The Synthetic & Rayon Textiles Export Promotion Council

MARKET WATCH 23 JULY, 2020

NATIONAL

INTERNATIONAL

 PM Modi to address India’s partnership with US

Indian Prime Minister Narendra Modi will today address the US-India Business Council’s (USIBC) 45th India Idea’s Summit online. Focused on nurturing stronger US-India relations, the summit will focus on, among other things, increased collaboration in the technology and defence sectors. With both Google and IBM answering Modi’s calls for increased investment in Indian technology infrastructure, today’s address will stress the need for greater technological cooperation, especially as a potential route to kickstart the country’s post-pandemic economic recovery. As a result, India will likely partner with the US on the development of 5G technology, consider bids from various European and Japanese firms to build infrastructure, and continue banning Chinese telecom giant Huawei from said networks. On defense, both the US and USIBC have called for greater investments in Indian aerospace security considering recent India-China tensions but face pushback from India’s Ministry of Defense (MoD). Specifically, the MoD’s ‘Make in India’ initiative looks to decrease India’s reliance on foreign security by stipulating defence spending be directed to indigenous Indian firms. As such, New Delhi is unlikely to harp on increased defence production cooperation with Washington. Instead, over the long-term, India will boost the amount of indigenous content required of all defence spending from the current 30%-50% to support manufacturing. However, as much of this indigenous content has been relegated to textiles and India continues to purchase American aerospace equipment, it is unlikely to find total independence.

Source: Daily Brief

Back to top

Government open to announcing more measures to boost growth, says Nirmala Sitharaman

Earlier this month, Prime Minister Narendra Modi too had said the Indian economy has started seeing "green shoots" of recovery and the country remains one of the most open economies in the world. Finance Minister Nirmala Sitharaman on Tuesday promised more policy interventions to revive the economy, and emphasised that green shoots are visible and the agriculture sector is driving growth. Indicators like electricity and fuel consumption, inter and intrastate movement of goods, PMI data and retail nancial transactions are witnessing a pickup, she said. Earlier this month, Prime Minister Narendra Modi too had said the Indian economy has started seeing "green shoots" of recovery and the country remains one of the most open economies in the world. Speaking at the India Ideas Summit, Sitharaman said the government has announced a stimulus package totalling 10 per cent of the GDP which was having its impact on economic revival. "All options are open...interventions will happen in future," Sitharaman said, assuring the industry that the government will not shy away from taking more steps to ensure early revival of the economy. The minister further said the "agriculture sector is driving the growth."

Source: Economic Times

Back to top

Economic crisis temporary, India still remains fastest growing economy: Nitin Gadkari

India has its huge population and skilled manpower to its advantage, and countries should look at investing in micro, small and medium enterprises, (MSMEs), infrastructure sectors, which promise "very good returns, Gadkari, who is also India's MSME minister, said at the US India Business Council annual summit on Tuesday. The current economic crisis being faced by India is a temporary phase and the country still remains the fastest growing economy in the world, and a favourable investment destination, Union minister for road transport and highways Nitin Gadkari said on Tuesday. India has its huge population and skilled manpower to its advantage, and countries should look at investing in micro, small and medium enterprises, (MSMEs), infrastructure sectors, which promise "very good returns, Gadkari, who is also India's MSME minister, said at the US India Business Council annual summit on Tuesday. Gadkari added that the government was determined to increase its exports and reduce imports, with rural, backward and tribal areas at the centre of its focus. “Presently, (there are) problems we are facing, but this is a temporary phase. I am condent that we are going to win the war against Covid-19. At the same time we are going to win the economic war,” Gadkari said. “India is the fastest growing economy, we have got huge potential and denitely we will convert all these problems into opportunity,” he added. Gadkari said that US-based companies should look at forming joint ventures with Indian companies, besides providing them technological support. Sectors like MSME, roads, railways, waterways and airways, oer huge potential for investment, he said. Gadkari also oered to “cooperate” with US companies if they wish to invest in India. “We are a big market, (with) skilled manpower. Our software engineers are the best in the world. Our priority is now to promote agro-msme, forest msme, food processing industries,” he added. Gadkari said that as the highways minister for the country, his department was not facing any shortage of economic resources, and is looking to award road projects worth Rs 15 lakh crore over the next two years. He added that the National Highway Authority of India under the highways ministry was a AAA-rated company. “My balance sheet is very strong. I am getting too much money from Indian bankers, LIC and others. I don’t have any problem. That is why I am making so many road projects,” he said. “So this is an opportunity,” Gadkari added.

