The Centre on Monday revealed that it released around Rs 14,000 crore to states as compensation for their losses due to the goods and services tax (GST) for March 2020. This takes the total compensation released for financial year 2019-20 (FY20) to Rs 1.65 trillion, against a cess collection of Rs 95,444 crore for this purpose. The Centre had released Rs 1.51 trillion for April-February period of FY20. The payment for March was delayed because of inadequate collections from the compensation cess. The biggest slice of the compensation went to Maharashtra at Rs 19,233 crore for FY20, showed data released by the finance ministry on Twitter. Last month, the Centre had released Rs 36,400 crore as GST compensation to the states and Union Territories for three months till February. For the April-November 2019 period, the Centre had already released Rs 1.15 trillion to the states. The Centre had released Rs 69,275 crore in FY19 and Rs 41,146 crore in FY18 as compensation for GST, rolled out on July 1, 2017. The cess collections in FY20, FY19 and FY18 was Rs 95,444 crore, Rs 95,081 crore, and Rs 62,611 crore, respectively. As the compensation requirement of the states was lower than the collection in the first two years, Rs 47,271 crore had remained unutilised. This, coupled with unallocated IGST collections, came in handy for the Centre to compensate states. Under the GST law, states were guaranteed payment for any loss of revenue in the first five years of its implementation. The shortfall is calculated assuming a 14 per cent annual growth in GST collections by states over the base year of 2015-16. Under the GST structure, taxes are levied under the 5, 12, 18 and 28 per cent slabs. On top of the highest tax slab, a cess is levied on luxury, sin and demerit goods and the proceeds from this are used to compensate states. There were no differences between the Centre and states with regard to compensation payment in FY18, FY19, and the first four months of FY20. However, with the revenue mop-up from the compensation cess falling short, the Centre held back fund transfers to states beginning in August 2019.
Source: Business Standard
We had purchased a duty credit scrip from the market and utilised it for paying duty on import of goods. Later, the authorities discovered that the duty credit scrip was obtained through misrepresentation. Can we be made liable for payment of duty or penalty? Can the goods we imported be confiscated?
No. A licence or duty credit scrip obtained through misrepresentation is voidable but not void till it is cancelled. So long as the transferee had purchased the duty credit scrip duly issued by the competent authority and it was valid on the date of payment of duty by the transferee, the duty demand from the transferee importer, or confiscation or levy of penalty on the transferee importer, cannot be sustained. In this connection, please refer to the case of East India Commercial Co. Ltd. Calcutta vs Collector of Customs, Calcutta 1983 (13) ELT 1342 (SC). This Supreme Court judgment has been followed in many subsequent cases, such as Deep Exports [2016 (338) ELT 742 (Tri.Del.)], Indian Acrylics Ltd. [2015 (325) ELT 753 9Tri. Ahd)], and Patiala Castings Pvt. Ltd. [2012 (283) ELT 269 (Tri.Del.)].
Under the Served from India Scheme (SEIS), is the duty credit scrip issued on the basis of a Chartered Accountant certificate? Do the authorities put it through any other checks?
The authorities may check the application to examine whether prima facie, the services exported are eligible for the benefits, and for any other obvious errors in the application and the Chartered Accountant Certificate. Besides, as per Para 3.19 of the FTP and Para 3.17of the HBP, 10 per cent of the scrips issued every month will be selected for scrutiny. The authorities can call for the original physical documents for examination in detail. If they find any discrepancies or deficiencies, the applicant will be asked to rectify them. In case of excess availment of rewards, the applicant will be asked to refund the excess claim with interest, in accordance with Para 3.19 of the FTP.
In order to incur a reduced export obligation under the EPCG scheme, we propose to pay IGST on imports of capital goods? Is it allowed?
Yes, provided you do not take input tax credit of the IGST paid. As per Para 5.01(d) of the FTP, “in case Integrated Tax and Compensation Cess are paid in cash on imports under EPCG, incidence of the said Integrated Tax and Compensation Cess would not be taken for computation of net duty saved provided Input Tax Credit is not availed”.
We want to re-export imported goods found defective. As we had not paid the foreign supplier, we had obtained GR waiver from the bank. Can we get drawback of 98 per cent of the duties paid?
Yes, provided you comply with the conditions specified under Section 74 of the Customs Act, 1962 read with Re-export of Imported Goods (Drawback of Customs Duties) Rules, 1995. Under the relevant provisions, there is no condition that you must realise the export proceeds.
Source: Business Standard
NEW DELHI: GST investigation wing Directorate General of GST Intelligence (DGGI) has booked three firms for tax evasion of over Rs 600 crore. "A case was booked against M/s. Fortune Graphics Limited, M/s. Reema Polychem Pvt. Ltd. & M/s. Ganpati Enterprises, who were found involved in issuance of invoices without any actual supply of goods," an official statement said. The case was detected and developed by the officers on further data analytics out of a case booked against one of the exporters, M/s Anannya Exim, covered in the all India joint operation, launched by DGGI-DRI (Directorate of Revenue Intelligence) in September 2019, against various exporters for fraudulently claiming IGST refund on the basis of ineligible input tax credit (ITC). "During the investigations conducted by the DGGI Hqrs, it has emerged that the aforesaid three companies/firms namely M/s. Reema Polychem Pvt. Ltd., M/s. Fortune Graphics Limited and M/s. Ganpati Enterprises have issued invoices worth more than Rs 4,100 crore wherein tax amount of more than Rs 600 crore has been fraudulently passed on as ITC credit to different entities," the statement said.
