MARKET WATCH 29 JULY, 2020

NATIONAL

INTERNATIONAL

Commerce minister Piyush Goyal reveals big reforms govt is planning to attract investments

India will soon set up a single window system for industrial clearances and approvals that would on-board both the Centre and states even as the country has begun the process of creating a land bank and….

Source: Economic Times  

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Commerce Ministry not accepting MEIS applications from exporters availing tax incentives

New Delhi: The commerce ministry has blocked the online system for exporters to apply for availing tax incentives under the MEIS scheme from July 23 as the department of revenue (DoR) decided to limit the benefits under the scheme at Rs 9,000 crore for April-December 2020. According to an office memorandum of the Directorate General of Foreign Trade (DGFT), the Department of Revenue in May had conveyed that it may not be feasible to exceed MEIS (merchandise export from India scheme) allocation beyond Rs 9,000 crore for 2020-21 (up to December 2020). It has also been suggested to review MEIS and coverage so that the benefit outgo remains within the allocation of Rs 9,000 crore in this period. The commerce department has requested its revenue counterpart to reconsider its decision, and a communication has also been sent by Commerce and Industry Minister Piyush Goyal to Finance Minister Nirmala Sitharaman on July 21.  In the meanwhile, according to the office memorandum, the database for MEIS scrip issuance has been checked and it has been found that as on July 20, the scrips of value Rs 422.4 crore have already been issued to exporters for shipping bills with Let Export Order (LEO) since April 1 onwards.  "Since allocated funds at this stage for MEIS for 202-21 stand at Rs 9,000 crore and any additional allocation has not been conveyed by the department of revenue, the online MEIS module has been blocked on July 23 from accepting new application for shipping bills with LEO date April 1 onwards to limit the issuance of any more scrips," the memorandum dated July 27 said. "DoR/CBIC (Central Board of Indirect Taxes and Customs) may take steps in such a situation and ask customs ports/field formations to stop registration of MEIS scrips with shipping bills with LEO date of April 1 and beyond," a deputy DGFT said in the memorandum.  Commenting on the development, Federation of Indian Export Organisations (FIEO) President S K Saraf said the government's intervention has been sought to resolve the issue as MEIS benefits are already factored by exporters in the prices and help in easing the liquidity of exporters which is severely impacted due to the COVID-19 pandemic. Under the MEIS, the government provides duty benefits depending on product and country.  Rewards under the scheme are payable as percentage of realised free-on-board value and MEIS duty credit scrip can be transferred or used for payment of a number of duties including the basic customs duty. The government has already announced a scheme for Remission of Duties or Taxes on Export Product (RoDTEP) to replace MEIS.

Source: Economic Times

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Import curbs on items targeting China may shield FTA partners

India is working to ensure that the next round of import tariff hikes targeting China includes items that are covered under free trade agreements with other trade partners, in order to insulate them, and for which domestic capacities and alternatives exist to avoid shortages. "The Commerce and Industry Ministry has received inputs from various industry bodies and council's proposing items where import duties can be increased. The suggestions are being vettted for their appropriateness and a final list is being drafted," an official told Business Line.  The Centre is trying to come up with tariff and non-tariff measures on goods …..

Source: Business Line

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Indian Textile & Apparel Industry During Pandemic

