MARKET WATCH 15 SEPT, 2020

 NATIONAL

INTERNATIONAL

 

VSF Value Chain Stakeholders appeal Hon’ble PM for the removal of AntiDumping Duty on Viscose Staple Fibre (VSF)

New Delhi, Sunday, 13th September 2020 : The Ministry of Textiles has set a target of US$ 350 billion market size for the growth of the Indian Textiles & Clothing (T&C) Industry by 2025. However, the same cannot be achieved until and unless we show progress in exports of textile products, especially in the Man Made Fibre (MMF) Sector. The industry has been facing stagnation since many years mainly due to the lack of availability of the basic raw materials of man-made fibre / filament yarn at internationally competitive prices. Taking a serious view of the high price of VSF in India, the captains of the various segments of VSF value chain, viz Apparel Export Promotion Council (AEPC), Bhiwandi Powerloom Weavers Federation Ltd. (BPWF), Confederation of Indian Textile Industry (CITI), The Clothing Manufacturers Association of India (CMAI), Federation of Gujarat Weavers’ Welfare Association (FGWWA), Handloom Export Promotion Council (HEPC), Indian Spinners Association (ISA), Ichalkaranji Shuttleless Looms Owners Association (ISLOA), Powerloom Development Export Promotion Council (PDEXCIL) and Tamil Nadu Federation of Powerloom Associations (TNFPA) have submitted a joint representation to the Hon’ble Prime Minister of India for the removal of Anti-Dumping Duty on Import of Viscose Staple Fibre (VSF) to achieve global competitiveness. They have also pleaded to the Hon’ble Union Ministers of Finance, Commerce and Textiles and their respective Secretaries in this regard. The textile industry players have stated that cotton fibre which is the basic raw material for the cotton textile industry and also the growth engine of the Indian T&C industry is available to the industry at internationally competitive prices. This has helped the entire cotton value chain to remain globally competitive as it doesn’t attract any import duty or anti-dumping duty. The VSF Value Chain stakeholders pointed out that India despite being the second largest producer of MMF in the world, its share in total T&C exports accounts for only 20%. While, China’s share of MMF products stands at 80% which is far bigger than India in comparison. The Indian Textile industry is not in a position to fully capture the market opportunities when compared to Vietnam, Indonesia, Thailand, Bangladesh, Pakistan, etc., mainly due to the expensive VSF price which is the second most important basic raw material for the MMF textile value chain. During the last four years, the imports of VSF spun yarn have increased by 27 times that has greatly affected the highly capital and labour intensive spinning sector including the latest investments in airvortex technology.  The Industry players stated that the Government of India has immensely helped the MMF Sector by removing anti-dumping duty on PTA, which is a major raw material for polyester staple fibre and by rejecting the proposal of ADD on PSF and MEG and thereby creating a level playing field in the polyester segment. Viscose Staple Fibre (VSF) (HSN Code: 55041000) is still being given undue protection by way of anti-dumping duty which also seriously affects the entire viscose staple fibre textile value chain. They said VSF attracts ADD of 0.103 USD to 0.512 USD per kg for the imports even from countries like Indonesia. The industry players pointed that the anti-dumping duty on viscose staple fibre has been in existence for the past 10 years and VSF is produced by a single manufacturer in the country and they monopolize their pricing policy. The MSME spinners don’t have strength to negotiate prices with supplier and this has led to the decline of powerloom fabric exports and made the sector uncompetitive in the international market. However, in the case of polyester staple fibre, there are several producers in India and spinners get competitive prices unlike VSF. The VSF Value Chain industry players stated that keeping in mind the growing demand for Viscose fibre in India, the current domestic capacity is not enough and hence the domestic producer is adopting import parity pricing while selling the fibre to domestic spinners at a premium of Rs.20/Kg taking advantage of ADD. While the same fibre is being exported to our competing countries at an international prices. The industry players pointed out that the Competition Commission of India in its order dated 16th March 2020, case No.62/2016 levied Grasim Industries Limited a penalty of Rs.301.61 crores for abuse of dominant position in the market for supply of Viscose Staple Fibre (VSF) to spinners in India and Grasim was found to be charging discriminatory prices to its customers, besides being found to be imposing supplementary obligations upon them. The industry players stated that the domestic fibre manufacturer adopts a highly complicated domestic pricing policy. They promise discounts to the tune of 40% while withholding over 1/3rd of it till the year end leading to the blockage of the working capital. They link the discount to the incremental fibre consumption with a one-sided penalty clause and prevent sourcing from other suppliers with an annual contract. The industry players stated that the powerloom imported Viscose Spun Yarn of 2,022 tons during 2016-17 and the same increased to 56,262 tons (over 27 times increase) during 2019-20. This has led to opportunity loss during 2019-20 due to Viscose Spun Yarn import estimated at four lakh spindles production capacity worth around Rs.1,000 crores and 8,000 jobs in spinning and also a forex outflow of USD 129.15 million.  The VSF Value Chain stakeholders stated that the Government is encouraging Make in India and Scale of Production by extending MEIS, RoSL and RoSTL schemes to the garment and made-ups segments, while the differential pricing policy followed by the indigenous VSF manufacturer makes us lose our competitive edge to other Nations who grab the lion’s share of the export markets for these products. VSF producers in countries like Indonesia supply VSF either at the same price or slightly lower price to encourage value addition, job creation and forex earnings which is not there in the case of Indian VSF manufacturer. The industry players stated that the entire globe follows the VSF price based on wood pulp prices which has been on the declining trend globally, however, the indigenous manufacturer always keeps the price much higher than the international price taking advantage of the anti-dumping provision. Even though the domestic producer is planning to add new capacities, they will continue to monopolize the domestic value chain unless ADD on viscose fibre is removed. The VSF Value Chain industry players concluded by saying that removing ADD on VSF will make the domestic VSF prices aligned with Global VSF Prices making the entire Indian VSF textile value chain globally competitive and boost production and exports of these products.

