INTERNATIONAL:
Spun yarn exports were up in February in terms of volumes but the fall in FOB per unit price, which apparently arrested in January, continued, leading to a sharp fall in revenue earnings. Volumes at over 122 million kg were worth US$355 million or Rs 2,190 crore, implying per unit realisation of US$2.90 per kg for all kinds of spun yarns. This was US cents 8 down from previous month and down US cents 45 from February 2014. Compared to last year, volumes were up 5 per cent while earnings in US$ term fell 9 per cent implying a 14 per cent fall in unit price realization, as the Rupee appreciated 0.4 per cent against the US$ in the same months.
The growth in volumes implies that Indian spun yarns have become competitive to attract global buyers and hence creating demand at this level. However, appreciation of the Rupee may hurt exporters and become unattractive given the firmness in fibre prices in recent weeks. During the first 11 months of 2014-15, spun yarn exports aggregated US$3.73 billion down, 14 per cent from the same period a year ago. In terms of INR, exports were at Rs 22,600 crore as against Rs 30,800 crore in April-February 2014. In terms of volume, April-February 2015 saw 1,175 million kg exported from India, down 7% from previous year. This implies an average unit price realisation of US$3.17 per kg in 2014-15, compared to US$3.45 per kg in 2013-14.
During February, 88 countries imported spun yarn from India with China continuing to lead and accounting for 40 per cent of India’s total spun yarn exported in February. However, this was 19 per cent higher than the value of export last year while shipment increased 38 per cent YoY. Bangladesh was the second largest importer of Indian spun yarns, accounting for 13 per cent of all spun yarn exported from India. It has also increased imports from India by 11 per cent in value and 25 per cent in terms of volumes. Egypt remained the third largest importer of spun yarns, ahead of Turkey and South Korea which have reduced imports from India.
Chile, Dominican Republic, Ukraine, Côte D'Ivoire, Syria, Canada and were the fastest growing markets in February for Indian spun yarn exports. However, they together accounted for only 1.2 per cent of total exports. Among losers, Honduras, Oman, Estonia, Sudan and Serbia and Montenegro did not import any yarns from India while Norway, Russia, Algeria, Djibouti and Yemen have significantly reduced their imports from India this year compared to their levels last year. Panama, France, Cuba, Paraguay and Finland were the major new destinations for Indian spun yarns, together importing US$1 million worth of spun yarns in February.
Cotton yarn worth US$305 million (Rs.1,870 crore) was exported to 73 countries with volumes totalling 104 million kgs. The average unit price realization was at US$2.91 a kg, down US cents 8 from previous month and US cents 51 down from the same month a year ago. China and Bangladesh together accounted for 60 per cent with combined volume at 66 million kg worth US$180 million. Chile, Ukraine, Côte D'Ivoire, Canada, United Kingdom, Dominican Republic and Philippines were the fastest growing destinations for Indian cotton yarn in February. Their imports from India more than doubled from previous year. However, they formed 1.6 per cent of total cotton yarn export value.
About 11 countries did not import any cotton yarn from India, of which Djibouti, Estonia, Russia, Sudan and Benin were the major ones. Meanwhile Norway, Kenya, Lebanon, Algeria and Hong Kong significantly reduced yarn import from India with Iran importing cotton yarn worth just US$5 million in February 2015 as against US$14.3 million in February 2014. Indian exporters found 12 new destinations for cotton yarn, of which, Panama, Syria, France, Cyprus and Mozambique were the major ones. Combed cotton yarn accounted for 62 per cent of the all cotton yarn exported in February with volumes at 57 million kgs worth US$188 million. Carded yarn export was at 34 million kg. Their respective unit value realization was US$3.28 per kg and US$2.61 per kg. Open ended yarn export was at 11 million kg at an average price of US$1.79 a kg.
SOURCE: Yarns&Fibers
Exports to China has sprung back to over 50 million kg in February 2015 after hovering around 30-40 million from April to October and in January. In February, export of spun yarn to China jumped 19 per cent year on year in terms of value and 38 per cent in volumes. It imported 53.3 million kg of yarns worth US$140 million. In February 2015, China imported textiles worth US$186 million, including fibres, filaments and spun yarns. Among these, the largest consignment was of cotton yarn followed by cotton fibre, both worth US$182 million. It also imported VSF, cotton/viscose, poly/cotton, PFY/cotton blend, polyester yarn, poly/viscose, PSF and viscose yarn.