Source:   Economic Times

Back to top

The government was working on a hand holding and single window system: Tarun Bajaj

According to Bajaj, the government was also looking to widen the ambit of the production linked incentives (PLI) scheme. The scheme, aimed at promoting manufacturing in India, was started in the electronics industry focusing on mobile phone production. The government was working on a hand holding and single window system to guide foreign companies through the “maze of various regulations and clearances”, said Tarun Bajaj, economic aairs secretary, on Tuesday. Acknowledging that foreign companies that come to India get “lost in the federal structure”, Bajaj said, “This proposal has now been fructied, it's a work in progress and we would like now to address companies’ concerns and hand hold them through this maze of various regulations and clearances that some of you actually face,” during an online conference hosted by the US India Business Council. Apart from this, the government was also attempting to deepen the bond market by opening up select government securities to foreign investors. “We have actually increased the FDI limit in corporate bonds from 9% to 15%. We are also taking steps to include ourselves in the global bond indices by opening up full access to foreign investors in select government securities,” Bajaj said. According to Bajaj, the government was also looking to widen the ambit of the production linked incentives (PLI) scheme. The scheme, aimed at promoting manufacturing in India, was started in the electronics industry focusing on mobile phone production. “The pharmaceuticals and also the medical equipment thing is also out. So that is also now included in the PLI scheme. We are also looking forward to including a few other sectors in this and should soon be coming out with that.” Stressing the government’s focus on infrastructure investment, the secretary said, ”There is an emphasis on infrastructure at this point of time in the country and we are making all out eorts to spend money in that area. The asset monetisation in road, power and railways is also our priority and some eorts are taking place on that side as well.”

Source:   Economic Times

Back to top

Limited trade pact with US just a few phone calls away, says Piyush Goyal

Commerce Minister Piyush Goyal says India is willing to have an 'early harvest trade deal' with the US for 50-100 export products and services A limited trade pact with the US is only a few phone calls away and will solve the bilateral issues that have accumulated over the past few years, Commerce and Industry Minister Piyush Goyal said on Tuesday. Speaking at the India Ideas Summit, organised by the US India Business Council, Goyal stressed that rather than wait for talks on a full Free Trade Agreement (FTA), India was willing to have an ‘early harvest trade deal’ that takes into account 50-100 export products and services. ‘Early harvest’ refers to a trade policy, in which both parties sign off on a set of deliverables. But Goyal also keenly batted for a more comprehensive trade deal as soon as possible. “The US and India need to sit down on the negotiating table. I don’t know if that can be done before the elections or post elections, but we need to work towards a much more robust and enduring partnership in the form of a FTA, towards which India is willing to work with an open mind,” he said. The US heads into Presidential elections in November. For that, India is willing to open “our hearts and our markets with a corresponding opportunity for Indian businesses in the US”, Goyal said. The minister also pitched India as the next manufacturing hub for tech innovations that US-companies come up with, providing affordable products for the global market. Assuring American businesses that ease of doing business remains a priority, Goyal said a GIS-based system that maps available land banks across six states, occupying a ‘few hundred thousand hectares of land’ will soon be launched on a pilot basis. A Google Earth view of the particular land parcel will be made available to potential investors. A step-by-step reduction of import duties on high-value US agricultural products, trade margin policy for medical devices, and a promise to continue talks on reducing price restrictions on American technology goods remains India’s basic proposal for trade talks with the US. This is also conditional upon the US backing off from its tough stance on digital services taxes imposed by India. India has also proposed to cut duties on high-value imports, such as almonds, walnut, apples, and wine, which were among 29 items on which the government had hiked duties by up to 50 per cent last year, said sources. The US wants India to reduce import duties on certain information and communication technology products, such as high-end mobile phones and smartwatches, which may make Apple iPhone products cheaper. Last week, during a meeting between Goyal and US Commerce Secretary Wilbur Ross, India flagged the pending US-India Social Security Totalisation Agreement, to avoid double deductions from the income of employees working in each other’s countries, and allowing short-tenure Indian workers in the US to get back billions of dollars in social security deposits there. India also raised its concerns on 24 Indian products being barred from the US government supply contracts due to them being America’s Trafficking Victims Protection Reauthorization Act list, which designates them as ‘child labour sectors’.

Source: Business Standard

Back to top

CBDT, CBIC sign pact for data sharing

 In addition to regular exchange of data, CBDT and CBIC will also share with each other, on request and spontaneous basis, any information available in their respective databases which may have utility for the other organisations. The direct and indirect tax boards have entered into an agreement for data exchange between them, the government said on Tuesday. The pact will facilitate data sharing between Central Board of Direct Taxes (CBDT) and Central Board of Indirect Taxes and Customs (CBIC) on an automatic and regular basis. In addition to regular exchange of data, CBDT and CBIC will also share with each other, on request and spontaneous basis, any information available in their respective databases which may have utility for the other organisations. The agreement comes into force from the date it was signed and is an ongoing initiative between the two organisation, the government said. It added that the memorandum of understanding (MoU) supersedes the one signed between CBDT and the erstwhile Central Board of Excise and Customs (CBEC) in the year 2015. “Significant developments have taken place since the signing of earlier MoU in 2015 including introduction of GST, incorporation of GSTN and change in the nomenclature of Central Board of Excise and Customs (CBEC) to Central Board of Indirect Taxes and Customs (CBIC). Changed circumstances, including advancements in technology, are duly incorporated in the MoU signed today,” the government said. The MoU was signed by Pramod Chandra Mody, chairman, CBDT, and M. Ajit Kumar, chairman, CBIC, in the presence of senior officers from both the organizations.