Source: PIB

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Textiles industry urge PM Modi to remove anti-dumping duty on Viscose Staple Fibre

 The Ministry of Textiles has set a target of $350 billion market size for the growth of the Indian Textiles and Clothing (T&C) Industry by 2025. However, the same cannot be achieved until and unless we show progress in exports of textile products, especially in   the Man Made Fibre (MMF) Sector. The industry has been facing stagnation since many years mainly due to the lack of availability of the basic raw materials of man-made fibre / filament yarn at internationally competitive prices. Taking a serious view of the high price of VSF in India, the captains of the various segments of VSF value chain, viz Apparel Export Promotion Council (AEPC), Bhiwandi Powerloom Weavers Federation Ltd. (BPWF), Confederation of Indian Textile Industry (CITI), The Clothing Manufacturers Association of India (CMAI), Federation of Gujarat Weavers' Welfare Association (FGWWA), Handloom Export Promotion Council (HEPC), Indian Spinners Association (ISA), Ichalkaranji Shuttleless Looms Owners Association (ISLOA), Powerloom Development Export Promotion Council (PDEXCIL) and Tamil Nadu Federation of Powerloom Associations (TNFPA) have submitted a joint representation to the Prime Minister Narendra Modi for the removal of Anti-Dumping Duty on Import of Viscose Staple Fibre (VSF) to achieve global competitiveness. Also Read - 13 states submit borrowing option to Centre for funding. They have also pleaded to the Union Ministers of Finance, Commerce and Textiles and their respective Secretaries in this regard. The textile industry players have stated that cotton fibre which is the basic raw material for the cotton textile industry and also the growth engine of the Indian T&C industry is available to the industry at an internationally competitive prices. This has helped the entire cotton value chain to remain globally competitive as it doesn't attract any import duty or anti-dumping duty. The VSF Value Chain stakeholders pointed out that India despite being the second largest producer of MMF in the world, its share in total T&C exports accounts for only 20%. While, China's share of MMF products stands at 80% which is far bigger than India in comparison. The Indian Textile industry is not in a position to fully capture the market opportunities when compared to Vietnam, Indonesia, Thailand, Bangladesh, Pakistan, etc., mainly due to the expensive VSF price which is the second most important basic raw material for the MMF textile value chain. During the last four years, the imports of VSF spun yarn have increased by 27 times that has greatly affected the highly capital and labour intensive spinning sector including the latest investments in airvortex technology. The Industry players stated that the Government of India has immensely helped the MMF Sector by removing anti-dumping duty on PTA, which is a major raw material for polyester staple fibre and by rejecting the proposal of ADD on PSF and MEG and thereby creating a level playing field in the polyester segment.

