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MARKET WATCH 08 SEPT, 2020

NATIONAL

INTERNATIONAL

SRTEPC - Source India Virtual 5.0 commences with 400 overseas buyers and 100 Indian exhibitors

The Union Textile Minister, Mrs. Smriti Zubin Irani, today inaugurated the 3-Day "Source India Virtual 5.0" organised by Synthetic and Rayon Textiles Export Promotion Council (SRTEPC).  In her Message on the event. Mrs. Irani informed that the  “Source India Virtual 5.0" from 7 to 9 September 2020 is the first ever online platform which has been supported by over 100 member companies of team SRTEPC. She welcomed and congratulated the overseas buyers from 65 countries for participating in the 5th edition of SOURCE India hosted by SRTEPC. For the opening of the Virtual show, MR. Ravi Kapoor, Secretary (Textiles) in his message mentioned that Reverse Buyers sellers Meet - is the pioneering show in the Manmade fibre textiles segment.  The event which was first held in 2010 has since 2016 been an annual event and each year has crossed many a milestones. This unique event has been highly successful as it gives both the Exhibitors and buyers an opportunity to interact and discuss business under a single platform.  He also mentioned that like in the past events, this year too exhibitors will be successful in clinching business deals in the comfort of their workplace. It may be noted here that around 400 overseas textile importers, buyers, agents, stockers, wholesalers, etc. from nearly 65 countries have registered to participate in the three-day online Exhibition. About 100 Indian leading Manmade Fibre Textile producers and Exporters are participating showcasing their latest range of excellent products in the entire Manmade Fibre Textile value chain from fibre, yarn, fabrics to made-ups, home textiles, technical textiles, etc. Mr. Ronak Rughani, Chairman, SRTEPC, Mr. Anil Rajvanshi, Convener, Export Promotion, Mr. Dhiraj R. Shah Vice-Chairman, SRTEPC, Mr. Sri Narain Aggarwal Immediate Past Chairman, SRTEPC and the Committee of Administration of the Council welcomed the distinguished overseas buyers to the maiden online Show of the Council and expect that they will be able to find their desired products and clinch successful business. In his inaugural message, Mr. Rughani, Chairman, SRTEPC, mentioned that the COVID-19 pandemic did throw some challenges, however it was decided to continue and the business should be as usual. Stressing on the Online Show, the SRTEPC Chairman, Mr. Rughani mentioned that the Virtual platform is the new normal for meeting between the suppliers/exporters and buyers/ importers. Due to global reach of the internet the virtual event has no geographic limitations and time-zone constraints. The concerned parties - suppliers/exporters and buyers/importers, etc. can contact each other, chat, discuss, etc. from their place of comfort and time. And this brought us closer without the requirement of travel overseas. The special features of the "Source India Virtual 5.0" are dedicated B2B platform, matchmaking, private interaction through chatting, video call, phone call, flexible timings, etc. The overseas visitors have started visiting the online show in good numbers and began their discussions with their Indian counterparts/participating companies. It is hoped that the online event will substantially help the Indian exporters participating in the show for establishing contacts and negotiating business, etc. with the potential and leading overseas buyers/importers/ agents from the major Manmade fibre textile consuming and converting countries globally.

Source: Tecoya Trend

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Both options allow full GST compensation for States, Centre clarifies