Source : Economic Times
New Delhi: The government is working on completing the stake sale process of about 23 public sector companies whose divestment has already been cleared by the Cabinet, Finance Minister Nirmala Sitharaman said on Monday. The minister also said she would soon meet small finance firms and non-banking finance companies (NBFCs) to review the credit being extended by them to businesses. Sitharaman, in a conversation with Hero Enterprise Chairman Sunil Kant Munjal, said the government as part of the Aatmanirbhar Bharat package had announced opening up of all sectors for private participation. "The final call as to which are the sectors which are going to be called 'strategic' is not made yet, that has to be announced and I can't preempt what announcement is likely to come. But in those sectors which we are going to call strategic, the private will obviously be allowed to come in but the public sectors will be limited to a maximum of four units," she said. She said this would lead to consolidation of public sector undertakings (PSUs) as well as scaling up of their operations. Talking about disinvestment plans, the minister said the government wants to sell stake in public sector companies at a time when it fetches the right price. "There are already nearly 22-23 such PSUs which have been cleared by the Cabinet for disinvestment. The intent is clear that at least for those which had already been cleared by the Cabinet, we will have to disinvest," Sitharaman said. For the 2020-21 fiscal, the government has set a disinvestment target of Rs 2.10 lakh crore. Of this, Rs 1.20 lakh crore will come from disinvestment of public sector undertakings and another Rs 90,000 crore from stake sale in financial institutions. With regard to extending credit to the industry, Sitharaman said under the Emergency Credit Line Guarantee Scheme (ECLGS), micro, small and medium enterprises (MSMEs) can avail loans. As of July 23, 2020, the total amount sanctioned under the 100 per cent Emergency Credit Line Guarantee Scheme by public and private sector banks stands at Rs 1,30,491.79 crore, of which Rs 82,065.01 crore has already been disbursed. "Now I am pushing the banks saying that it's not their risk, we have taken the risk on ourselves, they should now facilitate the process. "We have very clearly told banks that they are not going to sit on judgement of anybody's viability. Now it is the question of giving them resources, hand holding them so that they survive," Nirmala Sitharaman added.
Source: Economic Times
NEW DELHI: To check imports of sub-standard and non-essential goods, including from China, the Bureau of Indian Standards (BIS) on Monday said it is framing mandatory quality standards for 371 items identified by the commerce ministry and the process will be completed by March 2021. The list of 371 tariff lines includes several segments, ranging from steel, chemicals, pharmaceuticals and electrical machinery to furniture and toys. "The commerce ministry has identified 371 imported tariff lines, including Chinese products. We are trying to frame standards and make them mandatory and improve enforcement of the same," BIS Director General Pramod Kumar Tiwari told reporters in a virtual press conference. The concerned ministries are identifying the important products from the list given by the commerce ministry and approaching BIS for making the standards mandatory, he said. Asked for how many products from the list the standards have been made so far, Tiwari said: "It is a complex issue. Different ministries like steel, chemicals and petroleum have been told to identify the products for making standards." For some products, ministries have decided not to have standards because of insignificant import volumes, while for certain items, there are already standards in place, he added. On the deadline to make standards for all the 371 items, he said, "The cabinet secretary is also reviewing the matter closely. Different ministries have asked us to make standards for certain products. Standards for some products will be made by December and the rest by March 2021." The target is to make standards for products under 371 tariff lines by March 2021, he added. Meanwhile, BIS is strengthening its surveillance system and has posted officers at major ports to work closely with the customs department. "The officers will take the market samples of the imported products and test at the port itself," Tiwari said. To ensure quality products are imported and sold in India, he said BIS is making efforts to increase its surveillance visits at factories and markets to more than a lakh a year from the current 20,000 visits. In the press conference, Consumer Affairs Minister Ram Vilas Paswan launched the BIS mobile app and two portals on BIS certification and standards for the benefit of consumers and industry stakeholders. BIS is the national standard setting body. So far, it has set 20,866 standards and mandatory standards for 358 products.
Source: Economic Times
The government has not taken any decision to reintroduce the controversial Financial Resolution and Deposit Insurance Bill (FRDI Bill), the Finance Ministry said on Monday. The Financial Resolution and Deposit Insurance Bill, 2017, was introduced in the Lok Sabha on August 10, 2017, and, thereafter, was referred to the Joint Committee of Parliament for examination and report thereon, the ministry said in a statement. However, after a year, the government decided to withdraw the bill as concerns were raised about the protection of depositors' money if it was passed with the controversial "bail-in" clause that proposed use of depositor money by a failing financial institutions to stay afloat. The government had withdrawn the FRDI Bill in August 2018 for further comprehensive examination and reconsideration of the subject, it said. "There are some media reports about reintroduction of the FRDI Bill. This is to clarify that the government has not taken any decision to reintroduce the FRDI Bill," it said. The FRDI Bill among other things sought to make an enabling law for creation of an independent resolution corporation to carry out speedy and efficient resolution of financial firms in distress, providing deposit insurance to consumers of certain categories, monitoring of the systemically important financial institutions and protecting the consumers to the extent possible. The bill drew flak from the opposition and created a lot of controversies as some experts felt that the ''bail-in'' clause had the potential to harm deposits in savings bank accounts. The government had defended the provisions of the bill for months, pointing out that the bail-in clause will not adversely impact depositors.
Source: Business Standard
The government will soon set up a single window system for clearances and approvals for industry, and is working on creating a land bank with a view to attract investments, Commerce and Industry Minister Piyush Goyal said on Monday. He said six states have already given their consent for land bank, and potential investors would be able to locate and identify land from their distant offices for industries, without frequently visiting the offices of land owning agencies. The minister made the comments while talking to sovereign wealth funds, foreign pension funds and others on ease of doing business and investments in infrastructure sector in India. "The government is soon going to set up a single window system for clearances and approvals of industry in the country. This would be a genuine single window and all the concerned state governments and central ministries are being taken on board for the system," Goyal said. He said a nodal officer has been appointed in every central department, and project development cells are being set up which will help in development of investible projects in coordination between the central and state governments. The government, he added, has identified 20 industrial sectors to focus on. These sectors include furniture standard as well as special, air-conditioners, leather, footwear, agro-chemicals, ready-to-eat food, steel, aluminium, copper, textiles, electric vehicles, auto-components, TV set-top boxes, CCTVs, sports goods, ethanol manufacture and bio-fuels, and toys. "This will help in scaling up investment, and leveraging the competitive edge of the country...The industry should assimilate artificial intelligence, data analytics, robotics and all other best practices," he said, adding that using technology does not imply loss of jobs in any way as increase in production in the country will lead to creation of more employment. The minister said conducive environment will be created for foreign investment in health and education sectors also. Investors will be given full support in terms of policies, processes, regulations and everything will be transparent, open and equitable, he added. On the issue of labour reforms, he said a balance has to be worked out between the interests of labour and investors. Further, he said "we are now looking forward to (economic) growth in the third and fourth quarters...India was able to create health infrastructure during the lockdown, as could be seen in self-sufficiency in the indigenous production of large numbers of PPEs and ventilators". He invited foreign investors to India and assured them of all the support for facilitating investments. The participants in the meeting gave various suggestions for further improving the ease of doing business in India.