SOURCE: Yarns&Fibers
A sharp fall in Brazilian Real against the US dollar has made Indian exporters – mainly coffee, sugar, corn and soyameal – turn jittery as the currency slide in the South American nation is seen eroding their competitive advantage. As a result, the Indian commodities which compete with the Brazilian shipments have turned expensive in the world market, prompting some of the buyers to seek a discount. On a year-on-year basis, the Brazilian Real has been devalued by about 40 per cent. The real, which traded against the dollar at around 2.2 levels in March last year, is now hovering around 3.1, while witnessing a sharp decline in recent weeks. Over the past one year, the rupee has moved 4 per cent against the dollar.
“India has been completely out-priced in the world market because of the Brazilian devaluation,” said Tejinder Narang, Grains Trade Analyst. While the shipments of Indian commodities such as corn, sugar, coffee and soyameal have been impacted by the weak real, the imports of soya oil will turn out cheaper. India, a large buyer of edible oils, imports close to 2.2 million tonnes of soyabean oil from the South American countries such as Brazil and Argentina. “The devalued real has made Brazilian coffee more attractive now. As a result, there is pressure on us to cut our rates,” said Ramesh Rajah, President of the Coffee Exporters Association.
Brazil, the world’s largest and low cost producer of coffee, has been shipping more as the growers there – whose earnings are intact despite the volatile currency movements – are offering to sell more. As a result, the Brazilian exporters are shipping out more coffee while influencing the prices of other Central American countries such as Peru and Honduras. Rajah said the buyers want us to match our prices to that of the Central American producers and are seeking a discount to an extent of up to 10 per cent. On the contrary, the Indian growers are not keen to sell in anticipation of better prices, a trend that has contributed to slower shipments. “There is a mismatch between the buyers’ and growers’ expectations,” Rajah added. The coffee exports in calendar 2015 from January till March end are down by about 16 per cent at 84,258 tonnes against corresponding last year’s 97,684 tonnes.
“It (decline in real) has come in as a double whammy for Indian exporters,” said Raju Choksi, Vice-President at Anil Nutrients Ltd, a feed manufacturer, who also exports corn. The exports of corn from India this year have been lagging as the high local price has made it uncompetitive for exports. “Besides, there were very few export opportunities this year,” he added. Also, the soyameal exports have been sluggish as the high domestic price has made the overseas shipments unviable. Similarly in the case of sugar, Brazilian exporters have been flooding the world markets, posing a tough challenge for their Indian counterparts. The ₹4,000/tonne subsidy provided by the government to ship out raw sugar has not yielded any positive result as the Indian exporters have hardly contracted around 2 lakh tonnes, against the projected 14 lakh tonnes, trade sources said. Further, the decline in crude oil prices has also influenced the production of ethanol in Brazil resulting in higher sugar production, Narang said.
SOURCE: The Hindu Business Line
To help India meet its export target of $900 billion by 2019-20, 108 micro, small and medium enterprise (MSME) clusters have been identified, according to Knowledge and News Network, a media platform for MSMEs. This has been done under the new five-year Foreign Trade Policy unveiled by Union Commerce Minister Nirmala Sitharaman. For mentoring new and potential exporters, the Niryat Bandhu Scheme (NBS), a scheme for international business mentoring of start-up exporters, has been repositioned. Outreach activities will now be organised with the help of Export Promotion Councils as industry partners and the academic and research community to achieve the objective of NBS.
Under the newly announced Towns of Export Excellence (TEE) Scheme, selected towns producing goods worth Rs 750 crore or more may be notified as TEE, based on their potential for growth in exports. However, for TEE in the handlooms, handicrafts, agriculture and fisheries sector, threshold limit will be Rs 150 crore. Recognised associations of units in TEEs will be provided financial assistance for export promotion projects for marketing, capacity building and technological services. Common service providers in these areas will also be entitled to duty-free import of machines and equipment under the EPCG scheme.
SOURCE: The Buisness Standard
Pravir Kumar, the Union government’s director general of foreign trade, clarifies aspects of the Foreign Trade Policy 2015-2020, in an interview with Nayanima Basu. Edited excerpts:
Was it a conscious effort by the government to make the Foreign Trade Policy (FTP) in line with the country’s commitments at the World Trade Organization (WTO) or were you under pressure by the developed countries? Either way, this stance seemed to have not gone sown well with exporters.
