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MARKET WATCH 22 JULY, 2020

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India needs to reposition handloom sector and look at larger consumption market: Smriti Irani

The Minister reiterated the need for youngsters to retain the craft through use of available design technology so as to reduce the challenge that the weaving community has in terms of current feeling of limited opportunities amongst youngsters, and the need for sustaining the handloom sector Union Minister of Textiles, Smriti Zubin Irani said that India needs to reposition handloom sector and look at the larger consumption market. Dr. APJ Abdul Kalam Centre for Policy Research & Analysis under the aegis of IIM Shillong today hosted an esymposium on Handloom Sector, Irani said “For far too long, I think the handloom legacy of our country has been romanticised with the element of poverty, and I think from the marketing perspective we need to reposition ourselves and look at the larger consumption market” She said, “ Today when sustainability has become the buzzword not only for manufacturers, buying agents, and international chains that can leverage the handloom opportunity, there has to be a more systemic approach on how to make handlooms a better business opportunity given the semblance of pride in the handloom legacy of our country, particularly the northeast, while also trying to understand the issues that ail this particular sector that we are today talking about. Some of the points brought forward by her for consideration was the necessity to encourage weavers to actually have a business plan and a pathway to success, which means looking at input costs, access to better credit, access to better design opportunities, understanding of IPR and packaging, which also entails how positioning and branding of raw material can dier from one segment to the other. “ She further added, “Instead of looking at a minute segment which we see to service, we need to look at a product range for a larger consumer base,” while emphasising on not looking only at exports but also servicing India which is one of the largest global consuming markets of the world”. The minister reiterated the need for youngsters to retain the craft through use of available design technology so as to reduce the challenge that the weaving community has in terms of current feeling of limited opportunities amongst youngsters, and the need for sustaining the handloom sector. “The government at the ministry level is encouraging a lot of people to come together as producer companies,” she said, while also highlighting one of the major challenges of people positioning themselves as master craftsperson, who are not necessarily producers but only serve as a go-between, between the market and the actual weaver.” The minister added, “How can we break that system and encourage the individual weaver or set of weavers to come together and form producer companies,” she further pointed out while enlightening on government initiatives towards credit facilities such as Mudra Yojana where according to studies done, she said post access to the scheme a weaver’s income increases by at least 50 to 60 percent, “which means we need more and more research which can build credibility to such outreach programs,” she added. Chairman of the Board of Governors, IIM Shillong Shishir Bajoria said “Since the pandemic has impacted the world economy has taken a backseat. Lots of workers from the northeast who were earning their livelihoods from the different parts of the country have returned home. In this situation handloom sector can be primed up to boost the economy of the entire region and generate employment. What it needs is requisite intervention in terms of finance, appropriate technological introduction, creation of brand identities, forward and backward integrations, and above all logistics support.”

Source:   Economic Times

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Indian textile ministry opposes ADD on imported nylon yarn

The Indian textile ministry recently opposed the final findings of the Directorate General of Trade Remedies (DGTR) recommending the imposition of anti-dumping duty (ADD) on nylon multifilament yarn. In a letter to the deputy secretary of the department of revenue, the textile ministry stated that nylon multifilament yarn is a key raw material for the power loom industry, including knitting and weaving. There should not be any ADD imposed on the import of yarn from China, Korea, Taiwan and Thailand, the letter said. Power loom weavers in Gujarat’s Surat, Maharashtra and other states have been opposing the DGTR’s recommendation of imposing ADD on the nylon multi-filament yarn. Weavers have stated the quality of nylon yarn manufactured by the domestic yarn spinners was not up to the mark and the weavers are forced to import better quality yarn from other countries to reduce production loss and to supply quality fabrics in the domestic and international markets. In February, the Gujarat textile commissioner’s office had written to the textile ministry stating that against the increase of 19 per cent in the import of nylon multi-filament yarn between 2015 to 2019, the production of yarn in the country had increased by almost 24 per cent during the same period, according to a report in a leading English-language daily. However, there is no harm to the domestic industry and the demand for ADD is not justifiable. Nylon fabrics are used in the parachute, technical textiles, garments and knitted garments.

Source: Fibre2Fashion

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India starts probe into export of certain Chinese yarn

India has begun a probe into alleged low-cost imports of a certain type of yarn from China, which is reportedly affecting the domestic industry. The Directorate General of Trade Remedies (DGTR) initiated the probe to assess if the subsidy programme of China for export of viscose rayon filament yarn above 60 deniers is affecting the Indian industry. The Association of Man-Made Fibre Industry of India (AMFII) had filed an application with the DGTR on behalf of the domestic industry for anti-subsidy investigation on the import of this yarn from China. Alleging material injury to the domestic industry due to subsidised imports from China, the applicant has requested for imposition of countervailing duty on these imports, according to a news agency report. The product resembles silk, cotton and wool in its feel and texture. It is used to make woven fabrics, and home furnishings. It is a popular choice for making fabrics like georgettes, crepes and chiffons. “On the basis of the duly substantiated written application by or on behalf of the domestic industry, and having satisfied itself, on the basis of the prima facie evidence submitted by the domestic industry, substantiating subsidization” of the yarn originating in or exported from China, “the authority hereby initiates an investigation to determine the existence, degree and effect of alleged subsidies…and to recommend the amount of countervailing duty, which, if levied, would be adequate to remove the injury to the domestic industry,” the DGTR notification said. The period for investigation is from April 2019 to March 2020. However, it will cover the data from 2016 to 2019. Under the global trade rules of the World Trade Organization (WTO), a member country is allowed to impose anti-subsidy or countervailing duty if a product is subsidised by the government of its trading partner. These duties are trade remedies to protect domestic industry. Subsidy on a product makes it competitive in price terms in other markets. Countries provide subsidies to boost their exports.

Source : Fibre2fashion

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India best destination for foreign investment, offers golden opportunity: Nitin Gadkari

Terming India as the best destination for foreign investment with high returns, Union Minister Nitin Gadkari on Tuesday urged investors including from the US to reap rich dividends by investing in its infrastructure, MSMEs, banks, NBFCs and other areas. Referring to COVID-19 pandemic as a temporary phase, the Road Transport, Highways and MSMEs Minister said the country was confident of winning the economic war and the government has taken a number of steps to overcome the crisis. “It is golden opportunity for you to invest in airports, roads, MSME, railways, waterways and other sectors…There is a huge potential for investment. Returns are very good as compared to USA. I feel Indian situation is good,” the minister said addressing the ‘India Ideas Summit’ by US India Business Council and US Chamber of Commerce. The minister said that economic consultants have predicted budget deficit of Rs 10 lakh crore and the foreign direct investment is the need of the hour for pumping in liquidity into the market. “It is opportunity for people like you to invest in MSMEs. You will get very good returns. NHAI are another good opportunity. You can invest in seaplanes as there is much potential in the country,” the minister said. “India has strength. It has big market, skilled manpower and is focussing on increasing exports and reducing imports,” the minister said. He said a plan was on the anvil for assigning ratings to the MSMEs which will facilitate investment in it and added that MSME accounted for 48 per cent of the exports and has created 11 crore jobs. “Eradicating poverty is the most important agenda for us. To uplift the economy we need to create more jobs,” he said. Urging players to invest in the highways sector, the minister said that 22 green expressways were on the anvil and work has already started on seven of these. Rs 1 lakh crore Delhi-Mumbai express highway on a new alignment will be completed in three years span, the minister said and added that these projects offered huge investment opportunities. Besides, he said plans are afoot to take Rs 1 lakh crore blue economy to Rs 6 lakh crore with initiatives like exports of seafood. Also, he said that the government is planning to bring a policy for microfinance of Rs 10 lakh. “COVID-19 is a temporary phase, all things will be changed. India’s future is good. There are economically viable options for you,” he told the investors and added that he was confident that a vaccine for the virus will be out soon. “We are waiting for vaccine. Indian scientists are trying their best to get the vaccine. We have faced many problems…We will overcome this. Now there is need to create positivity in the mind of people. India is among the fastest growing economies,” he said.

Source: Financial Express

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Form GSTR-4 now available on GSTN portal

The Goods and Services Tax Network (GSTN), which manges the information technology system of the indirect tax regime, on Tuesday announced making available annual return form GSTR-4 on its portal. This will help nearly 17 lakh composition assesses to file annual return with effect from FY2019-20. Composition assesses are those GST assesses whose annual turnover is up to ₹1.5 crore. Theses assesses are not authorised to collect GST from consumers and also do not get the benefit of Input Tax Credit (ITC). However, they are permitted to deposit tax at a much lower fixed rate with the government. These assesses are to file annual return for FY2019-20 by August 30, 2020. Under the new arrangement, composition assesses are not required to continue with quarterly return, but need to submit a statement only in form GST CMP-08. Earlier, a composition taxpayer had to file returns on a quarterly basis in form GSTR-4; filing of annual returns in form GSTR-9A was optional. Now, annual returns have to be filed in GSTR-4. GSTR-4 can be filed only if all applicable quarterly statements in CMP-08 of that financial year have been filed. This annual return, once filed, can’t be revised. After successfully filing, an intimation will be sent through email and SMS. Currently, only online filing has been enabled on the portal. Shortly, an offline tool to file the form will also be made available.