Source: Financial Express

Back to top

Cheque book crisis disrupting payment cycles in textile, diamond sector

Surat: Kailash Agarwal, a textile trader has been waiting for his bank to issue cheque book from the last one-and-a-half-month, so that he can pay his creditors as well as his staff. Every time he visits the bank branch at Ring Road, he is told to wait for couple of more days for the dispatch of the cheque book. Agarwal is not alone who is facing the ‘cheque book’ crisis, but there are many traders in the city’s diamond and textile sectors facing similar problems, resulting in the serious disruption of the payment cycle. Not just the private banks, even the public-sector banks, too are unable to provide cheque books to their customers since last two months. According to the industry leaders, majority of the payments in the textile and diamond sector are made through cheques for withdrawal of cash from the account or for payments. The digital mode of payment like RTGS, NEFT and IMPS are used by very few traders. Most of the traders use the old method of cheque and cash payments to keep track of day-to-day business. Ketan Desai, president of SGCCI told TOI, “Since cheques is the preferred mode of receiving and making payments, there is severe payment crisis in the textile and diamond sectors. We are sending representation to the RBI and the Union Finance ministry to look into the cheque book issue.” “Even if I have sufficient balance in my account, I am unable to make payments to my parties and staff members due non-availability of cheque books. Despite three consecutive requests, the bank is yet to issue me one,” said Devkishan Manghani, a textile trader and chairman of Southern Gujarat Chamber of Commerce and Industry’s (SGCCI) textile committee. Manghani added, “The entire payment cycle is disturbed and delayed due to lack of cheque books in the private and nationalised banks.” KK Singh, deputy general manager, Bank of Baroda told TOI, “Due to Covid-19 and the lockdown, the cheque book printing and dispatch to the customers is badly affected. The private couriers have limited staff due to Covid-19 pandemic, which is aggravating the problem further.”

Source: Times of India

Back to top

Directorate General of GST Intelligence detects Rs 72 crore tax evasion

NEW DELHI: The Directorate General of Goods and Service Tax Intelligence unveiled evasion of tax of more than Rs 72 crore by a racket of clandestine clearance of cigarettes through a factory run in Kota. Acting on specific intelligence searches were conducted at various places in Kota and Nagaur on July 17, 2020 including the factory, trading firms, godowns, secret offices and residences of beneficiaries, the ministry of finance said in a statement Wednesday. “During the search, incriminating documents and electronic devices pertaining to the supply of cigarettes without payment of taxes and duties were recovered. Preliminary investigation showed tax evasion of over Rs 72 crore till now. Data from the seized documents has revealed that the supply of cigarettes was being carrying even during the lockdown period, the statement added. One person in this regard has been arrested on July 20, under the provisions of CGST Act, 2017, and further investigation is under process.

Source: Economic Times

Back to top

India can attract global supply chains away from China: Mike Pompeo

India, which has earned the trust of many nations around the world, including that of the United States, can attract global supply chains away from China and reduce its reliance on Chinese companies, Secretary of State Mike Pompeo said on   wednesday. In his virtual keynote address to the annual ‘India Ideas Summit’ of the US India Business Council (USIBC), Pompeo said it was important that democracies like the US and India work together, especially as they see more clear than ever the true scope of the challenges posed by the Chinese Communist Party. “We work closely together to make sure that the world intellectual property organisation election was won by someone who respects property rights. It seems pretty basic,” he said, he said amidst Washington’s growing frictions with Beijing on the issure of intellectual property rights. India, Pompeo said, has a chance to attract global supply chains away from China and reduce its reliance on Chinese companies in areas like telecommunications, medical supplies and others. “India is in this position because it has earned the trust of many nations around the world, including the United States,” he said. At the same time, the top US diplomat also underlined the need for India to encourage an environment that is “more open” to increased trade and investment from America. “But as I said last year to achieve these worthy goals, India will need to encourage an environment that is more open to increased trade and investment. I know that’s possible because Indians and Americans share a spirit of hard work and entrepreneurship, and I’m confident our partnership is only getting stronger,” Pompeo said. He pointed out that Prime Minister Narendra Modi has been invited to the next G-7 Summit to be hosted by the US. “We’ve also invited Prime Minister Modi to the next G-7 (summit), where we’ll advance the economic prosperity network,” Pompeo said. The G-7 is a group of countries and organisations that the US considers natural partners because they share values like democracy and transparency and the rule of law. In his address, Pompeo commended India’s recent decision to ban 59 Chinese mobile apps, including TikTok, which, he said, presents serious security risks for the Indian people. “We also had to work with India to advance the Blue Dot Network, an initiative to promote high quality, transparent infrastructure development,” he said, adding that this effort is crucial to adopt because free markets are the best way to lift people out of poverty. India has seen that in its own recent past,” he noted. That’s an especially vital truth to remember today because the private sector will be indispensable and overcoming the economic damage caused by the coronavirus pandemic that began in Wuhan, China, he said. The United States, he said, desires a new age of ambition in its relationship with India. “We don’t just interact on a bilateral basis. We see each other for what we are great democracies, global powers and really good friends. India is one of a few trusted like-minded countries whose leaders I call on a regular basis for counsel and collaboration on issues that span continents,” Pompeo said. “I’m confident that our relationship is only getting stronger. Let’s emerge from this current challenge more resilient and innovative than before. And let’s seize this moment to deepen cooperation between two of the world’s greatest democracies,” he added.

Source: Financial Express

Back to top

Gujarat and MP to exempt new businesses from provisions of two labour laws for 1,000 Days

Gujarat and Madhya Pradesh are taking the lead in labour reforms and will soon amend two key laws – the Factories Act and the Industrial Disputes Act – to empower them to exempt new……….

