MARKET WATCH 30 JULY, 2020

NATIONAL

INTERNATIONAL

PM Modi to meet chiefs of all financial sector regulators on Thursday

Prime Minister Narendra Modi will on Thursday meet the chiefs of all financial sector regulators including Reserve Bank of India, Securities and Exchange Board of India, Pension Fund Regulatory and Development Authority and Insurance Regulatory and Development Authority of India. Finance Minister Nirmala Sitharaman, Commerce Minister Piyush Goyal and Roads and Highways Minister Nitin Gadkari will also be a part of the meeting, scheduled to be held through video conferencing. The meeting is likely to focus on economic revival, particularly the steps taken in the field of MSMEs. The meeting comes a day after the prime minister met bankers.

Source: Business Standard

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Govt stands behind financial sector for India's growth, says PM Modi

Prime Minister Narendra Modi on Wednesday held a closed-door brainstorming session with top executives of banks and non-banking financial companies to take stock of credit flow and measures taken to support segments of the economy hit hard by the pandemic. Assuring continued government support to the financial sector, which plays a critical role in funding various segments, including agriculture and micro, small and medium enterprises, he also held forth on Atmanirbhar Bharat, said a source. Bankers gave presentations on credit flow and financial inclusion. Small groups comprising private and public sector executives, too, made presentations. They were to select one or two ideas in specific areas and present them with solutions before the PM and government officials. This is part of a series of meetings the PM has been holding for the past few weeks on various sectors of the economy. Multilateral agencies and raters have indicated that the Indian economy is expected to contract in the current financial year due to severe economic disruptions brought on by the pandemic. Banks have turned cautious on extending credit. The overall bank credit growth in the banking sector has remained flat for the fortnight ended July 3. Credit growth continues to remain at nearly half the levels seen in the past two fortnights at 6.2 per cent and 6.1 per cent, compared to 12 per cent in the same period in 2019, said CARE Ratings.

Source: Business Standard

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FM suggests AIIB to establish regional presence for effective project management

 The Finance minister led a roundtable discussion on the theme ‘AIIB 2030-Supporting Asia’s Development over the Next Decade’, during which she spoke about India’s initiative of creating a Covid-19 Emergency Fund for SAARC nations. The Asian Infrastructure Investment Bank (AIIB) was expected to introduce new financing instruments, mobilise private sector finance and provide financing for social infrastructure to achieve the United Nations‘2030 Social Development Goals, according to Finance minister Nirmala Sitharaman. Sitharman‘s comments were part of the fth annual meeting of the board of governors of the AIIB, which she attended virtually on Tuesday. The finance minister led a roundtable discussion on the theme ‗AIIB 2030- Supporting Asia‘s Development over the Next Decade‘, during which she spoke about India‘s initiative of creating a Covid-19 Emergency Fund for SAARC nations. Sitharaman also highlighted India‘s participation in the ‗G20 Debt Service Suspension Initiative‘, which involved a moratorium on debt servicing from the poorer nations to support their pandemic response. She also noted that India‘s National Infrastructure Pipeline, with an estimated expenditure of $1.4 trillion till 2025, created a plethora of fresh investment opportunities for AIIB‘s partnerships. In June, the AIIB approved an additional $750 million loan to strengthen India‘s Covid19 response. This, in addition to the $500 million package co-financed by the world Bank under its COVID-19 Crisis Recovery Facility (CRF) took AIIB‘s total support to India to $1.25 billion under the CRF. The multilateral lender initially set up its Covid-19 CRF, with a $5 billion investment which was later doubled to $10 billion, to make funds available to its members for urgent economic, financial and public health pressures and quick recovery from the crisis. The minister commended the AIIB management for the healthy growth the bank achieved in the five years since its establishment.

Source:   Economic Times

Government relaxes export policy for surgical masks and medical goggles

 The government has revised the export policy for these two products from ‘prohibited’ to ‘restricted’ and freed up the exports of face shields. The government on Tuesday amended the export policy for 2/3 ply surgical masks and medical goggles from prohibited ‘to restricted ‘and freed up the exports of face shields. A product in the restricted ‘category…………

Source:   Economic Times

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Date to file revised income tax returns for FY 2018-19 extended to September 30

The government has formally extended the date to file revised income tax returns for the financial year 2018-19, to September 30, 2020 from the earlier date of July 31, 2020. The Central Board of Direct Taxes issued a notification to the effect dated July 29. The finance ministry had announced the relaxation among several others on June 24. “Provided also that for the purposes of the second proviso, in case of an individual resident in India referred to in sub-section (2) of section 207 of the Income-tax Act, 1961 (43 of 1961), the tax paid by him under section 140A of that Act within the due date (before extension) provided in that Act, shall be deemed to be the advance tax," the Board said. The extension will reduce hardship of taxpayers said experts, amid challenges faced by taxpayers in meeting the statutory and regulatory compliance requirements across sectors due to the outbreak of Covid-19.