Source: Business Standard
“All options are on the table… There is a view that if any trade agreement has not worked out as expected, we should also look at exiting such a deal,” one official said, adding that a nal call on the future strategy for such arrangements would be taken at the highest level. India is eyeing a major reset of its free trade agreements, including exiting those that have brought few tangible benets to the country and have instead hurt domestic industry, government officials said. “All options are on the table… There is a view that if any trade agreement has not worked out as expected, we should also look at exiting such a deal,” one official said, adding that a final call on the future strategy for such arrangements would be taken at the highest level. Most trading arrangements have a clause for a review or exit. There is renewed focus on trade deals with the US, the European Union and the UK, which are key markets for Indian exporters and are keen to diversify their sourcing. India opted out of the Regional Comprehensive Economic Partnership deal in November and the trading arrangement with the 15- member grouping that includes China remains o the table for now, another oicial said. India could seek a review of some trading agreements including renegotiating taris on some items and a tightening of provisions governing country-of-origin certication. The government has set up four working groups to assess the trade agreements holistically and frame a fresh strategy for them, taking into account the geo-political changes following the Covid-19 outbreak, which will spur investments into the country and boost exports, another oicial told ET. The move follows a recent high-level meeting chaired by Prime Minister Narendra Modi. These inter-ministerial groups that include the nance, commerce & industry and external aairs ministries will chalk out a comprehensive plan. There has been a growing view among policymakers that FTAs signed by India have not brought the expected tangible benets and on the contrary, have hurt the country’s manufacturing sector due to liberal rules of origin. A detailed assessment of FTAs in terms of goods, services and investment ows has been carried out both by the commerce department and the economic division of the finance ministry.
Source: Economic Times
The Maharashtra government is chalking out a plan to help the MSME sector which has been hit by the economic downturn due to the coronavirus outbreak, state industries minister Subhash Desai said on Monday. The needs of the sector are being studied and the state government plan will definitely help the MSME sector, he told. "Companies are facing the burden of paying salaries during the lockdown when production is almost nil. They have demanded that fixed electricity charges be waived. The scheme being drafted will be as per their needs," Desai said. He said the state government was working to ensure firms operating outside the jurisdiction of MIDC get subsidy benefits on various purchases which are currently unavailable.
Source: Economic Times
About 200 investment proposals from China are awaiting security clearance from the Ministry of Home Affairs (MHA) after new rules were notified in April, making prior government approval mandatory for foreign direct investments (FDI) from countries which share a land border with India. As FDI is allowed in non-critical sectors through the automatic route, earlier these proposals would have been cleared without the MHA’s nod. Prior government approval or security clearance from MHA was required for investments in critical sectors such as defence, media, telecommunication, satellites, private security agencies, civil aviation and mining and any investments from Pakistan and Bangladesh. The Department for Promotion of Industry and Internal Trade (DPIIT) notified the new FDI policy on April 18, which said, “…an entity of a country, which shares land border with India or where the beneficial owner of an investment into India is situated in or is a citizen of any such country, can invest only under the Government route.” The revised FDI policy, a press statement from DPIIT said, is aimed at “curbing opportunistic takeovers/acquisitions of Indian companies due to the current COVID-19 pandemic.” A senior government official told The Hindu that since April, after the new rules were notified, the Ministry has received around 200 applications for vetting. “However, none of the proposals have been cleared so far. These agreements would have been in the pipeline for months and it is possible that many might withdraw due to the delay or stringent conditions put in place now,” said the official. India and China have been engaged in a standoff along the Line of Actual Control (LAC) in Eastern Ladakh as there has been a massive buildup of Chinese troops since AprilMay. In a first in more than four decades, 20 Indian soldiers were killed on June 15 in violent clashes with the Chinese troops at Galwan Valley. Several rounds of diplomatic and military level talks have been held as India has demanded that status quo be restored in the border area. On July 10, Chinese Ambassador Sun Weidong issued a video statement, saying “China has been India’s largest trading partner for many years in a row with cumulative investment in India exceeding $8 billion.” India shares land borders with Pakistan, Afghanistan, China, Nepal, Bhutan, Bangladesh and Myanmar. Investors from countries that are not covered by revised FDI new policy only have to inform the Reserve Bank of India after the completion of a transaction rather than seek prior clearance from the administrative ministry. Last week, the Centre amended the General Financial Rules, 2017, to enable imposition of restrictions on bidders from countries which share a land border with India in relation to public procurement for reasons of national security and other factors directly or indirectly related to the country’s defence. In 2019, MHA informed the Lok Sabha that the framework for security clearance has been streamlined and the average time taken for security clearance has reduced from 104 days in 2014 to 60 days in 2019. According to the MHA’s annual 2018-19 report, as many as 5,490 proposals related to security clearance were disposed from May 2014 to March 2019.