Source: Business Line

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India, US need to sit down on negotiating table for free trade agreement: Piyush Goyal

After concluding a “quick” trade deal, India and the US need to sit down on the negotiating table for working towards a more sustainable, robust and enduring partnership in the form of a free trade agreement (FTA), Commerce and Industry Minister Piyush Goyal said. For the FTA, the minister said, India is willing to work with an open mind, with willingness to open markets with a corresponding opportunity for Indian businesses in the US. “I believe we have a quick trade deal which some of the pending matters has built up over the last couple of years which we need to get out of the way quickly. We are almost there. I think another couple of calls and we should be able to solve that out. “Post that, as was already intimated to the US Congress, the US and India need to sit down on the negotiating table, I do not know if that can be done before the (US) elections or post the elections, but we need to work towards a much more sustainable, a much more robust, a much more enduring partnership in the form of a FTA,” he said in a webinar of US-India Business Council.Goyal said that both the countries should also look for a preferential trade agreement (PTA) which can include 50-100 products and services. While in a PTA two trading partners eliminate or significantly reduce import duties on a limited number of goods traded between them, in a FTA the countries remove duties on maximum number of products. “We believe we should also look at an early harvest in the form of a PTA, so that we can rather than waiting for the gains of a FTA, which may take several years to conclude, we could look at an early harvest of maybe 50 or 100 products and services, where we can engage with mutual trust and open spirit. So that the partnership between the US and India can kick start much faster,” he added. India and the US are negotiating a limited trade deal with a view to ironing out differences on trade issues to boost economic ties. India is demanding exemption from high duties imposed by the US on some steel and aluminium products, resumption of export benefits to certain domestic products under the Generalized System of Preferences (GSP), and greater market access for its products from sectors such as agriculture, automobile, automobile components and engineering. On the other hand, the US wants greater market access for its farm and manufacturing products, dairy items and medical devices, apart from cut in import duties on some information and communication technology products. The US has also raised concerns over trade deficit with India. Further the minister stated that the government is taking several steps to further improve the business climate to attract investors. He said businesses are looking for a stable and predictable policy environment, fair play, ease of doing business, better infrastructure in terms of logistics, utilities, and common facilities required for manufacturing firms. “By enlarge industry and business wants to be left alone, wants freedom to operate and is willing to commit itself to work within the framework of a country’s laws. And I think India is working towards making all of these enablers…whether it is ease of doing business, whether it is improving our competitive edge, bringing down logistics cost, making it easier to get approvals. All of this typical needs of business which we in government are trying to address,” he said. He added that there is an opportunity and a trust deficit available globally and India is willing to fill that gap in the international supply chain as a trusted partner. Talking about formulation of the single window clearance process, he said a team is working on this by understanding the needs of businesses, their pain points and requirements. “We understand industry pain points and their requirements. We are trying to create such a genuine single window, and not a window behind which it opens to 10 doors. It is a herculean task, will take some time but I assure you that we are committed to make it happen,” the minister said. To begin with one of the first things that on a pilot basis, the government is going to release “very soon” is a GIS based land bank availability across the country, he said adding “we have identified in six states a few hundred thousand hectares of land and we are actually going to offer you a Google earth view of particular lands available for industry to buy. Taking it forward from there so much so that my intention is that a person sitting in Iceland should be able to not only locate the land he wants but also pay for it and buy it”. “I will give you a simple example of how I am explaining it (single window process) to my own officers. I said look at the common application form that a student who applies to US university has to fill up. It’s eight universities, one form, small supplement to each…,” he added. The minister also said that India has become self-sufficient in ventilators and “I shortly be starting export of ventilators”. In March, the government banned export of ventilators in wake of the coronavirus outbreak.The US remained India’s top trading partner for the second consecutive fiscal in 2019-20. According to the data of the commerce ministry, in 2019-20, the bilateral trade between the US and India stood at USD 88.75 billion, as against USD 87.96 billion in 2018-19. The US is one of the few countries with which India have a trade surplus. The trade gap between the countries has increased to USD 17.42 billion in 2019-20 from USD 16.86 billion in 2018-19. In 2018-19, the US had surpassed China to become India’s top trading partner.

Source: Business Standard

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No more ban on deemed approval for GST registration

The goods and services tax (GST) administration has lifted a ban on deemed approval for new registrations, which was imposed during the lockdown period for fear that the facility could be misused in the absence of properly functioning GST departments across the country. Several states had reported the trend of newly registered businesses being engaged in circular trading during the lockdown. For registering as a GST business, a taxpayer has to file an application on the GST Network portal. This application is then allotted to either the central or state tax officials depending on the jurisdictions. According to the law, the official would process the application in three working days but if no action is taken, the same is deemed to be approved. The GST policy wing issued instructions last week that all registration applications as on June 30 that have remained pending till July 15 be granted deemed approval. Further, applications received post June 30 and pending till July 28 would be deemed approved also. The instruction also said that due to technical glitches in GSTN, few registration applications were approved even during the lockdown when the facility had been withdrawn. “GSTN has been requested to forward such GSTINs who got deemed approval during the lockdown to the jurisdictional officers. In such cases, wherever required, proper officers may get the physical verification of the premises done,” the letter said. During the lockdown period, many businesses had seen long delays in getting their GST registration confirmed, and found no help on raising the issues with the authorities. Most such complains were for applications submitted in April and May. A state tax official said that state’s commercial tax department had found several cases of circular trading – which involved businesses issuing fake invoices among each other to fraudulently avail input tax credit without actual supply of goods and services – with overwhelming participation from businesses registered during lockdown. “Tax authorities witnessed a sudden surge in GST registrations during the pandemic period, even though other economic indicators like e-way bills, tax collections, and GDP nosedived. Since lockdown is practically over in all states, process for deemed approval of application for registration would be resumed from August 1,” Rajat Mohan, senior partner at AMRG & Associates, said.

Source: Business Standard

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Aatmanirbhar Bharat: Big relief for textile sector likely soon, reveal sources

The government is focusing on certain sectors to promote its ‘Aatmanirbhar Bharat’ mission and has identified the textile sector as one of the key sectors to take it forward. In light of this, the Modi government is planning to give a much needed relief to this sector, Zee Business Executive Editor Swati Khandelwal told Managing Editor Anil Singhvi in this big breaking news. The textile sector will play a big role in realising government’s dream of ‘Aatmanirbhar Bharat’, Khandelwal said. Source close to her have revealed that the government is planning to develop a large world class textile infrastructure in the country in the form mega textile parks. The mega textile parks will encompass a complete value chain of this sector, she added. India has been lagging in this respect, though there are similar such ecosystems for this sector in other countries, the Executive Editor said. To make this happen, the government is planning to promote naturally used products like bamboo and high performance value added fibers, she said. The government is likely to increase its focus on these products, she further said. She also said that in order to promote Brand India on global platforms and telling the world about its strengths, employing aggressive marketing methods is also part of the agenda. The government is also thinking of providing credit at concessional rates through interest subvention schemes, credit guarantees and margin money subsidy. The government also wants a large warehousing infrastructure to be present near all ports. These should also be near the textile sector, Khandelwal said. Technical textiles are another important element. This segment caters to the sectors like automobiles. The role of India is quite small in this aspect and there is a big opportunity in this area, she further said. A report on this will soon be finalised.

