New Delhi: Union Minister Nirmala Sitharaman on Saturday participated in the third G20 Finance Ministers meet and discussed the global economic outlook amid the evolving COVID-19 crisis, along with other priorities of the group for this year. The Minister was speaking at the third G20 Finance Ministers and Central Bank Governors (FMCBG) meeting held at Riyadh (Saudi Arabia) through video conferencing. Sitharaman, in the first session of the meeting, spoke about the G20 Action Plan in response to COVID-19. The plan laid out a list of collective commitments under the pillars of health response, economic response, strong and sustainable recovery as well as global financial coordination, aimed at co-ordinating G20 efforts to fight the pandemic. Emphasising that the plan needs to reflect how the economies are balancing their supply-side and demand-side measures in response to COVID-19, Sitharaman shared with her counterparts the manner in which India is working on ensuring this balance through credit schemes for greater liquidity, direct benefit transfers, and employment guarantee schemes. The Finance Minister specifically referred to India's comprehensive economic package to address recovery and growth amounting to over USD 295 billion, about 10 per cent of India's GDP. Adding to this, Sitharaman also spoke about the procyclicality of credit rating downgrades by the rating agencies and its deterrent impact on policy options, particularly for EMEs. Meanwhile, in the second session of the meeting, the G20 Finance Ministers and Central Bank Governors discussed the developments on G20 Finance Track deliverables. First, enhancing access to opportunities for women, youth and SMEs as a priority agenda especially at a time when the pandemic has most impacted the vulnerable sections of the society. Second, referring to the international taxation agenda and the intended deliverable of formulating a solution for addressing challenges related to digital taxation, Sitharaman noted the progress on the agenda and said that it is imperative that this consensus-based solution should be simple, inclusive and based on a robust economic impact assessment. The Finance Minister also shared some of the policy measures taken by the Government of India to fight the pandemic, including direct benefit transfers, special support to agriculture and MSME sectors, rural employment guarantee measures and others.
Source: Economic Times
NEW DELHI: Amid the on-going row over digital taxation, Finance Minister Nirmala Sitharaman on Saturday said that a consensus-based solution on the issue should be simple and inclusive based on a robust economic impact assessment. The minister was speaking at the 3rd G20 Finance Ministers and Central Bank Governors (FMCBG) meeting held at Riyadh (Saudi Arabia) through video conferencing. Referring to the issues concerning international taxation and challenges related to digital taxation, Sitharaman said, "It is imperative that this consensus-based solution should be simple, inclusive and based on a robust economic impact assessment." Recently India 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 USD 267,000), which is a low threshold aimed at exempting very small e-commerce operators globally. 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. India is among 10 nations that are facing US investigations to assess whether the levies discriminate against American technology majors. Sitharaman in the first session of the meeting, talked about the G20 Action Plan in response to COVID-19 which was endorsed by the G20 Finance Ministers and Central Bank Governors in their previous meeting on April 15, 2020, the Finance Ministry said in a statement. This G20 Action Plan lays out a list of collective commitments under the pillars of Health Response, Economic Response, Strong and Sustainable Recovery and International Financial Coordination, aimed at coordinating G20 efforts to fight the pandemic. The Finance Minister emphasized that it is crucial to ensure that this action plan remains relevant and effective. She shared her perspective on the way forward on the action plan and highlighted the need for international coordination required in addressing the spill-over effects of exit strategies. Emphasising that the Action Plan needs to reflect how the economies are balancing their supply side and demand side measures in response to COVID-19, Sitharaman shared with her counterparts how India is working on ensuring this balance through credit schemes for greater liquidity, direct benefit transfers, and employment guarantee schemes. The Finance Minister specifically referred to India's comprehensive economic package to address recovery and growth amounting to over USD 295 billion, about 10 per cent of India's GDP. She also spoke about the procyclicality of credit rating downgrades by the rating agencies and its deterrent impact on policy options, particularly for Emerging Market Economies (EMEs). Meanwhile, RBI Governor Shaktikanta Das said, "Participated in virtual meeting of G20 Finance Ministers and Central Bank Governors today. Focused on macroeconomy, capital flows, cross border payments, transition from LIBOR and other issues." In the second session of the meeting, the G20 Finance Ministers and Central Bank Governors discussed the developments on G20 Finance Track deliverables under the Saudi Arabian Presidency. Enhancing access to opportunities for Women, Youth and SMEs is a priority agenda under Saudi Presidency and a Menu of Policy Options on Access to Opportunities has been developed by G20 under this agenda were discussed. "The Menu presents country experiences of G20 members related to policies aimed at: Youth, Women, Informal Economy, Technology & Adult Skills, and Financial Inclusion. The Finance Minister noted that this agenda has assumed even greater importance now as the pandemic has most impacted the vulnerable sections," it said. During the session, Sitharaman also shared some of the policy measures taken by the Government of India to fight the pandemic, including direct benefit transfers, special support to agriculture and MSME sectors, rural employment guarantee measures etc. She particularly highlighted how India has successfully employed technology-based financial inclusion by harnessing the nationwide digital payment infrastructure that India has built in the last five years, to make contactless cash transfers of over USD 10 billion into the bank accounts of 420 million people. The minister also referred to the swift measures to provide free food grain to over 800 million people for eight months till November 2020.