There is no question of pressure but of honouring your commitments. Once you are party to an agreement, it is expected of a responsible nation to come up with policies in tune with these. We cannot say one thing and sign on to something else. Its has to be cohesive. There is now a greater realisation that if we have to really boost exports, we need to improve internally. That’s why a lot of effort has gone into simplifying of processes. The external environment is out of our control.
One aspect that has come out very clearly in the FTP is that the days when exporters can expect sops to become competitive are gone. Is this, again, due to commitments to global norms or to fiscal constraints?
Both. Incentives cannot go on forever. We have to gradually take these away. We can justify and continue with those we can afford but beyond a point, we have to think of our own competitiveness. We can prop things up artificially but cannot make them run a marathon. The FTP has come after almost a year. Since there was no mention on an interest subvention for exporters in the (Union) Budget, it was highly anticipated that the announcement would be done with the FTP release. Now, it seems, you will take a couple of more months to clearly come out with it. That is a budgetary announcement. So, the legislative decision is already there. We will come up with the scheme; right now, we are in the process of finalising a proposal. Once that is done, it will finally go to the CCEA (Cabinet Committee on Economic Affairs). It will take at least two months.
The FTP statement categorically mentions that the thrust will be on sectors performing well, as well as labour-intensive ones. Will those sectors get the three per cent interest subvention boost?
That analysis is going on. The guidelines of the scheme have to be finalised. This is anyway not linked with the FTP. It will come after necessary approvals are taken.
Applicable retrospectively or prospectively?
It is generally done prospectively. But we have not yet taken a call on it.
Will the Services Export from India Scheme (SEIS) be given to Special Economic Zone units? The policy says SEZ units are ineligible.
SEZ units will get SEIS benefits. We will soon issue a corrigendum.
The additional revenue outgo the government will have to bear for doing so?
We have not calculated it. Ultimately, we were able to convince the finance ministry. There will be some outgo but then, we have taken into account all physical exports made from the country as a whole.
Was it not an indirect way to pacify the SEZ units, in lieu of imposition of MAT (Minimum Alternate Tax), DDT (Dividend Distribution Tax)?
Government has taken an overall view. It is part of the bigger picture.
Also, it will not be given to information technology or IT-enabled services' SEZs?
IT-ITeS is, in any case, out of the purview of SEIS. The rule is the same, whether for DTA (Domestic Tariff Area) or SEZs.
The duty scrips you are giving under MEIS and SEIS have basically become tradable.
Earlier, exporters complained that by issuing duty scrips which were non-transferable, the government was incentivising imports. Now, we are also incentivising exports, as we have made it freely tradable. Now, our scrips are as good as cash.
How will this check revenue loss?
Earlier, middlemen were making money; now, they are eradicated. If an exporter who earns it has no excise duty to pay, no service tax to pay, he can simply encash it from any other exporter. There is no more restriction to it. By this, we have effectively checked the root cause of corruption, by eliminating the middlemen.
Now that you have substantially reduced the export obligation under the EPCG (Export Promotion Capital Goods) scheme from 90 per cent to 75 per cent, do you feel there will now be less of defaulters?
Under the EPCG scheme, the government is allowing import for local procurement of certain items needed for making export products, some capital goods that are required to manufacture certain exports. Now that we have to promote exports, we are looking at making import of those items easier that help in producing such exports. So, this will help in both manufacturing and export.
SOURCE: The Business Standard
Special economic zones (SEZs) in Maharashtra might have a long wait ahead, as the state government has embarked upon a long review of the policy under which these were developed. The review would also analyse what factors led to the withdrawal or cancellation of some SEZs and what is the way out for the sustainable development and revival of some of them. State Industries Minister Subhash Desai told Business Standard: “As on date, 24 SEZs with a total investment of Rs 18,786 crore are operational. As the state has adopted the SEZ policy with effect from February 2006, in all 236 SEZ, proposals were received till December 2014. Of these, 124 SEZs were approved by the central government (formal approval 104 and in-principle approval of 20) and 66 of them are notified. However, some of the SEZs could not take off due to the change in the policy by the Centre. Besides, there were tax-related issues.”