Source: Zee News

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FTAs have not served India's economy well: External Affairs Minister S Jaishankar

 The free trade agreements (FTAs) that India entered into over the years have not been able to largely serve the country's economy well in terms of building its capacities, though all such pacts are not the same, Eternal Aairs Minister S Jaishankar said on Monday. The external affairs minister said there are ways of engaging the world which do not necessarily have to be "FTA-centric". Jaishankar made the comments during an online interaction with leading industrialist Sunil Kant Munjal and strategic aairs expert Prof C Raja Mohan on CNBC-TV18. Replying to a question on New Delhi's ties with neighbouring countries, he said it is a complex neighbourhood and India is often like a "punching bag", adding creation of structural linkages could address the problem of "volatility" resulted by domestic politics of the countries. Elaborating on his views on FTAs, Jaishankar said:"The fact is that they have not served the economy well in terms of building our capacities. I think there are ways of engaging the world which do not necessarily have to be FTA-centric," the external aairs minister said. He, however, added that all the FTAs are not the same. "Look at the state of the economy, look at the state of the manufacturing then look me in the eyes and say yes these FTAs have served me well. You won't be able to do that," Jaishankar said during the discussion on geopolitics of opportunities. He said post COVID-19, the world is heading towards a more protectionist economy. When asked about non-alignment and the current geo-politics, the external aairs minister said it was a term of a particular era and particular geopolitical landscape. Noting that India maintains a strong streak of independence in its foreign policy, he said today people turn to the country as part of solution, as it has been a key player in dealing with all major global issues and challenges like maritime security, climate change and terrorism. "If we are to grow by leveraging the international situation, then you have to exploit the opportunities out there," he said. "Either you are in the game or you are not in the game. I would say that the era of great caution and a very much greater dependence on multilateralism, that era is to a certain extent behind us. "We have to step out more, we have to be more condent, we have to articulate our interests better, we need to take risks because without taking risks like in business or in banking, you cannot get ahead. Those are the choices we have to make and I think there is no getting away from it," he To a question on the neighbourhood, he said the relations at times are impacted by the interplay of politics and sharp positioning. "We need to create those structural linkages between us and our neighbours so that they they care of political cycles and any volatility their politics may produce," he said. "Because, very often people say things about us. We are actually like a punching bag and the domestic issues which one of our neighbours is having," Jaishankar said in an apparent reference to Nepal. "I would say the sensible thing to do is to make sure that you have strong structural linkages so that the politics of the day plays on, but the realities of the economics and the social interactions and the people to people contacts... that carries on "Having said that I would take a lot of care with my neighbours to kind of smoothen the frictions as they come along. Sometimes you anticipate problems, sometimes it is important that you do not get provoked," he said. About China, he said the economies of India and China were roughly of the same size when the then Prime Minister Rajiv Gandhi visited Beijing in 1988. However, now, China's economy is about four-and-half or ve times that of India largely due to a series of reforms the neighbouring country initiated around 40 years back. He said India too grew "fairly signicantly" during the period. "The fact that we did not intensively industrialised, or pushed manufacturing the way many other Asian economies did. The fact that we opened up very much later, we opened up a full decade-and-half after China did," he said.

Source: Economic Times

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BAT signal: New tax likely on certain imports to provide domestic players a level-playing field

However, tweaking the Customs Act to slap the BAT will warrant a comprehensive exercise by the revenue department on the applicability and the quantum of such an impost on various goods. Amid a policy push for Atmanirbhar Bharat, the government has revived a proposal to levy the so-called border adjustment tax (BAT) on certain imported goods – including steel and certain related products – to provide domestic manufacturers, who are subject to various embeded taxes, a level-playing field against overseas suppliers. Alternatively, the government may consider a proposal to refund these taxes – including duties on electricity and fuel, clean energy cess, mandi tax, royalties and biodiversity fees — that are not subsumed by the goods and services tax (GST) to domestic manufacturers. While the Centre has approved a scheme, RoDTEP, to reimburse all such levies paid on inputs consumed in exports, it doesn’t cover goods sold in the domestic market. Indian industry has been complaining about the plethora of local levies inflating their cost of production. This is because these are not subsumed by the GST and, therefore, input tax credit isn’t extended against such imposts. But imported goods, in most cases, aren’t loaded with such levies in their respective countries of origin, thus, enjoying price advantages vis-à-vis products manufactured in India. A BAT will be designed to nullify this unfair edge to overseas suppliers and will be in sync with WTO norms, a senior government official told FE. It will require an amendment to the Customs Act. Another official source said the steel ministry recently wrote to the finance ministry, seeking the imposition of the BAT. The commerce department had earlier suggested to the revenue department to consider such a levy on imported goods. If finally approved, the impost will be levied over and above the existing customs duties. Several industries, including steel and garments, have highlighted the disadvantages to domestic manufacturers on this account. For instance, the production and import of coking coal, which accounts for 30-40% of the cost of making certain steel products, is subject to a clean energy cess of Rs 400 per tonne. This ultimately pushes up prices of domestic steel proportinately. As much as 0.77 tonne of coal is required to produce one tonne of steel. In a letter to revenue secretary Ajay Bhushan Pandey in December 2019, commerce secretary Anup Wadhawan had also said: “Such taxes (which are not subsumed by the GST), while resulting in an increase in the cost of production of domestic goods, also place them on an unequal footing vis-a-vis imports…rendering our exports uncompetitive.” The steel ministry also feels that nullifying this disadvantage will encourage domestic producers to utilise greater capacity, especially at a time when it has started producing high-quality speciality steel products, according to one of the sources. India, the world’s second-largest steel producer, has an installed capacity of 150 million tonne a year but it produces only about 110 million tonne. With the government stepping up focus on boosting infrastructure, domestic demand for steel is only going to grow up once the shadow of the Covid-19 pandemic disappears. As for refund of such levies, the government in March approved the Remission of Duties and Taxes on Exported Products scheme. But this will be tailored to replace the government’s flagship – but WTO-incompatible – Merchandise Exports From India Scheme (MEIS) and is meant to benefit only exporters. A BAT, therefore, is likely to come in handy for domestic manufacturers, said one of the sources. However, tweaking the Customs Act to slap the BAT will warrant a comprehensive exercise by the revenue department on the applicability and the quantum of such an impost on various goods. Already, the government has been deliberating on a raft of proposals – both tariff and non-tariff – to curb low-grade and “non-essential” imports and promote domestic manufacturing, the share of which in the country’s GDP has remained stagnant at about 15-17% for decades now. While the immediate target seems to be imports from China, which has initiated a border clash with India and is the largest source of substandard products, government officials say the reforms being considered under the Atmanirbhar Bharat are meant for a longer term and go well beyond the narrow considerations of targetting any country.

Source:   Financial Express

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With $2 billion in exports, MSMEs get international reach via Amazon’s GSP

 From a Mumbai-based textile company that has become one of the most popular brands in the bed-linen category on Amazon’s US marketplace to a Bengaluru-based electronics toy manufacturer that expanded its presence beyond India and the US to the UK, Canada, Australia and the UAE — several MSMEs have grown as a part of Amazon’s Global selling Programme (GSP). The online retailer’s GSP, which has clocked $2 billion in sales from India since its launch in 2015, saw the highest exports last year from cities like Delhi, Jaipur, Mumbai, Surat, Bengaluru and Indore. This January, Amazon had aimed for its GSP — which comprises 60,000 Indian exporters — to reach $10 billion in exports by Indian sellers by 2025. Mumbai-based NMK Textiles, which was established in 2006, manufactured and exported high-end bed linens to large department stores in the US and Canada. However, after 2016, the company saw its offline exports business slowing down, pushing it to rework its supply chain and launching its new brand on Amazon GSP in 2017. In the past three years, NMK Textiles’ brand California Design Den has seen an over 100 per cent yo-y growth in Amazon’s US marketplace, which paved the way for its expansion into other Amazon marketplaces. By 2022, the brand aims to post $100 million in sales on Amazon’s GSP. “We will continue to empower Indian micro, small and medium enterprises (MSMEs) at Amazon. We are committed to digitise 10 million MSMEs, create 1 million incremental jobs and drive $10 billion in e-commerce exports by 2025,” Amit Agarwal, senior vicepresident & country head, Amazon India, said at the launch of the third edition of Amazon Global Exports Digest. The gross merchandise sales on the GSP from India grew by 47 per cent year-on-year (y-o-y) in 2019, with Amazon’s flagship Prime Day sales posting 72 per cent on-year growth for exporters from the country. According to the Amazon Global Exports Digest 2020, released Monday, solid sheets, kitchen linen, toys, towels, apparel, spices and leather bags were among the top exported items from the Western part of India on the GSP, with the highest contributors from the region being Jaipur, Mumbai, Surat, Ahmedabad, Udaipur and Pune. Jodhpur and Kota in Rajasthan, and Bharuch in Gujarat featured among the top emerging cities from where goods are being exported. Similarly, Bengaluru-based PlayShifu, which started as an indigenous augmented realitybased recreational solution for Indian children, expanded to five other countries clocking eight times y-o-y growth on Amazon’s global selling platform in the first three years of the company’s operations since 2016. PlayShifu was an outlier in India’s southern region, from where the key categories to be exported include jewellery, leather journals, kantha quilts, tapestry, home décor products and herbal extracts. Another Mumbai-based MSME Aromatan Cosmetics — which sells incense and fragrances on Amazon — saw rapid growth on the GSP, with the company being able to expand from its traditional markets. “We have been making bakhoor, the most authentic and the purest form of incense, for 107 years. Our product range is consumed by people all over the world. We have been traditionally exporting to the Middle East and Africa. But Amazon has given us a tremendous opportunity to directly serve customers in the US and Europe. We have rapidly grown from daily earnings of $200 to $2,500. We are excited to see this growth within a year and are committed to making this a $2 million sales platform in next two years,” said Taha Nabee, vice-president, Aromatan Cosmetics. Listing the priority areas where Amazon India is working on to increase exports of Indiamade goods on its platform, Agarwal said that the company’s “work with various state governments and industry bodies on creating more awareness about e-commerce exports on ground, end-to-end digitisation of processes for MSMEs to get started off as exporters, and building effective yet low cost logistics solutions is progressing well”.