Source: Economic Times

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Govt caps export sops under MEIS at Rs 9,000 crore for April-December

The latest offering will give consumers access to shows before telecast on TV, apart from select Zee5 and Alt Balaji shows, Zee Zindagi shows and over 90 Live TV channels. The revenue-starved finance ministry has asked the commerce ministry to limit benefits under the flagship Merchandise Exports from India Scheme (MEIS) at just Rs 9,000 crore for the April-December period of FY21, prompting it to block the online MEIS module for exporters to apply for such incentives from July 23. Commerce and industry minister Piyush Goyal wrote a letter to finance minister Nirmala Sitharaman on July 21 to reconsider the revenue department‘s decision. Unless the issue is resolved fast, the decision would further hurt exporters as they struggle to cope with the impact of the pandemic and a wide-scale cancellation of orders. In FY19, the outgo under the MEIS was to the tune of Rs 40,000 crore. In an office memorandum on Monday, deputy director general of foreign trade Praveen Kumar told Nitish Kumar Sinha, joint secretary at the revenue department, that MEIS scrips worth Rs 422.4 crore have already been issued to exporters for shipping bills with the so-called ―let export order‖ (LEO) since April 1. ―Since allocated funds at this stage for MEIS for FY2020-21 (up to December) stand at Rs 9,000 crore and any additional allocation has not been conveyed by the DoR (department of revenue), the online MEIS module has been blocked on July 23, from accepting new application for shipping bills with LEO dated April 1 onwards to limit the issuance of any more scrips.‖ ―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,‖ the deputy DGFT said in the memorandum. For its part, the revenue department has asked its commerce counterpart to review the MEIS rates and coverage so that the allocation doesn‘t exceed Rs 9,000 crore. The MEIS would remain valid until December this year and was to be replaced with a more WTO-compartible scheme, RoDTEP, which reimburses all levies (that are not subsumed by GST) paid on inputs consumed in exports.

Source: Financial Express

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Centre says it may not be able to pay GST dues to states due to Covidinduced slump

The issue of GST compensation was raised by Opposition members of the standing committee on nance that met on Tuesday to deliberate on 'Financing the innovation ecosystem and India's growth companies'. The Opposition members also sought a discussion on the state of the economy. The Centre is said to have told a parliamentary panel it may not be able to pay goods and services tax (GST) compensation due to states in the near future as tax collections have fallen due to the economic slump on account of the Covid-19 pandemic………….

Source: Economic Times

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Lift curbs on exports of spunbond non-woven fabric, NWFI urges govt