Fibre2Fashion, July 28, 2020) Challenges facing the Indian textile and apparel sector as the country braces up to face the impact of the COVID-19 pandemic The textile and apparel sector has become the most severely affected among manufacturing sectors due to the novel coronavirus pandemic, which has challenged the world on every front be it economy, health care, politics, planning or social values at large. It is something unprecedented in mankind's history. It is the worst nightmare of policymakers, who on one hand are trying to slow its spread, and on the other, busy in efforts to make it less deadly in terms of its social and economic impact. When the pandemic struck, the world was totally unprepared to deal with a contingency of such magnitude and was caught napping. To slow the spread of the virus, lockdown seemed to be the only viable option. India also announced a nationwide lockdown in late March. As per the average stringency index prepared by the Oxford COVID-19 Government Response Tracker (OxCGRT), India ranked third only after France and Peru. The brunt of this lockdown was born by migrant workers, who in no time saw their dreams and livelihood shattered as factories stood idle. With no work in hand, migrant workers started moving back to their native places and the country witnessed a mass exodus of workers from cities and industrial hubs unseen in post-partition era. The sector severely hit by the pandemic-induced lockdown is the textile and apparel. It contributes 13 per cent to India's total exports, 7 per cent to the industrial output in value terms, 2 per cent to India's gross domestic product (GDP), 15 per cent to export earnings and offers employment to around 60 million directly or indirectly. The industry was estimated to be worth $100 billion in January 2020 and includes a wide range of players, including manufacturers, retailers, wholesalers and exporters of cotton textiles, handloom and woollen textiles. It also includes those engaged in the manufacturing of capital goods, such as textile machinery and equipment, dyes and raw materials, finished textiles, fabrics and garments. Exports in the sector from India were projected to reach $82 billion in fiscal 2020-2021 from $39 billion in the last fiscal. The pandemic has not only affected the demand for textile and apparel but also its supply. India is one of the major textiles and apparel exporters (around 60 per cent of the country's exports) to the United States and the European Union (EU) and these markets are hit hard by the virus. Buyers from these markets have either cancelled orders or put them on hold because consumers are locked inside, shopping malls are closed and access to online marketing is restricted.  A report by Wazir Advisors titled Impact of COVID-19 Scenario on European and US Apparel Market estimated that combined US and EU apparel consumption might fall by about $308 billion, around 45 per cent lower than projected in 2020. The spread of the virus has majorly impacted the textile industry as China, the United States and the EU are huge markets for Indian textile products, according to T Rajkumar, chairman of the Confederation of Indian Textile Industry (CITI). The cascading effect of external demand shock along with domestic demand slack resulted in lower production. Many firms were shut down and production fell drastically. Retail prices now will see a jump because sanitisation and social distancing measures are going to add to the costs. This will make deficient demand a perennial phenomenon for the industry. The virus has shattered the supply chain at each level. Most of employment in the textile and clothing industry is in the informal sector, which generally pays much lesser wages than the formal sector. While the pandemic has affected both formal and informal sectors, the impact will be more disastrous for workers in the latter. This sector is characterised by the lack of social security provisions, paid leaves, healthcare provisions and other safety measures, and therefore, workers are more vulnerable. In the formal sector, the rise in contractual workforce, a post-liberalisation phenomenon, has helped employers in retrenching workers with ease during the pandemic. This has led to a mass exodus of workers from cities back to their villages. The Clothing Manufacturers Association of India (CMAI) had projected in April that there could be a job loss of a crore in the textile sector due to the lockdown. The losses in the textile industry in Punjab has been reportedly pegged at around ?2,000 crore so far.

Structural changes resulting from pandemic

The virus has shown us that the global supply chain is highly fragile and fundamentally susceptible to disruptions. The weaker links in the supply chain can pose a great threat to the entire ecosystem on which the textile business sustains itself. The industry across its supply chain needs reorientation and restructuring towards a more sustainable and resistant web. A Forbes article argued that prior to the pandemic, all talk related to fast fashion focused on sustainability and companies were rethinking their business models for 2030 and beyond. But the pandemic has reduced that timeline, it said. Robert Antoshak, a textile consultant, in his blog argues: "The pre-virus apparel industry was not sustainable. It was only a matter of time before the ailments in the sector caused the industry to either falter or, worse, collapse. It doesn't matter: COVID-19 has elected the latter." The virus will end sooner or later. The post-pandemic world will altogether be different. Most industries will see a sharp rise in demand, but it will not be so for the textile   industry. Its nature and the customer-product relationship are such that it makes it more susceptible to a post-pandemic recession. Global consulting firm McKinsey feels once the dust settles on the immediate crisis, the fashion industry will face a recessionary market and industrial landscape will undergo a rapid structural transformation. It further argues that the industry will see a period of recovery characterised by a lull in spending and slack in demand across channels. Jeanologia founder Enrique Silla explains that after the crisis is over, consumers will feel uncomfortable to touch and feel garments in retail stores. They will be nervous about who would have touched the garments before them. The psychological damage resulting from the pandemic will make people less likely to spend as nobody will like to fill wardrobes just to feel better when they will not enjoy them wearing outside. If social distancing becomes a norm, people will stay out of retail stores. It also connotes long queues outside shopping malls, an implicit tax on consumers. If the textile industry has to sustain in the post-pandemic era, it has to regain consumer trust. However, the damage done may take generations to bring back consumer confidence back to prepandemic levels. During the pandemic, the demand for protective masks and other health textiles increased beyond their supply and the Indian ministry of textiles has issued guidelines and encouraged firms towards the production of these products. However, this shift in demand is not enough to compensate for the havoc the virus has wreaked. There will also be a shift from purchasing needs towards basic commodities. The apparel industry has already lost the summer cycle of sale and given the current situation it is almost certain that the virus will hit the winter collections as well.