Source:   Economic Times

Back to top

India's GDP to contract by 6.1% in FY21, estimates Nomura

Economic activity in India continues to be weak and will lead to a 6.1 per cent contraction in the gross domestic product (GDP) in this fiscal, according to Japanese brokerage Nomura, which recently said the Reserve Bank of India is likely to pause at the upcoming policy review in August and cut rates by 25 basis points each in the October and December reviews.
Nomura said the June quarter will be the 'nadir' from a growth perspective and the economy will contract by 15.2 per cent and the GDP will never come into the positive territory in the remaining part of this fiscal. It estimated contractions of 5.6 per cent in the September quarter, 2.8 per cent in the December quarter and 1.4 per cent in the March quarter, which will give a full fiscal GDP at negative 6.1 per cent. “Overall, aggregate demand continues to lag aggregate supply, especially due to weak services activity and subdued urban consumption demand,” it said in a report. Demand has taken a larger hit from the lockdown, likely reflecting higher precautionary savings by consumers amid rising income uncertainty. In contrast, the supply side is constrained only to the extent mandated by the rules, it said. The brokerage said the growth estimates are arrived at after analysing 'ultra' high frequency indicators such as various mobility indices, employment and electricity demand to glean the direction of the growth trajectory.
“We do not believe this is the end of the easing cycle, because of the mounting growth risks, and relatively unscathed medium-term view of benign inflation,” it said, adding that given the limitations on the fiscal side, the central bank will have to do heavy lifting, a news agency reported.

Source: Fibre2fashion

Back to top

Good news for UP! Over half a dozen Japanese companies keen to invest in Uttar Pradesh

The investment proposals include developing five fish hatcheries in the state with high-end technology, putting up a 100 MW solar park for irrigation as well as setting up an agri processing park, these sources added. At a time the country is witnessing a prolonged investment famine, more than half a dozen Japanese companies have evinced interest in making new investments in Uttar Pradesh, including Miyachi Corp and Tokachi Corp, official sources said here. The investment proposals include developing five fish hatcheries in the state with highend technology, putting up a 100 MW solar park for irrigation as well as setting up an agri processing park, these sources added. These proposals came forth in a video conference interaction between Uttar Pradesh MSME, Investment and Export Promotion Minister Siddharth Nath Singh and the Japanese companies here on Tuesday. The conference was also attended by the Indian ambassador to Japan Sanjay Verma. The UP government is hard-selling to the potential investors its GIS-mapped 1 lakh acres of land available in different parts of the country, as well as its vast network of expressways and air connectivity, which is being bolstered. Speaking to FE, Singh said that the interaction was part of the Uttar Pradesh government’s initiative to woo multinational companies of various countries which are keen to relocate from China, post the coronavirus pandemic. “We have been holding country-specific interactions regularly and it was during our interaction with the Japanese today that we got some solid proposals that we hope will mature soon,” the minister said, adding that the state government was very serious about increasing its exports to various countries and is going about it in a planned manner. Talking about the possibility of increasing exports to Japan, Singh said that at present, China’s exports to Japan stood at a massive $173 billion/year while India’s exports to Japan are in the vicinity of $4.8 billion per annum. “China’s exports to Japan have started getting disturbed due to geopolitical reasons. With the sentiment going against China, and no country willing to engage with it, the supply chain has been disturbed. India can actually take advantage of this and can pitch in for a larger share of exports to Japan. Even if we assume that 10% of the supply chain is disturbed, it means (an export opportunity of) $17.3 billion” Currently, UP’s exports to Japan are worth $103.2 million, out of which the share of machine parts and machinery a quarter, followed by essential oils clothing, garments, footwear and carpets. The minister said that in all the interactive country sessions that he has chaired, the main question asked by all the companies was whether land is available. “To address that issue, we have started offering large land banks to investors. We have already notified 85,000 acres land for industries in the eastern part of the state, which will cut across the the freight corridor. In the central region, we have 3,000 acres area for ready to move for industries and another 2600 acres ready for companies interested to invest in the defence corridor. Also, 3,000 acres are ready in the western region of the state near Meerut and another 5,000 acres land is available near the Jewar airport,” he said.

Source:   Financial Express

Back to top

Under GST, are BPO units to be classified as ‘intermediary’ or ‘exporter’?

The Punjab & Haryana High Court has issued notice to the Union Government on classifying Business Process Outsourcing (BPO) units as an ‘Intermediary’ and not as an ‘exporter’ under the GST system. The issue holds interest because if exporters are classified as ‘intermediaries’, they do not qualify for tax refunds. That is exactly what happened to Gurugram-based Genpact India. The company got a tax refund after assessment of its GST returns on the ground that it is involved in ‘Export of Services’. However, the GST Department moved the First Appellate Authority, Joint Commissioner (Appeal), and secured a stay on the refund, since the appellate authority ruled that the company was an ‘intermediary’. Aggrieved by this, the firm moved the High Court. In its interim order, the Court ruled that the First Appellate Authority had illegally relied on a July 2019 circular that had been withdrawn by the Centre. Senior Advocate Tarun Gulati, who represented the company, said the issue affects the entire BPO industry and needs to be resolved quickly. Blocking refunds on “untenable grounds” would affect the competitiveness of an industry that earns valuable foreign exchange, he said. “At a time when employment levels are at their lowest and companies’ profitability is compromised on account of the pandemic, it should be ensured that the Indian BPO industry is given full support rather than raising roadblocks to their progress,” he said. Harpreet Singh, Partner at KPMG, said that the case, and another recent ruling by the Andhra Pradesh AAR in the case of DKV Enterprises Private Limited, had revived the issues that arise when back offices and the Indian branch of multinationals, especially those who interact with ultimate customers of their overseas group entities, are classified as “intermediaries”.