Source: Millenium Post

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Exporters facing huge liquidity challenges due to stoppage of MEIS benefits of over Rs 10k cr: FIEO

The MEIS (merchandise export from India scheme), introduced in April 2015, will be wound up by December 31, 2020, and the government has already announced the Remission of Duty or Taxes on Export Products (RoDTEP) scheme to replace MEIS.  Seeking support from the government to execute new orders, the Federation of Indian Export Organisations (FIEO) on Monday said exporters are facing huge liquidity challenges due to the stoppage of MEIS benefits of over Rs 10,000 crore from April 1 and IGST refunds. The MEIS (merchandise export from India scheme), introduced in April 2015, will be wound up by December 31, 2020, and the government has already announced the Remission of Duty or Taxes on Export Products (RoDTEP) scheme to replace MEIS.  FIEO President S K Saraf said exporters have started receiving a lot of enquiries and orders from across the globe helping many sectors to show improved performance, which is likely to get better in next few months. “However, exporters, particularly from MSME sector, are facing huge liquidity challenges due to the stoppage of MEIS benefits of over Rs 10,000 crore from 1.4.2020 and IGST (integrated goods and services tax) refund now,” he said in a statement.At this point of time, he said, when exporters are receiving new orders from new buyers and destinations, support needs to be given to help them to execute such orders. “Unfortunately, many of the exporters have expressed their inability to honour such orders, in view of liquidity challenges, due to stoppage of exports benefits and refund of GST,” he added. The FIEO president urged the government to look into the issue as any let-up in export efforts, at this juncture, will cost exporters dearly. He added that all departments of the government should sit together to resolve the technical and financial issues, helping the seamless flow of liquidity to exports sector. He also said that banks are helping eligible exporters with the emergency credit line guarantee scheme but due to hold up of GST refund and MEIS, the exporters are forced to seek additional loans from banks and such additional requirement is now subject to very high interest rates. “Banks need to consider this pragmatically and provide a competitive interest rate to the exports sector particularly as the deposit rates have come down substantially with the reduction in key interest rate. Government needs to pay interest on the delay in refunding GST to compensate the exporters,” he added.  Further, Saraf urged the government to address the issue of risky exporters by providing them duty drawback and IGST benefits against a bond, if physical verification of such exporters has been established. The government has capped export incentives under the scheme, MEIS, at Rs 2 crore per exporter on outbound shipments made during the period from September 1 to December 31, 2020. Contracting for the fifth straight month, India’s exports slipped 10.21 per cent to USD 23.64 billion in July on account of decline in the shipments of petroleum, leather and gems and jewellery items.