Government response

When the coronavirus hit China late last year, Indian firms began to feel the brunt as India imports raw materials from there. When the lockdown was announced and within no time it became a universal instrument to fight the virus, it brought disastrous economic effects as a by-product. Indian textile and apparel producers began to press for relief packages. The government announced a relief package for micro, small and medium enterprises (MSMEs). The reform package, though scant, covers several areas, including redefining MSME, collateral free loans with a moratorium of 12 months on principal repayment and interest payments, 25 per cent reduction in taxes collected and deducted at source, to improve liquidity and a marginal reduction of 2 per cent in employer's and employees' contribution to Employees Provident Fund. These reforms are expected to benefit the textile and apparel industry in a big way as more than 80 per cent of textile firms are MSMEs.   It is expected that around 45 lakh small businesses will get benefited from the ?3-lakh crore collateral free automatic loans for businesses. Chairman of the Southern India Mills Association (SIMA) Ashwin Chandran said the revised MSME definition will benefit around 60 per cent of textile units across the value chain. The government also announced some labour reforms, which encouraged contractual work to meet the seasonal demand in the garment sector. "It is time for the industry to introspect. The textile industry had been looking for packages or supports.Now, it is time for a new direction and new thinking," said textiles minister Smriti Irani in a webinar. Textile producers are complaining about the lack of credit and high interest rates. These units need loans at lower interest rates as well as export support from government to overcome the pandemic stress. These reforms, though necessary, are not sufficient to push the textile sector to its potential level. The anti-Chinese sentiment that has grown due to the virus has brought fresh opportunities for Indian textile and apparel producers. They need to improve their productivity and quality to replace China as the 'supplier of choice' in international markets. Along with this, China is fast losing markets on account of rising unit labour costs and Bangladesh and Vietnam are filling the void. The government should come forward to help textile units to upgrade technology, promote exports and offer them tax incentives. This will not only bring foreign exchange into India but will also help the country in its fight against poverty and unemployment.

Source: Fibre2fashion

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With 80% idle capacities, non-woven mask makers seek export permission

A three-month dream run for non-woven masks makers — mostly MSMEs — has hit a roadblock with massive capacity built-up and exports restrictions hammering the plant utilisation to below 20 per cent. The trade estimates a loss of around ₹1,000 crore for non-woven fabric makers and converters (masks products makers) on account of restrictions on export of spun bond non-woven fabrics and various types of masks. After the Covid-19 outbreak in India, companies rushed to create capacities for 3-ply surgical and N-95 masks and hit a total capacity of about 77 crore masks per month. Mostly 90 per cent of the ...

Source: Business Line

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RBI is compromising on financial stability, need to recapitalise system, says Viral Acharya