Source: Economic Times
NEW DELHI: Discussions between Southern African Customs Union (SACU) [South Africa, Namibia, Botswana, Lesotho, Eswatini] and India to achieve a Preferential Trade Agreement (PTA) have been revived with the two sides holding a virtual meeting last week to discuss various aspects of the PTA. The Indian side at the dialogue was led by Srikar Reddy, Joint Secretary, Department of Commerce while SACU was led by Amb. Steve Katjiuanjo, Executive Director, Ministry of Industrialization,Trade and SME Development of Namibia. Reddy underlined India’s historically close ties with Southern Africa and its steadfast commitment to deepen economic engagement with this region. He informed that in 2019-20, trade between India and Africa as a whole stood at 66.7 billion, of which the India-SACU trade was $ 10.9 billion with an immense potential to expand further. Amb Katjiuanjo called India as a strategic partner for SACU. Trade is currently in SACU’s favour, thus showing that the region is benefiting from access to the vast Indian market. Prashant Agrawal, High Commissioner of India to Namibia, said on the occasion that in these unprecedented times of Covid-19 pandemic and its economic challenges, economies of the region, including of Namibia, could vastly benefit by enhanced trade and commercial links with India’s $ 2.9 trillion economy. India stood fully committed and ready to support manufacturing and industry in Namibia in areas such as agriculture, irrigation, renewables, ICT, pharma and medical supplies. Both sides reviewed the progress made and discussed steps to quickly move forward on the PTA. India-Namibia bilateral trade during 2018-19 was $ 135.92 million with India’s exports valued at $ 82.37 million, while India’s imports stood at $ 53.55 million. Mining sector is an area of mutual interest. Namibia is rich in uranium, diamonds, copper, phosphates and other minerals. Indian technological prowess in IT, engineering, pharmaceuticals, railways and SMEs is of interest to Namibia. Bilateral cooperation in the energy and agricultural sectors also has good prospects. Meanwhile exports from India to South Africa include vehicles and components thereof, transport equipment, drugs and pharmaceuticals, engineering goods, footwear, dyes and intermediates, chemicals, textiles, rice, gems and jewellery, etc. Imports from South Africa to India include gold, steam coal, copper ores & concentrates, phosphoric acid, manganese ore, aluminium ingots & other minerals. India-S Africa bilateral trade was $ 10,584.5 million during 2018-19.
Source: Economic Times
The proportion of manufacturing units reporting an increase in output dropped to 10 per cent during April-June 2020 from 15 per cent in the previous quarter, according to a quarterly poll by industry body Ficci. The survey, which drew responses from over 300 manufacturing units from both large and SME segments with a combined annual turnover of over Rs 2.5 trillion, revealed that the automotive sector is the worst hit in terms of ongoing operations in the factories as far as demand and current orders are concerned post easing of lockdown restrictions. Other sectors where operations remain abysmally low are leather and footwear, electronics and electricals & textiles machinery. Moreover, the percentage of respondents expecting low or same production is 90 per cent in April-June 2020-21 which was 85 per cent in the last quarter of 2019-20. Hiring outlook for the manufacturing sector shows a bleak picture as 85 per cent of the respondents mentioned that they are not likely to hire additional workforce in the next three months. "This presents a worrisome situation in the hiring scenario as compared to the previous quarter Q-4 of 2019-20, where 78 per cent of the respondents were not in favour of hiring additional workforce," Ficci said. The outlook for exports is subdued and seems to be substantially affected due to COVID outbreak and other restrictions in place, as only 8 per cent of the participants are expecting a rise in their exports for the first quarter of 2020-21 and 10 per cent are expecting exports to continue to be on same path as that of same quarter last year. The survey also assessed if there is any change in sourcing strategies of the manufacturers to reduce dependence on one country. The results showed that in certain areas like automotive, textiles machinery and leather/footwear firms are looking at alternative sources of inputs/raw materials. In terms of back to business status, the survey noted that on an average, firms are operating depending on the sectors between 28 per cent to 63 per cent of their capacities with workforce deployment ranging from 33 per cent to 57 per cent. This assessment is also reflective in order books as 85 per cent of the respondents in April-June 2020-21 expected lesser number of orders as against 54 per cent in January-March 2019, said Ficci.The industry body's latest quarterly survey assessed the sentiments of manufacturers for Q-1 (April-June 2020-21) for 12 major sectors namely automotive, capital goods, cement and ceramics, chemicals, fertilizers and pharmaceuticals, electronics & electricals, leather and footwear, medical devices, metal & metal products, paper products, textiles, textile machinery, etc. The survey found that overall capacity utilisation in manufacturing has witnessed a decline to 61.5 per cent in January-March (Q4) 2019-20 as compared to 76 per cent in Q-3 2019-20. The future investment outlook looks subdued as only 22 per cent respondents reported plans for capacity additions for the next six months as compared to 28 per cent in the previous quarter. High raw material prices, high cost of finance, uncertainty of demand, shortage of skilled labour and working capital, high logistics cost, low domestic and global demand due to imposition of lockdown across all countries to contain spread of coronavirus, excess capacities due to high volume of cheap imports into India, lack of financial assistance, unstable market, complex procedures for obtaining environmental clearances, high power tariff, are some of the major constraints which are affecting expansion plans of the respondents, Ficci said. Besides, 76 per cent of the respondents expect either more or same level of inventory in April-June 2019, which is considerably less as compared to the previous quarters, where around 82 per cent respondents expected either more or same level of inventory in Q-4 2019-20 and Q-3 2019-20. Average interest rate paid by the manufacturers has reduced slightly to 9.4 per cent per annum as against 9.9 per cent per annum during the last quarter and the highest rate remains as high as 14.5 per cent. The recent cuts in repo rate by the RBI have not led to a consequential reduction in the lending rate as reported by 65 per cent of the respondents, Ficci said. Based on expectations in different sectors, all the sectors are likely to register low growth in Q-1 2020-21. The primary reason for such depressed expectations seems to be the imposition of lockdown, restricted exports and other guidelines in place as a response towards COVID outbreak, Ficci said. The cost of production as a percentage of sales for manufacturers in the survey has risen for 64 per cent respondents. This is considerably higher than that reported in Q3 2019-20, where 55 per cent respondents recorded increase in their production costs. Industry respondents have attributed the hike in production costs primarily to high fixed costs, higher overhead costs for ensuring safety protocols, drastic reduction in volumes due to lockdown, lower capacity utilization, high freight charges and other logistic costs, increased cost of raw materials, power cost and high interest rates. Sectors like textiles and textiles machinery have only one third of the total labour force engaged in the operations and are hence facing labour shortage. Similarly, automotive and leather & footwear have also witnessed around 35 per cent workers attendance at factories.