Case history

Last July, the Central Board of Indirect Taxes & Custom (CBIC) issued a circular to clarify the concept of ‘intermediary services’ and the treatment of Information Technology enabled Services (ITeS), Back Office Support services, from a GST standpoint. In one of the scenarios, the circular clarified that the provision of back-end services (such as back-office operations, call centre services, support centres, payroll, revenue accounting, data processing services) on their own account would not be covered under the ambit of an ‘intermediary’ and would count as export of services. That came as a relief to the industry. On the flip side, however, the clarification provided in another scenario took forward a ruling by the Maharashtra Appellate Authority of Advance Ruling in the case of Vservglobal Private Limited. In that ruling, the AAAR had opined that the services in question (which included liaising with client’s buyers/suppliers with respect to delivery, transportation of goods, and settlement of payment between them) went way beyond back-office support services, and that they were to be classified as ‘intermediary’ services. The circular was somewhat ambiguous, and left open to interpretation the question of which back-end services can be classified as ‘support services’, and which would qualify as ‘arranging or facilitating the supply of goods or services between two or more persons’. However, in December 2019, the government withdrew the circular ab-initio — that is, as if the circular never existed. This provided respite to the industry, to the extent that authorities were relying on the July circular to issue show-cause notices to back-office support providers. The action now shifts to the Punjab & Haryana High Court, which has issued notice to the Centre. Watch this space for further developments.

Source: Business Line

Back to top

Global Textile Raw Material Price 23-07-2020

Item

Price

Unit

Fluctuation

Date

PSF

762.03

USD/Ton

-0.28%

23-07-2020

VSF

1208.10

USD/Ton

-0.06%

23-07-2020

ASF

1688.48

USD/Ton

0%

23-07-2020

Polyester    POY

704.13

USD/Ton

1.44%

23-07-2020

Nylon    FDY

1980.13

USD/Ton

-0.36%

23-07-2020

40D    Spandex

4003.16

USD/Ton

0%

23-07-2020

Nylon    POY

5146.92

USD/Ton

0%

23-07-2020

Acrylic    Top 3D

922.16

USD/Ton

0%

23-07-2020

Polyester    FDY

1815.72

USD/Ton

0%

23-07-2020

Nylon    DTY

1858.61

USD/Ton

0%

23-07-2020

Viscose    Long Filament

879.27

USD/Ton

0%

23-07-2020

Polyester    DTY

2201.74

USD/Ton

-0.65%

23-07-2020

30S    Spun Rayon Yarn

1708.49

USD/Ton

0%

23-07-2020

32S    Polyester Yarn

1336.77

USD/Ton

0%

23-07-2020

45S    T/C Yarn

2158.85

USD/Ton

0%

23-07-2020

40S    Rayon Yarn

1515.48

USD/Ton

0%

23-07-2020

T/R    Yarn 65/35 32S

2030.17

USD/Ton

0%

23-07-2020

45S    Polyester Yarn

1872.91

USD/Ton

0%

23-07-2020

T/C    Yarn 65/35 32S

1665.60

USD/Ton

0%

23-07-2020

10S    Denim Fabric

1.13

USD/Meter

0%

23-07-2020

32S    Twill Fabric

0.64

USD/Meter

0%

23-07-2020

40S    Combed Poplin

0.93

USD/Meter

0%

23-07-2020

30S    Rayon Fabric

0.48

USD/Meter

0%

23-07-2020

45S    T/C Fabric

0.65

USD/Meter

0%

23-07-2020

Source: Global Textiles

Note: The above prices are Chinese Price (1 CNY = 0.14297 USD dtd. 23/07/2020). The prices given above are as quoted from Global Textiles.com.  SRTEPC is not responsible for the correctness of the same.

Cambodia-China FTA talks conclude, to be signed this year

The Cambodia-China free trade agreement (FTA) will provide greater market access to Cambodian products and bring more benefits to the two sides, the Cambodian commerce ministry recently said. Chinese commerce minister Zhong Shan and Cambodian counterpart Pan Sorasak announced the conclusion of the talks via a video conference yesterday. The FTA is expected to be signed this year. "The successful conclusion of the negotiations for the FTA in a short time has clearly reflected the commitment of the two countries' leaders to building closer ties, and this FTA will provide a lot of socio-economic benefits to the two peoples," the Cambodian ministry said in a press release. "Once signed, the deal will give us greater market access, and definitely, trade and investment volume between the two countries will be further expanded," Seang Thay, secretary of state and spokesman for Cambodia's commerce ministry, told an official Chinese media outlet. Two-way trade between the two countries stood at $9.42 billion dollars in 2019, according to the Chinese embassy in Cambodia. The two countries began to discuss the feasibility of a bilateral FTA in December 2019 and launched the first round of negotiations in January this year.