The Non Woven Federation of India (NWFI) on Tuesday urged the government to remove the restrictions on exports of spunbond non-woven fabrics and various types of masks, asserting that the curbs are hurting the domestic industry. NWFI also sought removal of restrictions on exports of 3-ply surgical and N95 masks. In view of the COVID-19 pandemic, the Directorate General of Foreign Trade (DGFT) in March had prohibited exports of textile raw materials for masks and coveralls, and surgical or disposable masks in March. However, on July 13, the DGFT allowed exports of non-woven fabric other than 25-70 GSM (grams per square metre), while continuing to prohibit exports of fabric of 25-70 GSM, the federation said. "Majority of the demand is for spunbond non-woven fabric of 25-70 GSM. This policy of partially lifting of ban on non-woven fabric exports is technically not correct, as there is no differentiation in manufacturing facilities on the basis of GSM," said NWFI President Suresh Patel. He said manufacturers can make fabric of GSM ranging from 10 to 200 in the same plant with change in the process speed. The federation said that if there are concerns about the availability of fabric for PPE kits and masks after lifting of the restrictions, the government can reserve 50 per cent of the non-woven fabric production for domestic consumption and allow exports of the remaining 50 per cent. "However, there should not be any restrictions on the export of fabric based on particular GSM," said Patel. The domestic consumption of spunbond non-woven fabric for medical application such as PPE kit, 3-ply masks and N95 masks is around 5,200 tonnes per month, which is 12.6 per cent of the total production capacity of 41,350 tonnes. Similarly, capacity utilisation of 3-ply surgical masks and N95 masks is just 18 per cent of the total monthly installed capacity of 79.89 crore pieces. "These figures show that the country is self-sufficient in spunbond non-woven fabric and surgical mask requirements. Hence, the restrictions on their exports do not make any practical sense," said NWFI Vice-President Anshumali Jain. Jain added that before the ban was imposed in March, the capacity utilisation was 90 per cent, and the products were being exported across the world. "We are losing market share in the international market because of the curbs," said Jain. The spunbond non-woven industry directly employs about 6.5-7 lakh people, while the indirect employment is estimated at more than 20 lakh. The federation noted that the installed capacity is continuously rising due to addition of new facilities, even as fabrics like cotton, polyester, nylon, SMS, SSMMS, meltblown, and spunlace fabrics are also now being used as raw materials for making PPE coveralls and masks. In separate letters to Textile Minister Smriti Irani, MSME Minister Nitin Gadkari and Health Minister Harsh Vardhan, the federation demanded that the export restrictions be lifted. "The government should allow exports of spunbond non-woven fabric and 3-ply surgical masks without any restrictions, while certified manufacturers should be allowed to freely export N95 masks," the federation said. It demanded an increase of quota and relaxation of the criterion of selection based on various quality certifications, and also demanded that import duty on all types of masks and PPE coveralls be reinstated. "Weak domestic demand and ban on exports of non-woven fabric and masks have put the survival of the whole industry at stake. These measures will go a long way in supporting the industry, and safeguarding lakhs of jobs across the country that are at stake now," said NWFI General Secretary Nikesh Shah. According to him, major problems being faced by the industry on account of the ban include under-utilisation of production capacity, loss of international market share and loss of foreign exchange, among others. "Due to the anti-China sentiment, there is a good overseas demand and opportunity that we can tap right now," he said adding that currently, the domestic spunbond industry is losing its export market share to much smaller countries like Pakistan, Indonesia, Turkey, Bangladesh and Vietnam. "The spunbond fabric industry since mid to end of April has been in an absolute slump. There was a very brief spike in the demand of spunbond fabric mostly in March," Jain said. He said that 80 per cent of the capacity for producing masks is lying idle, translating into revenue losses in terms of potential business of exporting N95 masks to the tune of Rs 360 crore per month and Rs 400 crore potential revenue loss on fabric. The federation represents regional associations of about 1,000 spunbond non-woven fabric manufacturers and its convertors (finished products) in India.

Source: Outlook India

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Signs of economic revival: Exports at 87% of year-ago level, freight exceeds

Non-oil exports have reached 95% of the previous year’s level while non-oil imports are almost 70% of July 2019 mark. These are seen as indicators of strength of domestic economy. India‘s exports in July have recovered to 87.5% of that for the same period last year, data available till July 26 showed. Railway freight loading as on July 27 has exceeded that for the corresponding period of……..

Source:   Economic Times

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Exporters lose over two-thirds of duty remission benefits after govt caps MEIS outlay