Source: Business Standard
Ease of Doing Business for MSMEs: Business-to-business wholesaler Metro Cash & Carry, which is celebrating its 17th year of operations in India, said that 99 per cent of products sold across its stores are manufactured in India even as it focuses on enabling local kirana and small business ecosystem. “Since Metro’s inception in India, we have strongly propagated ‘Vocal for Local’ and supported Indian brands. 99 per cent of the products that we sell across our stores are ‘Made in India’,” said Arvind Mediratta, Managing Director and CEO, Metro Cash & Carry India. The India arm of German multinational wholesale chain entered Indian market back in 2003 and current runs 27 wholesale distribution centres. It sells food and non-food products to hotels, restaurants and caterers along with independent traders. “With our dedicated focus on the local community and kirana stores, we are confident we will play a key role in enhancing our honourable Prime Minister’s vision of an Atmanirbhar Bharat,” added Mediratta in a statement as the company announced anniversary sale and safety measures amid Covid pandemic. Metro Cash & Carry has 3 million customers in India including multiple kirana stores and small businesses. It had launched e-commerce app in April this year for such businesses to drive efficiency and growth. Information about Country of Origin of product by the sellers made mandatory on GeM to promote Make in India and Aatmanirbhar Bharat, Ministry of Commerce & Industry Retail trade suffers Rs 15.5 crore loss in 100 days; unlock 1.0 nearly fails to revive demand Mukesh Ambani’s JioMart launches app for Android, iPhone users; offers free delivery, loyalty programme. The company claimed “increase in the frequency of orders” for kiranas through the app as it has got “customers buying additional varieties of products and new items that they haven’t ordered before,” it said in a statement. The shift to digital channel amid lockdown has turned out to be a positive move for the company and is likely to continue ahead as consumers have been preferring online purchase despite relaxations in restrictions under the unlock exercise by the government. The impact of Covid and lockdown on digital retail seems to be similar to what demonetization had on digital payments. The app saw more than a lakh downloads in less than three months of launch, PTI reported citing Mediratta as saying adding that adapting to technology is the need of the hour and future for the retail sector. “If exercised rightly and blended well with offline, online channels are here to stay”.
Source: Financial Express
A budding alliance will be harder to cement without deeper economic ties. Not only does trade tend to cement alliances, but building up allied countries’ economies makes them much more able to resist military encroachments by rivals. The US once understood this, but in recent years seems to have forgotten this lesson. Conflict between China and India has made it urgently necessary for the US to deepen its economic integration with the latter country, through increased trade and investment. On June 15, 20 Indian soldiers and an unknown number of Chinese soldiers were killed when the two countries clashed over a disputed border. In response, India banned a number of Chinese apps. As my Bloomberg Opinion colleague Mihir Sharma points out, these conicts are likely to drive India closer to the US in strategic terms. But that budding alliance will be harder to cement without deeper economic ties. Not only does trade tend to cement alliances, but building up allied countries’ economies makes them much more able to resist military encroachments by rivals. The US once understood this; the Marshall Plan famously helped stabilize Western Europe after World War II and prevent it from falling into the Soviet orbit, while opening US markets to Japanese, South Korean and Taiwanese products helped those countries industrialize. In recent years the US seems to have forgotten this lesson. Opposition to the Trans-Pacic Partnership largely ignored the geopolitical importance of that treaty, which would have created an Asian trade bloc to rival China. Now, with the US-China rivalry heating up, let's hope the US will remember the importance of trade and investment as tools for cementing alliances. And the most important ally will almost certainly be India. Deepening the economic partnership with India will be a long and diicult road. India now is only the US’s ninth most important trading partner, barely ahead of tiny Taiwan: A trade deal between the two countries could boost this number. But even a minor agreement fell through earlier this year. True to form, the Trump administration has been refusing to allow India duty-free access to US markets unless India opens its agricultural sector to US exports. Because India is still a largely rural, agrarian economy, demanding that the country put hundreds of millions of poor farmers at risk of being displaced by US agribusiness was always a nonstarter. A future administration should be more sensitive to India’s needs and vulnerabilities. Opening US markets to Indianmade goods, even with no reciprocal opening by India, makes geopolitical sense. Having the US as a stable source of demand for manufactured products would also help India to build up its industrial sector in the same way that China and South Korea did. And it would be unlikely to increase the trade decit or put US workers out of a job; instead, it would result in some companies shifting labor-intensive manufacturing out of China into India, as is now happening with Vietnam. An even more benecial economic relationship, however, would be increased direct investment by the US into India. China famously bolstered its economy by relying heavily on foreign direct investment -- as the workshop of the world, it invited companies from all over the globe to build factories in its special economic zones. Nor is China’s experience unique; economists have found that FDI, especially in manufacturing, tends to boost growth. In addition to providing capital for new buildings and machines, FDI is a way of transferring technology between countries. When US companies build a factory or other facility in a developing country, they show the locals how advanced machinery, production processes and other technologies work. Those locals can then go start their own companies, making use of what they learned and raising productivity in the domestic economy. In the long run, technology is what makes a country rich, and because learning technologies from developed nations is much cheaper than reinventing them, tech transfers are a good way to help a country develop quickly. India has long been faulted for lagging behind China when it came to FDI, especially in manufacturing. But things may be changing, as China becomes more insular and India makes an attempt to open up: The US is already one of the largest direct investors in India (it’s hard to know because most Indian FDI comes in through tax havens). But joint eorts to boost bilateral investment would pay o both for India, and for the US investors who reap the returns. Increasing US-India FDI would yield multiple benets. In addition to making both countries money and aligning the interests of the two nations even further, making India a richer, more advanced and more powerful country would strengthen it as a bulwark against Chinese domination of Asia. India is already taking various steps to try to attract more US direct investment; now the US needs to do its part. Tax breaks and other incentives for US companies to invest in India could help grow and solidify this crucial 21st-century partnership.