Source: Fibre2Fashion

Back to top

ITM 2021 to accelerate textile sector of Turkey

The ITM exhibition planned to be held from June 2-6 this year, was postponed to June 22-26, 2021 due to the coronavirus pandemic. The exhibition will bring together textile investors from all over the world at the Istanbul Tuyap Exhibition and Congress Center next year. It will prove to be a comeback for Turkish textile industry in the post-pandemic period. Thousands of international exhibitors will choose the ITM 2021 exhibition – a meeting point of textile technology leaders, to highlight their latest innovations. Participating companies in countries that had to interrupt their production and were the most affected by the virus like Italy, France, Spain, Germany and China, have welcomed the postponement of the ITM exhibition. The countries having similar opinions that it is not possible to fight the pandemic without effective drug treatment or vaccine against coronavirus have increased their protective measures while fighting the pandemic. The wheels have started to turn again in the factories, and production and orders have gained momentum. Turkey, which was not affected from the pandemic as much as other countries due to lesser number of cases and death rates, continues its production in the textile sector. It will serve as the correct address for the exhibitions to be held in the postpandemic period. While there is shortage of mask and protective clothing all over the world, Turkey which has strong infrastructure in the field of textile, garments and nonwoven, has supplied personal protective equipment to the world and also met its own requirements. Turkey has shown that it is one of the largest producers and raw material suppliers of the world in this process. The major brands and companies in Europe and the United States shifted their orders from China to Turkey due to China being the focal point of the coronavirus pandemic. Turkey, which will accelerate technological investments due to the increase in production, will continue to lead the world textile industry. ITM 2021 exhibition will coincide with the period when the global economy will resuscitate, which will increase the interest of the companies to the exhibition.

Source: Fibre2Fashion

Back to top

ITC International Trade Centre : Designing South-South trade and investment projects with impact

A new International Trade Centre (ITC) report shows governments and funders how to design and execute effective South-South programmes that have a sustainable impact on development. Drawing from case studies and interviews with ITC staff who have worked on South-South projects, the report serves as a guide for good project management and trade and investment promotion. It urges learning from relevant role models to transfer knowledge and technology. 'Here is the key: in a South-South context, projects must be flexible and given space to determine which solutions work, while bridging information and perception asymmetries between Southern actors,' said Dorothy Tembo, ITC Executive Director a.i. South-South trade represented 52% of developing country exports in 2018, according to Melissa Leach, director of the Institute of Development Studies, which partnered with ITC on the report. Companies from the South will generate a third of global foreign direct investment outflows by 2025, she said. The report, Designing for Impact: South-South Trade and Investment, recommends pilots to determine the feasibility of projects. Pilots build flexibility by allowing learning, regardless of the outcome. They also help partners manage and minimize risk. Case studies on Rwandan chilli and Ethiopian ginger - both part of ITC's flagship Supporting Indian Trade and Investment for Africa (SITA) programme - illustrate the value of pilots. The Ethiopian trial, for instance, led to support for farmers, including a 30-month nationally funded ginger rehabilitation plan and workshops to revitalize the sector. And the Rwandan pilot led to a long-term partnership with an Indian spice company. Flexible project management addresses perception gaps, avoids cultural misunderstandings and creates partnerships, the report notes. Under ITC's Partnership for Investment and Growth in Africa, companies and investment promotion agencies from Ethiopia, Kenya, Mozambique and Zambia completed a course on doing business with Chinese firms before matchmaking events with Chinese investors. This helped lead to deals for three African enterprises worth $55 million. Building visibility in new markets Participation in business-to-business meetings and trade fairs is key to building visibility in new markets - as well as trust and predictability. For instance, two Indian textile investors began production in Ethiopia following SITA-facilitated exposure visits in 2018, creating more than 1,700 jobs to date. And a Ugandan tannery that received SITA support to attend trade fairs targeting markets in the South achieved silver status Leather Working Group certification in 2019. Tailored training and learning opportunities are important, too. After training on best agricultural practices that showed Ethiopian spice farmers how to improve the quality of their turmeric, the farmers were able to sell at almost 60% above standard market prices. In Rwanda, more than 850 farmers were trained in chilli and ginger cultivation and five new varieties of hybrid chillies were introduced. The country exported 87,559 kilograms of chillies to India in 2019 thanks to buyback arrangements between four Indian companies and 18 Rwandan farmers. Land for chilli cultivation grew from four hectares in 2016 to 198 hectares in 2020, while Indian investors in the sector rose to five from just one. Exposing firms to local technologies and best practices promotes upgrading and value addition. 'The learning effect can be particularly effective in a South-South context, because the technologies adopted and businesses challenges in one country are often both similar and relevant to other Southern countries,' the report says. For example, chilli and turmeric farmers benefited from Indian know-how and a 'package' of agricultural processes. A woman-owned Kenyan tea company profited from Indian know-how and diversified into rosemary cultivation. African producers of cardamom and sunflower oil have enjoyed similar benefits from knowledge and technology transfers. The report calls for investment in new regions, such as targeting smaller cities that are regional hubs in sectors like clothing or leather. It also recommends investor-specific services and locally tailored information products - for instance, tools and activities to build communication, bridge misconceptions about certain countries or regions, and create awareness. Investment promotion requires 'smart targeting' to harness opportunities so they have a sustainable development impact, it adds.