Source: Financial Express

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Rs 10,000 crore export sops stoppage causing liquidity challenge: Exporters body tells govt

NEW DELHI: The Federation of Indian Export Organisations (FIEO) has sought support from the government to execute new orders amid exporters facing liquidity challenges due to the stoppage of export benefits of over Rs 10,000 crore under a key scheme along with refunds of the integrated goods and services tax (IGST).  The Merchandise Export from India Scheme (MEIS) would be wound up by December 31, 2020 and the government has already capped the benefits under it to Rs 2 crore per exporter from September 1-December 31, 2020. “Exporters, particularly from MSME sector, are facing huge liquidity challenges due to the stoppage of MEIS benefits of over Rs 10,000 crore from April1, 2020 and IGST refund now,” said FIEO President S K Saraf.  The pitch for easing the liquidity constraints comes amid exporters receiving enquiries and new orders from new buyers and estinations that would help many sectors to show improved export performance. India’s exports shrank for the fifth month in a row in July when they contracted 10.2% on year at $23.64 billion. “Unfortunately, many of the exporters have expressed their inability to honour such orders, in view of liquidity challenges, due to stoppage of exports benefits and refund of GST,” Saraf said. Urging the government to look into the issue, Saraf said any let-up in export efforts will cost exporters “dearly”. He also said that banks are helping eligible exporters with the emergency credit line guarantee scheme but due to hold up of GST refund and MEIS, the exporters are forced to seek additional loans from banks and such additional requirement is now subject to very high interest rates. “Banks need to consider this pragmatically and provide a competitive interest rate to the exports sector particularly as the deposit rates have come down substantially with the reduction in key interest rate Government needs to pay interest on the delay in refunding GST to compensate the exporters,” he added, and suggested the government to address the issue of risky exporters by providing them duty drawback and IGST benefits against a bond, if physical verification of such exporters has been established.

Source: Economic Times

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Man made fibres, yarn sector to recover due to pent up demand: Ind-Ra

Mumbai, Sep 14 (PTI) Man-made fibres and yarn segments are expected to recover on the back of pent-up demand and strong export order build up in all the segments, India Ratings said in its report. Both man-made fibres and cotton segments should start benefiting from the low raw material prices in the third quarter this financial year, it added. Man-made fibres and yarn segments'' volumes have improved to 50-80 per cent of the normal levels in August, led by pent-up demand and strong export order build up in all the segments, Ind-Ra said in the report.  Plant utilisation of pure man-made fibres and yarn manufacturers was severely impacted over the first quarter of 2020-21, amid COVID-19-led lockdown. The volume recovery of pure man-made fibres and yarn should be quick but has started relatively late from August, while the cotton and blended spinners'' volumes started recovering in June. Ind-Ra expects raw material prices to remain moderate in the second half of FY21. Further, Ind-Ra said it expects fabric and apparel prices to decline in August, led by a quick supply restoration than demand recovery. During July-August, most players have resorted to discounts to boost sales and also generated the much required internal liquidity, it added. Disbursement of COVID-19 bank loans and promoter-led infusions also supported liquidity and the ability of fabric and apparel players to ramp up operations quickly, the report said, adding that it expects apparel prices to remain modest in 2HFY21 to push sales. Readymade garments exports recovered significantly starting June-July and order book build up in August was strongly supported by restocking at global retailers and global sector consolidation, it said. Large Indian players are benefitting from the shift in market share to India from China, it added.  Big apparel and readymade garment manufacturers have largely been able to resolve labour mobility and availability concerns, it added. Demand for home textiles has been only moderately impacted as they are necessary products for day-to-day life. However, the US-China trade war has impacted imports from China into the US, thus giving a strong push to exports from India. Ind-Ra expects the demand for home textile exports to sustain in 2HFY21 at healthy levels achieved over August-September. Indian players are likely to increase their already strong market share in terry towels and bed linens, led by supply chain diversification away from China, the rating agency said.

Source: Outlook

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GST shortfall: States willing to borrow want process to start soon

