment workers in key hubs across the UK, such as Leicester, have reportedly continued to work in factories throughout lockdown in crowded, unregulated conditions. The reports of varying horrific conditions add weight to the growing concerns of Modern Slavery, which many argue, is a crime at the core of fashion industries across the world, including in the UK. While most reports have rightly highlighted the shocking physical conditions and economic exploitation these workers are facing, it is important to highlight the impact modern slavery has on the mental health of victims. Victims of modern slavery are often prevented from accessing basic health care, including mental health resources. Yet, given the nature of the modern-slavery, the figures are ambiguous. Still, estimates suggest there could be more than 100,000 victims of modern slavery in the UK, meaning, there could be over 100,000 vulnerable people with neither basic health care nor minimum wage. It is crucial the Government not only steps-up and creates a clear, transparent process by which victims can access support without penalty, but the Government must also ensure and enforce the regulation of supply-chains. As it currently stands, only high-profit companies must adhere to supply-chain slavery transparency – and even then, not all do. Though the responsibility does not rest with the Government alone. The fashion industry itself must step-up. COVID-19 has proven how powerful and capable the fashion industry can be, with brands both big and small repurposing their operations to create PPE masks and gowns and save lives. The industry has therefore proven it can adapt, so moving forward, brands both big and small must take steps to adapt and ethically source their labour, rather than wait for the Government to regulate. There is now an opportunity for the UK to become a world-leading, innovative, exportled, ethical fashion and textile manufacturing industry, delivering better-skilled jobs. If the right steps are taken, fashion retailers and brands will seek to source more production from the UK, which will provide new jobs for the UK economy and benefit trade. As chair of the All-party Group for Textiles and Fashion, I am working with the BRC and have written to the Home Secretary, requesting urgent action, starting with the implementation of a ‘Fit to Trade’ Licensing Scheme to ensure all garment factories meet legal obligations to employees. This licensing should cover protection of workers from forced labour, debt bondage and mistreatment, ensuring receipt of the National Minimum Wage and other personal finance basics, like sick pay. The British Fashion Industry is renowned for its quality, but it’s time for this reputation to encompass the equality and rights of which we give our workers, and to do so, we need to act. Unless action is taken now, thousands more will face exploitation both now and beyond the coronavirus crisis.
Source: Politics Home