Under both the borrowing options proposed by the Centre, the states governments’ entire GST shortfall – including the part caused by the pandemic – will be fully compensated, official sources clarified. They refuted reports in section of the media that if states go for the first option and borrow Rs 97,000 crore (shortfall computed just on account of GST implementation), the pandemic-related part of shortfall would not be offset. “This (first) option does not mean they will have to forego the remaining (pandemic-induced) compensation,” the sources asserted. The balance compensation will be paid to states after the above borrowing has been fully repaid. The sources said that since the compensation cess is a tax owned by the states and under Article 292 of the Constitution of India, the Centre cannot borrow in the security of that tax. Compensation cess is a resource dedicated to states and only states can borrow on the strength of future flows from cess, which will eventually get credited to the consolidated Fund of States. Also, partially meeting the resource gap through borrowing is not only beneficial for the market but also for the States.The sources also said that even though the government has already enhanced the borrowing limit for states in FY21 from 3% to 5 % of GSDP, on an average the states have borrowed so far only about 1.25 % of the GSDP. Only a few states have reached around above 2% of the GSDP. Therefore, enough headroom is available to the states to borrow as per their requirements and needs.  However, the fact remains that the additional revenue slippage on account of Covid-19, an event that was not foreseen once the states were offered a guaranteed revenue level under GST, could be addressed only with a cost to them. The revenue shortfall caused merely by GST implementation will only be bridged without a cost to the states.

Source: Financial Express

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Entire GST shortfall will be compensated, says govt ahead of Sept 10 meet

The GST Council will meet on Thursday to take a call on the borrowing options given by the Centre to meet the compensation gap of states. Ahead of the special meeting, finance ministry sources reiterated that the shortfall in compensation to states - whether on account of GST implementation or the coronavirus (Covid-19 pandemic) - would be compensated. The ministry also ruled out borrowing by the Centre as suggested by some states with sources saying that under the GST law, the compensation cess is a tax owned by the states and under Article 292 of the Constitution. The Centre can borrow on the security of its own taxes and resources which is the Consolidated Fund of India. “It cannot borrow against the tax which it does not own,” the ministry said. Moreover, it said that any borrowing by the Centre would crowd out the much-needed resources for private players and push up rates on the government paper which is a benchmark in the market. The ministry estimated that there would be a compensation requirement of Rs 3 trillion for states and the compensation cess would be around Rs 65,000 crore for the current financial year, leaving a gap of Rs 2.35 trillion. Of this gap, Rs 97,000 crore is on account of GST structure and the remaining due to the lockdown imposed to arrest the spread of the Covid-19 pandemic. “It has never been the stand of Union finance minister (Nirmala Sitharaman) that the loss of revenue due to Covid-19 would not be compensated. The Central government has, time and again, committed that the entitlement of the States would always be for full compensation,” a key finance ministry source said. He said the entire compensation sum on account of shortfall would be paid and honoured. The Union government offered two solutions to the state governments. The first is that states take a Rs 97,000 crore window, to be worked out with the Reserve Bank of India, or borrow Rs 2.35 trillion from the markets to be facilitated by the central bank. The amounts will be paid by the compensation cess which will be extended beyond June 30, 2022. However, states will have to bear the interest burden if they decide to borrow the entire Rs 2.35 trillion shortfalls. In case of the second option, the proposed extension of cess will be used for paying only the principal amount and not the interest. While in the first case, borrowing under the special window will not be treated as debt of