Senior officials from the Union Ministry of Commerce and Industry on Thursday sought to allay apprehensions that Free Trade Agreements could lead to trade deficits for India. In a seminar on ‘India’s Engagement with FTAs’ here, the officials said that with tariff barriers coming down all over, India had no choice but to push for trade pacts. In fact, FTAs brought about significant opportunities for exporters and importers, with the chief goal being to increase India’s competitiveness, they added. Sanjeet Singh, Director, Department of Commerce, said FTAs were not responsible for trade deficits. “Our trade deficit is the highest with China, but we have no trade agreement with that nation,” he said.
Allaying fears
On FTAs leading to possible higher imports than exports, he said not all imports were bad for India, especially in the context of the Centre’s Make in India programme. Moreover, FTAs have adequate safeguard mechanisms to tackle the adverse effects of imports on the domestic industry and to take corrective action against import surges. Anuradha Guru, Director, Department of Commerce, said a recent analysis by the Ministry showed that trade diversion has been limited after the FTAs were signed, which meant that FTA partners had not displaced other markets.
The Department of Commerce had analysed the broad trend of India’s preferential imports under the trade pacts India has concluded with countries such as Thailand, Singapore, South Korea and Japan. Though preferential imports have been increasing from 2009-10 to 2013-14, they are still not significant, ranging from 3.4 per cent of total imports under the India-Malaysia pact to 22.4 per cent under the India-Japan pact. This clearly indicates that preferential imports under FTAs have not contributed to the increase in trade deficits with some countries, said the Commerce Department. India’s rationale for entering FTAs is to diversify and expand its exports of both goods and services, access to raw materials, intermediate products and capital goods to stimulate value-added domestic manufacturing and address non-tariff barriers.
SOURCE: The Hindu Business Line
Prime Minister Narendra Modi’s ‘Make in India’ programme should also focus on making ‘for India’, said economists from the Organisation for Economic Cooperation and Development (OECD). This will encourage businesses that cater to the local market and boost the economy.
“India is a huge and diverse market. So, firms here should have a comparative advantage of serving the Indian market. Creating special zones, free trade zones to promote exports is good for the short run but that will create a dual economy. That is the wrong direction to go,” said Catherine Mann, OECD Chief economist, after a seminar on the 3rd OECD Economic Survey of India at the Indian Institute of Management (IIM-A) here. Mann further said there was a large domestic market of willing buyers in India, and Indian firms should be serving it. “So, Make In India for India should be the direction to go,” she told mediapersons.
OECD suggested several recommendations to boost the manufacturing sector in the country. Isabelle Joumard, OECD Head of India Desk, stressed on the need to make labour laws more flexible so that they do not discriminate by the size of enterprises. “There is a need for better and earlier vocational training besides pushing up the infrastructure sector with implementation of single-window clearance,” she said, adding that the economy needs to be opened up further to improve the business environment and streamline the tax regime.
On the investment environment, Mann said India has seen insufficient investments in the past decade similar to the US or Europe. “The one fallout of the financial crisis has been a severe risk aversion on the part of the private sector. It is also the case with governments in general. There has not been sufficient infrastructure investment, private business investment. So, currently, India faces the same challenges as it did in the past.” However, she expressed optimism about the new government being “business-friendly”.
SOURCE: The Hindu Business Line
Favourable government policies, low wages, shorter sea route and growing garment exports make Myanmar an attractive option for Indian textile entrepreneurs, says Rajesh Kumar Shah. The garment sector in Myanmar has grown enormously since the lifting of economic sanctions by Western nations in 2012, after a gap of 15 years. Today, it employs over 250,000 people and accounts for 10 per cent of export revenues earned by the country.
In 2014, Myanmar’s garment exports were estimated at US$ 1.5 billion in terms of FOB value, which has doubled in the last three years alone. The National Export Strategy (of Myanmar) wants to increase the country’s garment exports to about $4 billion by 2020. Like Vietnam, Myanmar too is not self-sufficient in raw materials and imports many of its garment sector requirements. Second, unlike Bangladesh which has strong knitwear and woven apparel segments, most of the apparel exported by Myanmar are non-knitwear.