Source:   Indian Express

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View: The problems with India's production-linked incentive scheme and how to fix them

 It’s difficult to build a manufacturing nucleus around R&D of semiconductors and compete with MNCs overnight, including high-value components like displays, camera modules and memory chips to be part of India’s manufacturing nucleus — as opposed to assembly and packaging, which is quite doable. Atmanirbhar Bharat is complementary —not supplementary — to globalisation. The need to collaborate globally in search of lasting solutions is probably irreversible for the overall………..

Source:   Economic Times

Tamil Nadu government signs MoUs for Rs 10,000 crore new investments, jobs creation

The Tamil Nadu government on Monday signed eight new Memoranda of Understanding (MoUs) worth Rs 10,399 crore. The cumulative investment envisaged in the projects will create 13,507 jobs across the state in solar cells, data centres and industrial parks, an oicial release here said. The MoUs will bring in investments in the areas of solar cells and modules manufacturing, agrotech and iron foundry, among others. The memoranada of understanding were signed in the presence of chief minister K Palaniswami. Of the eight MoUs, ve were signed in the presence of the CM, while three were done through video conferencing. "The projects will be implemented in Kancheepuram, Chengalpattu, Ranipettai, Coimbatore, Viluppuram and Erode districts," the release said. A high powered committee, chaired by the chief minister, will expedite various clearances and also establish a Special Investment Promotion Task Force under the chairmanship of the chief secretary, the release added. Industries minister M C Sampath and chief secretary K Shanmugam were present during the signing of the MoUs.

Source: Economic Times

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How digital challenges are deepening economic crisis for MSMEs

Digital challenges are deepening the economic crisis for MSMEs The fear of infection is preventing people to go to markets even as governments have started to relax the lockdown. A survey by the Retailers Association of India (RAI), conducted with over 100 retailers between June 1 and June 15, showed that retailers in malls reported a 77% year-on-year dip in business in the first 15 days of the month; high streets saw business decline by over 60% in the same period. While governments can relax restrictions on movement, they cannot directly influence consumer preferences. As major cities record high single-day spikes, people are increasingly finding it unsafe to go out to buy the products they need and desire. Keeping in view that to a vast majority of micro, small and medium enterprises (MSMEs), retailers and kirana shops serve as their sales outlets, closure of this vital sales window smothered demand, even when industries were allowed to open. During this crisis, with social distancing norms in place to prevent the spread of the virus, home delivery through e-commerce platforms has become a relatively safer and convenient channel to access goods and services. From the MSME development perspective, this has also prompted the need to actively encourage small businesses to explore online selling as a way out of this crisis. MSMEs continue to expect that the government will take measures to help them further grow and become a part of the digital economy in larger numbers. However, the current tax regulations for online sellers are far from encouraging, and in fact these will disincentivise these sellers from selling through online channels. A cursory glance at the tax regulations for online and offline sellers highlights how the compliance burden and tax rate is considerably higher for online sellers when compared to those selling offline. There are over 6 crore MSMEs but total registration under GST including traders, retailers, service providers who have opted for non-registration of GST is around 1.25 crore. Therefore, a bulk of MSMEs having a turnover below Rs 40 lakh avoided registering under GST. But the Goods and Services Tax Act mandates that every entity selling through online ecommerce platforms is required to obtain GST registration irrespective of annual turnover. Further, the Composite GST Scheme for small taxpayers allows businesses earning less than Rs 1.5 crore to get rid of tedious GST formalities and pay GST at a fixed rate of turnover, i.e. 1% for traders. However, the scheme prohibits traders registered as Composite Dealers from selling online. To add to the burden, the Union government this year introduced a 1% TDS levy on ecommerce transactions, on the gross amount of sale or service, expected to be implemented beginning October 1, 2020. This is in addition to the 1% TCS under GST which is already levied on e-commerce transactions. These TDS and TCS rules create working capital concerns especially for MSMEs who are seeking wider market access through e-commerce marketplaces. Online resellers in categories such as electronics, toys and books typically have margins in the range of 1-2% and maintain high inventory levels to support their business. According to an industry analysis, the earnings margin before interest, tax and depreciation for retailers is in the range of 3-8%, which points to the overall issue on low net margins post interest and depreciation. The above-mentioned upfront taxes withhold much-required working capital from the entrepreneur. At a time when MSMEs are struggling with massive cash-flow issues, these compliance burdens will only ensure that offline sellers don’t come online and are unable to access the e-commerce opportunity. A crisis presents the need to introspect on our gaps and identify ways to lead us out of the chaos. The Union government, with its capacity to drive bold reforms, must look at relaxing entry barriers for sellers to go online, as a way out of this crisis. The inequalities in regulations have to be weeded out and our small businesses need to be encouraged to explore selling their products online. To begin with, the government can look at equally aligning the threshold for GST registration for online and offline sellers, allow composite taxpayers to at least make intra-state or city supplies on an e-commerce platform, and consider withdrawing the onerous TCS and TDS requirements applicable to small sellers selling through online platforms. These can be replaced by PAN or GSTbased simplified reporting obligations on e-commerce platforms to check against any GST or income tax non-compliance by online sellers. Industry data and trends from the past three months have spelled out the benefits and the edge that e-commerce marketplaces provide our small businesses in this pandemic. It is important for us to be cognisant of these benefits and accordingly take reforms to reduce barriers for online selling. The government must realise that in spite of the economic relief package that was announced, most MSMEs continue to worry about their survival. Many have already shut shop. Unless the ease of doing business for MSMEs is improved drastically, the sector may be headed for real tough times. The author is secretary general, the Federation of Indian Micro and Small & Medium Enterprises

Source:   Financial Express

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Global Textile Raw Material Price 22-07-2020

 Item

Price

Unit

Fluctuation

Date

PSF

764.98

USD/Ton

0%

22-07-2020

VSF

1210.08

USD/Ton

-0.06%

22-07-2020

ASF

1690.25

USD/Ton

0%

22-07-2020

Polyester    POY

694.85

USD/Ton

0.41%

22-07-2020

Nylon    FDY

1989.37

USD/Ton

0%

22-07-2020

40D    Spandex

4007.36

USD/Ton

0%

22-07-2020

Nylon    POY

923.12

USD/Ton

-1.53%

22-07-2020

Acrylic    Top 3D

1817.62

USD/Ton

-1.55%

22-07-2020

Polyester    FDY

1860.56

USD/Ton

0%

22-07-2020

Nylon    DTY

880.19

USD/Ton

-0.81%

22-07-2020

Viscose    Long Filament

2218.36

USD/Ton

-0.96%

22-07-2020

Polyester    DTY

5152.32

USD/Ton

0%

22-07-2020

30S    Spun Rayon Yarn

1710.28

USD/Ton

-0.42%

22-07-2020

32S    Polyester Yarn

1338.17

USD/Ton

0%

22-07-2020

45S    T/C Yarn

2161.11

USD/Ton

0%

22-07-2020

40S    Rayon Yarn

1874.87

USD/Ton

0%

22-07-2020

T/R    Yarn 65/35 32S

1667.35

USD/Ton

0%

22-07-2020

45S    Polyester Yarn

1517.07

USD/Ton

0%

22-07-2020

T/C    Yarn 65/35 32S

2032.30

USD/Ton

0%

22-07-2020

10S    Denim Fabric

1.13

USD/Meter

0%

22-07-2020

32S    Twill Fabric

0.64

USD/Meter

0%

22-07-2020

40S    Combed Poplin

0.93

USD/Meter

0%

22-07-2020

30S    Rayon Fabric

0.48

USD/Meter

0.30%

22-07-2020

45S    T/C Fabric

0.65

USD/Meter

0%

22-07-2020

Source: Global Textiles

Note: The above prices are Chinese Price (1 CNY = 0.14312 USD dtd. 22/07/2020). The prices given above are as quoted from Global Textiles.com.  SRTEPC is not responsible for the correctness of the same.