Source: The Hindu, July
Currently, India is going through an unprecedented complete lockdown since March 22, which was extended to July 31, to prevent the spread of coronavirus. The ongoing lockdown has severely hit the textile industry which is so far dominated by smaller manufacturers said Rahul Mehta, Chief Mentor, Clothing Manufacturers Association of India (CMAI). Apparel industry body chief was speaking at a webinar on ‘Rebooting Textile Industry.’ He also said industry will become a low margin industry and smaller players will struggle to survive. Mehta feels there will be consolidation within the textile industry. “It is sad that the ones who were doing textile business for 30 years or more, just because of one bad year they are thinking about closing down,” Mehta said. With around 80 percent of the garment industry mostly micro, small and medium enterprises, CMAI, which has around 3,700 members employing over 7 lakh people, said most of its members do not have the kind of reserves to see them through 3-6 months of this magnitude. Currently, India is going through an unprecedented complete lockdown since March 22, which was extended to July 31, to prevent the spread of coronavirus. Mehta said CMAI had done a survey among its members and analysed around 1,500 responses and the responses were quite frightening. According to the survey, almost 20 percent of them said that they were thinking of closing down the business after lockdown. At least 60 percent of them anticipated a drop in revenue to the tune of 40 percent, which is massive, if you look in terms of number of employment," he said. Going ahead, Mehta feels, customers will move from unbranded to branded clothing further impacting the smaller players. If the garment industry closes down, it would impact the entire value chain from fabric supply industry to brand to the zipper and label industry, Mehta said. India’s textile sector is the second-largest employer generator in the country after agriculture and India is the first largest exporter of textiles and apparel in the world. In the same webinar, brand guru Harish Bijoor said Atmanirbhar is the way to grow for textile industry. “In the garment industry there nearly 129 mln people involved, 30 unicorns, $30 bln, it largely depends on foreign currency. It is a export dependency industry. But now we need to follow desinomics by becoming ‘Aatmanirbhar’ (Self Reliant) as advocated by PM Modi,” said Harish Bijooor, Brand Guru and Founder, Harish Bijoor Consultants Inc. Siddharth Bindra, Managing Director of women’s ethnic wear Brand Biba said COVID19 is a Black Swan event for textile industry and there will be tectonic shift from offline to online. Nitin Mohan Founder and Director of men's fashion brand Blackberrys agreed with Bindra opinion and said, “We are getting in to the era of shared returns so textile players should not ignore e-commerce platforms for growing their business.”
Source: Money Control
Generous market conditions are forcing big changes in business practices. More important, the consumer’s behaviour too is changing for the better. Unlike demonetization in November 2016, which was a short-term blip, the crisis from the novel coronavirus will carry forward with long-term changes.The construction industry for one is undergoing a major shift to prefabricated technology and away from the traditional brick and mortar route. Prefab was used for large affordable housing projects initially, but now the changeover is quick as the lockdown in different parts of the country has made movement of materials and workmen logistically difficult. Like putting a jigsaw puzzle together, prefabricated structures are constructed by casting at central hubs entire building parts – floor slabs, columns and large sheer walls – and then transported to the construction sites to be put together. Though believed to be 20 per cent more expensive, there is net saving as speed of construction is 25-30 per cent faster with half the requirement of manpower on construction sites. A 400-bed hospital for instance is currently being built at Kasargod, in Kerala, by Tata Projects Ltd using prefabricated structures made in Jamshedpur, and then shipped by road to the Kerala site. For those who use these structures, it will be a new cultural experience as there is no plaster on the smooth precast walls. At the construction sites, workers will need a higher skill set as they slot together giant columns and slabs using cameras and internet-enabled hand devices. One envisages, few construction groups will go back to the messy, old brick-and-mortar systems.
Anti-Corona fabrics
There are, of course, those who quickly shifted to cater to immediate demands – pharmaceutical and FMCG units that focused on sanitizers and textile units that cashed in on the demand for PPE suits. This may dry up but the big textile brands have realized that the virus is here to stay, and have therefore reworked their priorities to include fabric that is antiviral and anti-microbial. This assumes that on traditional textile surfaces, certain viruses can survive up to two days. Seeing this niche, most textile big brands have announced ‘anti-virus’ clothing and luxury wear. Peter England, an Aditya Birla menswear brand, has tied up with a Swiss based HeiQ to launch fashionable work wear and even masks at pocket-pinching prices. Siyaram, another big menswear brand, has collaborated with Australian company Health-Guard to develop what it claims is an anti-coronavirus fabric. But it’s in the way we handle cash, that is seeing a definitive shift. In the last quarter of calendar 2019, a significant milestone was achieved when the total value of card and mobile payments at Rs 10.57 lakh crore for the first time exceeded ATM withdrawals which were at Rs 9.12 lakh crore. This gap has further expanded now.