states, in case of the second option, only the amount up to Rs 97000 crore, which is the shortfall arising due to GST implementation, will not be treated as debt. The states were given time till Tuesday to send their feedback to the Centre, after which the GST Council meeting will be called to take up the matter. Reaction to the offer from states has so far come on the party lines. While the Opposition-ruled states accused the Centre of reneging on their promise, some BJP-ruled states such as Bihar and Karnataka opted for the first option. The ministry sources said borrowing for meeting the entire shortfall at a time when the private sector is struggling to get back on its feet could hurt them badly. “If states go for option 1 and borrow Rs 97,000 crore, it does not mean they will have to forgo the remaining compensation. The remaining compensation will be paid to states after the above borrowing has been fully repaid. Therefore, where is the doubt about the center not meeting its commitment,” wondered a top official. In fact, while giving the two options, the ministry had stated in the note that to the extent the shortfall is not made good, the states would still be eligible to get it in arrears after the transition period through extension of the cess, if so decided by the Council. The sources cited above referred to the note. They said working out the revenue shortfall on account of GST implementation is just a mechanism to assess how much of the shortfall should be met by borrowing and how much could be deferred. According to an official, the compensation cess has to be transferred to the Compensation Fund and released to states in the form of compensation. It is not really a resource of the Central government on the strength of which it can borrow under Article 292 of the Constitution of India. "Compensation cess is actually a resource dedicated to states and only states can borrow on the strength of future flows from cess which will eventually get credited to the consolidated Fund of States," the source said. Also, partially meeting the resource gap through borrowing is not only beneficial for the market, but also for the States. “It will ensure that some resources in the form of compensation keep coming even after the end of the transition period which would allow future generations also to maintain healthy levels of public expenditure. States falling off a resource cliff after the transition period of five year would not be a prudent fiscal strategy," said the same source. Finance ministry sources said that the Union government had already enhanced the borrowing limit from 3 per cent, which goes up to five per cent of the gross state domestic product (GSDP). On an average, the states have so far borrowed only about 1.25 per cent of the GSDP. Only a few states have reached above 2 per cent of the GSDP. Therefore, “enough headroom is available to the states to borrow according to their requirements and needs. In any case, they will get the full compensation shortfall and therefore it is win-win-win for all – states, the Centre, and economy” said the top official. Sources said that if the Centre borrows, it would have a higher impact on the market and push the G-Sec rate which becomes the benchmark rate for other borrowings, including borrowing by the state governments. Any borrowing by the Central government would crowd out borrowings by the private sector and would make borrowings costly for entrepreneurs. The deciding factor would, thus, be whose borrowings will have the least impact on the market rates, they said. “It is unarguable that since rates on Central government securities work as one of the benchmarks for market rates, any additional borrowings by the Centre would have a higher impact on the market rates than that by States. If the benchmark rates increase on account of borrowing by the Center, the states too will get impacted because it will increase their cost of borrowing," said the source in the know of the matter. Therefore, according to the top sources, in the current scenario, it may be a safer option for states to raise the additional resources to meet the resource gap due to non-availability of compensation. “Since the repayment will come from the compensation cess, there is no reason why the rates would be different from each State. In fact, the debt window could be so packaged that it is State independent altogether," said the top sources.