The MEIS would remain valid until December this year and is to be replaced with a more WTO-compatible scheme, RoDTEP, which reimburses all levies (that are not subsumed by GST) paid on inputs consumed in exports. If India’s foreign trade in goods and services have in recent quarters been a continuous drag on the gross domestic product (GDP), the pull-down effect could be far stronger in the current fiscal. By capping the outlay for the Merchandise Exports from India Scheme (MEIS) at Rs 9,000 crore for the April-December period, the revenue department has deprived exporters of over two-thirds of the duty remission benefits they are entitled to. The move could also have wider implications for exporters of assorted goods as the denial of the benefit will suffice to blunt the already-narrow edge they enjoy in key markets over competitors, trade source say. Fearing a shortage of funds following the revenue department’s decision, the commerce ministry has, for the time being, blocked the online module for claiming MEIS benefits since July 23. “This is despite the fact that during the same period rupee had devalued by about 20%, giving as much additional gains to Indian exporters under MEIS scheme,” the official quoted above said.Finance ministry justifies cap: ‘MEIS benefits fail to boost exports’GST, GST framework revision, GST revised, GST compensation framework, Kerala, Finance Minister, Thomas Isaac, GST compensation payout, GST Compensation, GST Council, Goods and Services Tax, GST law, GST revenue, Punjab, Manpreet Singh Badal, Harsimrat Kaur Badal, pension schemeAny revision in GST compensation framework would be betrayal of federal trust: Kerala FM Thomas Isaac Federation of Indian Export Organisations (FIEO) president Sharad Kumar Saraf cautioned that many liquidity-starved exporters, especially MSMEs, could go out of business. “Cash flow is badly hit and export recovery is in jeopardy now,” he said. Merchandise exports have been contracting since March. They witnessed a record 60% crash, year-on-year, in April, although the contraction narrowed to 37% in May and 12% in June, as lockdown curbs were lifted last month. However, the latest decision of the revenue department may dash hopes for a steady recovery anytime soon, exporters warn. Industry sources said the government’s FY21 budgetary allocation for benefits under the MEIS (or a new scheme that is now expected to replace the MEIS from January 2021) was about Rs 27,000-30,000 crore, although there is no official word on it. In FY19, the MEIS outgo was to the tune of Rs 40,000 crore, according to an official source. Exporters typically firm up deals after factoring in the MEIS scrips, which range from 2% to 5% of the export turnover, depending on the products or shipment destinations. Any abrupt or premature withdrawal of or reduction in benefits by the government will, therefore, erode exporters’ margins proportionately, at a time when they are already bruised by a Covid-induced cancellation of orders, said Mahesh Desai, chairman of the engineering exporters’ body EEPC India. “The decision will also stoke further uncertainties on the export front,” he added. Hard-pressed for resources following the Covid-19 outbreak, the revenue department has asked its commerce counterpart to review the MEIS rates and coverage so that the allocation doesn’t exceed Rs 9,000 crore. In a letter to finance minister Nirmala Sitharaman on July 21, commerce and industry minister Piyush Goyal sought a review of the revenue department’s decision. Of course, the MEIS rates have been reduced for several commodities since FY19. Also, given the export contraction so far, the outgo was expected to drop in FY21. Nevertheless, the magnitude of MEIS fund reduction surprised exporters. In fact, with two of the key markets – the US and the EU – battered by the pandemic, exporters were hoping for a some kind of succour to beat the pandemic blues. The MEIS would remain valid until December this year and is to be replaced with a more WTO-compatible scheme, RoDTEP, which reimburses all levies (that are not subsumed by GST) paid on inputs consumed in exports. As reported by FE, in an office memorandum on Monday, deputy director general of foreign trade Praveen Kumar told Nitish Kumar Sinha, joint secretary at the revenue department, that MEIS scrips worth Rs 422.4 crore have already been issued to exporters for shipping bills with the so-called “let export order” (LEO) since April 1. “Since allocated funds at this stage for MEIS for FY2020-21 (up to December) stand at Rs 9,000 crore and any additional allocation has not been conveyed by the DoR (department of revenue), the online MEIS module has been blocked on July 23, from accepting new application for shipping bills with LEO dated April 1 onwards to limit the issuance of any more scrips.” “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,” the deputy DGFT said in the memorandum. Even before the pandemic started to spread its tentacles far and wide and forced a nation-wide lockdwon from March 25, India’s merchandise exports had contracted by just over 1%, year on year, until February last fiscal. With a 35% fall in March, the contraction widened to 5% in FY20.

Source: Financial Express

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UP exports strategy: Yogi Adityanath govt ropes in PwC to wrest space vacated by China

Speaking to FE, Uttar Pradesh’s minister for MSME, Investment and Export Promotion Siddharth Nath Singh said that the government has engaged PwC as consultant and strategic partner and it would prepare a strategy for the short as well as long run. In a bid to increase its footprint in world exports and execute the “local-vocal-global” call given by Prime Minister Narendra Modi, the Uttar Pradesh government has roped in international consultancy firm Price Water house Coopers (PwC) to form a proper strategy to wrest the space that would be gradually vacated by China due to geo-political disturbances. The products through which the government is seeking to make an imprint in the global market include ceramics, woven fabrics, footwear and electronics. “This is despite the fact that during the same period rupee had devalued by about 20%, giving as much additional gains to Indian exporters under MEIS scheme,” the official quoted above said. Finance ministry justifies cap: ‘MEIS benefits fail to boost exports’ GST, GST framework revision, GST revised, GST compensation framework, Kerala, Finance Minister, Thomas Isaac, GST compensation payout, GST Compensation, GST Council, Goods and Services Tax, GST law, GST revenue, Punjab, Manpreet Singh Badal, Harsimrat Kaur Badal, pension scheme Any revision in GST compensation framework would be betrayal of federal trust: Kerala FM Thomas Isaac Speaking to FE, Uttar Pradesh’s minister for MSME, Investment and Export Promotion Siddharth Nath Singh said that the government has engaged PwC as consultant and strategic partner and it would prepare a strategy for the short as well as long run. “Uttar Pradesh has the potential to occupy China’s global share in many products. In order to be well prepared to occupy the space that would be vacated by China due to geo-political disturbances, the state government has engaged PwC to prepare a paper for both the short run and the long term,” he said. Explaining this, the minister said that the short-run strategy is for the low hanging fruits, in this case, products in which Uttar Pradesh already has a global presence. “For example, let’s take ceramics. China presently has 80% share presence in the world ceramics market. Now UP already has a Maati Kala Board and ceramic products from Kurja are already being exported to many countries where China is also selling, especially countries on Mediterranean side, such as Spain, Italy, Cyprus,” he states. “In the case in textiles, especially woven textiles and footwear, China has a 77% market share in woven fabrics and 57.4% global share in footwear exports. Uttar Pradesh also has a global market and exports textiles and footwear, especially from Kanpur and Agra but our market was taken away by China in all these products as they became more competitive by using innovative methods. But with geopolitical disturbances happening, we can actually turn the tables. During my interactions with Indian High Commissions and embassies of various countries, it was quite well reflected that this is a space that UP must occupy and that is what we are targeting,” Singh said. Similarly, in long term, the government is looking at occupying the space in the food industry. “Presently, China exports a lot of agri items, including vegetables and processed foods. PwC will work on what could be our long-term strategy in it since we will have to import technology for aqua-farming and producing different varieties and qualities of vegetables that can be exported. Same goes for the electronics sector. UP already has a hub in Noida and Greater Noida but we can bring many more units that can become export units or we can create new units without getting anything from China,” he said, adding that working out the backward and forward linkages is a part of the mandate for PwC. Reiterating that Uttar Pradesh is serious about increasing exports, he said that one has to go about it in a methodical manner. “While the Prime Minister has said that we must take the local, vocal, global route, no other state is thinking on these lines yet. One has to plan for that and by engaging a PwC, we have started a process,” he says.