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U.S. Imposes Sanctions on 11 Chinese Companies Over Human Rights

 The move, which affects suppliers to major international brands such as Apple, Ralph Lauren and Tommy Hilfiger, could force companies to sever some ties to China. The Trump administration on Monday barred 11 new Chinese companies from purchasing American technology and products without a special license, saying the firms were complicit in human rights violations in China’s campaign targeting Muslim minorities in the Xinjiang region. The list of sanctioned companies includes current and former suppliers to major international brands such as Apple, Ralph Lauren, Google, HP, Tommy Hilfiger, Hugo Boss and Muji, according to a report by the Australian Strategic Policy Institute, a think tank established by the Australian government. The group cited the websites of the sanctioned Chinese companies, which mentioned their financial relationships with major American brands. The administration’s announcement could precipitate more efforts by prominent clothing and technology brands to sever ties with opaque supply chains that touch on Xinjiang, a major source of cotton, textiles, petrochemicals and other goods that feed into Chinese factories. Human rights groups and journalists have documented a campaign of mass detentions carried out by the Chinese government in Xinjiang, in which one million or more members of Muslim and other minority groups have been placed into large internment camps intended to increase their loyalty to the Communist Party. Some of these detainees are forced to work in factories in or near the camps, often processing Xinjiang’s abundant cotton crop into various textiles that may then be funneled into international supply chains. A Times video investigation identified Chinese companies using a contentious labor program for Muslim Uighurs to satisfy demand for face masks and other personal protective equipment, some of which ended up in the United States and other countries. Nine of the companies that the Trump administration cited on Monday, including Changji Esquel Textile Co. Ltd., Nanchang O-Film Tech and Hetian Taida Apparel Co. Ltd., were added to the so-called entity list for their use of forced labor, the Commerce Department said. Two other companies, Xinjiang Silk Road BGI and Beijing Liuhe BGI, were added for conducting genetic analyses that were used to further the repression of Uighurs and other Muslim minorities in Xinjiang, according to the announcement. The blacklist only prevents U.S. companies from selling components or technologies to Chinese companies without a license, not from purchasing products. In practice, however, major international brands are unlikely to continue doing business with any firm named on a government list for forced labor or other abuses in Xinjiang. “Beijing actively promotes the reprehensible practice of forced labor and abusive DNA collection and analysis schemes to repress its citizens,” Wilbur Ross, the secretary of commerce, said in a statement. “This action will ensure that our goods and technologies are not used in the Chinese Communist Party’s despicable offensive against defenseless Muslim minority populations.” The move comes amid rising tensions between the United States and China, and less than two weeks after the administration imposed sanctions on multiple Chinese officials for aiding in human rights abuses. Mr. Trump held off on sanctions over China’s treatment of its Uighur minority for much of 2018 and 2019 in the interest of closing a trade deal with China, which he signed in January. Since then, the Trump administration has become more critical of China, blaming it for not doing enough to contain the coronavirus and rebuking a new security law that increases Beijing’s control over Hong Kong. The announcement on Monday is the latest step in the administration’s campaign to bar Chinese companies from buying products from American companies. The United States had previously placed 37 companies on its entity list for violations related to Xinjiang. The Trump administration has also sanctioned a variety of Chinese technology companies, including Huawei, for national security threats. One of the companies sanctioned on Monday, Nanchang O-Film Tech, has said that it manufactured selfie cameras for some models of the iPhone, as well as other camera and touch screen components for Huawei, Lenovo and Samsung. In December 2017, Tim Cook, Apple’s chief executive, visited O-Film’s Guangzhou factory, posting a picture of himself on the Chinese social media platform Weibo, according to the report from the Australian Strategic Policy Institute. “Getting a closer look at the remarkable, precision work that goes into manufacturing the selfie cameras for iPhone 8 and iPhone X at O-Film,” the post read. According to a O-Film news release that has since been deleted, Mr. Cook praised the company’s “human approach towards employees” and said the workers seemed to be living “happily,” according to the ASPI report. Before that visit, 700 Uighurs were transferred from Xinjiang to work at an O-Film factory in Nanchang, Jiangxi Province, a move that was expected to “gradually alter their ideology” and increase their “gratitude toward the Party and contribute to stability,” the ASPI report said, citing a Xinjiang newspaper. It remains unclear whether the government in Xinjiang ultimately supplied more workers to O-Film. Apple did not immediately respond to a request for comment. O-Film could not immediately be reached for comment. Another company on the list, Hefei Bitland Information Technology Co, has said on its website that its cooperative partners include Google, HP, Haier, iFlytek and Lenovo. Another listed company, Changji Esquel Textile Co. Ltd, also appears to have ties to major international brands, working with Ralph Lauren, Tommy Hilfiger, Hugo Boss and Muji, according to the Chinese company’s website. PVH, which owns the Tommy Hilfiger brand, Ralph Lauren, Hugo Boss and a representative for Muji in the United States, where the brand is restructuring, did not immediately return requests for comment on Monday. The Wall Street Journal reported in May 2019 that Esquel had set up three spinning mills in Xinjiang, and that the company had taken in at least 34 Uighur workers offered by Chinese officials. In a statement this April, Esquel denied that it had ever used forced labor and called the statements “completely false and deeply upsetting.” In a letter to Mr. Ross on Monday, Esquel again said it did not and would never use forced labor, and asked to be removed from the list. “Where is the evidence that Esquel has ever, in its 25 years of operations in Xinjiang, used forced labor?” wrote John Cheh, the chief executive of Esquel Group. “No agency of any government nor any nongovernmental organization has presented such evidence, because it does not exist. In the lead up to including our Changji mill on the entity list, no one from the Commerce Department spoke with anyone at Esquel or we would have gladly provided them with the facts and answered any questions at that time.” The companies on the entity list also include KTK Group, which supplies components for high-speed trains, and Hetian Haolin Hair Accessories Co. Ltd. On July 1, U.S. Customs and Border Protection seized a shipment of 13 tons of hair products manufactured by Lop County Meixin Hair Product Co. Ltd. that it suspected were made with human hair originating in Xinjiang.

Source:   New York Times

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Bangladesh: FM to envoys: Explore new markets protecting RMG export

Foreign Minister Dr AK Abdul Momen has urged Bangladesh’s  envoys in European countries and the UK to explore new markets for Bangladeshi products protecting the readymade garment (RMG) export market during Covid-19 pandemic. He made the call during a virtual meeting on Monday. Bangladesh envoys from the UK, Italy, France, Sweden, Belgium, Greece, Spain, Portugal, the Netherlands, Germany, Switzerland and Austria joined the virtual briefing, according to the Ministry of Foreign Affairs.  State Minister for Foreign Affairs M Shahriar Alam, Foreign Secretary Masud Bin Momen and President of Bangladesh Garment Manufacturers and Exporters Association (BGMEA) Dr Rubana Huq also joined the meeting. The Foreign Minister urged the envoys to play their due role in keeping the trend of export earnings uninterrupted. He briefed the Bangladesh envoys to explore opportunities for Bangladeshi workers in new areas there. The Foreign Minister directed the Bangladesh envoys to share government initiatives, including a stimulus package, to overcome the Covid-19 situation with the respective government and expatriates Bangladeshis there. He urged the Bangladesh Ambassadors to remain alert about negative campaigns against Bangladesh in the external world. Dr Momen said Bangladesh has been able to keep the wheel of its economy moving apart from ensuring treatment for COVID-19 patients due to the farsighted leadership of Prime Minister Sheikh Hasina. He said a $12.11-billion stimulus package has been announced to overcome the temporary pressure on the national economy amid the Covid-19 outbreak. Dr Momen said around 5 crore people of the country received cash support. BGMEA President Rubana Huq said the RMG factories are in production following the guidelines of the World Health Organization (WHO) and International Labour Organisation (ILO). She said Bangladesh, after meeting its domestic demand, exported 6.5 million pieces of Personal Protective Equipment (PPE) to the US market. Rubana Huq shared the problems of the RMG sector with the Ambassadors and sought their support in addressing those. The envoys assured her of providing required support in this regard.