On the other hand, India is rich in cotton, and manufactures various kinds of yarn and fabric in large quantities, which are both supplied to the domestic industry and exported. This presents an opportunity for India to export its textiles, and also to invest in the Southeast Asian country for setting up textile and garment manufacturing units. India is the fourth largest trade partner of Myanmar (third largest export destination for Myanmar and fifth largest source of imports into Myanmar), according to data with the Embassy of India in Yangon. Trade between India and Myanmar also takes place via third country (Singapore) and across the 1,624 km land border, in addition to direct trade. However, textiles is certainly not among the top traded items between the two countries. “Trade (between the two) has been small. Almost no garment exports go to India and not too many textiles are imported from India. The vast majority comes from China,” notes Jacob A Clere, project manager, Myanmar Garment Manufacturers Association (MGMA).
Why Myanmar?
Favourable government policies, low-wages, short sea-route between the two nations are some of the reasons that make Myanmar an attractive destination for Indian textile entrepreneurs. In November 2012, the Myanmar government passed a new foreign investment law, which increased the maximum shareholding of foreign parties in manufacturing to 50 per cent. The law allows foreign investors to lease land for an initial period of 50 years with an option to renew. In addition, foreign companies are entitled to tax exemption for the first five years; no tariff is levied on raw materials imported by these companies; and they are allowed to exchange and transfer investments.
In addition, both India and Myanmar have signed and ratified Bilateral Investment Promotion Agreement (BIPA) and Double Taxation Avoidance Agreement (DTAA). These agreements provide for free flow of bilateral investments, and business profits will only be taxable in the source state. Further, some banks like the United Bank of India have signed agreements with banks in Myanmar to facilitate trade between the two countries.
SOURCE: Fibre2fashion
Taking a major step towards achieving its aim of improving India's ranking on 'Ease of doing business' index, Prime Minister Narendra Modi-led government on Thursday launched an eBiz portal (www.ebiz.gov.in).
eBiz, which is a G2B portal has been launched with eleven government services. "The eBiz portal is a response to the challenge put to us by PM Narendra Modi to improve ease of doing business," said Commerce Minister Nirmala Sitharaman at the launch. "We shall keep expanding the eBiz portal. Many pilot states have been identified for implementation of these single-window services," Sitharaman said.
DIPP Secretary Amitabh Kant said that the aim of the portal is to eliminate needless procedures and integrate use of technology. "PM Narendra Modi has really challenged all of us to make India an extremely easy place to do business. There will be a radical shift in government's service delivery approach from department-centric to customer ..
SOURCE: The Economic Times
Active buying by some leading mills and spinners was seen but the ginners were not ready to oblige them by lowering the rates. In fact, ginners raised asking prices amid fresh buying by mills and spinners, at Pakistan cotton market on Wednesday. According to Cotton analyst, Naseem Usman, the Pakistan Cotton Ginners Association (PCGA) issued fortnightly phutti arrivals report till February 15, at 14.6 million bales. Prices of best quality may depict further rise in times to come. The arrivals are almost at the end of season and the quality factor is still a concern for buyers and sellers, as well. The official spot rate remained unchanged at Rs 4,900. In the ready session, around 20,000 bales of cotton changed hands between Rs 4500 and Rs 5200, dealers said.
The following deals reported: 200 bales from Kotri at Rs 4500, 400 bales from Mehrabpur at Rs 4750, 100 bales from Rasoolabad at Rs 4875, 6000 bales from Upper Sindh at Rs 5100-5200, 1000 bales from Haroonabad at Rs 4700-4800, 400 bales from Faqirwali at Rs 4800, 600 bales from Fort Abbas at Rs 4875-5100, 600 bales from Vehari at Rs 4700/4900, 400 bales from Yazman Mandi at Rs 4950-5050, 600 bales from Burewala at Rs 4700-5000, 400 bales from Alipur at Rs 5000, 2000 bales from Sadiqabad at Rs 5000-5100, 1000 bales from Rahim Yar Khan at Rs 5100, 1000 bales from Mian Chano at Rs 4800-5100, 600 bales from Chani Goth at Rs 5100, 400 bales from Jalalpur at Rs 5100 and 4000 bales from Khanpur at Rs 5200.
On global front, ICE cotton rose for the fourth straight session on Wednesday, hitting a five-month high as certified stock levels remained near 2012 lows, indicating strong demand for US cotton on the physical market. The most-active May cotton contract on ICE Futures US rose 0.79 cent, or 1.2 percent, to settle at 65.32 cents a lb, after rising as high as 65.44 cents a lb, the highest level for the second-month since September 2014.