Source: Financial Express

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Covid is unpredictable but responses should be to boost investment, demand: CII

The Confederation of Indian Industry has asked governments to standardise their responses based on certain thresholds that would trigger a certain action which would bring in a dimension of predictability and boost investment. It also suggested that containment zones be limited to micro areas to ensure that the supply chains function seamlessly across state and district boundaries. Business disruptions due to localised lockdowns should be mitigated in order to sustain the nascent signs of economic recovery, the Confederation ofIndian Industry (CII) said on Tuesday. ―In order to nurture the nascent signs of recovery, it is important to mitigate the uncertainties that are currently prevailing regarding the restrictions. Corporates are unable to plan beyond a horizon of a few weeks, aecting all operations‖, said Chandrajit Banerjee, director general, CII. According to Banerjee, governments should standardise their responses based on certain thresholds that would trigger a certain action which would bring in a dimension of predictability and boost investment. ―Although it is not possible to predict the course of the pandemic, a dashboard approach, triggering predictable responses based on the progression of infections, can reduce uncertainty and boost both consumer and industry condfience, which in turn will support demand and investment recovery‖, Banerjee said. He also suggested that containment zones be limited to micro areas to ensure that the supply chains function seamlessly across state and district boundaries. Acknowledging that the agricultural sector has emerged as a ‗beacon of hope‘ for the economy, Banerjee noted that considerable government support through enhanced outlay under the National Rural Employment Guarantee Act and the Pradhan Mantri Garib Kalyan Rozgar Abhiyan have raised hopes of rebooting the economy through the rural sector. Highlighting positive developments in other sectors, Banerjee said consumer facing industries, such as staple based FMCG would see a 15-20% growth this scal as demand for food and hygiene and sanitation products would rise. Similarly, while the hospital sector is likely to see at growth in FY21, the crisis has expedited digital health servicing which otherwise would have taken a few years to actualise, the CII statement said. While the early signs of resumption in activity since the unlock phase started in June point to a V-shaped recovery, Banerjee called for the deployment of all policy levers to sustain the improvements.

Source: Economic Times

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Global Textile Raw Material Price 30-07-2020