Source: Bloomberg
The Central Board of Direct Taxes (CBDT) has issued refunds worth Rs 71,229 crore in more than 21.24 lakh cases upto 11th July, 2020, to help taxpayers with liquidity during COVID-19 pandemic, since the Government’s decision of 8th April, 2020 to issue pending income tax refunds at the earliest. Income tax refunds amounting to Rs. 24,603 crore have been issued in 19.79 lakh cases to taxpayers and corporate tax refunds amounting to Rs. 46,626 crore in 1.45 lakh cases have been issued to taxpayers during COVID-19. It is stated that the government has laid great emphasis on providing tax related services to the taxpayers without any hassles and is aware that during these difficult times of COVID-19 pandemic, many of the taxpayers are waiting to see that their tax demands and refunds reach finality as quickly as possible. It is further emphasized that all the refund related cleaning up of the tax demands are being taken up on priority and is likely to be completed by 31st August, 2020. Also, all applications for rectifications and for giving effect to appeal orders are to be uploaded on the ITBA. It has been decided to do all the work of rectification and appeal effect on ITBA only. It is reiterated that taxpayers, for quick processing of their refunds, should provide immediate response to the emails of I-T Department. A quick response from the taxpayer in this regard would facilitate the I-T Department to process their refunds expeditiously. Many taxpayers have submitted their responses electronically for rectification, appeal effects or tax credits. These are being attended to in a time bound manner. All refunds have been issued online and directly into the bank accounts of the taxpayers.
Source: PIB
The Clothing Manufacturers Association of India (CMAI) has signed MOUs with three leading regional associations—Garment Exporters Association of Rajasthan (GEAR), West Bengal Hosiery Association (WBHA), and Apparel Manufacturers Society of Indore (AMSI)—to help broaden their reach and spheres of providing service to the Indian domestic garment industry. All the three associations will become affiliated to CMAI, as per the MoU. The associations will also be represented in the National Coordination Committee of Associations of Domestic Garment Industry, which is being created by the CMAI so that the industry can speak in a cohesive, comprehensive, and united voice. The idea of tying up and working unitedly for a more unified holistic approach was recently mooted by Richa Bansal, consulting editor with Fibre2Fashion at a webinar titled 'Rewiring the Home Front'. "The industry needs to come together in a unified manner to settle the differences, the oneupmanship, to position India on the new global platform where it can take a leadership position. Look at Bangladesh, for example, where there is one voice that speaks for the textiles industry in that country. How much of that is feasible in India? Do you think we need a new industry body?" Bansal asked the panelists who included CMAI chief mentor Rahul Mehta. Welcoming the three associations as affiliates, Mehta said, “It gives me great pleasure to see the signing of the MoUs, as it marks the culmination of efforts which have been on for the last several months. I would also like to thank and compliment the leadership of GEAR, WBHA and AMSI, for their foresight and initiative in partnering with CMAI.” CMAI president Rakesh Biyani said the move will "lead to a substantial growth in the outreach of CMAI in these regions, and at the same time promote the activities of these associations all across India through CMAI’s offices and membership spread across the country." GEAR is a 42-year-old association and currently has 275 members. Although it was initially formed to cater to the growing body of exporters of Rajasthan, particularly in Jaipur, GEAR’s membership has increasingly turned to the domestic market in addition to traditional exports. Today, close to 80 per cent of GEAR's members are operating in the domestic sector directly or indirectly. "They are a progressive, forward-looking, and service-oriented association with ambitious plans for the future, and they will add tremendous value to CMAI members for any assistance required in Rajasthan," CMAI said in a release. WBHA is a 50-year-old association and has over 350 members, who are primarily involved in the manufacture of hosiery underwear garments, lingerie, and kidswear, catering largely to the domestic market. "Some of India’s leading brands in lingerie and kidswear are based in Kolkata. WBHA is providing yeomen service to the industry members of West Bengal, and is one of the most important voices for the hosiery industry. They will be an important addition to the scope and spread of services to the CMAI membership," the release said. AMSI has close to 170 members, in both export and domestic sectors. Indore is one of the most important manufacturing centres of Madhya Pradesh, and also a significant player on the national scene, especially in the kidswear segment. "Though only six years old, AMSI’s young leadership has been active in development of Indore’s garment industry, and has aggressive plans for improving the technology, productivity, and progress of its member manufacturers. Here too, CMAI members will receive tremendous value for any assistance required in Indore," CMAI said.