Digital money
A variety of reasons has speeded up the switchover from cash to digital transfers. The fear of the virus sitting on physical money, and the reduction of face-to-face contact during lockdown, has helped the growth of digital money. The Reserve Bank (RBI) estimates that digital transactions will jump to 1.5 billion transactions valued at Rs 15 lakh crore a day by 2025 from the current level of about 100 million transactions worth Rs 5 lakh crore a day. The current levels again are about 5 times the volume witnessed in June 2016. One of the important reasons cited for the not-so-successful demonetization move of November 2016, when high denomination notes of Rs 500 and Rs 1,000 were scrapped, was the government’s intent to make India a digital economy. Initially, there was rapid progress, as people without cash were forced to opt for digital modes; however, after 6 to 9 months, cash became king again. When 85-90 per cent of our workforce is in casual employment, and there is little availability of digital credit, cash rules. Post demonetization, circulation of currency notes grew rapidly despite the government’s counter-claims. From `17.47 lakh crore of notes in circulation on November 4, 2016, the figure had surged to `21.71 lakh crore by May 31, 2019. Current conditions though are once again in favour of digital options. The most recent Payments Council of India (PCI) and PwC report estimates that India will contribute 2.2 per cent to the world’s digital market by 2023. Interestingly, the ‘home-grown’ digital payments infrastructure including Unified Payments Interface (UPI), Bharat QR and mobile wallets have captured the pockets of small merchants, and even hawkers and street sellers. In volume, it is estimated that there will be 59 million transactions by 2023 and that “UPI has witnessed a compounded annual growth rate (CAGR) of 785 per cent in volume and 570 per cent in value from FY2017 to FY 2020.When a small nursery owner in Raigad district, off Mumbai, insisted he be paid for plants and shrubs not in cash but a Google Pay transfer, then indeed the digital age has arrived. 2.2% India’s estimated share in the world’s digital market by 2023, according to a recent NPCI-PCI report
Source: Indian Express
The Indian industry has sought fresh measures through public infrastructure investment stimulus which will have a multiplier eect on increasing disposable income, generating demand and boosting private sector investments. "We strongly believe that the government should come out with a massive public investment stimulus sooner than later to help facilitate and complete the pipeline of national infrastructure projects of Rs 100 lakh crore," the Bombay Chamber of Commerce and Industry suggested to Reserve Bank ofIndia governor Shaktikanta Das, during pre-consultations for the monetary policy expected next month. A combination of borrowings from central public sector enterprises (CPSEs) and central government could be considered to nance the stimulus, which in turn could be channelled into relevant projects, said the industry body. "This will surely have a multiplier eect on the overall economy leading to a virtuous cycle of greater disposable income, increased demand and nally increased private investments," said the Bombay Chamber of Commerce and Industry. The suggestions came on the back of ndings from an industry-wide survey which showed that businesses fear negative top-line growth and economic impact due to the Covid-19 pandemic to extend to the next three quarters or more. To revive the economy, businesses suggested salary cuts of 10-30%. While challenges to ongoing business such as availability of cash credit, foreign exchange operations and goods and service tax (GST) related issues were agged in the survey, a large majority was concerned about rising energy prices as well. "Bankers and/or nancial institutions are more conservative now than in the previous period," the survey found, along with the fact that there was a delay in sanctioning working capital loans as well as insistence on securitising the loans. The challenges are likely to lead to a 5% increase in input prices and a sharper rise of 8.25% in output prices, according to the survey.
Source: Economic Times
|
Item |
Price |
Unit |
Fluctuation |
Date |
|
PSF |
760.96 |
USD/Ton |
1.14% |
28-07-2020 |
|
VSF |
1184.99 |
USD/Ton |
-0.60% |
28-07-2020 |
|
ASF |
1686.11 |
USD/Ton |
0% |
28-07-2020 |
|
Polyester POY |
706.71 |
USD/Ton |
0% |
28-07-2020 |
|
Nylon FDY |
1955.95 |
USD/Ton |
-0.36% |
28-07-2020 |
|
40D Spandex |
3997.56 |
USD/Ton |
0% |
28-07-2020 |
|
Nylon POY |
2191.52 |
USD/Ton |
0% |
28-07-2020 |
|
Acrylic Top 3D |
5139.72 |
USD/Ton |
0% |
28-07-2020 |
|
Polyester FDY |
920.87 |
USD/Ton |
0% |
28-07-2020 |
|
Nylon DTY |
1820.32 |
USD/Ton |
0.79% |
28-07-2020 |
|
Viscose Long Filament |
1856.01 |
USD/Ton |
0% |
28-07-2020 |
|
Polyester DTY |
885.17 |
USD/Ton |
0% |
28-07-2020 |
|
30S Spun Rayon Yarn |
1684.69 |
USD/Ton |
-0.42% |
28-07-2020 |
|
32S Polyester Yarn |
1320.62 |
USD/Ton |
-0.54% |
28-07-2020 |
|
45S T/C Yarn |
2148.69 |
USD/Ton |
-0.33% |
28-07-2020 |
|
40S Rayon Yarn |
1499.09 |
USD/Ton |
0% |
28-07-2020 |
|
T/R Yarn 65/35 32S |
2027.33 |
USD/Ton |
0% |
28-07-2020 |
|
45S Polyester Yarn |
1856.01 |
USD/Ton |
0% |
28-07-2020 |
|
T/C Yarn 65/35 32S |
1663.27 |
USD/Ton |
0% |
28-07-2020 |
|
10S Denim Fabric |
1.13 |
USD/Meter |
-0.13% |
28-07-2020 |
|
32S Twill Fabric |
0.64 |
USD/Meter |
-0.22% |
28-07-2020 |
|
40S Combed Poplin |
0.93 |
USD/Meter |
-0.15% |
28-07-2020 |
|
30S Rayon Fabric |
0.47 |
USD/Meter |
-0.30% |
28-07-2020 |
|
45S T/C Fabric |
0.65 |
USD/Meter |
0% |
28-07-2020 |
Source: Global Textiles
Note: The above prices are Chinese Price (1 CNY = 0.14277 USD dtd. 28/07/2020). The prices given above are as quoted from Global Textiles.com. SRTEPC is not responsible for the correctness of the same.