Source: Business Standard

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India, Angola hold 1st joint commission meet, agree to diversify trade ties

India and Angola on Monday held the first Joint Commission Meeting during which the two sides agreed to diversify their trade relationship and discussed cooperation in health, pharmaceuticals, defence, agriculture, food processing, digitization and telecom. The meeting was co-chaired by External Affairs Minister S Jaishankar and his Angola counterpart Tete Antonio. "Co-chaired the 1st India-Angola Joint Commission Meeting with FM Tete Antonio. Comprehensive review of bilateral issues. Agreed to diversify the trade basket. Discussions included cooperation in health, pharmaceuticals, defence, agriculture, food processing, digitization & telecom," Jaishankar tweeted. "Welcome the signing of MoUs on health, training and visa facilitation," he added.

Source: Business Standard

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GST compensation cess states revenue, Centre can’t borrow against it: Finance Ministry sources

The revenue accruing from GST compensation cess goes to the states and the Centre cannot borrow on the security of the tax which it does not own, Finance Ministry sources said. The Centre and opposition-ruled states are at loggerheads over the financing of the Rs 2.35 lakh crore GST shortfall in the current fiscal. Of this, as per the Centre’s calculation, about Rs 97,000 crore is on account of GST implementation and rest Rs 1.38 lakh crore is due to the impact of COVID-19 on states’ revenues. The Centre late last month gave two options to the states to borrow either Rs 97,000 crore from a special window facilitated by the RBI or Rs 2.35 lakh crore from the market and has also proposed extending the compensation cess levied on luxury, demerit and sin goods beyond 2022 to repay the borrowing. Chief Ministers of six non-BJP ruled states of West Bengal, Kerala, Delhi, Telangana, Chhattisgarh and Tamil Nadu have written to the Centre opposing these options which require states to borrow for meeting revenue shortfall. Reasoning why the Centre cannot borrow to fund the shortfall, sources said that it needs to be appreciated that under the GST law, the compensation cess is a tax owned by the states. “Under Article 292 of the Constitution of India, the Centre can borrow on the security of its own taxes and resources which is Consolidated Fund of India. It cannot borrow in the security of the tax which it does not own,” one of the sources said. Compensation Cess is a resource dedicated to States and only states can borrow on the strength of future flows from cess which will eventually get credited to the consolidated Fund of States, sources said. A source further said that if states go for option 1 and borrow Rs 97,000 crore, it does not mean they will have to forego the remaining compensation. “The remaining compensation will be paid to states after the above borrowing has been fully repaid. Therefore, where is the doubt about the Centre not meeting its commitment?” the source said. The Centre has already enhanced the borrowing limit of states from 3 per cent to 5 per cent of GSDP. “On an average, the states have borrowed so far only about 1.25 per cent of the GSDP. Only a few states have reached around above 2 per cent of the GSDP. Therefore, enough headroom is available to the states to borrow as per their requirements and needs, the source said. Sources said that if the Centre borrows it would have a higher impact on the market and push the G-Sec rate which becomes the benchmark rates for other borrowings including borrowing by the state governments. Any borrowing by the central government would crowd out borrowings by the private sector and would make borrowings costly for entrepreneurs. The deciding factor would, thus, be whose borrowings will have the least impact on the market rates, they said. “It is unarguable that since rates on Central Government securities works as one of the benchmarks for market rates, any additional borrowings by Centre would have a higher impact on the market rates than that by States. If the benchmark rates increase on account of borrowing by the Centre, the states too will get impacted because it will increase their cost of borrowing,” one of the sources said. Sources further said that since the repayment will come from the compensation cess, there is no reason why the rates would be different for each State and a debt window could be so packaged that it is State independent altogether. Finance Ministry sources said that working out revenue shortfall on account of GST implementation is just a mechanism to assess how much of the shortfall should be met by borrowing and how much could be deferred.

Source : Financial Express

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External Affairs Minister S Jaishankar to stop over in Iran enroute Russia

External Affairs Minister S. Jaishankar is likely to make a stopover in Iran on Tuesday on his way to a four-day visit to Russia, where he is expected to hold bilateral meeting with his Chinese counterpart Wang Yi. Sources told IANS that India and Iran are to explore the revival of regional approach to diplomacy with respect to Afghanistan following the US-Taliban peace deal. China and Iran share a strong bilateral relationship and have a strategic alliance in the region. On Saturday, Defence Minister Rajnath Singh had met his Iranian counterpart Brig General Amir Hatami in Tehran enroute New Delhi from Moscow. India's strategic alliance with the US -- the arch-rival of both China and Iran -- has strained its relationship with Tehran, especially after the Trump administration killed Iranian Revolutionary Guard Corps (IRGC) commander Major General Qassem Soleimani and other top military leaders of Iran in an air strike in Baghdad in January this year. The Chabahar port in Iran, which India is helping develop to access oil and gas resources in Central Asia, has seen very slow progress since. The project is important to India as the port aims to offset the competition China poses with its Gwadar port built in Pakistan's Balochistan province.

Source: Business Standard

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Raghuram Rajan calls economy a patient that needs emergency treatment now, not later