Source: ITC Press Release

Back to top

What Kenya is seeking in free trade deal talks with America?

Kenya’s need to export value-added agricultural products dominated the first round of talks with America after its formal launch on Wednesday last week. On the negotiation table, the US will be pushing its document with 24 chapters to be adopted so as to get access to almost all Kenyan economic sectors including State-owned enterprises. Kenya will, on the other hand, present its 14 areas which seek to provide safeguards to secure its industrial and agricultural sectors to avoid dumping America products in the country. In its objectives document, Nairobi wants to enter negotiation cautiously to make sure that the free trade agreement provides safety nets and exceptions to protect Kenya's economic interests. The US is seeking unfettered access to the Kenyan market in the proposed free trade agreement, which could have far-reaching implications on Kenya’s critical agricultural sector and its growth plans In a virtual dialogue, the Kenyan team led by Industrialisation, Trade and Enterprise Development Cabinet Secretary Betty Maina, said there was need for agricultural value added products to be allowed in US market while America pushed for the right regulations to ensure the outcome of the agreement is backed up by right regulatory regime. According to US players, regulation focusing on digital taxes, intellectual property, and corruption should form a vital part of the deal. “We must promote good regulatory practices that encourage markers for goods and services. Investors are excited about an environment that guarantees success by following the rules,” said US Ambassador to Kenya Kyle McCarter. Chairman of the Agriculture Sector Network, Dr Bimal Kantaria, emphasised the need for Foreign Direct Investments (FDI) into the agricultural sector to facilitate value addition for horticulture and floriculture. Mr Kantaria asked stakeholders to channel more funding into the sector. In the meeting hosted by the Corporate Council on Africa (CCA) and the Kenya Private Sector Alliance (Kepsa), the private sector expressed optimism in the talks hoping to expand their market share in US once the deal is signed. Business experts have already warned Kenya to be cautious considering she is entering into an agreement with a superpower. “The FTA will be ideal for Kenya, but this will depend on how the talks end. Kenya needs to be cognisant it is negotiating with super power and it has to keep interests of its businesses and people at heart. The team should not be dazzled by people on the table,” said Nick Nesbitt, chairman of the Private Sector Consortium who is also chairman of the Kenya Private Sector Alliance and the East Africa Business Council. Mr Nesbitt said a free trade agreement will not only benefit Kenyans but Africa at large, and that it will complement regional integration efforts within the East African Community (EAC), as well as act as a landmark in African Continental Free Trade Area (AFCFTA) considering Kenya will be the second county in Africa and first in sub-Saharan Africa to achieve that deal.

BILATERAL TRADE

“We have learnt a lot about Morocco which entered into such bilateral trade agreement with the US in 2006 and its economy has grown from $1.13 billion when the agreement came into force to $5.8 billion in 2018. We support the talks since Kenya will benefit through increased market access abroad,” said Mr Nesbitt. American Chamber of Commerce-Kenya chief executive Maxwell Okello said investment by US companies in Kenya will greatly benefit SMEs, which will play a key role in supplying firms with raw materials. “We expect different sectors ranging from education, trade, tourism among others to grow significantly once the asegreement comes into force and there is nothing to worry since Kenyan government is very clear in its negotiating objectives that it will protect its nascent sectors such as textiles and agriculture," said Mr Okello. Two weeks ago, Kenya and US formally launched talks for a bilateral trade pact that the pair hopes could serve as a model for additional agreements across the African continent. The discussions, which begun after lapsing of the 90 days statutory notification and the publication of the two countries negotiations objectives, kicked off despite criticism that the Free Trade Agreement could undermine regional integration. According to the Trade and Investment Working Group (TIWG), the talks are scheduled to last for at least 12 months before moving to the last stage. During the launch, Ms Maina and US trade representative Robert Lighthizer were hopeful of a comprehensive, highstandard agreement that can serve as a model for other agreements across Africa. “Kenya is a recognised leader across the continent, an important strategic partner of the United States, and there is enormous potential for us to deepen our economic and commercial ties,” said Ambassador Lighthizer. “We believe this agreement with Kenya will complement Africa's regional integration efforts, including in the East African Community and the landmark AfCFTA, and the United States pledges its continued support to help the AfCFTA achieve its fullest potential.”

SECURE INVESTMENT

Ms Maina, on the other hand, said striking the bilateral trade agreement was crucial to "secure trade and investment relations" ahead of the lapse of the African Growth and Opportunity Act (Agoa) in 2025, which eliminates import tariffs on goods from eligible African nations. She said the pact will promote the export of textiles, clothing, tea, coffee, and fish to the US - currently Kenya's third-largest export market and seventh overall trading partner. “Increasing and sustaining export performance to the United States requires a trade arrangement that is predictable and guarantees preferential market access for Kenyan products. Kenya is also keen to attract Foreign Direct Investment from the US that will improve vertical and horizontal linkages in the Kenyan economy," said the CS. The CS said the FTA will increase inflow of investment from the US and create job opportunities as well as catalyse other value chains that will benefit micro and small enterprises in Kenya. Plans to begin talks on the bilateral trade agreement were announced after President Uhuru Kenyatta visited his America counterpart Donald Trump in February where they elevated the Washington-Nairobi bilateral relationship to a strategic partnership. In addition to the launch of trade negotiations, America and Kenya agreed on a strategic co-operation framework to provide technical assistance and trade capacity building in Kenya with the aim of maximising Kenya's utilisation of the Agoa trade benefits for the remaining years of the preference programme. The framework will also support development and competitiveness of key agricultural value chains in Kenya. Late last month, Kenya set terms ahead of trade talks as it moves to protect key economic sectors and shield several strategic State-owned enterprises from the deal. The US summary of key negotiation points in the proposed bilateral deal will see Kenya lift tariffs on all American agricultural products and open its maritime, textile, telecommunications financial services and other industries, including those classified as sensitive sectors to the foreign investors.