With a 97-million-strong young and tech-savvy population, Vietnam, compared with its peers remains still one of the most competitive on labour cost and land lease, construction cost. In its annual ranking of the most suitable locations for global manufacturing among 48 countries in Europe, the Americas and Asia Pacific, Cushman & Wakefield has assessed that Vietnam is the second most cost-competitive manufacturing hub in the world. China remains the most attractive manufacturing hub globally from an operating conditions and cost competitiveness perspective. The annual Global Manufacturing Risk Index (MRI) scores each country against 20 variables that make up the three final weighted rankings which cover conditions, cost and risk. The data underpinning the MRI comes from a variety of reliable sources, including the World Bank, UNCTAD and Oxford Economics. Vietnam’s global ranking is “Phở-nomenal” news, borrowing a phrase from HSBC Bank. What gradually started snowballing in 2018, continued throughout 2019. The US-China trade war was an impetus for the shift in production from China to Vietnam. The shift in production to Vietnam benefited all sub markets across Vietnam. In 2019, the North of Vietnam caught up with the south compared to the previous years in terms, accounting for half of the total new foreign direct investment projects. In addition, Tier 2 regions that are well linked by infrastructure planning started to show up as highly competitive and fast-growing regions with good opportunities to reduce growing cost of land and labour especially when enjoying tax incentives granted to the economic zones. Cost aside, Vietnam’s stable geopolitical situation and the wide-reaching market integration is another success factor. With 260 operational industrial parks, industrialists benefit from the ease of doing business, with a relatively swift and simple due diligence process. For the long-term sustainability of Vietnam’s manufacturing sector, keeping costs low cannot be the only strategy. Indeed, efforts are now being made to move the economy up the value chain to transition its manufacturing base towards Industry 4.0 through automation, robotics, 3D printing. Vietnam is also now experimenting more with contactless technology in the wake of Covid-19. This will boost its potential as a Covid-19 vaccine production base and stimulate the relatively undeveloped pharmaceutical industry. Should Vietnam succeed in embracing Industry 4.0, Vietnam’s overall position as a manufacturing hub will strengthen further, beyond its ability to keep land cost and wages low. Tremendous potential for Vietnam’s biomedical, food manufacturing sector Vietnam stands to benefit even if China retains a clear infrastructure advantage to efficiently move goods via road, rail or sea transport. Vietnam businesses were already re-inventing, improving efficiency and diversifying supply chains. Industry & aLogistics 4.0, Covid-19 and the resulting disruption in global supply chains has just accelerated the pace of innovation. For one, Vietnam took advantage of the global shortage of personal protective gear at the height of Covid-19 infections to fill the gap, cementing Vietnam’s position as the PPE supplier to the West. There is potential for Vietnam to develop its status as a key supplier of PPE in the coming years. Similar growth potential is being observed in the garment, textile, shoes and non-woven plastic bags. One thing the pandemic demonstrated was the under-supply and short term need for more cold storage facilities across Southeast Asia. Food manufacturers saw demand for frozen food supplies spike at the height of lockdowns across Southeast Asian countries. In this regard, Vietnam’s tier 2 cities and remote regions possess tremendous potential to develop cold chain facilities to meet the increasing demand for frozen food. This will put Vietnam in a good position to lead the region as a food distribution hub. Fast-track Recovery with more FDI in 2H 2020 Vietnam recorded strong momentum in industrial activity at the end of 2019 as manufacturers continued to shift production from China to mitigate risks. Covid-19 halted the momentum with the closing of Vietnam’s borders to all countries. Still, the investment by foreigners in those few weeks before the lockdown made up a sizeable proportion of the US$6 billion in foreign direct investments in the first half of 2020. On the eve of the 13th National Congress vote, the market expects the government to pivot to infrastructure development, land compensation, new legislation as well as decisions on when and how to open the borders of Vietnam around August /September 2020. This latter decision will set the stage for new potential foreign investors studying Vietnam’s market, ready to decide on the next course of action. Since Vietnam posted economic growth in manufacturing in June and with the GDP growth of 1.8 per cent for the first 1H 2020 still expected to be fastest growing market in SEA. In hindsight the outbreak was managed extremely well, thanks to intensive testing, effective tracing, strong campaigns with a world-famous soundtrack and just a very proactive acting government with swift decision making and deploying e-government tools to effectively communicate with the population. The country is back to normal for at least two months and on the road to recovery looking at the PMI bouncing back to 51.1 in June, up from 42.7 in May and above the 50 no-change mark for the first time in five months ever since the PMI hit a record low of 32.7 in April. Overall new orders increased, yet export business declined as export markets as still closed. Another good sign for manufacturing is that staffing declined at the weakest pace since February. 2021 could be or should be the year Vietnam could advance its economy in an accelerated pace and gradually enter the league of some of the more advanced APAC economies. The central government’s role is key to step up infrastructure development, and public investment and reform law reducing the hurdles for real estate development. Segway to real estate development, this heralds a new generation of agile developers who need to provide value-added facilities manufacturers require. For one, in the wake of Covid-19, the demand for ready built factories and warehouses will grow as manufacturers look to enhance supply chain resilience and mitigate impacts of unexpected events with a preference for asset light solutions. Manufacturers will also be looking to the government to ensure the development of a robust local supply chain and high level of corporate governance in Vietnam. Although Vietnam government has limited capacity to deploy relief packages as seen in OECD countries, resolution 42 that targets six categories of individuals and businesses stimulus for SME and individuals contributing to the future bounce back ability as well. Besides curbing inflation government is aware that it is crucial to speed up the infrastructure development and remove as many hurdles from stimulating real estate development. All eyes are on the Prime Minister’s decision in August around Vietnam’s 5,000 ha airport which is expected to be one of the largest airports in the world. ACV is scheduled to start working on phase 1 in May 2021 expected to open its gates by Q2 2026.