Desai admitted development of some of the SEZs was also hampered due to the issues relating to the land acquisition and compensation to the project-affected persons. “The government is at present engaged in talks with the SEZ developers and various farmer organisations to settle land acquisition-related issues.” The minister also said the state government would examine a slew of incentives announced by the National Democratic Alliance government in the New Trade Policy released last week. He was referring to the Centre’s decision to extend export inventive schemes for both goods and services to units in SEZs also in the new trade policy. This apart, total revenue forgone by way of Merchandise Export from India Scheme and Serve from India Scheme (SFIS) sops to SEZ units are likely to be within Rs 500-2,500 crore. He said the government would convey its views to the Centre to bring in more clarity on issues with regard to taxes and land acquisition.
A industry ministry official, who did not want to be named, said further clarity is needed on whether or not SFIS benefits will really be given to SEZs and what is the Centre’s stand on minimum alternate tax and dividend distribution tax. The official said of the 124 approved SEZs in the state, 23 were de-notified or withdrawn. Those were supposed to come up on a total land of 1,713 hectare. There has been a loss of Rs 18,444 crore.
SOURCE: The Business Standard
The Kandla Port Trust (KPT) on Monday announced plans to set up a port-based multi-product special economic zone spreading over 5,000 hectares (ha) in Kandla and Tuna. The project has already received formal approval from the Ministry of Commerce & Industry for 5,000 ha spreading over two areas— 3,600 ha in Kandla and 1,400 ha in Tuna, KPT said at an investor-meet held in Kandla.
Kanlda Port has already received more than 25 EOIs (expressions of interest) for the proposed SEZ project from leading companies in the domain of renewable energy, desalination plant and free trade warehousing zone. The project development activities are at an advance stage and different approvals will be in place before the implementation starts. The port trust did not reveal the investment details of the project.
Renewable Energy Park
The Kandla area proposes to develop a renewable energy park covering an area of 1,000 ha, while the remaining 2,600 ha land would be used by non-polluting manufacturing industries. The Tuna region would focus on shipbuilding / repair facilities along with several ancillary units to support the activity.
Crowning glory
This will be one of India’s largest port-based SEZ with world class infrastructure. The units operating inside the SEZ will be promoting industrial development within the State, KPT said. “The prime objective for the project would be to increase trade and investment, bringing in FDI wherever possible, creation of employment for skilled, semi-skilled and unskilled categories and enabling an effective administration mechanism,” a KPT statement said.
SOURCE: The Hindu Business Line
Reserve Bank of India has tweaked rules to deter exporters from using long term export advances merely to refinance rupee loans, instead of executing long term supply contracts for export of goods. The central bank told banks to classify refinance of rupee loans to exporters as one being restructured if exporters concerned are under financial stress and repay their existing rupee loans with export advances. This means, banks would have to make higher provisions against such loans and that would prevent them from allowing these exporters to repay rupee loans. This rule will be applicable if the foreign currency borrowings export advances are obtained from Indian lenders or with support from them in the form of guarantees or letters of credit.
From April 1, all the restructured loans necessarily need to be classified as NPAs and the relative provisioning at banks would be 15% of the loan outstanding. This provisioning is an increase by 10% from the existing 5% on 'restructured standard asset' as applicable earlier. RBI observed that the facility of long term export advances is primarily being used for refinancing rupee loans of borrowers instead of being used for execution of long term supply contracts for export of goods.
SOURCE: The Economic Times
Predicting average sub-five per cent inflation this year, Morgan Stanley said India was in for a long period of higher sustainable growth and lower prices. “We are more constructive on inflation outlook and we expect the retail price index to decelerate to 4.7 per cent by December against the consensus estimate of 5.8 per cent. We also expect growth momentum to pick up but do not expect a rise in inflationary pressure,” said Chetan Ahya of Morgan Stanley in a note. He added rural wage growth had come down to a nine-year low of 5.5 per cent in January from a steep 20 per cent in FY13.
Morgan Stanley draws optimism from a slew of favourable factors which influence retail inflation trends such as wage growth, fiscal policy, growth-mix, real interest rates and global commodity prices. The last time inflation and growth moved in tandem was 2003-05, paving the way for near double digit growth before recession played spoilsport. "Comparing the drivers of inflation between the two cycles we see that domestic factors are moving along similar lines as in the 2003-05 cycle and decline in global commodity prices are an added support in the current cycle," Ahya said.