Source: Fibre2Fashion
In November 1971, on assuming UN Security council seat, Time magazine’s cover prophesised “The Chinese are Coming”. At home, however, due to successive policy failures with its Great Leap Forward (58-62) and its Cultural Revolution (66-76), China found itself socially torn with poverty as its dominant national feature. Within fifty years as it stands corroding India’s border, it’s time we analysed its hurried economic ascendency to plan an effective policy response. China has confounded observers worldwide by continuity in its National Vision, beginning with a humble, gradualist, experimental approach to its economy with a strategy of “crossing the river by feeling the stones”. Today it boasts of a home grown economic model, wherein capitalism has been tactically trained to evolve a successful socialist socio-economic system. Chinas rural industry policies of 1979, learnt from both England’s and Japanese Meiji industrial revolution to evolve its three tiered reforms. Its prime focus was on enhancing agriculture productivity through its household responsibility system, industrial growth via its private and collective town and village industrial enterprises (TVEs) and accessing foreign investments through coastal economic zones (SEZs). Tiny, village level pilot industrial projects were encouraged in light industry and textiles and if successful, were scaled up. Accompanying social reforms, encouraged job shifts from agriculture to transform rural manufacturing. China regularly tracked its poverty alleviation initiatives, single child policy, skill upgradation schemes, gender equality and healthcare initiatives to create an industrial workforce. From early 80s, rural TVEs, began accessing bank credit, sold their produce in urban areas; learning from failures while creating personal wealth. By 1985, household businesses employed 23.5 million people. Govt. data shows that Chinas investment focus on specialized vocational schools saw output numbers jump from18% in 1980 to 56% of total educated, by 1994. Chinas per capita income doubled between 1978 and 1984 and consumption increased by 51 percent till 1983(Riskin rural survey,1987). Govt. 1985 data shows that over 87% of its TVEs were privately owned. By 1990 private TVEs engaged over 50% of workforce. By 1995 each of 23.4 million TVEs employed 6 people; creating employment for 135 million (B Naughton,2007). Chinas 800 million farmers directly benefitted through TVEs. Simultaneously, China set up four coastal SEZ to attract FDI by offering huge tax breaks, duty free imports and tax holiday. Initial failure of SEZs led to tax breaks being used by companies for fulfilling local demand as only 20% products got exported (Wang 1993). Chinas trade deficit by 1985, jumped from $2 billion to $15 billion, in 3 years. Undeterred, SEZ policies were further liberalised and simplified as SEZs expanded to other areas. Initially only Taiwan and Hong Kong invested in China. Priority was given to foreign companies working with a local partner. Condition of all JVs included technology transfer and local manpower training in return for market access. Chinas industrial, technological and economic priorities decided the policy favours of Government for any FDI. By 1990, China doubled its power generation capacity and added 5000km railway network, as its trade deficit turned surplus by $6 billion. Concurrently, China began creating a legal system to harmonise the divergence between its industrial dream and social vision. Between 1982-1990 China unleashed a slew of 15 progressive laws; extending tax incentives and exemptions, reduction in infra costs and tariff-free imports for investors. Efficient transport systems, low cost land, water, electricity and natural gas, easy access to raw materials and components were also ensured. By 1993, FDI valued at $110.9 billion flowed in; more than total over last fourteen years. World Bank poverty figures disclose that by 2004, over half a billion people in China overcame poverty and hunger. China multiplied its GDP in PPP terms by 3.6 times during 1980-90. What World bank mistook as globalization, was home grown individual capitalism coupled with rural and grass root innovation that unshackled China from its povertarian past, forever. This fact is ignored by most nations at their peril, while dealing with China. In 1978, the Indian GDP per capita was more than Chinas and it boasted of superior overall infrastructure. By 1991 China had reversed this. Unlike China, Indian policies often fumble between expectations and dreams as planners often mistake them for vision. India’s economic compulsions in early 50s, were driven by need to prioritise import substitution in large Government enterprises and licensed small scale industries (SSI). This left private business at the mercy of India’s policy makers, who ignored the multiplier effect that rural small industries create on agriculture incomes and rural skill development. Small landholdings, illiteracy and poverty lowered India’s agricultural productivity; leaving its rural economy weather God dependent. This led to food dependence on USA during sixties, under PL-480 loan. Lack of employment turned Government jobs into a business of political handouts, breeding systemic inefficiencies. In area of education, healthcare and social development, India’s policy initiatives failed to convert its fixation with size and quantity into the realm of relevance of content and quality. Primary and secondary education was neglected to favour higher education. Lack of focussed curriculum rendered it ineffective in enabling a technical, agrarian or financial workforce. Lack of jobs after education, kept children away from schools and they had to be coaxed to join, with free mid-day meals. Rural healthcare, skill development and adult education programmes met the same fate; as India’s planning focused mainly on outlays without monitoring and measuring their socio-economic impact, on ground. Repeated policy failures drove India to its 1991 balance of payment crisis. For decades, it was assumed that manufacturing output share determined a countries economic growth. An ADB study of 52 nations shows that between manufacturing (mfg.) employment and its output share, employment remains the key to any nation’s growth. Thus, small and medium enterprises (SME) are critical for income, skills and employment growth. If a nation does not cross the threshold of 18% employment in mfg., then even with an output share of over 22%, it can never become a rich country. In 1960, Govt. data shows, India had 37,000 SSI units, which by early 1990 formed India’s industrial backbone and consisted of over 70 lakh industries employing 166 lakh people. In the next 14 years, these increased to 118 lakhs, employing 282 lakh workers. Yet, the average investment per unit increased only by Rs.7000 from 1.43-1.51 lakhs, while employment stagnated at 2.4 person per unit. Within SSIs, the share of labour-intensive industries such as textiles and leather gradually shrank, post 1990. Between 1987-93, one per cent increase in GDP increased 0.4 