Source: Business Times
South Africa’s Trade and Industry Minister Ebrahim Patel has highlighted a slew of measures to grow jobs and production in critical industries post the COVID-19 pandemic, which has ravaged the economy. Patel, while presenting his department’s budget vote in Parliament, outlined the actions taken to protect the key sectors. “Together with the leaders of business and labour, we have forged consensus on the masterplans in four sectors - auto production, clothing and textiles, poultry, and sugar,” Patel told Parliament on Friday. From July last year, the South African Revenue Services has seized 550 shipping containers of illegally-imported and undervalued clothing and footwear, to protect local industries and entrepreneurs, he said. “In February this year, we increased tariff protection for poultry farmers against unfair foreign competition, protecting the local industry and local jobs,” Patel said. In March, local retailers committed to buy 80 per cent of their sugar locally over the next year, growing further in future years, whilst local farmers and millers agreed to price restraint in this period, the minister said, adding that the automotive industry in the country has performed exceptionally well. “We reached a new record of almost 390,000 locally-made cars that we exported to the rest of the world. Thousands of jobs were sustained in the making of those cars in factories in Uitenhage, Nelson Mandela Bay, eThekwini, Buffalo City and Pretoria,” he said. An agreement has been reached with the UK to maintain access for South African products in its market after Brexit and the country has also worked hard to build the African Continental Free Trade Area as the foundation for a long-term growth, the minister said. “South Africa is well-positioned to become a major supplier of industrial goods and value-added services to the continent,” he said. Patel said that COVID-19 has exposed the fragility in the global economy. “To prepare for the post-COVID world, we will strengthen efforts around reconstruction and recovery, including broader pacts with workers and businesses, focused on saving many firms and jobs; identifying new opportunities; embracing digital technologies to recover and change; and addressing economic inclusion with greater urgency,” he said. The quest for competitiveness must be balanced with the need to nurture economic resilience, the ability of economies to respond to risks that an open and integrated world present; be they to digital systems, or from climate change, or to food security or the spillover of trade wars raging elsewhere, or indeed from pandemics, Patel said. “History suggests that from the greatest human crises, the greatest human advances can be made. “So, in the darkest hour, we must prepare for a brighter future – at the heart of which must lie a new economy – fit for future purpose, fair and just, sustainable and resilient so that future shocks can be absorbed,” the minister added.
Source: Money Control
The economic challenge of the global COVID-19 crisis has hit Nigeria hard, making the country enter its worst recession in four decades. With the oil prices falling over 50% in the first quarter of 2020, growth has evaporated, unemployment skyrocketed and access to foreign exchange greatly limited. In a baseline scenario, the World Bank expects the Nigerian economy to shrink by 3.2% in 2020, equaling a loss of $20 billion to GDP. Nigerian government statistics put the potential contraction as high as 8%, depending on the level of stimulus and severity of lockdown. Unemployment is expected to reach 40 million by the end of 2020, and the 87 million population living in extreme poverty will swell. In response, the government released an economic sustainability plan outlining a strategy focused on spurring local manufacturing and agricultural production and a proposal to inject about $6 billion into the economy. While the overall economy is in for a couple years of negative or slow growth, investment opportunities exist in key sectors, including import replacing local production, renewable energy and digitization. Smart investors looking at Africa’s largest market will focus on promising subsectors and back entrepreneurs with the ability to operate in uncertain times.
Urgent Need for Diversification
The dire economic reality of the global pandemic will hopefully accelerate Nigeria’s ongoing diversification efforts. While oil constitutes less than 10% of GDP, oil still represents more than half of the government’s revenue — and over 90% of export earnings — making the economy exceptionally vulnerable to oil price volatility. This dependence hinders the government’s ability to inject meaningful amounts of capital into the economy to counteract the COVID-19 slowdown, and as a result, companies and investors will have a stronger influence on shaping a more resilient postCOVID economy. Smart investors can see pockets of opportunity even in the middle of a recession. By backing the right maoffnagement team with scarce capital, companies can seize upon changing consumer behavior and capture market share from cash-strapped competitors. Global giants — such as Disney, HP and Microsoft — were all started during recessions and built upon their founders’ understandings of long-term trends. Investors should be watching three COVID-aligned trends in Nigeria closely. ‘Produce What We Eat, and Eat What We Produce’ A shift toward self-reliance and local supply chains, mirroring the route taken by countries from Japan to France, is defining the Nigerian approach to economic recovery. The government’s Economic Sustainability Plan prioritizes agricultural value chains as the country seeks to reduce its food import bill and lay the groundwork for food security. Large-scale farming projects are planned in all 36 states with an aim to create five million jobs over the next year. Outgrower schemes, agro-extension programs, government procurement and partnerships with large private sector players are envisioned to help move the food from the field to the table. With local processing at less than 10% of GDP and a total population of 200 million people, Nigeria presents an attractive opportunity for agribusiness investors.
Off-Grid Solutions
Power has been the major constraint on economic growth in Nigeria for decades with less than 30% of businesses having access to grid electricity. The transition to work from home for some Nigerians, as a result of COVID-19 lockdowns, has further highlighted the challenge. With Nigerians spending over $12 billion per year buying and operating diesel generators, the high cost of power has been a drag on company growth and profits. But the lack of a reliable national grid has created a large opportunity for solar off-grid solutions, both at a household and industrial level. Companies, such as Rensource, are pioneering solar energy options at a large scale in markets that house tens of thousands of micro-businesses. The government’s economic recovery plans, along with donor-funded programs, will inject additional capital in the space. Signature programs include the installation of mini-grids, support for reaching five million new households with solar panels and incentives for local manufacturing of solar panels. Nigeria’s green entrepreneurs will have the government as a partner in their scaling efforts, and investors should take note.
Digitization
Cutting across all sectors in Nigeria is a need to unlock growth through enhanced efficiency and productivity. The dependence on paper processes and in-person interaction constitutes high transaction costs, prevents a proper data market from forming and leads to rent-seeking opportunities. Nigeria’s young and vibrant tech sector has been slowly chipping away at this national reliance on paper and cash. Flutterwave and Paystack are scaling digital payments, Lori and Kobo360 are digitizing trucking, Helium Health is updating hospital systems and a new cadre of startups are tackling problems in agriculture with digital solutions. The startup ecosystem proved that they could grow during the 2016 recession and continue to attract the largest share of venture capital going into Africa.
A New Awakening?
COVID-19 is accelerating the need to digitize and the upside for doing so across key sectors of the economy, while also enhancing opportunities in digital-first creative industries, such as film, music and gaming. Nigerian entrepreneurs continue to innovate, and investors who back the best with smart capital and patience will be rewarded with returns. The COVID-19 crisis and concomitant recession requires investors to take a more nuanced view of Nigeria. Zero or low growth for the next 24 months will certainly dampen global interest in the traditional sectors, such as oil and gas; however attacking inefficiencies can yield growth, and government incentives can help inject scale and certainty into priority sectors. It will be a long and rocky road back to meaningful economic growth in Africa’s most populous country, but the economy that will emerge will be less dependent on oil, greener and more tech-enabled.