MUMBAI: The Reserve Bank of India has been diluting some of the toughest measures prescribed for financial stability and its surplus liquidity policy has weakened inflation-targeting and shifted the goal post, former deputy governor Viral Acharya has said. “We are certainly showing signs of willingness to accommodate and compromise,” Acharya told ET in an interview. “Look at the number of forbearances we have rolled out. The real question is, now that IBC (Insolvency & Bankruptcy Code) is not producing resolutions in a timely manner, suppose that debt moratorium expires, when payments are not made — at that point, will the central bank do an asset quality review? That is the real test. The RBI should use the Financial Stability Report’s stress test right now to recapitalise the system.”  Acharya returned to the New York University to teach in 2019, prematurely ending his term after a tussle with the government over the RBI’s autonomy. He, along with governor Urjit Patel and his predecessor Raghuram Rajan, cleaned up the banking system and introduced tough rules to ensure unscrupulous borrowers don’t game the system. Some tough measures rolled back, others diluted’ But Acharya fell out with the government that was struggling to revive economic growth and wanted some of these strict conditions relaxed.  A tough default clause that made banks begin talks on resolution even if the borrower falls behind in payments by a day, restricting lending by weakly capitalised banks, recognition of bad loans as per global standards and a national credit registry to monitor borrowers were among the tough measures that ruffled the corporate world.  “Some of these were important to ensure that whatever happens the system doesn’t become vulnerable to short-term pressures,” said Acharya. “Some of these things have been rolled back, some of it has been diluted. We are still not ensuring timely capitalisation of banks based on forward-looking stress.” A crusader against inflation, Acharya is critical of the RBI’s decision to move its liquidity stance to ‘surplus’ from ‘neutral’, which makes the key policy rate — the repo rate at which the RBI lends to banks — ineffective.“If the MPC (Monetary Policy Committee) is controlling the policy rate, then the system has to be in ‘deficit’ mode, or in a small surplus,” he said. “What the central bank is doing is, on paper, it wants to say that the rate is controlled by the MPC, but in execution it wants to be in control of interest rates.” “Given the large surplus, all the rates in money markets are hugging the reverse repo rate or lower. I think they have completely given up, inexplicably, on how to use the liquidity in sync with MPC to achieve money market rates that are in line with what the policy rate of the central bank is. I think the policy rate can become completely irrelevant if the central bank wants to just manage the yield curves entirely on its own,” said Acharya. Flooding the market with excess liquidity has forced banks to park more than Rs 5 lakh crore daily with the RBI at the reverse repo rate of 3.35%. Even some overnight borrowing rates are far lower than the repo rate of 4%, making the MPC rate setting meaningless. Acharya said recognising bad loans and resolving bankruptcies in a timely manner are among measures to revive economic growth post the Covid freeze. Only adequately capitalised banks can ensure growth, not the weak ones, he added. “Lack of capital can produce so much risk-aversion,” he said. “The problem with recapitalisation of PSU banks is the lack of fiscal discipline. We are unwilling to accept that if you want to own banks, if you want them to lend, you have to put up some capital for this activity. You want to own, but you don’t want them to be a burden on the exchequer. These are incompatible.”

Source: Economic Times

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India's GDP growth to lose momentum from third quarter: Oxford Economics


Global forecasting firm Oxford Economics on Tuesday said it expects India's GDP growth to lose momentum from late third quarter (October-December) of the current fiscal as the push from the initial reopening fades. It further said India fares the worst in its Asia recovery scorecard, implying that the country will likely take the longest among major economies to converge to its pre-coronavirus growth level. Oxford Economics, in a report titled 'India: A reopening gone wrong', said the central government's attempts to restart the economy are already running aground. "In our baseline, we expect GDP growth to lose momentum from late Q3 on, once the push from the initial reopening fades and, likely compounded by the ongoing pandemic and inadequate policy support, legacy economic headwinds re-assert themselves. "The risk clearly is that proactive steps by regional governments, especially the richer ones, to stem the spread of the virus bring the tipping point forward," it said.
According to Oxford Economics, early data suggests that the positive economic impact of the accelerated lockdown exit will be felt in June, with the effect reinforced by a global growth pick-up that has aided a recovery in exports. "The outlook beyond that, however, has turned more worrisome. The reopening drive is already beginning to hit roadblocks, amid the surge in COVID-19 cases," it observed. It pointed out that new virus hotspots have emerged across the country since late June and, barring Delhi, no major region has had notable success in containing the virus. "First, while we do see a high probability of restrictions being tightened anew, we do not expect them to match the stringency of the phase one of the nationwide lockdown that caused the maximum economic damage. "Second, the rural economy, which is leading the recovery so far, seems at a much lower risk of shutting down again compared to cities, and should help cushion the downside to domestic demand," it noted. India's economic growth stood at 4.2 per cent in 2019-20. Growth projections for the current year by various global and domestic agencies indicate a sharp contraction, ranging from (-) 3.2 per cent to (-) 9.5 per cent. With a single-day increase of 47,703 COVID-19 cases, India's virus tally mounted to 14,83,156 on Tuesday, while the death toll rose to 33,425, according to the Union Health Ministry data. Recoveries surged to 9,52,743, pushing the recovery rate to 64.24 per cent.