Item

Price

Unit

Fluctuation

Date

PSF

763.77

USD/Ton

0.38%

30-07-2020

VSF

1184.91

USD/Ton

0%

30-07-2020

ASF

1686.00

USD/Ton

0%

30-07-2020

Polyester    POY

711.66

USD/Ton

0%

30-07-2020

Nylon    FDY

1955.81

USD/Ton

0%

30-07-2020

40D    Spandex

3983.00

USD/Ton

-0.36%

30-07-2020

Nylon    POY

1855.88

USD/Ton

0%

30-07-2020

Acrylic    Top 3D

892.25

USD/Ton

0%

30-07-2020

Polyester    FDY

2191.37

USD/Ton

0%

30-07-2020

Nylon    DTY

5139.36

USD/Ton

0%

30-07-2020

Viscose    Long Filament

927.94

USD/Ton

0%

30-07-2020

Polyester    DTY

1813.05

USD/Ton

-0.39%

30-07-2020

30S    Spun Rayon Yarn

1677.43

USD/Ton

-0.17%

30-07-2020

32S    Polyester Yarn

1320.53

USD/Ton

0%

30-07-2020

45S    T/C Yarn

2148.54

USD/Ton

0%

30-07-2020

40S    Rayon Yarn

1663.15

USD/Ton

0%

30-07-2020

T/R    Yarn 65/35 32S

1484.70

USD/Ton

0%

30-07-2020

45S    Polyester Yarn

2027.19

USD/Ton

0%

30-07-2020

T/C    Yarn 65/35 32S

1841.60

USD/Ton

-0.77%

30-07-2020

10S    Denim Fabric

1.13

USD/Meter

0%

30-07-2020

32S    Twill Fabric

0.64

USD/Meter

0%

30-07-2020

40S    Combed Poplin

0.93

USD/Meter

0%

30-07-2020

30S    Rayon Fabric

0.47

USD/Meter

0%

30-07-2020

45S    T/C Fabric

0.65

USD/Meter

0%

30-07-2020

Source: Global Textiles

Note: The above prices are Chinese Price (1 CNY = 0.14276 USD dtd. 30/07/2020). 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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EU-Vietnam trade pact to take effect from 1 August

 The EU-Vietnam Free Trade Agreement (EVFTA) will take effect on 1 August following ratification of the trade pact by both parties and over a decade of negotiations. The implementation of EVFTA is expected to open up a number of strategic cooperation opportunities to promote trade and industry relations between Vietnam and the EU, Vietnam's Ministry of Industry and Trade said today (28 July). "The EU is a largecapacity market with unity in diversity and plenty of room for growth. At the same time, the structure of goods import and export between Vietnam and the EU is complementary rather than competitive. Successful penetration of the EU market means Vietnam has the opportunity to expand cooperation with 27 member countries at the same time, contributing to solving the output problem of market expansion and diversification, going deep into the global value chain." Vietnam is the EU's second-largest trading partner in the Association of Southeast Asian Nations (ASEAN) after Singapore, with trade in goods worth EUR47.6bn (US$51.91bn) a year and EUR3.6bn when it comes to services. The main EU imports from Vietnam include telecommunications equipment, clothing, and food products. At present, only 42% of Vietnamese exports to the EU currently enjoy zero tariffs under the Generalised System of Preferences (GSP). The FTA provides for the almost complete (99%) elimination of customs duties between the two blocks: 65% of duties on EU exports to Vietnam will disappear as soon as the FTA enters into force, while the remainder will be phased out gradually over a period of up to ten years. The EU will do the same over seven years.

Source: Just style

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UK manufacturing export index falls to all-time low in Q2

UK manufacturing exports fell sharply in the second quarter of this year, according to the Lloyds Bank International Trade Index, which showed the speed of decline was the fastest since data collection began in 1996, driven by the impact of the novel coronavirus on both international supply chains and falling overseas demand for British goods and services. The index hit a new low of 34.6 for new manufacturing exports between April and June 2020, representing a dramatic decline from 46.8 in the first quarter of this year. The previous historic low of 38.8 was recorded in 2009 amid the global financial crisis. A reading below 50 signals a reduction in new export orders, while a reading above 50 indicates growth. Of those manufacturers that reported a downturn in overseas orders, the vast majority (93 per cent) attributed it to the impact of coronavirus, blaming the pandemic for shrinking demand, widespread business closures, and delays to export projects. In June, UK clothing and textiles (50.7) and other manufacturing (56.7) goods (which includes sports and leisure equipment), furniture, and luxury items such as jewellery manufacturing exports grew. Basic metals (28.3) and automotive (31.5) exports were hit hardest, reflecting a fall in global demand for manufacturing components and the shutdown of car production in Europe. Exports of chemicals and plastics (41.1), including pharmaceuticals and healthcare products, fell at a slower rate than other manufacturing goods. This was in part due to forward purchasing by overseas buyers in expectation of delivery delays. Basic metals (28.3) and automotive (31.5) exports were hit hardest, reflecting a fall in global demand for manufacturing components and the shutdown of car production in Europe. Exports of chemicals and plastics (41.1), including pharmaceuticals and healthcare products, fell at a slower rate than other manufacturing goods. This was in part due to forward purchasing by overseas buyers in expectation of delivery delays. The end of the second quarter of 2020 saw early signs of international demand returning with June showing an increase in appetite for British consumer goods. Sharp economic contraction in the majority of UK export markets, including the European Union and North America was also recorded, driving a trade-weighted measure of global demand for British goods and services to a record low of 35.2 in the second quarter, according to a press release from the company. China, after posting a reading of 42 in the first quarter, was the only UK export market to see an increase in the second quarter (52.6), as the country‘s lockdown measures eased.