Stating that sustained inflation deceleration will provide more room for more monetary easing, he forecast a sustainability lower inflation path of 5% to be achieved from April, and expects inflation to decelerate to 4.75% by December this year. "Based on our expectation of the inflation trajectory, we believe the Reserve Bank could lower rates by a further 75-100 bps in 2015. Also we believe deposit rates are to decline significantly and more than policy rates."
Comparing the current inflation-growth cycle to the 2003-05 cycle and citing the present domestic and external macro environments, Ahya said, "like in the current period, the economy was in the early stage of recovery between 2003 and 2005. In the previous cycle acceleration in growth was accompanied by significant improvement in productivity which kept inflation low and stable."
Citing parallels with FY 2003-05 periods, he recalled that driven by heavy investment in infrastructure by government and a private sector capex spree, coupled with low inflation the country saw higher growth rates during FY 2003-05. While growth scaled past 9%, and averaged at 7.9%, inflation remained stable and low averaging at 4%--with food inflation averaging 3.2% and non-food inflation averaging 4.5%. This higher growth was driven by capex, which did not create excess inflationary pressure, said Ahya, adding growth accelerated from around 4.6% in FY 2002 to 9.2% in FY 2005 and capex as a percentage of GDP rose from 24.8% in FY 2003 to 34.7% in FY 2006, while CPI inflation remained range-bound.
SOURCE: The Business Standard
Silver Spark Apparel, a unit of Raymond –the Indian textile major and a global conglomerate-has signed an agreement with the Gokaldas Exports which is amongst the nation’s largest manufacturers and exporters of apparels. The apparel major through this pact is liable for acquisition of the entire shareholding in Robot Systems ,a wholly owned subsidiary of Gokaldas Exports. Gokaldas Exports has four decades of partnering the world's most trusted fashion labels, 30 state-of-the-art factories and 32000 employees.
Their customer base is global, covering USA, Europe, Latin America, Middle East and India, servicing almost all major brands. The share purchase agreement was initiated in the presence of Gautam Chakravarti, Whole-time Director and amongst the Chief Executive Officers of Gokaldas Exports. The said transaction will be subject to the terms and conditions mentioned in the agreement entered into by the parties but the transaction amount remains undisclosed as yet. This agreement is one of the most important ones between the largest integrated manufacturer of worsted fabric in the world and the rising global leader in apparel industry.
SOURCE: Yarns&Fibers
The Indian rupee dropped 12 paise at 62.31 against the US dollar in early trade today at the Interbank Foreign Exchange due to appreciation of the American currency overseas. Forex dealers said fresh demand for the dollar from importers also weighed on the local currency but a higher opening in the domestic equity market limited the rupee’s losses. The rupee had ended 30 paise higher at 62.19 against the American currency in yesterday’s trade on sustained selling of dollars by banks and exporters on hopes of foreign capital inflows in view of strong equity market. Meanwhile, the benchmark BSE Sensex rose by 105.71 points, or 0.37 per cent, at 28,610.17 in early trade.
SOURCE: The Financial Express
Prabhu Damodaran, secretary of Texpreneurs Forum on Saturday put forth his views regarding the trade agreements between India and Bangladesh. According to him there is disparity in the trade policies between the two nations. This disparity will affect the domestic garment producers/suppliers, as China too is using the trade route through Bangladesh to dump their products. At present, 48 types of textile items, including finished garments from Bangladesh, were being sold in India without any duty following the free trade agreement signed between the two countries. But the yarn and fabrics exported from India were attracting duties in Bangladesh
Industrialists in the apparel sector has asked the Union Textiles Ministry to have a re-look into the existing trade agreements with Bangladesh pertaining to textiles to ensure a balance in commerce between the two nations. The Union Textiles Ministry has sought views of the apparel sector on the trade policies after representations were made by a merchants’ chamber from North India to the Prime Minister’s office on the difficulties faced by Indian textile entrepreneurs because of the imbalances in trade between India and Bangladesh. The textile entrepreneurs are of the opinion that the government should use the diplomatic route to convince Bangladesh to reduce the duty on yarn and fabrics sourced on large scale from India.Bangladesh should ensure that a certain minimum quantity of the fabrics and yarn sourced from India was compulsorily used in the garments which are exported to India.