per cent employment. By 2004, it was down to 0.1 per cent. Studies show for every crore of capital investment small industries generate nearly five-fold more employment than large ones. Thus, Indian policy’s fascination for large industries for creating jobs, remains totally misplaced. In Germany over 50% of all industries are SMEs, while in Taiwan they exceed 80%. India’s industrial policy remains extremely lopsided. It has either very small or very large industries. MSME census shows that over 10 million informal industries provide 24 million jobs contributing only 2.6% to GDP, while registered SMEs employ over 8 million workers and contribute 5.08% to GDP. However, India’s 1.4 lakh large industries employing 7.8 million workers contributed 7.67% to its GDP. Hence, SMEs employ 82% of unproductive workforce, while the large, capital-intensive industries shoulder 58% of India’s output burden. Asia’s industrial success is characterised by a healthy balance of efficient small, medium, and large firms. India suffers from a missing middle; proving that India’s industrial policies are a deterrent to SMEs scaling up. Employment data reveals that post liberalisation, imports shot up while industries lost jobs. Between 1977-2011, both urban and rural manufacturing employment grew by mere 1%. Post 1991 construction and trade created most jobs. Average productivity of capital in Indian SMEs decreased from 6.92 to 2.57 between 1991 and 2008. But regulatory rent seeking deterred employment growth. Across India, land prices in Industrial parks are designed to keep SMEs out. To add to Indian SME woes, they are starved for funds. Credit growth to SMEs dipped from 9% in March 2015 to minus 2% in March 2016 and remains in negative territory. Thus, 1991 reforms only increased unemployment and manufacturing redundancy, while increasing import dependence. India’s education and industry requirement mismatch is a reason for India’s poorest productivity amongst Asian tigers. Ind-Ra data shows that India’s annual labour productivity declined further from 10.3% during 2006-10 to 3.7% during 2016-18; while annual wages declined from 11.7% during 2011-15 period, to 6.5% during 2016-18, thereby causing demand deflation. Thus, poor quality manpower and rigid labour laws are driving enterprises to automation. Some Indian industries, by 1990, after decades of Government support, emerged globally cost competitive. BHEL was reputed for quality heavy electrical equipment. Indian fibre optics, high- frequency radio products including industrial and electronic instrumentation were globally in demand. Many countries sourced IT hardware from India, while Indian PV cells had greater efficiency than China. India also exported chemicals and dyes, medical equipment and small machinery. All these and more industries ceded space to cheap low quality imports from China; reducing manufacturing units into importers; shipping jobs to China. Trade deficit with China of nearly $ 50 billion, today, is a policy failure story. Asian Tigers success was based on selectively regulating imports to use FDI investments to upgrade local industries and talent. Once their industrial infrastructure grid got established, they liberalized completely. India, rapidly and mindlessly, freed imports thereby strangling its homegrown industry. India’s policy obtuseness got compounded by problems of inverted duty structure, where the tariffs on finished goods were often less than those for intermediate inputs. This deterred employment in manufacturing. Many policy makers believe service industry jobs can replace industrialization. However, with 12.5% annual growth between 2007 and 2016, services added only 3% to India’s employment. On the contrary, growth of services sector upsets the wage equilibrium across mfg. industries, thereby defeating India’s advantage of being a low-cost SME destination. The only way to overcome this is by ensuring greater workforce productivity through improved education and training. India has already abandoned its programme to train 300 million people by 2022. There is a service sector bias in its training initiatives. Of the 3.3 million trained between 2010- 2015, only 2.6% catered to labour intensive manufacturing. Most of these holding technical diplomas, could not find employment. India’s attractive domestic demand and not its export potential has attracted FDI. 60% of FDI inflows are driven by services, where few jobs get created. Nearly half of FDI, post 1991 cannibalised local industry; resulting in downsizing of jobs for enhanced efficiencies. FDI in greenfield projects has been scant. 92% of FDI in pharma and 60% in chemical sector was M&As driven. FDI has benefitted parent companies while short changing local customer and local shareholders. RBI data shows that India’s net loss in forex, from FDI investments amounted to Rs1.2 trillion between 2004-13. Royalties, technical fees and other forex expenses outweighed even the imports by these companies. Many companies doubled their royalty outgo, despite lower company profits and dividends. India’s SEZ experiment began five decades ago, in Kandla. Despite starting early, it’s the only Asian nation that failed to generate mfg. employment through SEZs due to its inability to create backend connectivity with other industries. SEZ policy changes have consistently focused on plugging revenue leakages rather than employment and industrial growth. Nokia aborted their SEZ and left India, due to differences with taxmen. Even Philippines, Iran, UAE and Bangladesh could benefit from SEZs. India ranks amongst the worst in several key metrics of ease of doing business. It’s desire to wean away FDI into China, lacks strategy and policy seriousness. Of 56 companies that left China during 2018- 19, only 3 invested in India while half chose Vietnam, as per Nomura. Thus, India must immediately stop itself, from getting in its own way. The world is changing fast. Many products that generated employment in industry like radios. watches and cameras are obsolete. More will soon follow. Global power has shifted into hands of borderless corporations, (author’s TOI blogs Covid laid bare, June 13,) who direct major economic policy shifts. Simultaneously, the world is trending towards de-industrialization; where manufacturing is increasingly getting automated. It is estimated that 80% of manufacturing jobs will soon be redundant. India’s uphill task today, is to promote employment in industry through lower costs and skills, thwarting these corporations’ attempts to unify and control global markets. Progressively, nations have begun focussing inwards. So, borderless trade and MFN status ideas, seem way past their prime. India, increasingly shares the 1945 dilemma of victorious Britain. With growing joblessness, damaged industrial spine, poor infrastructure, dismembered colonial control and overwhelming cost of maintaining its grandeur; it had the choice to either industrialise or focus on services. Its policy choice then, left it indebted. Meanwhile, Germany replaced it industrially, while USA did it technologically and economically.