Source: Fibre2Fashion

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Call to modernise Sri Lanka apparel sector amid Covid-19

Sri Lanka's government is being called upon to modernise and diversify the country's apparel and textile industry and ensure its survival amid the economic damage caused by the pandemic. A report prepared by the Department of Labour, 'Covid-19 & Beyond - The impact on the Labour Market of Sri Lanka', e-surveyed 2,764 private sector businesses. It outlines short-term and medium term recommendations, including the establishment of a comprehensive social security system. "[The] labour market of Sri Lanka has suffered a similar fate to that of other countries fighting to contain the spread of Covid 19," it states. "The existing legislation does not address the current pandemic situation, depriving both employees and employers alike of relief measures to be adopted in this situation. Hence, protecting employment whilst protecting businesses and ensuring sustainability has become a challenging task." For the apparel and textile industry, in particular, which contributes 6% to Gross Domestic Product (GDP), with a share of almost 40% of the total exports, the report suggests it is essential to take steps to sustain the manufacturing industry of the country. "The significantly high level of employment in the manufacturing industry reaffirms this need further." Of the 2,764 establishments in the formal private sector that responded to the survey, 58.59% belonged to the Colombo District. All 21 types of industries included in the International Standard Industrial Classification of All Economic Activities (ISIC) were captured, with the manufacturing sector taking the lead with a cohort of 28.65% of the total. Around 53% had their businesses closed during the survey period of April and May, with only 3% of the establishments capable of functioning fully. Around 1,084 establishments indicated they would be unable to pay salaries to their employees, while the results indicate the commencement of lay-off/ termination strategies of establishments hinting at the rising unemployment figures of the country. Only 2% of the responded establishments have been successful in securing the working capital loans offered by financial institutions, with 48.11% of establishments awaiting the outcome of the applications. "The uncertain manner in which 'Covid 19' is evolving does not make room to prepare concrete plans for revival of industries in the country," the report states. "Yet, it is essential that immediate steps are taken to minimise the threat to the labour market, which is essential in the revival process of the country." The report issues two-fold recommendations for both short and medium term:

Short term recommendations

 1. Retaining of employment, with deducted salaries for those who have been made to stay at home due to non-availability of work/short-term lay off strategies which ensure return to work to full-time positions within a six-month period with the payment of certain percentage of wage instead of terminating them. Both the EPF and ETF contributions to be continued during this time – guaranteeing continued social security. 2. Establishments to be allowed to prorate payments according to the number of hours worked by each employee, if losses of business/ social distancing requirements have resulted in lower hours of work per employee. 3. Continue the granting of loans to provide working capital to the businesses at lower interest rates. 4. Allow for the employers to recover a portion of 'lost paid hours without work' in future having consent with trade unions or relevant parties.

Medium term recommendations

1. Establishment of a comprehensive integrated social security scheme including unemployment benefit scheme linked to reskilling, re-employment, and upskilling. 3. Strengthen social dialogue mechanism at enterprise and sectoral level to mitigate the negative impact of the labour market leading to industrial peace. 4. Exploring and adopting strategies to modernise and diversifying agriculture (including fisheries), apparel and textile industries, and tourism sectors.

Source:   Just style

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Apparel continues to be hardest hit by Covid-19

Apparel continues to be the worst hit segment in retail due to Covid-19 as store closures and virus-wary consumers have severely dented seasonal spending. The rising unemployment and threat of a global recession will exacerbate the contraction of the consumers' expenditure on apparel," says GlobalData, a leading data and analytics company. "As predicted, the pent-up demand is coming mainly from young consumers while family life-stage and older consumers continue to rein back on their discretionary spending." GlobalData forecasts that Covid-19 will wipe US$395.6bn from global clothing and footwear sales in 2020, a 19.5% decline on 2019. The firm adds the segment's loss of sales is highly significant as it is equivalent to 29.1% of the US$1.36trn of total sales lost by the overall retail industry in 2020. Similarly, Asia-Pacific (APAC) post-Covid-19 forecasts for the sector are $95.4bn lower than those prior to the pandemic, responsible for 16.3% of the overall retail sales lost in the region in 2020. Meanwhile, GlobalData says the crisis has changed the purchasing attitudes of consumers. Most declare that trust is an important factor when purchasing products, with 60% stating that trustworthiness, risk-free and familiarity are factors influencing their choices of products/services, according to the firm's Covid-19 Tracker Survey. The study covered 5,500 respondents across Australia, Brazil, China, Germany, India, Italy, South Africa, Sweden, the UK, the US and the UAE from 25-31 March, 21- 26 April, and 26-31 May 2020. "Brands need to continuously engage with consumers through social media channels and personalised messages to stay in contact and engage with their customers. They should continue to build trust by delivering messages addressing Covid-19 and social responsibility and advertise the safety and hygiene measures taken during the manufacturing process and in-stores to drive more consumers to the stores," says Vijay Bhupathiraju, retail analyst at GlobalData. On the other hand, the pandemic has already caused reduced product availability, assortment gaps and stock delays across apparel sectors. With severe financial uncertainty, suppliers will find it difficult to get credit insurance with retailers, and retailers will have less flexibility with their supply base. Bhupathiraju adds: "Suppliers will be struggling with cash flow as many retailers have cancelled outstanding orders and extended supplier payment terms. Although normal production may not resume for a while, the eventual surge in demand will likely leave ports congested, resulting in a backlog of shipments."