Source: Brink News
Five years ago, Sadeka Begum was working 12-hour shifts in a garment factory as the main earner for her family in Bangladesh. Today the 23-year-old is one of the first graduates of a special university programme that aims to inspire female workers to become leaders and boost women’s rights across industries. Begum now interns for the United Nations children’s agency (UNICEF) and hopes to use her economics degree to launch a project to improve the lives of the children of Bangladeshi textile workers by addressing a lack of schooling and childcare. “I am an example of how education can change a person,” said Begum, one of four former garment workers to graduate from the Pathways for Promise course at the Asian University for Women (AUW) - based in the southeastern port city of Chittagong. “Garment workers are the reason why Bangladesh’s economy is doing well,” she added. “Their children deserve better.” About 470 disadvantaged women including tea pickers and refugees have enrolled for the free degree programme since it started in 2016, and receive a monthly stipend while they study. Dozens of ex-textile workers are part of the cohort and the AUW’s vice chancellor, Nirmala Rao, said the university was involved in creating internships to tackle a “dearth of female middle and senior managers” in Bangladesh’s garment industry. While up to 80 percent of garment workers are women in largely junior positions such as seamstresses, the majority of senior management positions are taken by men, U.N. data shows. Rubana Huq, who heads the nation’s largest trade association for garment manufacturers and was also involved in designing the academic course, said seeing the graduates taking on management positions in the sector would inspire other women to dream big. “They have different exposure and their outlooks are very fresh,” Huq told the Thomson Reuters Foundation. “They will be able to contribute to how we look at female empowerment.”
WORKERS’ RIGHTS AT RISK
Bangladesh is the world’s second largest supplier of clothes to Western countries after China, and relies on the garment industry for more than 80% of exports and four million jobs. Yet the sector has been rocked in recent years - first by the 2013 Rana Plaza collapse on the outskirts of Dhaka that killed 1,136 workers, then by the novel coronavirus pandemic. The 2013 disaster sparked efforts to improve labour rights and conditions but the coronavirus outbreak led to thousands of garment workers being laid off in recent months as Western fashion brands cancelled orders due to global store closures. As workers push for overdue wages and the jobless seek to find work, the AUW graduates want to help to steady the sector and push for change by rising through the ranks of management. “I want to see everyone with the same eye, it doesn’t matter what category someone’s working in,” said former factory packer Yesmin Akther. “I want people to behave well towards workers.” A recent report by a U.S. Senate committee found Bangladesh was backsliding on garment workers’ rights. Union leaders faced intimidation, hampering their ability to investigate claims of threats and abuse - mainly from women workers - the report said. Factory owners dismissed the findings of the report as inaccurate while local researchers said verbal abuse of workers was more prevalent across smaller factories and subcontractors.
GIVING BACK
The university, funded by donors including the IKEA Foundation and the Bill & Melinda Gates Foundation, has female students from across Asia and the Middle East pursuing degrees in subjects such as public health, philosophy and politics. The students from the garment sector receive full pay - worth about $100 a month - from their employers while studying. This proves vital as their families rely on the income, according to the AUW, which said it had persuaded several factory owners to back the initiative and allow some of their brightest female workers to leave the workplace for five years. The former textile workers, who had to pass a rigorous entrance exam for a place on their courses, said adapting to academic life was challenging as was improving their English. One of the graduates said she used to “just stare at people” at the start because her English wasn’t good enough, while another recalled practising the language in front of the mirror. Dipali Khatun, who is set to graduate in December, said her ambition was to work for a charity or to return to the garment sector in a human resources role where she could have an impact. “I would ... ensure that there is no bad behaviour against any garment worker,” she said. Kalpona Akter, founder of the Bangladesh Centre for Worker Solidarity, said she hoped the all the garment worker graduates would return to the sector rather than seek other opportunities. “If the 100 girls who are studying get into 100 factories, that can bring change because they have seen how difficult lives are for workers,” Akter said. “If they join other industries, they will be empowered, but that won’t help our situation.” Yesmin Akther is one such graduate who wants to give back. “My factory paid me for the last four years and supported me so I could study,” the 23- year-old said. “Given the chance, I would like to do something good in return.”
Source: Reuters
The Sustainable Development Goals (SDGs) are a plan of action for people, planet and prosperity. Seventeen goals provide a common framework and language for governments, business and civil society to work towards a balanced world socially, environmentally and economically. Who would have thought that this year would be a timely reminder of these global goals on poverty eradication, good health, clean water and sanitation, among others. In January, business, political, academia and other global leaders came together at the World Economic Forum (WEF) event. Every year, the WEF publishes the Global Risks Report that highlights key risks the world will likely face. There are five categories for these risks: economic, environmental, geopolitical, technological, and societal. This year’s report the global long-term risks in terms of impact for the next 10 years are biodiversity loss, climate failure, water crisis, human made environmental disasters, extreme weather, weapons of mass destruction, natural disasters, food crises, infectious diseases, and cyber-attacks. Despite infectious diseases being a top risk, countries and companies did little to plan for it. Business continuity planning has been around for decades, with organisations focusing on economic risks like credit and liquidity, among others as well as operational risks like systems and processes. There are five categories for these risks: economic, environmental, geopolitical, technological, and societal. This year’s report the global long-term risks in terms of impact for the next 10 years are biodiversity loss, climate failure, water crisis, human made environmental disasters, extreme weather, weapons of mass destruction, natural disasters, food crises, infectious diseases, and cyber-attacks Despite infectious diseases being a top risk, countries and companies did little to plan for it. Business continuity planning has been around for decades, with organisations focusing on economic risks like credit and liquidity, among others as well as operational risks like systems and processes.
Source: Business Daily Africa