Source: Times of India
|
Item |
Price |
Unit |
Fluctuation |
Date |
|
PSF |
764.34 |
USD/Ton |
-0.19% |
19-07-2020 |
|
VSF |
1215.50 |
USD/Ton |
-1.16% |
19-07-2020 |
|
ASF |
1688.83 |
USD/Ton |
0% |
19-07-2020 |
|
Polyester POY |
703.56 |
USD/Ton |
0% |
19-07-2020 |
|
Nylon FDY |
2002.00 |
USD/Ton |
-0.71% |
19-07-2020 |
|
40D Spandex |
4004.00 |
USD/Ton |
0% |
19-07-2020 |
|
Nylon POY |
1859.00 |
USD/Ton |
0% |
19-07-2020 |
|
Acrylic Top 3D |
886.60 |
USD/Ton |
0% |
19-07-2020 |
|
Polyester FDY |
2237.95 |
USD/Ton |
-0.32% |
19-07-2020 |
|
Nylon DTY |
5148.00 |
USD/Ton |
0% |
19-07-2020 |
|
Viscose Long Filament |
943.80 |
USD/Ton |
0% |
19-07-2020 |
|
Polyester DTY |
1851.85 |
USD/Ton |
-0.38% |
19-07-2020 |
|
30S Spun Rayon Yarn |
1716.00 |
USD/Ton |
-0.17% |
19-07-2020 |
|
32S Polyester Yarn |
1337.05 |
USD/Ton |
0% |
19-07-2020 |
|
45S T/C Yarn |
2173.60 |
USD/Ton |
0% |
19-07-2020 |
|
40S Rayon Yarn |
1530.10 |
USD/Ton |
0% |
19-07-2020 |
|
T/R Yarn 65/35 32S |
2030.60 |
USD/Ton |
0% |
19-07-2020 |
|
45S Polyester Yarn |
1873.30 |
USD/Ton |
0% |
19-07-2020 |
|
T/C Yarn 65/35 32S |
1665.95 |
USD/Ton |
0% |
19-07-2020 |
|
10S Denim Fabric |
1.13 |
USD/Meter |
0% |
19-07-2020 |
|
32S Twill Fabric |
0.64 |
USD/Meter |
0% |
19-07-2020 |
|
40S Combed Poplin |
0.93 |
USD/Meter |
0% |
19-07-2020 |
|
30S Rayon Fabric |
0.48 |
USD/Meter |
0% |
19-07-2020 |
|
45S T/C Fabric |
0.65 |
USD/Meter |
0% |
19-07-2020 |
Source: Global Textiles
Note: The above prices are Chinese Price (1 CNY = 0.14300 USD dtd. 19/07/2020). The prices given above are as quoted from Global Textiles.com. SRTEPC is not responsible for the correctness of the same.
The IIF said the first-quarter debt-to-GDP ratio jumped by over 10 percentage points, the biggest quarterly surge, to reach a record 331% Global debt surged to a record $258 trillion in the first quarter of 2020 as economies around the world shut down to contain the coronavirus pandemic, the Institute for International Finance (IIF) said in a report. Debt levels are continuing to rise, it further said. The IIF, which represents global banks and financial institutions, said the first-quarter debt-to-GDP ratio jumped by over 10 percentage points, the biggest quarterly surge, to reach a record 331 per cent. While the rise in debt levels was well below average quarterly gains seen from 2015 to 2019, the pace of global debt build-up by governments, companies, financial institutions and households had accelerated since March, it said. Overall gross debt issuance hit an “eye-watering” record of $12.5 trillion in the second quarter, compared with a quarterly average of $5.5 trillion in 2019, the IIF said. It noted that 60 per cent of those issues came from governments. “...over 92 percent of government debt is investment-grade,” the report stated. Debt in mature markets topped 392 percent of GDP, up from 380 percent in 2019, with the rise in debt ratios outside the financial sector most pronounced in Canada, France, Norway and the United States. U. S. debt made up half of the total $185 trillion of debt in mature markets. US reports 77K Covid cases in a day The United States shattered its daily record for coronavirus infections on Thursday, reporting more than 77,000 new cases as the number of deaths in a 24-hour period rose by nearly 1,000, according to a Reuters tally. The loss of 969 lives was the biggest increase since June 10, with Florida, South Carolina and Texas all reporting their biggest one-day spikes. Employers have “more discretion” on whether to bring staff back to the office, says UK prime minister Boris Johnson as he relaxes work-from-home rules Britain’s economy has started to recover, says Bank of England governor.
Source: Reuters
Officials have warned that another summit later this month could be needed to clinch a deal German Chancellor Angela Merkel raised doubts that European Union leaders, meeting in person for the first time in five months, would be able to agree this week on a landmark 750 billion euros ($855 billion) recovery fund to help their economies heal from the pandemic. “We’re entering these discussions with plenty of vigor, but I have to say that the differences remain very, very great, so I can’t predict whether we’ll reach an agreement here,” Merkel said in Brussels before the start of the summit. “I expect very, very difficult negotiations.” Their meeting comes after weeks of intense negotiations between diplomats and governments, seeking to bridge differences over the total size of the package, how money would be distributed and the proportion of loans versus grants. Officials have warned that another summit later this month could be needed to clinch a deal. Stocks in Europe slipped as investors weighed the prospects for a deal on the proposal. The Stoxx Europe 600 Index fluctuated before turning lower after Merkel’s comments, with banks leading the declines. Dutch Prime Minister Mark Rutte seemed even more pessimistic on reaching a deal at this gathering, and has said that any disbursements from the recovery fund need to be contingent on reforms from each country, which would be subject to unanimous approval by each member state. This would ensure that funds would only go toward projects to help laggard economies catch up and would give each nation an effective veto. “If they want loans and even grants then it’s only logical that I can explain to the people in the Netherlands and other countries that in return those reforms have taken place instead of only assurances,” Rutte told Bloomberg TV before the start of the meeting. He added that the likelihood of a deal was “less than 50%.” Rutte held a short one-on-one with French President Emmanuel Macron before heading into the main session. Macron left that conversation feeling trusting but cautious, according to a French official. As talks got under way, the president of the EU leaders’ council, Charles Michel, asked leaders to focus on three key points, budget rebates for richer nations, the size of the fund and its governance, according to a senior EU official. The goal on Friday is to find common ground on these points and build from there, the official added, asking not to be named discussing private negotiations. Under the compromise being discussed, the recovery package would be financed by joint EU debt issuance, marking a major step toward further economic integration in the 27- nation bloc. And 500 billion euros of those proceeds would be given out in grants, a type of transfer that would have been unthinkable just a few months ago. Danish Wedding The emergency nature of the summit was highlighted by the fact that it forced Danish Prime Minister Mette Frederiksen to reschedule her wedding, which had been planned for this weekend. Instead, she got married at a small ceremony on Wednesday, and on her Facebook page referred to the meeting with her counterparts as her “honeymoon”. The first day of the summit also coincided with Merkel’s 66th birthday -- Macron gave her a few bottles of a white Bourgogne wine, according to a French official. But the festive mood may not last long, given the sheer scope of the negotiations planned. The volume of money under the plan and the various burden-sharing taboos it would break have rendered a compromise elusive, especially when it comes to countries that would be net contributors. The debate is complicated by the fact that the recovery fund will have to be agreed alongside the EU’s next long-term budget, which is set to kick in next year. Negotiations over the seven-year spending plan were already testy before the pandemic struck. But the complication also offers an opportunity for tradeoffs. Budget hardliners are all net payers to the EU budget and want to receive corrective payments that will reduce their net contributions, a key bargaining chip in the negotiations. The four countries -- Austria, Denmark, Sweden and the Netherlands -- were planning to meet before the meeting started to coordinate their position on key issues. “Differences in positions are still relatively large, and that means of course that negotiations will stretch for a while,” Austrian Chancellor Sebastian Kurz said before the meeting. “It isn’t entirely clear if we will be successful in achieving a breakthrough this summit or if it will hopefully be the case during a coming one.”