SOURCE: Yarns&Fibers
Aiming to boost bilateral business ties, industry bodies from India and Turkey today signed agreements here. To achieve the objective, Union of Chambers and Commodity Exchanges of Turkey (TOBB) signed separate pacts with industry bodies CII and FICCI. The FICCI-TOBB agreement is for establishing India-Turkey Working Committee to identify obstacles in trade and economic cooperation. The two organizations will also co-host and organize Investment Forums to promote investment opportunities both in India and Turkey.
TOBB President Rifat Hisarciklioglu said that Turkey could open markets of North Africa, Middle East and Eurasia to India which would supplement its quest for new markets. Under the MoU between TOBB and CII, both parties agreed to take all such steps as may be necessary and feasible to promote bilateral trade and economic cooperation between the two countries. These include undertaking studies to determine support which might benefit their respective members and exchange of information on all economic and commercial matters with regards to Turkey and India including specific industrial sectors relevant to both the countries.
"India and Turkey share strong bonds of friendship and commercial linkages dating back several centuries. Today, both India and Turkey have a vibrant economic relationship that has only touched the tip of the iceberg," Godrej Group Chairman Adi Godrej said. Besides, CII also signed a pact with the European Bank for Reconstruction and Development (EBRD), which aims to increase financing opportunities of EBRD to Indian corporates. EBRD has already made $1 billion investment in India and there is huge untapped potential in the Indian private sector. The MoU will provide access to Indian corporates to global financing opportunities.
SOURCE: The Economic Times
In a letter to the Prime Minister, value-added textile producers in Pakistan have opposed the move to merge the textile ministry with the commerce ministry. Recently the finance minister, Muhammad Ishaq Dar had mooted a proposal to club the merge the textiles ministry with the commerce ministry, the letter informs. The value-added textile sector associations have expressed surprise at such a recommendation which it said has been made without consulting them and other stakeholders in the industry.
The letter adds that the textiles ministry was earlier set up due to their demands, since the textile sector makes up for 54.63 per cent of overall exports and generates 42 per cent of total employment. “India has a full-fledged textiles ministry, despite the fact that Indian textile exports account for only 11.9 per cent of its exports,” the letter noted. According to the letter, Pakistan is the fourth largest cotton global producer and also one of the biggest exporters of cotton.
“Our cotton crop is 14 million bales and if we even convert 50 per cent of this, we can fetch $42 billion in exports and create more jobs, instead of exporting raw cotton,” it observed. “Rather, the textiles ministry should be given more powers to take vital decisions, since in its absence, it is not able to take vital decisions regarding implementation of the Textile Policy,” the letter concludes by saying.
SOURCE: Fibre2fashion
Hong Kong firms are scouting the neighbourhood to shift their production lines. With the mainland encouraging wages to rise, Hong Kong companies with operations across the border are increasingly looking for new options. Hongkong is thus eyeing pointers from early movers like Fountain Set. One of Sri Lanka's largest knitted fabric manufacturers; Ocean Lanka which is a joint venture between Hong Kong-headquartered and listed Fountain Set and Sri Lankan apparel majors Brandix and Hirdaramani may be an apt find for their hunt. The company based in Biyagama Export Processing Zone, 20 km from Colombo, counts among its customers Victoria's Secret, Tommy Hilfiger, Marks & Spencer, Nike and Gap.
Andrew Claughton, deputy general manager of Ocean Lanka said that production lead time there is shorter because of the well-established supply chain, labour and safety standards are high and sailing time to Europe is much shorter than in China. Also the average wage in Guangdong increased 6 per cent in the first three quarters of last year. The minimum wage is expected to rise by an average 19 per cent from next month. Thus, Sri Lanka is great for niche segments.
Dickson Ho, principal economist (Asian and emerging markets), at the Hong Kong Trade Development Council (HKTDC) said that Hong Kong companies are keen to identify alternative production bases in Asia in light of the surging labour and other costs of operating factories in China. Among the various places in Asia, Sri Lanka has attracted a growing interest. Apart from Hong Kong textile and garments houses like Fountain Set, Crystal Group and Pacific Textiles that have been active in this country of 21 million, Hong Kong-based GM Metal Packaging has identified opportunities there.