Former RBI Governor Raghuram Rajan said that the government’s reluctance to do more at present to conserve resources for a possible future stimulus is a self-defeating strategy. In a post published on LinkedIn, the noted economist, Raghuram Rajan, added that if one thinks of the economy as a patient, relief is the sustenance the patient needs while on the sickbed and fighting the disease. Without relief, households skip meals, pull their children out of school, and send them to work or beg, he further said. Illustrating the need for an economic package, Raghuram Rajan insisted to now think of the economic stimulus as a tonic.  Rajan also stressed that the recent pick-up in sectors like auto is not evidence of the much-awaited V-shaped recovery. It reflects pent-up demand, which will fade as we go down to the true level of demand in the damaged, partially-functioning, economy, he noted. Given the pre-pandemic growth slowdown and the government’s strained fiscal condition, officials believe it cannot spend on both relief and stimulus. Raghuram Rajan highlighted that this mindset is too pessimistic, but the government will have to expand the resources in every possible way and spend as cleverly as possible.As the Indian economy registered a record slowdown in the first quarter of the current fiscal, the former RBI Governor said that bureaucracy should come out of complacency and take meaningful action. The current crisis requires a more thoughtful and active government, he added. He also termed the sharp decline as alarming and estimated that the numbers will probably be worse when after getting estimates of the damage in the informal sector. Even as various sectors such as construction, manufacturing, etc have started to see some signs of recovery, the economist believed that discretionary spending, especially on high-contact services like restaurants, and the associated employment, will stay low until the virus is contained. Meanwhile, he suggested that reforms can be a form of stimulus, and even if not carried out immediately, a timeline to undertake them can boost current investor sentiment.

Source: Financial Express

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Surat's textile industry faces labour shortage, urges resumption of train services to bring in workers

Businessmen have claimed that the textile industry in Surat is facing a shortage of workers as they have not returned in the absence of transport services. Hence, they are trying to bring them back from Odisha by requesting Chief Minister Naveen Patnaik to further urge the Centre to run special trains for workers. "We have requested Odisha Chief Minister Naveen Patnaik to further urge the Central government to run special trains from Odisha to bring back workers to Surat so that we can resume our operations," said Ashish Gujarati, President of Pandesara Weavers Cooperative Society Ltd in Surat, Gujarat. "We want workers to safely return and resume work. A bus takes 72 hours to reach Surat while the train takes 42 hours. If they return, it will be very helpful for us," he added.  A couple of days back, a bus with labourers, met with an accident while returning from Odisha following which eight workers lost their lives. Hence, businessmen here are trying to get in touch with the Central government for the trains from Odisha to Surat."We have requested Odisha Chief Minister Naveen Patnaik to further urge the Central government to run special trains from Odisha to bring back workers to Surat so that we can resume our operations," said Ashish Gujarati, President of Pandesara Weavers Cooperative Society Ltd in Surat, Gujarat.  Mayur Golwala, Secretary, Sachin Gujarat Industrial Development Corporation (GIDC), said, "Around six lakh people work in the industry here. Out of these around 50 per cent workers are from Odisha." "If the train service from Odisha starts, labourers in large numbers will be able to come back. Our State government should also urge the Centre to resume train services. The industry which is running on 20 per cent to 30 per cent operations will reach 60 per cent to 70 per cent of if they return and boost the work of the industry," he added.

Source: Economic Times

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Centre contemplating measures to discourage silk imports from China

Textile Ministry officials have informed a Parliamentary standing committee that the Centre is contemplating measures to discourage silk imports from China, it has been learnt. The move was conveyed during a meeting of the standing committee on labour on Monday, headed by BJD MP Bhartruhari Mahtab, which deliberated on the subject of “Challenges and Opportunities – Indian Textile Industry”, a source said. When a member asked about the decline in the quality of silk in general and “Banarasi saris” in particular, Textile Ministry officials informed the committee that it is due to cheap imports from China, the source said. It is learnt officials told the committee the ministry “is considering various measures to discourage the cheap import of silk from China and steps will be announced soon”.