 AGRICULTURAL GOODS

President Trump’s administration has been pursuing an America First policy in its trade negotiations with other countries as part of his attempt to counter a surging Chinese economic and political clout around the world. In the proposed FTA, the US is seeking to secure comprehensive market access for its agricultural goods in Kenya by reducing or eliminating tariffs and providing ‘’reasonable’’ adjustment periods for import-sensitive agricultural products. It intends to push for establishment of new and enforceable rules to eliminate “unjustified trade restrictions,” which means its agricultural products will be allowed into Kenya at zero or reduced tariffs. Washington expects Kenya to streamline and expedite customs treatment of its products for express shipments, as per proposals in the document tabled in the Congress on May 22, by ensuring there is simplified customs procedures for low-value goods. The US proposes the development of rules of origin to ensure that benefits of the agreement go to products genuinely made in the US and Kenya and to ensure that the rules of origin incentivise production in the territory of the parties. The US also wants to promote supply of its telecommunications services by facilitating market entry, secure commitments to provide reasonable network access for telecommunications suppliers and establish provisions protecting telecommunications services suppliers’ choice of technology.

MARKET OPPORTUNITIES

It also wants to expand market opportunities for its financial service suppliers “to obtain fairer and more open conditions" of financial services trade. Washington also intends to ensure free or reduced tariff on its digital products and to ensure Kenya does not discriminate treatment of digital products transmitted electronically. The US, during the negotiations, will also table rules that, if adopted, will provide full market access for US pharmaceuticals and medical devices. Kenya on the other hand also submitted its trade objectives where it will be seeking to protect key economic sectors and shield several strategic state-owned enterprises from the Free Trade Agreement (FTA) commitments. According to Kenya's negotiation objectives document released late last month, Nairobi seeks to enter into negotiation cautiously to make sure that the FTA provides safeguards, and exceptions to protect Kenya's nascent industrial and agricultural sectors to avoid dumping America products in the country. “The Kenya-US FTA will include negotiations under which Kenya is seeking to have the FTA deliver on general and specific objectives and they will be based on a number of World Trade Organisations (WTO) trade remedies laws, namely Subsidies and counter vailing measures, anti-dumping and safeguard..” read part of Kenyans objectives. To achieve this, Nairobi will gradually remove the tariffs on the US products starting with steep tax cuts on items deemed to be of interest to the economy which mostly include agricultural products and textile. While implementing FTA, Kenya will ensure that there is no disruption of Kenya's market access into the USA after the African Growth and Opportunities Act (AGOA) expires on September 30th 2025 by securing a predictable trade regime with the U.S that is AGOA Plus.

PAY FIDELITY

Nairobi also says it will strive to stimulate and to ensure that the FTA agreement pays fidelity to Kenya's commitments and obligations with existing multilateral, regional and bilateral trade agreements for which Kenya has signed and ratified and also create room for EAC member to enter into future US trade deals. “Kenya seeks to protect existing EAC and Continental trade protocols and negotiations on customs should be based on the existing Trade Facilitation Cooperation Agreement between the USA and EAC, and WTO Customs Valuation. FTA will create a framework through which any EAC Partner State that did not participate in these negotiations at the outset is allowed to join the negotiations, subject to terms and conditions that would be agreed between the USA and Kenya," said Kenya in its wish list. Regional trade officials have criticised the proposed FTA, saying it is potentially in breach of the Customs Union Protocol of the EAC, of which Kenya is a signatory. However, the Ms Miana has said the team constituted will seek to get the best possible trade and investment deal out of the negotiations, “putting into consideration the promise made to our EAC members.” Ms Maina defended Kenya, saying it has abided with Section 37 of the EAC trade protocol, which calls for any EAC member state to inform other partners whenever it intends to offer preferential market access to a third-party since member states share a common Customs territory before such a deal is signed. The controversial Kenya-US deal, once signed, is meant to replace the African Growth and Opportunities Act (Agoa) agreement that expires in 2025. It has, however, raised concerns within the EAC where critics described the planned bilateral agreement as a breach of regional and continental trade protocols since Kenya had not formally written to EAC trade officials in Arusha regarding the intended new deal before it was made public. African Head of States have discouraged African Union member countries from entering into bilateral free trade negotiations with third parties to avoid jeopardising the AfCFTA. The planned agreement between US and Kenya is a first for US trade relations in subSaharan Africa and signifies a shift from multilateral trade deals, such as Agoa, to bilateral free trade agreements with individual countries. Agoa is the current trade preference programme in 2000 providing duty-free entry into the US for almost all African products, from oil and agricultural goods to textiles, farm, and handicrafts.

Source: The Nation

Back to top