Source: Economic Times

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Carpet industry seeks export succour from textiles ministry amid COVID-19 pandemic

 The handmade carpet industry has written to Textiles Minister Smriti Irani, seeking export assistance in the wake of the COVID-19 pandemic disrupting the supply chain. The Carpet Export Promotion Council (CEPC), in a letter to Irani, said the industry is totally export-oriented and employs more than 20 lakh weavers who are mostly located in rural areas. Chairman of CEPC Siddh Nath Singh said the industry earns more than Rs 12,000 crore of equivalent foreign exchange annually. Singh urged the ministry to restore the Merchandise Exports from India Scheme (MEIS) to the earlier level of seven per cent from the existing five per cent. He said this would help the industry become more competitive in the international market, where India is the leading player. CEPC also called on the central government to provide five per cent interest subvention to MSME exporters on packing credit finance on additional loan limits. The industry needs access to natural fibres like sisal, hemp and sea grass which are used for making carpets at competitive rates, Singh said. Chairman of carpet manufacturer OBEETEE, Rudra Chatterjee, said India has replaced China as the largest exporter of handmade carpets. He said it has trained more than 2,000 women weavers in this trade.

Source: Outlook India

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Takeaways from RBI’s financial stability report on moratorium

 The moratorium has been extended by another three months and, hence, a clear picture, on whether these accounts will remain standard or not, will emerge only towards the end of the year. The moratorium, extended to all bank customers, as per RBI‘s March announcement, had raised some issues; these have been answered, to an extent, in the latest Financial Stability Report (FSR). There was no firm data concerning how many loan-accountholders availed of the moratorium and the overall value of outstanding credit reserved for this. There was ambiguity regarding whether or not this was automatic or whether one had to opt for it. There was strong messaging from the government that it had to be automatically offered to all customers, while the borrowers often complained that they had to ask their bankers. The data provided in the FSR is interesting. The accompanying table shows that around half of the outstanding loans were under the moratorium, which also covered 55% of customer accounts. Given that outstanding credit in the system was Rs 104 lakh crore (includes farm loans too) as of March 2020, a sum of up to Rs 45 lakh crore, or around 22% of India‘s GDP, is, thus, under the moratorium. (this was offered to all standard assets as of March 1, which was above 90% as of March-end). This shows the effect of lockdown on the economy, with half the borrowers preferring to opt for this facility. Indeed, even the borderline companies that could have serviced their loans went for the moratorium owing to the uncertainty of future cash-flows, but this shows that such loans can be considered vulnerable to differing degrees. The highest share of o/s loans is, quite expectedly, with the SMEs, and this should be a cause of worry. SMEs were adversely affected by demonetisation and GST, now lockdown has added to woes. Even after this scheme ends, the government will have to announce a restructuring scheme for this segment. The other revelation is that, in all segments, the share of outstanding loans that have sought moratorium is higher than the share of accounts, which means that it is the relatively larger ticket-size borrowers that are under stress. Only in the case of individuals is the differential low as the ticket-sizes tend to be normally homogenous across the board. Banks, hence, need to take a closer look at the bigger tickets in the corporate segment as they could potentially be trending towards becoming NPAs. And, as some segments like hospitality, airlines, media, tourism, construction, and real estate are still to recommence activity—some may even take another six months—a rigorous monitoring policy should be in place. The retail loans would also be a concern as PSBs, in particular, had moved more aggressively into the mortgage segment with the pressure of affordable housing being an overriding factor. Now, anyone taking a moratorium here would be in an extremely challenging position compared to say a corporate. Job-loss or a salary-cut would typically increase the probability of not being able to service the loans. Here, the situation will not change during the year. In case of corporate loans, with the   phase being in force, it may be possible for companies to recover. In the case of personal loans, this may not be the case. For FY20, RBI has pointed to an NPA ratio of 2%, which can rise sharply in the coming year once the classification norms are normalised. The affordable segment will be the most vulnerable section as the loss of jobs has already affected or will impact the lowestincome group. In fact, a section of the migrant labourers who have gone back to their hometowns in rural India would also be covered here. The other interesting bit revealed by the data is the residency of these loans across the different categories of banks. The overall picture on loans under moratorium has been skewed by the PSBs, as shown in the accompanying graphic. Two-thirds of their accounts and loan-value are now covered under the moratorium. This is much lower for the private and foreign banks. Several conclusions can be drawn from this. First, the government may have nudged the PSBs to be more aggressive in getting customers to opt for the moratorium. Affordable housing, too, has been high on the agenda of the government. Second, PSB accounts are clearly more stressed than others, something that gets revealed in the NPA numbers as well. With a high impaired-assets ratio, it is but natural that the more vulnerable accounts would be in their portfolio relative to other banks. Third, for foreign and private banks, the difference between the percentage of accounts and outstanding loans is quite stark, with the share of customer accounts being higher than those held by debt. This means that typically the smaller tickets have gone for the extension and the bigger accounts have not. Hence, the number of accounts seeking moratorium is higher than that by value. Fourth, a corollary, the non-PSBs have better quality of customers, which is buttressed by the fact that their NPA levels are much lower. Therefore, their customers tend to be financially stronger, and thus have not opted for this facility. They have been choosier when picking their customers. Interestingly, for the small finance banks, 85% of the accounts covering 63% of the o/s are under moratorium. Here, it is the smaller tickets that are under pressure. For urban cooperative banks, it is the reverse with 57% of accounts and 65% of the value being under moratorium. The same is seen for NBFCs, where 29% of the accounts and 49% of outstanding have opted for this facility. The moratorium has been extended by another three months and, hence, a clear picture on whether these accounts will remain standard or not will emerge only towards the end of the year. This is a global problem and can lead to an increase in the set of impaired assets at a later date. The clue is to restart the economy as soon as possible so that the   enterprise can get back to work and start earning revenue. For individuals who are working with pay-cuts or are out of work, the situation is unsatisfactory, which will finally show on the books of banks. Will the government be forced to announce waivers in future?