Source: Indian Express

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CII launches India's Future Business Group

The Confederation of Indian Industry (CII) recently launched over a digital platform its Future Business Group (FBG), which will accelerate the process of developing disruptive technologies and business models. Going further, India can lead the FBG forum for G20 countries, according to Manoj Kohli, country head, SoftBank India, and chairman of CII FBG. CII FBG has been constituted to support the emergence of new-age businesses, attract global investment in new businesses in India and to foster government-industry cooperation to help develop new policies to support the innovative businesses. Its theme is ‘Nurturing the existing new businesses and fast-tracking the entry and growth of new businesses in India for getting growth back’. CII would soon launch the Global Unicorn series under the auspices of SoftBank India with the participation of unicorns from the United States, the European Union, Japan, Australia, Singapore, Israel and South Korea to share their journey to glory. Minister of railways and commerce and industry Piyush Goyal said CII FBG holds an immense potential to script an inclusive growth story by new-age ideas, technology and innovation the masses and to position India on a strong foundation in the global business arena, according to a CII press release. The Indian industry can come together to create a pool of capital that can be utilised towards supporting new businesses and research, the minister said. CII director general Chandrajit Banerjee proposed to Goyal to have a joint working group with the Department for Promotion of Industry and Internal Trade to formulate a national strategy and focus on sector-wise reforms.

Source: Fibre2fashion

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World economy unlikely to re-attain pre-pandemic output levels before 2022: Report

On Asia Pacific, the report said "optimism that leading Asia-Pacific economies' early containment of the virus could lead an exceptional GDP performance is receding, with South Korea on the brink of lockdown in August, Japan suffering case numbers comparable to those in western European countries, and even virus-free Taiwan region's economy shrinking year-on-year in Q2".With COVID-19 still dominating major developments globally, the world economy is not likely to re-attain pre-pandemic output levels before 2022, says a report. According to Dun & Bradstreet Country Risk and the Global Outlook, “nothing about the pandemic can be classified as over, despite recoveries in activity levels in some economies in Q3, as evident in PMIs (Purchasing Managers Indices), Google Mobility data and monthly economic data”. Unemployment will keep rising above the pre-pandemic baseline as government programmes are phased out and cease to protect workers, while the pace of what recovery there is may yet weaken in Q4, said Arun Singh, Global Chief Economist, Dun & Bradstreet.Singh further said “we do not expect the world economy to re-attain pre-pandemic output levels before 2022. The biggest question mark is not over the depth of the recent shock but over its persistence.” According to Singh, “in India, the pace of economic revival will depend on how quickly the health concerns abate as India is yet to witness a peak, economic activity restarts with ‘Unlock 4′ and importantly the psychological impact of the COVID-19 ebbs away.” The steady rise in case-loads, even as India demonstrates one of the highest recovery rates, and the spill over effects of the strict lockdown measures undermines the growth impulses in Q2 and Q3 of the fiscal year, he added. India’s economy suffered its worst slump on record in April-June, with the gross domestic product (GDP) contracting by 23.9 per cent as the coronavirus-related lockdowns weighed on the already-declining consumer demand and investment. On the employment front, all countries that Dun & Bradstreet covers (with the exception of Serbia) are showing year-on-year declines, the report said. “Indeed, we believe that the road ahead will be one of further spikes and troughs in economic activity, with considerable regional variations. Even if all jobs were to be saved, the decline in 2020 corporate profits in most OECD (Organisation for Economic Co-operation and Development) economies would be at least 5 per cent,” it said. On Asia Pacific, the report said “optimism that leading Asia-Pacific economies’ early containment of the virus could lead an exceptional GDP performance is receding, with South Korea on the brink of lockdown in August, Japan suffering case numbers comparable to those in western European countries, and even virus-free Taiwan region’s economy shrinking year-on-year in Q2”.