Source: Bloomberg
UK interior minister Priti Patel recently condemned a ‘modern-day scourge’ in the country’s textile sector, following reports that thousands were working in modern slavery. Parliamentarians urged Patel to do more to eradicate the ‘clear evidence of modern slavery in plain sight’ at garment factories, particularly in Leicester, central England. Leicester has at least 1,000 garment factories. In the last few weeks, campaigners highlighted pressure on workers to stay on the job at textile factories in Leicester despite the COVID-19 outbreak, and wages paid being well below the national minimum of £8.72 an hour. Patel said she ‘completely agreed’ with the description of them as ‘a modern-day scourge when it comes to exploitation’, and called for better enforcement of existing legislation. Andrew Bridgen, who belongs to the ruling Conservative Party, estimated that the city's garment factories could count up to 10,000 victims of modern slavery. Those affected were a ‘mixture of local people and immigrant workers’, some of them illegal, making them ripe for exploitation, he told a news agency. "The National Crime Agency and others are looking into the appalling allegations about sweatshops in Leicester and the home secretary has been clear that anyone profiting from slave labour will have nowhere to hide," a government spokesman said.
Source: Fibre2Fashion
Adjusting your glasses, you observe models sashaying down the runway, taking note of every minute detail of next season’s trends. Parading down for the final walk, you clap softly as the show comes to an end, and instead of clutching your Bottega Veneta and leaving, you close the tab on your browser. This is perhaps how fashion shows are held in a time of global pandemic, where health and safety regulations mean there is no more preening outside of venues as photographers capture this season’s must-have accessory. In February, a spike in confirmed cases in Milan led to the cancellation of several major shows closing Milan Fashion Week, including Giorgio Armani, who cancelled invitations with less than 24 hours to go and instead livestreamed the emptied-out show via the designer’s website and social media. While watching shows remotely is nothing new, as those who have missed out on Jakarta Fashion Week shows or are avid watchers of FashionTV can attest, fashion shows in general have moved online. London Fashion Week, one of the big four in the global fashion industry, went fully digital in June, swapping catwalks and cocktails for podcasts and playlists. Paris and Milan followed suit this month, staging events through videos and films. As for Indonesia, Jakarta Fashion Week’s usual October schedule is still a couple of months away, but another online event has already taken place for those missing the runway. The Fashion and Cultural Festival held its annual presentation on July 8, taking the form of an online-only event livestreamed on YouTube. Dubbed as “Fashi(ON) Line”, the presentation showcased the works of 29 local and international designers. The virtual fashion shows came in the form of fashion films, showcasing models preening and posing in various locales wearing cocktail attire and ready-to-wear creations. These sets include the editorial, such as helipads and luxurious properties; the mundane, like airports and football fields; to the familiar, like stay-at-home moods. Also modelling were several ambassadors, namely Armenian ambassador Dzyunik Aghajanyan and Russian ambassador Lyudmila Vorobieva wearing Menoor Batik; Finnish ambassador Jari Sinkari and Belarusian ambassador Valery Kolesnik in Garuda Kencana Batik. Opening the show was Adith Hendart’s presentation, which saw the models walking up and down a deserted but still functional airport terminal, perhaps evoking a mundane fantasy of air travel in an era of lockdown and isolation. The opening look of a bold fuchsia embellished mini dress with satin elbow-length gloves certainly livened up scenes of concrete and glass panels, while a floor-length gown with voluminous sleeves would likely be quite the showstopper inside an airport train car. Meanwhile, Poppy Dharsono’s traditional and classical touch of Indonesia made for an interesting outfit when worn inside a modern art gallery, though the eclectic color choices blended well with the paintings. The standout look featured traditional textiles worked into a sharp yet sensual ensemble of fitted strapless top and wide-leg trousers layered under a sheer, floor-sweeping outerwear. By contrast, Steven Huang’s fabric and palette was much simpler, though they did not detract from the minimalist elegance of an azure strapless gown. Minimalism is the name of the game here, but with details being the main attraction like the crumpled-paper texture of a sleek jumpsuit paired with sheer orange outerwear. Amot Syamsuri Muda’s elevated streetwear provided interesting silhouettes, like a playful take on the humble denim jacket that saw exaggerated shoulder lines jazzing up a daily look. Samuel Wattimena went for bold menswear, utilizing clashing patterns of traditional textiles that somehow blended in an amalgamation of old and new, of tradition and modernity. Styling was decidedly vivacious, but individual pieces can work as statement items for the more low-key, such as a pair of black-and-white capri trousers or a patchwork jacket. Samuel, who also served as the event’s curator, told The Jakarta Post that the primary reason for the show was creativity. “Creativity must not be stopped or limited, the show must go on. It’s not about merely attracting purchases, so there needs to be a concept to communicate,” he said. While preparations are more or less similar to physical shows, the production process for an online event requires additional considerations, such as camera framing, the overall background and mood. These aspects, he says, are crucial so the main message can be communicated clearly. “I’m very much interested in online fashion shows, as it’s much simpler to prepare and the reach can become wider globally. I can showcase the details and get the concept across comprehensively.”
Source: Jakarta Post