Source:   Financial Express

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Global Textile Raw Material Price 29-07-2020

Item

Price

Unit

Fluctuation

Date

PSF

761.23

USD/Ton

0%

29-07-2020

VSF

1185.41

USD/Ton

0%

29-07-2020

ASF

1686.70

USD/Ton

0%

29-07-2020

Polyester    POY

711.96

USD/Ton

0.71%

29-07-2020

Nylon    FDY

1956.63

USD/Ton

0%

29-07-2020

40D    Spandex

3998.96

USD/Ton

0%

29-07-2020

Nylon    POY

2192.29

USD/Ton

0%

29-07-2020

Acrylic    Top 3D

5141.52

USD/Ton

0%

29-07-2020

Polyester    FDY

928.33

USD/Ton

0.78%

29-07-2020

Nylon    DTY

1820.96

USD/Ton

0%

29-07-2020

Viscose    Long Filament

1856.66

USD/Ton

0%

29-07-2020

Polyester    DTY

892.63

USD/Ton

0.81%

29-07-2020

30S    Spun Rayon Yarn

1680.99

USD/Ton

-0.25%

29-07-2020

32S    Polyester Yarn

1321.09

USD/Ton

0%

29-07-2020

45S    T/C Yarn

2149.44

USD/Ton

0%

29-07-2020

40S    Rayon Yarn

1485.33

USD/Ton

-0.95%

29-07-2020

T/R    Yarn 65/35 32S

2028.04

USD/Ton

0%

29-07-2020

45S    Polyester Yarn

1856.66

USD/Ton

0%

29-07-2020

T/C    Yarn 65/35 32S

1663.85

USD/Ton

0%

29-07-2020

10S    Denim Fabric

1.13

USD/Meter

0%

29-07-2020

32S    Twill Fabric

0.64

USD/Meter

-0.22%

29-07-2020

40S    Combed Poplin

0.93

USD/Meter

-0.15%

29-07-2020

30S    Rayon Fabric

0.47

USD/Meter

-0.30%

29-07-2020

45S    T/C Fabric

0.65

USD/Meter

0%

29-07-2020

Source: Global Textiles

Note: The above prices are Chinese Price (1 CNY = 0.14282USD dtd. 29/07/2020). The prices given above are as quoted from Global Textiles.com.  SRTEPC is not responsible for the correctness of the same.