Source: Financial Express

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China’s export strength continues as global demand rebounds

China’s exports continued to expand due to demand for medical goods, electronics, and the effects of major trading partners gradually resuming business activities. Exports rose 9.5% in dollar terms in August from a year earlier to $235.3 billion, the third-highest level on record, customs data showed. Both the value of shipments to the US and the bilateral trade surplus were at the highest levels since November 2018. China’s exports have defied expectations this year, growing significantly faster than global trade due to strong demand for Covid-related goods. The gradual reopening of many economies in Asia and around the world has also increased appetite for Chinese goods, although it’s unclear how long the nation will continue to benefit from these factors. “China’s surprising resilience in exports amid the global pandemic is due to some special factors,” said Lu Ting, chief China economist at Nomura International HK Ltd. That includes surging exports of personal protective equipment and work-from-home products as well as declining exports “from some emerging market competitors which are still severely hit by the pandemic.” Textile exports including masks rose 33.4% in the first eight months in dollar terms from a year ago, according to the data released Monday in Beijing. Without the boost from medical-related goods, exports in March through July should have fallen an average of 3.1% each month, instead of the average 0.3% rise, according to a report from China International Capital Corp. economists led by Peng Wensheng published Sunday. The boom in shipments may not last, according to Frederic Neumann, co-head of Asian economic research at HSBC Holdings in Hong Kong. Production outages elsewhere have propped up China’s exports, and concerns over renewed trade tension with the U.S. may also be prompting rushed shipments. However, “as factories in the rest of the world come back on stream, and demand for Chinese-made goods normalizes, China’s export growth will re-align with global demand growth, which looks set to be sluggish over the coming years,” Neumann said.

Source: Hindustan Time

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Pak cabinet approves industrial hemp production by govt

The recent decision by Pakistan’s cabinet to allow production of industrial hemp by the government could generate $1 billion in revenue for Pakistan in three years, according to minister for science and technology Fawad Chaudhry, who recently said the ‘landmark decision’ would place Pakistan in the international cannabidiol (CBD) market worth billions of dollars. The minister had first announced the decision on Tuesday on Twitter, saying the cabinet had approved the first license for the science and technology ministry and the Pakistan Council of Scientific and Industrial Research (PCSIR) for industrial and medical use of hemp. He said Allaying fears that the cultivation of a poppy-like crop in the country could lead to manufacture of addictive drugs, the minister said several countries like China and Canada are cultivating hemp on tens of thousands of acres. The plant's seed is used to make hemp oil, the leaf is used in medicines, while the stem is used to make fibre that could one day replace cotton in the textile industry, he was quoted as saying by Pakistani media reports. The places chosen for production in the first phase include sites in Peshawar, Chakwal and Jhelum.

 Source: Fibre2fashion

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Textile firms survive on weekly export orders: Vietnam

The textile and garment industry continues to be hurt by the Covid-19 pandemic with only weekly orders coming in due to uncertain demand. Shipments of textile and garment, Vietnam’s third largest export earner, fell 11.6 percent year-on-year in the first eight months to $19.6 billion because of the pandemic, the Ministry of Industry and Trade said in a recent report.Producers receive orders by the month or even week because of the plunging global demand due to Covid-19, whereas in previous years by this time they would have received orders for the first half of the following year, the report said. Some producers have seen September orders drop by 40-50 percent, while orders have not been confirmed for the rest of the year and 2021, it added. Global demand for textile and garment products in the third quarter has not shown sign of reviving, as consumer confidence remains low in the U.S., the E.U. and Japan, three of the Vietnam’s largest buyers. This has affected producers like Vietnam National Textile and Garment Group (Vinatex). Cao Huu Hieu, its deputy CEO, said the company forecasts a 20 percent fall in revenues this year. "We have barely received orders for the last quarter, which is a major challenge for our production plans. Prices of masks have dropped to just enough to cover costs." Companies are doing all they can to survive. Garment 10 Corporation Jsc (Garco10) is working to get long-term orders to ensure cash flows and retain jobs, while Vinatex seeks to boost domestic sales. Truong Van Cam, deputy chairman of the Vietnam Textile and Apparel Association (VITAS), said the domestic market is promising amid the pandemic though revenues from it would not be high since consumers are also trying to cut down spending. Companies want the government delay loan repayments to banks. There are around 6,800 textile and garment businesses in the country. Last year their exports were worth $32.85 billion, increasing 7.8 percent year-on-year.

Source: VN Epress

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