Though wages are a big part of Sri Lanka's attraction, it is by no means a cheap manufacturing destination. While the average wage in Dongguan is more than US$550 a month, in Sri Lanka it is US$161. But that still makes it considerably more expensive than Bangladesh (US$100), Cambodia (US$113) and Myanmar (US$127). Panduka Adikaram, Ocean Lanka's assistant general manager, finance said that Sri Lanka's labour costs are high, electricity costs are among the highest in the region, but that also forces them to stay lean and focus on productivity. They continue to be profitable despite the high costs because of the market they cater to - high-end consumers willing to pay a premium for high standards.
The HKTDC stresses the country's superior manpower and location makes it suitable for high value-added production. One of the recent reports on the nation has quoted that Sri Lankan workers are considered of a high quality; partly on account of the country's well-developed education system. The average number of years of schooling in Sri Lanka is the highest among all the developing countries in Asia. Apart from its proximity to more mature markets such as the EU and the US, Sri Lanka's proximity to India and its free trade agreement with the country also offers Hong Kong manufacturers easy access to the world's second most-populous market.
According to risk analysis firm Verisk Maplecroft, there are other downsides for foreign businesses looking to set up shop here. These include the prevalence of corruption and poor infrastructure such as railway and road networks, which push up production costs and restrict growth. Strong government support for the apparel industry and the development of export processing zones create an increasingly favourable environment for investment in the garment sector.
SOURCE: Yarns&Fibers
The Federal Minister for Finance Senator Muhammad Ishaq Dar chaired the Committee on Restructuring (CCoR) held on March 27th, 2015 recommending the merger of the textile and commerce ministries. The letter proposed regarding the same quoted that the Ministry of Textile Industry was established on the ethical demand of the value added textile export sector - the backbone and lifeline of our nation’s economy, which exports 54.63 percent of the total nation’s exports and generates 42 percent of the total employment including male and female workers. But Muhammad Jawed Bilwani, chief coordinator of the value added associations said in the letter that they are surprised at such a recommendation and proposal of CCoR which has been made without consulting the export sector and genuine stakeholders and strongly opposes such an action.
He added that Pakistan the fourth largest cotton producer in the world is termed as a raw material supplier. Their cotton crop is 14 million bales, if they even convert 50 percent of 14 million bales, they can fetch price of $42 billion or if they convert 100 percent they can fetch $84 billion like is done in Bangladesh. The letter also quoted that initially after the establishment of the Ministry of Textile Industry, textile exports flourished and received a great boost. However, the Ministry of Textile Industry has not been provided any powers to take vital decisions and issue SROs, therefore it faces problems in implementation of the vibrant textile policy .If the Ministry of Textile Industry is handed over the authority, it can alone, in consultation with the stakeholders, reduce the trade deficit and our textile exports can be enhanced to US $60 billion.
To this Bilwani stated that in India there is a full-fledged Ministry of Textiles despite the fact that their textile exports were 11.9 percent of total nation’s exports, said the letter. Similarly their other competitors Bangladesh also has its Ministry of Textiles and its textile exports were 87.5 percent of total exports of Bangladesh. The value-added textile export associations thus through their discussions signal a strong denial to any proposal to merge textile ministry with the commerce ministry in the letter addressed to Prime Minister Nawaz Sharif on Friday.
SOURCE: Yarns&Fibers
In the Chinese domestic market, prices of Cotton Linter were assessed at RMB 2415/ton in the last week ending April 3, which were stable as compared to the previous week ending March 27, 2015. In the last updates from market, offer prices were in the range of RMB 2515/ton to RMB 2715/ton. Trading prices were at RMB 2415/ton. Prices of Dissolving Pulp were witnessed at RMB 6075/ton in the last week, which was up as compared to the previous week. Prices of imported Dissolving Wood Pulp were quoted in the range of US$ 795/ton to US$ 800/ton. Prices of Pulp imported from the US and Europe were in the range of US$ 830/ton to US$ 840/ton and US$ 810/ton to US$ 815/ton respectively, while those from Canada were in the range of US$ 750/ton to US$ 780/ton. Prices of Pulp imported from Sweden were between US$ 795/ton and US$ 800/ton.
VSF prices were spotted at RMB 11505/ton in the last weeks, which were up as compared to the previous week. During the week, VSF market opened at RMB 11475/ton and closed at RMB 11550/ton level. In the Chinese market, offers for imported VSF hovered in the range of US$ 1.55/kg to US$ 1.57/kg. Market analysts expect VSF prices to remain upward in the upcoming week. In the last week, VFY prices went up and were offered at RMB 35600/ton. VFY market sentiments were favourable during the week. Producers’ kept offers in the range of RMB 35550/ton to RMB 35600/ton. In the Chinese market, offers for imported VFY went up and hovered in the range of US$ 5600/ton to US$ 5650/ton.