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Austrian Chamber of Commerce Promotes Business with Sri Lanka and Bangladesh

The WKO Austrian Federal Chamber of Commerce offers the opportunity to participate in a webinar on the opportunities for Austrian and European companies in the two countries Sri Lanka and Bangladesh with and after COVID-19.  

Situation in Sri Lanka

Sri Lanka has now relaxed the nationwide curfew in most provinces, although the capital Colombo is still considered a "high risk" area. Parliamentary elections, originally scheduled for the end of April, are now scheduled to be held on August 5, 2020. Sri Lanka will not be spared an economic slump this year, as the most important economic sectors - tourism and the textile industry - have practically come to a standstill.

Situation in Bangladesh

The rapid spread of COVID-19 in Bangladesh hit the low-income population strata hardest. The textile industry, the country's main employer, completely stopped production for weeks. In the capital Dhaka, the highest number of Covid-19 cases was recorded. Little by little, companies, shops and shopping malls have reopened in recent weeks. The government is striving to return to normality and revive business life, while taking every precaution. Nevertheless, uncertainty among the population remains high.‘

Source: Austrain Chamber of Commerce

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A New Italian Amendment to provide Covid 19 Tax Break specifically for Fashion accessories Company

With big names like Gucci, Prada, Valentino, and Versace operating within its ranks, Italy‘s fashion and textile industry is the second largest manufacturing sector in the country (after metallurgic). Employing some 600,000 people and representing at least 20 percent of national exports, the industry generates 95 billion euros ($98 billion) in annual revenues, according to Reuters, making it not only one of the largest segments of the Italian market (and that of the European Union), but also one that has benefitted from steady growth in recent years, growth that has since been hampered by the onset of COVID-19, which is precisely why the industry is being given specific attention in new economic legislation. Following its initial enactment in May, Law Decree No. 34, or the ―Rilancio Decree – an Italian law that introduced a number of economic measures in response to the COVID19 crisis – was revamped this month to include a number of amendments in furtherance of its larger goal to provide corporate and tax measures to support Italian companies in light of the sweeping manufacturing disruptions and greater market volatility cased by the COVID pandemic. Among the new additions to the law, which first went into effect on May 19, 2020 and pledged an additional €55 billion in stimulus measures to help ―relaunch  the Italian economy, is a specific provision that aims to provide tax credits for entities in the ―textile, fashion and accessories sectors  in connection with their ―final stock inventories.  According to Baker McKenzie‘s Mariassunta Pica, Bianca Bagnoli, and Marzio Bucciol, the July 19, 2020 amendments include one that states that for the 2020 fiscal year, ―Taxpayers carrying out business activities in the textile, fashion and accessories sectors may benefit from a new tax credit equal to 30 percent of the value of their unsold inventory at the year-end that exceeds the average of the inventories booked in the three previous fiscal years.  The law requires that in order for a company to be eligible for such a tax credit, which will offset tax and social security liabilities pertaining to the fiscal year, ―the inventories must be evaluated by using the same methodology and criteria both in the [2020] tax period and in the three previous tax periods.  The new amendment – which comes on the heels of efforts by various major Italian apparel industry trade organizations and lobbying groups to push the country‘s government to enable fashion and luxury brands to resume work on the basis of the  lasting damage  that could be caused to the county‘s economy and the viability of its apparel sector as a result of a potential ―economic epidemic  – appears to be a clear nod to the COVID-induced disruption to the state of the global apparel market. Between widespread interruptions to global supply chains, including those for various types of raw materials (from textiles to product packaging), and the ever-growing number of fashion industry order cancellations, Italian brands and manufacturers, alike, have been impacted significantly. ―The supply chain is a disaster, David Shiffman, co-head of consumer and retail banking at investment bank PJ Solomon, told Bloomberg, and Italian entities are not immune. In addition to the risk that items go out of style, ―there‘s a limit to how much you can pack away for next year, because you‘re packing away your cash,  he notes, referring to the practice that some brands are turning to in order to salvage some of the full-price sell-through potential for their unsold wares. There is also a limit on how much any brand can rely on discounting in order to sell off unsold inventory. Jean-Marc Duplex the CEO of Gucci‘s parent company Kering stated in a call with investors in April that Kering would enact ―some discount activities  to improve sell- through for its inventory, in addition to extending the shelf-life for its house‘s Spring/Summer 2020 garments and accessories. But in the luxury segment, discounting is not a magic bullet, as it must be balance with the aura of exclusivity, which is often achieved by brand-induced scarcity. Ultimately, in addition to leaving companies with cancelled contracts and/or mountains of unsold wares as store-closure mandates and stay-at-home orders have affected consumers and business across the globe, COVID has stunted the quarterly and annual growth projections of companies like Italian mainstays like Prada, whose CEO Patrizio Bertelli revealed in March that COVID had already ―interrupted our growth trajectory,  noting that the group ―expects a negative impact on this year‘s results, a far-reaching reality for brands big and small, and a driving force behind the newly-enacted Italian law.