SOURCE: Yarns&Fibers
Stakeholders of the country's textile and apparel sector have asked for providing special credit support and enhancing the existing cash incentive to help exporters recoup their losses caused due to the prevailing political stalemate. Their other demands included suspension of interest on 'forced loan' during the period and transfer of all other credits into a blocked account for two years without any interest. They also sought 35 per cent reduction of insurance premium to safeguard trade and business during the current situation and fixing of lorry risk insurance rate at 0.02 per cent.
The demands were placed at the first meeting of a committee, which was formed earlier to review the impact of the ongoing political turmoil and seek necessary measures and support from the government to this effect. The meeting was held Thursday at the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) headquarters in the city. Abdus Salam Murshedy, president of the Exporters Association of Bangladesh (EAB), presided over the meeting attended by its 21 other members. "We request the authorities concerned for immediate release of cash incentive and to provide us a special credit so that exporters can pay the workers timely," Mr Murshedy added.
The committee would prepare a list of their demands that were made by the members and send it to the concerned government authorities next week, he added. Their demands also included enhancement of cash incentive for new market exploration to 5.0 per cent from the existing 3.0 per cent and also provision of the same benefit for the exports to the EU market to be competitive there. "We are losing our competitiveness due to the devaluation of Euro against US dollar," Mr Murshedy said demanding cash support for the market as most of the exports are destined to the EU. Replying to a question, he said exporters are making costly air shipment facing discount or deferred payment due to the ongoing political situation.
SOURCE: The Financial Express Bangladesh
Italian Deputy Foreign Minister Benedetto Della Vedova on Thursday said Bangladesh and Italy may join hands in further improving the economic relations by cooperating in the areas of energy, infrastructure, transfer of technology and heavy machinery for textile industries. The visiting Italian deputy minister made the remark during a meeting with State Minister for Foreign Affairs M Shahriar Alam at his ministry, according to a news agency.
SOURCE: The Financial Express Bangladesh
Turkey can play an important role in economic turnaround of Pakistan being the second fastest growing economy of the world after China. The textile sector has traditionally been the biggest sector of the Pakistan economy. Studies and surveys confirm that its contribution in total exports are almost 60 percent and it engages almost 38 percent of manufacturing labour force to acquire more than 46 percent share in overall manufacturing. In the context of having won the GSP Plus status, the need of technology improvement and capacity building in textile sector of Pakistan has become necessary. Turkey has a lot to offer their Pakistani counterparts who should avail the opportunities, according to LCCI President Ijaz A Mumtaz.
He called for exchange of business delegations so that both sides could have first-hand knowledge of the available opportunities in Pakistan and Turkey. As both the countries have marvellous untapped business potential that needs to be realized by maximising the involvement of private sectors of the two countries. He hoped that economic relations between the two countries would strengthen further to create a win-win situation for Pakistan and Turkey. Ijaz A Mumtaz said that time has come that businessmen of the two countries should enhance their bilateral relations which will be beneficial for the people of two countries. They can strengthen the economy by adopting the development and progress of Turkey as model. He commended the efforts made by the Prime Minister Nawaz Sharif and for accelerating two-way interaction among the businessmen of Turkey and Pakistan.
Turkey is well positioned to take advantage of Pakistan's economic potential and its geo-strategic location. Ijaz A Mumtaz said that Pakistan needs to make trade and investment, the central pillar of this co-operation.He emphasised that some kind of understanding should be developed between the private sector representatives of both the countries that will certainly provide basis to convert that into business deals. In fact with some joint efforts made by public and private sectors of both the countries, the trade volume between Turkey and Pakistan can be increased as high as US two billion dollars.
SOURCE: Yarns&Fibers
Turkish business community, united around the Confederation of business women and businessmen in Turkish industry has vowed substantial investments in textiles, energy, tourism, food industry in Macedonia, Bulgaria, Albania, Croatia and other Balkan countries in 2015, said Vice President of the Confederation Aljatin Bayraktar. The Chair of the Confederation, Emine Atasoy, took part in talks with representatives from the Balkan states to discuss opportunities for facilitating Turkish investors and improving economic conditions.
Trade relations with the Balkan countries will be implemented in cooperation with the Turkish government, it is said in written statement of the Confederation. Officials from several Balkan countries said that they are eager to work with Turkey to find new areas of co-operation that will strengthen regional economic ties. Turkish investors are among the most preferred ones in the Balkans region, and they have already showed their good performance in various investment projects.