Source: Just Style

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EVFTA to open “new wave of trade and investment” for Việt Nam

HCM CITY — The EU-Việt Nam Free Trade Agreement (EVFTA) is expected to kickstart a “new wave of trade and investment” if Việt Nam continues to strengthen the business environment and completes the legal framework for trade and investment, experts said on July 28 in HCM City. Speaking at a dialogue with HCM City leaders, Jean-Jacques Bouflet, vice chairman of the European Chamber of Commerce in Việt Nam (EuroCham), said one of the most critical factors in the success of EVFTA’s implementation will be Việt Nam’s progress in administrative reform and improvement of the business environment. Slated to take effect in August, the trade agreement will open up more opportunities for Việt Nam’s exports to the EU, one of the largest and most lucrative markets in the world. Việt Nam has made huge progress over the last few decades in streamlining business conditions and modernising the legal framework to catch new investment and business opportunities, Bouflet said, adding that the EVFTA is a strong vote of confidence in Việt Nam from the EU. With a population of more than 500 million and a combined GDP of over US$15 trillion, accounting for 22 per cent of the world’s GDP, the EU is the largest exporter and importer in the world with annual trade of $3.8 trillion. As economies around the world struggle with the impact of the COVID-19 pandemic, the EVFTA will offer Việt Nam a chance to attract more FDI from European enterprises seeking an open, competitive and business-friendly market, he said. Nguyễn Thành Phong, chairman of the city People’s Committee, said with 30 years of diplomatic relations between Việt Nam and the EU, the new trade pact is expected to deepen the trade and investment relations between Việt Nam and the EU. The country, especially HCM City, is trying to maintain the macro-economy by resuming business activities to realise its dual goals of combating the pandemic and revitalising the economy, he noted. “While creating good conditions for enterprises’ operations, the city will also ensure a disease-free environment for all citizens,” he said. “The EU has been an important economic partner of HCM City for years. It is the third largest export market, only after China and the US. The trade deal is expected to boost the city's exports to the EU.” Phong said the city would develop a detailed action plan on how to help local exporters increase exports to the choosy EU market.

Recommendations

Bob Fletcher, vice chairman of EuroCham’s Transportation and Logistics Sector Committee, pointed out that Vietnamese businesses should pay more attention to rules of origin (RO), corporate social responsibility (CSR), sustainable development and environmental protection, in addition to product quality and price. “A legal framework for the origin of Vietnamese products and products with ‘Made in Việt Nam’ labels should also be created," he said, adding that producers’ self-certification of origin must comply with Vietnamese regulations as well as EVFTA requirements on RO to prevent origin fraud.

Businesses should also study the tastes of European consumers, he added.

Alexandre Sompheng, chairman of EuroCham’s Digital Sector Committee, urged Việt Nam to continue its development of a digital economy and promote the application of advanced technologies. Bouflet emphasised that the EU is a highly demanding market so exporters must meet its food safety and hygiene standards and management procedures, and provide transparent information related to labour and the working environment.

EuroCham Whitebook

EuroCham’s 12th Whitebook, its annual report, was featured during the meeting. In it, the chamber’s 17 sector committees raise the issues that are most important to their business operations and highlight specific actions the Government can take to improve the business environment and increase trade and investment with the EU. The Whitebook is designed to provide a concise overview of the issues affecting European businesses in Việt Nam. Under the trade deal, the EU will immediately remove import duties for 85.6 per cent of tariff lines – equivalent to 70.3 per cent of Việt Nam’s exports – when the agreement comes into effect. After a seven-year period, 99.2 per cent of tariff lines – equivalent to 99.7 per cent of Việt Nam’s exports – will be eliminated. On its side, Việt Nam will cut 48.5 per cent of tariff lines – equivalent to 64.5 per cent of EU exports – to zero per cent right after the agreement takes effect. After seven years, 91.8 per cent of EU tariff lines will be eliminated. — VNS 

Source: Vietnam News

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