Source: Fashion Law

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Tradewind's webinar on SME growth with trade finance

Tradewind Finance, which provides tailored working capital solutions for small and medium-sized enterprises (SMEs), will share the benefits of factoring—an alternative form of financing ideally suited to SME businesses, especially companies with cash flow problems due to slow-paying clients—during a Fibre2Fashion hosted webinar on Wednesday, August 5. With an objective to address the financial needs of young companies and SMEs, the webinar titled 'Empowering SME growth with Intelligent Trade Finance Solutions' will be held at 4.00 p.m. (India time). Among other things, the webinar will address how factoring and supply chain finance solutions can potentially unlock new markets and working capital capabilities, and how such receivables finance offerings may help SMEs navigate through challenging times whilst enabling them to do more business. Maham S Siddique, vice president of Commercial & regional marketing lead for Asia Operations at Tradewind Finance will speak on importance of trade finance in today's changing and growing world, role and contribution of intelligent trade finance in the growth story of SMEs, and why should a business go to Tradewind for financing instead of a bank. Siddique, who plays a key role in facilitating seamless cross-border trade flow by providing sustainable and scalable liquidity solutions for enterprises, will also dwell on Tradewind's response to global challenges in international trade, by sharing case studies and examples, while also briefly touching on Tradewind's process flow and operations.

Source: Fibre2Fashion

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U.S. Fashion Industry Association Elects New Chair From Levi Strauss & Co.

The United States Fashion Industry Association (USFIA) announced today that the Board of Directors has elected a new Chair, Anna Walker, Vice President of Public Affairs at Levi Strauss & Co. ―We are very pleased that Anna will take over as USFIA‘s Chair. During these difficult times for fashion brands and retailers, her leadership and experience in public policy will guide the organization to provide the information and advocacy that the industry needs,  says Julia K. Hughes, President of USFIA.  USFIA is dedicated to our mission to eliminate barriers to trade, and we also focus on providing resources to help members stay current with global labor, human rights, and environmental standards,  explains Hughes. ―Anna‘s expertise reflects USFIA‘s commitment to help global brands and retailers successively navigate the variety of trade and compliance challenges that we face every day.  Walker has been a member of the USFIA Board of Directors since 2014 and served as Vice Chair of the Board of Directors since 2017. ―I look forward to leading USFIA in our mission to eliminate barriers to trade for fashion brands and retailers,  says Walker. ―And I‘m excited to bring my vision to the organization to enhance the industry‘s advocacy and leadership for trade policy as well as sustainability and ethical sourcing.  Since joining Levi Strauss & Co. 2004, Walker has worked to support LS&Co.‘s business strategy and strengthen the company‘s reputation by anticipating and shaping external public policy and stakeholder initiatives. Anna also leads LS&Co.‘s community affairs program, developing strategy for community grants and employee giving and volunteerism programs globally. Anna is a member of the Levi Strauss Foundation Board. She has a masters from Johns Hopkins University School of Advanced International Studies and bachelors of arts degrees from the University of California, Davis. To replace Walker as Vice Chair, USFIA chose Christopher Lucas, Director and Associate General Counsel for American Eagle Outfitters, Inc. Lucas has been a member of the Board of Directors since 2018.

Source: Textile World

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