Source: Dhaka Tribune

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German ministers push for supply chain law against exploitation

 Few German companies are ensuring basic labor and human rights standards are respected in the supply chain. That's why two German ministers are now planning a law obliging companies to take responsibility. A typical bar of chocolate costs a mere €0.80 ($0.91) at a German supermarket. Many of these sweets, however, are produced using child labor. Two decades ago, the University of Chicago launched a research project looking into how many child laborers are employed on the West African cocoa plantationsin Ivory Coast and Ghana. According to the scholars' latest report, 2.26 million children are currently toiling away in the industry — a tragic new record. "The problem is that industrialized nations externalize, meaning we outsource production to developing countries and thereby undermine the production standards we apply in our wealthy societies," says Germany's Minister of Economic Cooperation and Development, Gerd Müller. Social and environmental standards which are widely accepted in Germany, he says, are violated in this way. "We accept and cement the exploitation of other human beings and nature in developing countries," he says. Ineffective voluntary commitments Unfortunately, this grim division of labor has existed for many decades. There have been numerous political efforts to change this reality. Some companies based in developed countries, too, have attempted to ensure basic labor, environmental and social standards are met during the production process abroad. Indeed, German Labor Minister Hubertus Heil of the Social Democrats (SPD) has stressed that "anyone who ensures product standards are met can also ensure human rights are respected." According to a survey of over 5,500 large German companies with over 500 employees, voluntary commitments have brought little improvement. A first report published in December 2019 shows that merely 18% of companies surveyed implemented a system to monitor how their foreign-made goods are produced. A later survey showed that 22% of companies had implemented such a monitoring system. Ministers propose binding law to end exploitation "The results of the second company survey are once again disappointing," says Minister Gerd Müller. To him, concrete steps are now needed. "We need a legal framework, as stipulated in the coalition agreement, to meet human rights standards that rule out child labor along the supply chain, and ensure basic environmental and social standards are met," Müller stresses. In 2018, Germany's governing coalition — comprising the Christian Democrats (CDU), Christian Social Union (CSU) and Social Democrats (SPD) — agreed that a law to this end would be passed unless companies' voluntary commitments proved effective. Since this is not the case, Labor Minister Hubertus Heil announced he will table a bill to tackle this problem in August this year. The plan is to adopt the law by early 2021. Globalization should not imply exploitation The bill envisions obliging companies with more than 500 employees to ascertain whether their business activities abroad are undermining human rights, and to take counter measures if needed. Moreover, the bill would require companies to publish an annual report on what they are doing to prevent human rights abuses. "Human rights are universal and the German state, its economy and society, carry responsibility to guarantee they are honored," says Labor Minister Heil. The German economy, in his opinion, is highly globalized and therefore obliged "to take responsibility." Some businesses support the idea Over 60 companies have expressed support for the proposed law, among them coffee roaster Tchibo, food manufacturers Rewe and Nestlé, and chocolate manufacturer Alfred Ritter. Pro-business associations, meanwhile, reject the bill. They say companies are already under significant pressure due to the coronavirus pandemic. Foreign trade association BGA, for example, criticizes that "the introduction of a due diligence law would bring us to breaking point and further postpone economy recovery." "It is assumed that companies have more power than Chancellor Merkel's government when it comes to pushing for human rights," says Steffen Kampeter, who heads Germany's employers' association. In his view, the bill expects too much of companies. He, along with many other business representatives, takes issue with the fact that companies are supposed to be held liable if human rights standards are breached along the supply chain. Making an effort is key Labor Minister Heil, however, disagrees. He argues German companies will only be held accountable for foreseeable and thus preventable violations. "We want to oblige companies to make an effort and to do whatever is in their power — if they do this, they will not be held liable," says Economic Cooperation and Development Minister Müller. While Heil and Müller are keen to see their bill turned into law as quickly as possible, this is anything but certain. Not everyone on Chancellor Merkel's cabinet is a fan of the proposed law. Germany's Minister of Economic Affairs, Peter Altmaier, for instance, thinks little of it. Should the EU act? Altmaier has declared all government members would carefully analyze the bill. "We will assess which loopholes exist, and how we can use Germany's Presidency of the Council of the European Union to ensure that across the bloc, all states ensure standards are met along the supply chain," Altmaier said. Armin Paasch of the Catholic aid agency Misereor says this is exactly the problem. "Moves to shift this debate to the EU level have been and continue to be aimed at postponing the law for years on end," says Paasch. "This will allow actors to block or water down the proposal," he says. Paasch hopes Müller and Heil will succeed in pushing though their bill. He is convinced that "we need a German supply chain law because this will increase the odds that in two or three years' time a similar EU regulation will be put in place that applies to other member states as well."

Source: DW

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Vietnam: Textile industry ready for EVFTA’s effectiveness

Europe is a market of 500 million people, with great potential for development, but Vietnam's annual textile and apparel export turnover to this market is merely over US$8 billion. In just over 10 days, the Vietnam - EU Free Trade Agreement (EVFTA) will officially take effect, whether textile and apparel enterprises can take advantage of this great opportunity? According to the Ministry of Industry and Trade, in the past six months, due to the impacts of the Covid-19 pandemic, garment and textile export turnover merely reached $12.8 billion, of which, garment and textile exports to the European market exceeded $2 billion. Last year, the total garment and textile export turnover reached around $39 billion, of which, the European market contributed more than $8 billion. Currently, the EU has become the third-largest garment and textile importer of Vietnam after the US and Japan. However, according to the evaluation of textile enterprises, currently, garment and textile exports to the EU are still quite modest compared to the potential of this market. The reason is that Vietnam's textile and apparel products exported to the EU are imposed extremely high import tariffs. Mr. Pham Van Viet, Chairman of the Board of Directors of Viet Thang Jean Company shared that denim products of this company exported to the EU are currently subject to a tax rate of up to 16 percent. Meanwhile, on average, Vietnam's garment products exported to this market are levied a tax rate of about 9 percent. High tax rates and high labor costs in the past two years have weakened the competitive advantage of Vietnam's textile and garment products compared to those of Myanmar, Laos, Cambodia, India, and Bangladesh. The representative of the Vietnam Textile and Apparel Association emphasized that to maintain the market share in the European market, many domestic garment and textile enterprises have turned to process sophisticated products that require higher skills. A few enterprises with large internal capital capacity have switched to designing, manufacturing, and selling branded products. However, the complicated situation of the pandemic since the beginning of this year has led to a sharp drop in the number of textile export orders. On the other hand, it has also changed the consumption trend of textiles in the third and fourth quarters of this year. The market will likely recover basic textile products with low or average value. Thereby, textile enterprises in this segment will take the upper hand in the number of orders in the global supply chain. The fact that the National Assembly ratified the EVFTA which will become effective as of August 1 is a large opportunity for the garment and textile industry. Because, according to the commitments of the EVFTA, among key export products of Vietnam into the EU, garment and textile products will be removed import tariffs on 77.3 percent of export turnover for five years, and import tariffs on the rest 22.7 percent of exports will also be eliminated after seven years. Besides enjoying duty incentives, the EVFTA promises to provide Vietnamese textile and apparel enterprises the opportunity to import high-quality machinery and access to raw materials under the European standards. With the aforesaid opportunities, many textile and garment enterprises are ready to take advantage of the tariff incentives when the agreement comes into effect. Many enterprises have invested in all facilities from factories, and machinery to technology, to meet the technical standards of importers. According to Mr. Tran Nhu Tung, member of the Board of Directors of Thanh Cong Textile Garment Investment Trading Joint Stock Company (TCM), with what that the EVFTA will bring, as well as the potential that TCM currently has, the company aims to achieve an increase of 30-50 percent in exports into the EU in the next few years. To realize the opportunities that the EVFTA brings, TCM has built a textile dyeing factory in Hoa Phu Industrial Park in Vinh Long Province with more than 1,500 employees. It is estimated that this factory provides enough fabric for the company's production needs each year. In the longer term, TCM is expected to promote the opening of another factory in the West of Vietnam to be able to take initiative in raw materials for its production. Similarly, some garment enterprises in Ho Chi Minh City have already prepared factories, machinery, technologies, as well as raw materials, and auxiliary materials to grasp the opportunities from the EVFTA. Mr. Pham Van Viet, Chairman of the Board of Directors of Viet Thang Jean Company, said that since the EVFTA was signed, Viet Thang Jean has signed long-term procurement of raw materials from partners in South Korea and Turkey to replace raw materials from China to meet the requirements of the rules of origin according to the commitments of the EVFTA. However, it must be admitted that there are only a few enterprises that can meet the requirements like TCM or Viet Thang Jean. Because for many years, the garment and textile industry still depends largely on raw materials and supplies imported from China and this material has not been accepted by the European market. To overcome this, the Ho Chi Minh City Textile and Garment - Embroidery Association said that for nonprocessing enterprises, there are two options. First, they either produce fabric by themselves or buy domestic raw materials. Secondly, they should import raw materials from countries with bilateral trade agreements with the EU such as South Korea and Turkey. Another problem of the textile and garment industry is that many enterprises exporting to the EU are small and medium-sized enterprises with limited resources and their production processes have not met the European standards. They have not invested adequately in researching and developing products, have not effectively exploited the intellectual property assets and trademarks. They lack human resources with foreign language skills and professional trade negotiation skills to carry out export activities to the EU market. Therefore, what Vietnamese businesses need to do immediately is to invest in increasing the value and quality of products to enhance competitiveness in the EU market. Enterprises need to meet the standards and the management process prescribed by the EU, attach importance to social responsibility, make transparent information on labor and production environment, especially ensure the rules of origin.