SOURCE: Fibre2fashion
As a crucial date approaches for Greece to make a major debt payment, the markets are yet again weighing the possibility that the country could actually default on its loans. Such an outcome - a decision by the Greek government not to pay its creditors - has generally been seen as remote, even since the left-wing Syriza government came to power in January. But now, after months of bitter, inconclusive negotiations over the austerity measures Greece would have to impose to secure desperately needed cash from Europe, Greek government officials are grappling with very limited options for handling their cash squeeze.
On April 9, Greece must pay euro 458 million, about $503 million, to the International Monetary Fund, a date and sum that in recent weeks have come to loom large for investors, many of whom worry how the markets would absorb a messy Greek default. Adding to these concerns was the abrupt decision by Greece's finance minister, Yanis Varoufakis, to fly to Washington and meet with the IMF's managing director, Christine Lagarde, on Sunday. Following the meeting Lagarde said she welcomed "confirmation by the minister that payment owing to the fund would be forthcoming on April 9th." Varoufakis said that Greece would meet all its obligations, although neither party provided details in terms of how Greece would secure the funds to make this happen.
Greece has said on numerous occasions that it has the money to pay the IMF this week. Moreover, Varoufakis, from the moment he became finance minister this year, has gone out of his way to cultivate ties with Lagarde and has said that paying the fund was a priority for Greece. Over the last month, however, the economic situation in Greece has worsened greatly. Deposits worth about €25 billion have been withdrawn from Greek banks, some of which are now on life support with the European Central Bank. The government's tax collections are also suffering as companies and consumers fret over the prospect that Greece might be forced to abandon the euro.
Now, with Europe refusing to permit Greece access to temporary lines of liquidity - such as letting its banks issue more short-term treasury notes - Greece is running out of cash. Which means that if it were to pay the fund €458 million this Thursday, there might not be enough left to pay pensions and public sector wages the next week, some Greek officials say. Varoufakis, who came to power on a platform of ending the policy of putting the needs of Greece's creditors above its suffering citizens, was to make the case to Lagarde that his government could not meet all of its commitments. "This government has made strong statements that they will meet their commitments," said a person involved in the negotiations but not authorised to speak publicly. The problem is, this person said, Greek officials have made commitments to their own people as well. "They are being pushed to the wall." There is some wiggle room. Even if Greece does not pay up on Thursday, it will not be in technical default as there is a 30-day grace period that could allow the government to pay its pension and wage obligations and strike a broader deal so that its creditors could disburse the needed funds.
Varoufakis is also planning to meet with officials in the United States Treasury on Monday in the hope that the United States, as the dominant voice at the IMF, might pressure fund officials, and Europe as well, to cut Greece some slack. The United States has been quietly critical of Europe's harsh stance toward Greece, warning of the consequences that a Greek default and exit from the euro would have on financial markets. Not paying the IMF could set off defaults in the billions of euros that Greece owes its European lenders. All told, Greece owes €320 billion, with close to €20 billion in payments coming due in the next six months. Since the IMF was founded in 1945, developed nations have made good on their debts. But there have been numerous cases in which countries with troubled economies, like Argentina, have ended up in arrears.
"Of all the possible steps the Greeks could take to manage their immediate cash flow crunch, default on the IMF would be the most serious," said Peter Doyle, an independent economist who worked for many years in the fund's European department. "It would be tantamount to a declaration of 'war' by the Greeks." Last week, Varoufakis sent a 26-page report to Greece's creditors, laying out in considerable detail the measures the country planned to take to improve its financial situation. While there were many conventional proposals dealing with labour reforms and improved tax collection, aimed at appeasing the country's lenders, the policy menu included items like adding extra pension payments to low-income Greeks that are unlikely to please the country's austerity-obsessed counterparts. At the same time, Prime Minister Alexis Tsipras has scheduled a visit to Moscow to meet with President Vladimir V Putin of Russia this week, increasing speculation that Greece is looking elsewhere for ways out of its cash squeeze. But with its own economy is in dire straits, Russia may not be in a position to rescue Greece financially.
SOURCE: The Business Standard