According to the latest data of Turkey's Economy Ministry, Turkish companies are currently conducting 12 projects in BiH with a total value of $564 million, while Turkey's direct foreign investment in the country is concentrated on the banking, education and airline sectors. Economic relations between Serbia and Turkey have been growing steadily since September 2010, when the two countries signed a free trade agreement. Last year, the level of trade reached approximately $750 million, with a growth rate of 20 percent in comparison with 2012.
Filip Sanovic, economy advisor at Serbia's Consulate General in Istanbul, said that trade is getting more balanced, and the trade deficit on the Serbian side is narrowing, but there is still space for further progress. The number of business forums and levels of businessman visits on both sides are promising the closer co-operation in the coming years. Still, there is a huge untapped potential for Turkish companies and their investments in Serbia, Sanovic said.
Political stability, geographic location, lower production and utilities costs, and an experienced labour force are the key factors for Turkish businessman to take Serbia into consideration as an investment point, Sanovic added. Serbia's free trade agreement with customs union of the Russian Federation, Belarus and Kazakhstan, as well as the Central European Free Trade Agreement, can open doors to those markets for Turkey, Sanovic said, adding that experienced Turkish businessman can also help Serbia to increase its presence.
Sanovic said that the textile sector has become one of the highly productive areas of economic co-operation between the two countries. There are a few large projects of Turkish textile companies in Serbia in the final phase, and launching of production is expected to be in the spring. They are hoping that their good experience will lead the new wave of Turkish investments in Serbia, leading to increasing of co-operation and stability between two countries.
Last May, Turkey, Serbia and BiH established a Trilateral Trade Committee, aiming to promote foreign investment and co-operation opportunities among the three countries. Romania is also hoping to attract more Turkish investors to increase already significant economic relations between the two nations. During the recent visit of Romanian President Traian Basescu to Turkey on February 5th, Turkish President Abdullah Gul said the countries have been experiencing the greatest volume of trade throughout the Balkans.
Currently, the investments of Turkish companies in Romania amount to $5 billion and cover a wide range of sectors. Basescu met with the representatives of the business world as part of his program in Turkey. Ramo Bralic, Montenegrin ambassador to Turkey, said that Turkey's leading companies have longstanding economic interests in his country and have benefitted from its low tax rates. According to the World Bank's Southeast Europe Regular Economic report, presented in December, Montenegro's economy is expected to grow 2.5 percent in 2014. Montenegro was recognised as a favourable investment destination for the Turkish capital as a connection and bridge point for further economic co-operation with the EU and CEFTA countries including Russia, with which it has preferences agreements, Bralic said.
SOURCE: Yarns&Fibers
As part of its monitoring and analysis of economic activity, the HCP revealed disconnect between employment and exports within the textile and leather industry, between 2013 and 2014. According to the HCP, the added value of textile and leather industries improved by 1.2 per cent year-on-year in 2014, after falling 2.7 per cent in 2013, mainly driven by increase in number of textiles and clothing production units.
Improved foreign demand was also a primary reason for the revival of textile and leather activities, and exports of readymade clothing increased by 5.3 per cent in 2014. However, the contribution of textile and leather industry in Moroccan total exports was 16.7 per cent in 2014, against an average share of 17.6 per cent over the past four years and 23.4 per cent between 2007 and 2010.
The recovery in exports last year, compared to 2013, failed to immediately create new jobs, the HCP said in its analysis. A loss of 32,000 jobs was recorded between 2013 and 2014, showing a 7 per cent drop annually. There was a reduction of 14 per cent in the workforce in the textile sector, 4.6 per cent in clothing, and 8.6 per cent in the leather and shoe sector.
In fact, the downward trend in the number of people employed in the textile and leather sector had been continuing since 2007. Between 2008 and 2014, textiles and leather industry lost about 119,000 jobs as companies readjusted their staff numbers in response to slowdown in their activity, exacerbated by the international economic crisis. In 2014, companies in the textile and leather industry were more cautious about the impact of the effects of recent resumption of exports, mainly because of poor economic performance in leading export destinations like France and Portugal, HCP said.
The share of textile and clothing units employing less than 6 people exceeds 51 per cent, while the share of those employing more than 50 people is 15.7 per cent. The textile and leather industry accounts for nearly 42 per cent of industrial employment in Morocco. The textile segment contributes up to 19 per cent of the total production by this industry, whereas the clothing segment accounts for approximately 78 per cent, and the leather and travel goods segment for the remaining 3 per cent.
SOURCE: Fibre2fashion