Source: SGGP News

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Swedish firm receives funding to develop biodegradable water-repellent product for textiles

Swedish cleantech company OrganoClick has been granted funding from a government R&D agency called Vinnova to develop its biodegradable water-repellent product called OrganoTex. The company has received SEK 1.3 million as part of a project called POPFREE. The POPFREE-project was launched three years ago with the aim of developing and investigate chemical substitutes to polyfluoroalkyl substances (PFAS), which are often used in textile finishing products, according to OrganoClick. Many of these substances are suspected to be carcinogenic and hormone disruptive and bioaccumulate in nature, the company said in a statement. Partners involved in the project include outdoor companies Bergans Nordic and Houdini sportswear, and R&D organisations RISE Research Institutes of Sweden and IVL Swedish Environmental Research Institute. It also includes the International Chemical Secretariat (ChemSec) and the Swedish Society for Nature Conservation. OrganoClick hopes promotion of its OrganoTex product can help phase out what it describes as harmful chemicals. OrganoTex is a biodegradable and PFAS-free, water-repellent technology for textile fabrics which has been developed with inspiration from the water repellent properties of the Lotus flower. “Vinnova’s funding of POPFREE strongly supports the phase-out PFAS from Swedish products which we think is very important,” Mårten Hellberg, CEO OrganoClick. “That we together with companies such as Bergans and Houdini as well as organisations such as the Swedish Society for Nature Conservation, ChemSec, RISE and IVL are given the opportunity to develop and test a 100 % biobased and biodegradable textile impregnation will be the next step that will give us to not only a PFAS-free product but also will take the technology for textile impregnations to a new level in which also the fossile raw material is replaced with a completely “green”, renewable raw material.” The project will officially be unveiled this September and finish in 2022.

Source:, Biomarket Insights

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Cambodia may gain from shifts in apparel manufacturing, says Fitch Solutions

Cambodia is among several apparel producing countries which may gain the most from shifts in apparel manufacturing.According to a recent report from Fitch Solutions, Cambodia, Vietnam and Myanmar are among a few Asian nations set to gain the most from shifts in apparel manufacturing. The report said that along with Bangladesh, a very large apparel producer and exporter, the three countries are able to expand their presence as suppliers to China and increase their market shares in North America and Europe at China’s expense.While Cambodia accounted for only 1.4 percent of the market in 2019, its apparel manufacturing sector has grown at a compound annual growth rate of 13 percent over the last decade, due in large part to relatively low labour costs and favourable investment policies, including allowing full foreign equity ownership in the textiles sector. Vietnam’s apparel exports meanwhile, jumped 30 percent last year, raising its global share to 8.7 percent, up from 6.8 percent in 2018. Being able to use Vietnamese shipping ports also helps Cambodia with the transport and import of raw materials from China. Myanmar is also expected to continue seeing strong growth, with numerous seaports facilitating shipping at one of the cheapest rates in the region. VNA

Source: Khmer Times

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Sino-Cambodia FTA talks wrap up, signing to follow

Cambodia and China wrapped up free trade agreement (FTA) talks on Monday, the Ministry of Commerce said. The announcement was made during a video conference between Minister of Commerce Pan Sorasak and his Chinese counterpart Zhong Shan. The deal is expected to propel bilateral trade to $10 billion by 2023, the Chinese embassy in Phnom Penh said. Bilateral trade between Cambodia and China was worth $9.42 billion last year, up 27.29 per cent from $7.4 billion in 2018, data showed. Once signed later this year, the deal will enable the liberalisation of trade in goods and services and provide greater market access for the Kingdom’s products, Sorasak said. He said it will also broaden investment options and provide socio-economic benefits to the people of both countries. The next step in the process, Sorasak said, will be for the two sides to complete their respective internal procedures and prepare for a signing later this year. “The successful conclusion of the FTA negotiations in such a short time exhibits the will of the two countries’ leaders to forge closer, stronger and broader ties. “The agreement reflects the long tradition of relationships as well as cooperation under the comprehensive partnership between the two countries,” Sorasak said. The two countries began to discuss the feasibility of a bilateral FTA in December and initiated the first round of negotiations in January. Ministry spokesman Seang Thay told The Post on Tuesday that all terms of the deal have been agreed by both sides, which are deliberating on a suitable time for the signing. “We hope that once the agreement comes into force, Cambodian exports to China will grow around 25 per cent per annum, given the extensive concessions accorded across a broad range of products,” he said. Garment Manufacturers Association in Cambodia (GMAC) secretary-general Ken Loo previously told The Post that the FTA with China will strongly stimulate the Kingdom’s exports – not only in the garment sector. There will be a greater flow of investment from China, he said. “From what we have read from the Ministry of Commerce’s statement regarding the results of the third round of negotiations, exports from Cambodia are set to increase more than 20 per cent. “At the same time, we will see more investment into the raw material supply for garment, footwear and travel goods, electronics and other industries. I believe the FTA will help other sectors much more than the garment sector,” said Loo. Ministry of Economy and Finance permanent secretary of state Vongsey Vissoth told a press conference on July 8 that Prime Minister Hun Sen would lead a delegation of high ranking officials to sign the FTA in Beijing on August 12.

Source: Phnopenhpost

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Pakistan: COVID-19 and the garment industry’s invisible hands

The pandemic has unveiled an opaque global supply chain that is propped up by exploited labour and a quagmire of third-party contractors. In her recent essay, ‘The Pandemic is a Portal’, writer Arundhati Roy likened COVID-19 to a “chemical experiment” that “illuminated hidden things.” In the textile industry, it has unveiled the hidden hands that stitch, pick, and package clothes in the bottom rungs of global supply chains. In Pakistan, the pandemic has driven workers from their machines and to the factory gates, manifesting their outrage at unpaid wages. Their employers – many of whom are suppliers to international brands – responded with mass layoffs and gun fire. Further up the supply chain, shop workers in Debenhams Ireland have picketed stores and demanded their redundancy payments. The global supply chain of the textile industry is labyrinthine, and its lower rungs are cloaked by a web of agencies, contractors and subcontractors. The linkages between each end of the chain are obscure. The only thing that connects those on the shop floor with those behind the machines is typically a clothes tag that bears the name of the brand. This precarious model has only lasted this long because it has not been transparent and because different ends of the chain do not come into contact. Now the chemical reaction of the pandemic has illuminated this supply chain, and shone an unforgiving light on the structures that link the shop assistant in Ireland who has lost their job with the seamstress in Pakistan who has been robbed of her pay packet. For the first time, it has allowed them to see one another. On the factory floor in Pakistan The garment industry is the second largest employer in Pakistan. It accounts for 8.5% of GDP and almost 70% of the country’s exports. Declining demand in Europe and North America as a result of COVID-19 prompted big brands to cancel orders, which in turn have led to mass layoffs and non-payment of wages. In response, wild cat strikes have erupted at factory gates across the country. According to Nasir Mansoor, the General Secretary of The National Trade Union Federation of Pakistan, this kind of grassroots organising was unprecedented in over three decades: “It’s a paradigmatic shift. Previously, we would have mobilised them, now they are doing it themselves...the protests begin as small rallies on the factory floor, then they move onto the streets, then up onto the roofs of the buildings. And they are getting more militant.” Lahore based company ChenOne is a subsidiary of the Chenab group, one of the biggest exporters of textiles in Pakistan. Haseeb, a former assistant manager at ChenOne, recalls the conditions in the factory before lockdown: “It was common for us to wait two months for wages. Minimum wage is 17,500 rupees a month, I received only 10,000 in a month…. When COVID hit, lots of people were sacked, those who stayed weren’t paid for 4 months.” One worker on a picket outside the ChenOne factory described the situation on a patchy phone interview: “We haven’t been paid for 4-5 months, we haven’t been able to pay our rent or utility bills...the money that is owed to us is from before lockdown.” Following a series of protests in which workers were fired upon by factory guards, management paid the salaries. All the workers were then sacked. Similar scenes played out at the gates of Karachi based company Denim Clothing – the largest Pakistani supplier of textiles to brands like H&M and C&A. The company fired 15,000 of its workers to avoid paying their Eid Bonuses, flouting the Sindh Covid-19 Emergency Ordinance 2020 which banned redundancies during lockdown. The remaining 28,000 workers continued to demand their bonuses, which they relied on to visit their families during the holiday. Management eventually capitulated, but then cancelled the factory shuttles that transported the workers to the factory the following day. The workers arranged their own transport, but were met with armed factory guards. H&M were approached for comment, and responded that only 8,500 workers were employed by their supplier and that no workers were laid off during the lockdown period. However, they acknowledged that “450 workers left the factory without any notice nor applying for leave, and after waiting for them to return within the legally mandated time period, the supplier needed to replace them. These 450 workers have been paid full wages and bonuses in accordance with agreements.” According to one source, out of the 70,000 Denim Clothing workers “90% were not registered with social security and pension scheme... 60% were [employed on] a third party contractor system [via an agency].” Denim Clothing themselves reported to the Clean Clothes Campaign that they employed 10,000 workers across four units, all registered with the Sindh Social security Institute (SESSI). However, according to the SESSI’s records the company registered ten units and only 4,612 workers. This paperless, labyrinthine network of suppliers and contractors means the buck stops with no one. On Monday 15 June, graphic photos and shaky iPhone footage emerged from a picket outside the gates of Kassim Garments – a supplier to German brand Tom Tailor Jeans. Workers protesting the dismissals of 35 employees had been fired at by the factory guards. Four were injured, and fifteen were arrested. In one video, a worker wielding his smartphone was faced with a loaded gun, and said almost wearily, “Go on, go ahead and shoot.” Tom Tailor Group were approached for comment but did not respond. Flexible working Before COVID-19, the garment and textile industry supply chain was already fragile. It has always relied on a precarious army of workers in producer countries with weak or non-existent social security systems. This is by design – it demands flexibility from workers in production companies with regards to unpaid overtime and delayed or unpaid wages, all of which creates wiggle room for the buyers further up the chain. The acrobatic feat of working 10-12 hour days for sub-minimum wage is met by rigid inflexibility at the other end of the chain. This production model removes the brands’ obligations to the supplier factories. According to the Clean Clothes Campaign, many suppliers are forced to pay the costs for production upfront, and brands often don’t pay for orders until 60-90 days after delivery. The black and brown workers at the other end are required to be ‘flexible’ and expect a minimum delay of 2 months in the receipt of wages as a result. The same flexibility is applied to health and safety guidelines, which has cost workers their lives. The deaths of 259 workers in the fire at Ali Enterprises textile factory in Karachi due to fire exits being sealed and a lack of fire alarms and safety equipment is an illustration of the fatal implications of a buying model that is structured on the expendability of its lowest paid workers. 80% of garment workers are women, and this is no accident – they are desirable precisely because of their flexibility. The obligation for them to perform multiple jobs in addition to domestic labour renders them a malleable workforce. Supply chains are a winding network of loosely linked agents and subcontractors. The connective tissue that stitches them together is the ‘flexibility’ of the working conditions for those at the bottom. A shock to the system COVID-19 has disrupted this delicate balancing act, and the connective tissue in the system is now fraying. The economic repercussions of declining orders in Europe and North America have rippled down the supply chain, landing squarely on the shoulders of already exposed workers in countries like Bangladesh, Cambodia and Pakistan. Garment brands have cancelled orders worth $1.6 billion from Bangladesh alone. COVID has unveiled a carefully engineered production model that insulates brands from shock and enables them to shirk cost further down supply chain, retroactively cancelling orders or even refusing to pay for orders already in production. Rather than accepting responsibility, big brands have demanded yet more flexibility from their suppliers. Workers should not only be content with less – they should forego wages altogether. According to Christie Miedema from the Clean Clothes Campaign, “this injustice is not caused by COVID, the industry was broken before this. These issues were already there, they’re just more exposed now.” Invisible hands In recent weeks many of the slick, woke brands in Europe and North America have issued Black Lives Matter support statements. While their PR departments comfortably style themselves as anti-racists, their contractors deny their black and brown workers their wages and open fire on their picket lines. But tracing these abuses is no easy task. Accountability evaporates with every twist and turn in the chain. In Pakistan, garment workers are typically hired via an agency and lack a written contract. As far as the brands are concerned, they don’t exist. In an email exchange, the H&M press office said that 15,000 workers could not have been sacked from Denim Clothing “because we only have 8,500 on the books”. This may be true, but just because their names aren’t on paper it doesn’t mean they don’t exist. Women, who are predominantly employed as home-based workers, labour in practical obscurity, rarely knowing the brand they’re stitching tees or gluing tennis shoes for. Zehra Khan, general secretary of The HomeBased Women Workers Federation estimates that 12 million women in Pakistan are home based workers, the majority of them employed without formal contract. In Pakistan, home-based workers are not legally recognised as workers; they don’t exist and therefore are not entitled to basic worker protections. An ILO study from 2017 led by Khan revealed that on average, home based workers work 12.3 hours a day, six days a week for an hourly wage of $0.39. Due to their contract-less status, they have no bargaining power. “Of the workers who attempted to negotiate better rates with their middlemen, 95% failed” the report details. For the past two years, Khan has done the painstaking work of trying to estimate the numbers of home-based workers in Pakistan and piece them into the chain connecting them with international brands via a winding network of agencies and contractors. Navigating this labyrinth is a Herculean task of guesswork when workers exist the shadows of their own homes. “There is no data for them,” Khan explains. The chain will keep us together Further up the supply chain in Dublin, Debenhams retail workers were informed via email on 9 April that they were losing their jobs. The eleven company stores were to be liquidated; the entire Irish arm of the company was gone. In the dark of a bank holiday weekend, the women, many of whom had done over twenty years of service for the company, scrambled around for information. “It was so calculated... because of that long weekend, there was nowhere open,” Ann, a mandated shop committee member and personal shopper for Debenhams of fourteen years, explains. “By the Tuesday, Debenhams were hoping we would have been yesterday’s news. We’re in the middle of a pandemic, let’s move on. Unfortunately for them, that wasn’t to be.” On the following Tuesday the workers rang around every radio station, TV channel and newspaper. “We inundated every minister we could think of with emails. We came out fighting, screaming and champing at the bit,” Ann recalls. And they did their research. Much like the brands cloaking their most exploited workforce in a quagmire of third-party contractors at the other end of the supply chain, Debenhams used obfuscation when dealing with their staff. The strikers had no previous experience of campaigning, but they rolled up their sleeves and did the painstaking work of unpicking the string of companies Debenhams was using to dodge responsibility. Debenhams.ie became Debenhams Online, which continued to trade in Ireland after liquidation of the stores was announced – until the strikers managed to crash their online store four times. “We got all our friends and family to inundate the comment section... if you go on there now you won’t be able to use it” Ann recalls proudly, adding with a smile, “we were pretty chuffed with that.” According to Mandate Trade Union, in early 2020 the UK parent company took control of the Debenhams Ireland online business before seeking liquidation. According to Michael Meegan, the union Divisional Organiser, “shortly after doing this, Debenham’s UK withdrew its financial support of the Debenhams Ireland business which directly resulted in the Irish arm of the business going into liquidation.” In doing so, “approximately 1,500 workers lost their jobs.” To stop the company transferring the stock in the Irish stores to the UK, Ann and her colleagues drew up 24 hour rotas for pickets outside the stores – often doing ‘spot checks’ at 3am to ensure it was being manned and that “not a pair of stockings would leave that store.” Burly security guards sent by the liquidators, KPMG, were startled by a line of women standing resolutely in front of the doors. “The company should live up to its obligations and abide by the redundancy agreement that the company freely entered into with the workers in 2016”, Meegan explains. “These workers have a combined 10,000 years of service to this company, helping to generate profits for the owners year after year.” This rigorous detective work led the Debenhams workers to the garment strikers in Bangladesh. While unpicking the stitches of the garment supply chain, they found that at the other end workers were being denied at least two months’ pay and that Debenhams UK owed $18.5 million to suppliers in Bangladesh for goods they had released from UK ports into their warehouses. According to a Bangladeshi supplier for Debenhams and member of the Debenhams Vendor Community, a network of suppliers, in addition to the goods that were released from the UK ports without payment, the company owed around $44.6m on orders sitting in the factories. “The money we’re asking for is not charity money, it’s our money, our people live on that. It’s our sweat and blood,” he explains. He estimates that up to 160,000 workers could potentially be left starving as a result of Debenhams refusal to honour payment. The company eventually agreed to pay for $5m of the goods sitting idle in UK ports – after initially demanding a staggering 90% discount they eventually negotiated a 25% discount. Subsequently they hired subcontractor, Centrotex to negotiate payment for just $1.4m of the $44.6 worth of goods in the Bangladeshi factories. In response, the Irish strikers set up a Go Fund Me for the Bangladeshi workers, stating that “as a group of workers recently made redundant by Debenhams it angered us that this company could be responsible for ruining the livelihoods of so many people in such a cavalier manner.” Debenhams were approached for comment and said that “suppliers who are continuing to work with Debenhams in administration are being paid to terms.” H&M stressed that “in these troubling times it is crucial we get our facts straight”. The Debenhams workers learnt this very early on in their fight for their redundancy payments. “We’ve learnt a lot through this process, it’s opened our eyes and what we’ve seen has disgusted us”, Ann explains. In their pursuit of the truth, they have unravelled a rotten business model propped up on the exploited labour of those sewing stitches at the bottom of it. For workers at both ends of the chain, there’s no going back through the portal.

Source: Open Democracy

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