 The states that have opted for exercising the borrowing options to make good their GST revenue shortfall want the process to start, without having to wait for the states that are not in favour of the Centre’s plan. As many as 12 states have agreed to borrow according to the ‘option 1’ presented to them in the last GST Council meeting. While six more states are likely to convey their borrowing preference sometime this week, many states, including Punjab, Kerala, Tamil Nadu, West Bengal and Delhi, have objected to the idea of states borrowing from the market. A few other states have also expressed their views on the plan without indicating a preferred option. Bihar deputy CM Sushil Kumar Modi told FE that the state would borrow its quota of about Rs 3,000 crore compensation and has conveyed this to the GST Council. “It is imperative that we get the money as soon as possible at a time of fund crunch where no compensation has been paid to us for April-July period.” GST aid is paid to states on a bi-monthly basis.  Another state government official said that the Council can continue to engage with those who are either opposed to the plan or unable to decide on one of the options but the disbursement should start for states which have decided. The next GST Council meeting is now scheduled for October 5. The average monthly GST collection in the April-August period was down by nearly 30% compared with the same period a year ago. The 12 states ready to borrow are Andhra Pradesh, Bihar, Gujarat, Haryana, Karnataka, Madhya Pradesh, Meghalaya, Sikkim, Tripura, UP, Uttarakhand and Odisha. Manipur has chosen the ‘option 2’ of the borrowing plan. Six states, including Goa, Assam, Arunachal Pradesh, Nagaland, Mizoram and Himachal Pradesh, will also borrow but are likely to indicate their preferred option this week.  The ‘option 1’ of the borrowing plan allows states to borrow an aggregate amount of Rs 97,000 crore through central-assisted special window to ensure interest rates are at G-sec level. The option comes with no interest or principal repayment burden on the state and would also not reflect as states’ debt in their books. Further, it also allows states to carry forward to next year any unutilised borrowing of 2 percentage point. While the ‘option 1’ amount has been arrived at considering the shortfall only due to GST implementation but the total shortfall in states’ GST mop-up from a guaranteed 14% y-o-y growth is estimated at Rs 2.35 lakh crore. The second borrowing option is for this amount but it comes with the burden of interest payment. Further, the amount over Rs 97,000 crore would be considered states’ debt and there will not be any carry forward of the borrowing limit not used this year.

Source: Financial Express

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India eyes investment from Japanese firms

 India has reached out to Japanese companies, not yet present in the country, such as Nintendo, Hitachi Metals, Taisho Pharma, Ono Pharma and Mizuno to set up operations here, and urged conglomerates already here to bring verticals currently missing. The Japanese government is oering its companies incentives to shift manufacturing bases out of China either back home or to India or Bangladesh. New Delhi is keen to wean some of them here and is reaching out to them to facilitate their entry, oicials said. “We are in touch with Japanese investors,” a senior government oicial told ET. “Engagement with them is going on at various levels.”   The government has drawn up a list of all the Japanese companies and is reaching out to them. Three categories of companies have been identied as part of the exercise. The rst category consists of companies not present in India. The second list is of companies that have just one business vertical in the country while other verticals are in China. The third is of those companies that have manufacturing here but can expand capacity further. Those in the rst list include auto companies Mazda and Subaru, sports retail and ecommerce company Mizuno, textiles companies Descente and Unitika, and railcars maker Japan Transport Engineering Company. Japan has allocated about $221 million subsidy to encourage companies to relocate their manufacturing from China for 2020. Japanese supply chains are currently heavily dependent on China. India has formed a high-level group chaired by cabinet secretary to draw up a phased manufacturing plan and incentive schemes to attract foreign investments in manufacturing of mobile and electronics, medical devices, and pharmaceutical drugs. The group, comprising secretaries of key ministries and departments including the Department for Promotion of Industry and Internal Trade (DPIIT), has also been mandated to identify potential investors and organisations across key sectors and geographies with the capacity to invest in India or enter into joint ventures with Indian companies. A national repository of landbank has been set up to provide ready access to availability of land and resources in the country. Japan is the fourth biggest investor in India. Its total cumulative equity foreign direct investment (FDI) into India is nearly $200 billion, 7% of the total ows and more than that from the US and UK.

Source:   Economic Times

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DPIIT working on credit guarantee, seed fund schemes for startups

Both the schemes would require the approval of the finance ministry and then the DPIIT would seek the nod of the Union Cabinet for these two schemes. The Department for Promotion of Industry and Internal Trade (DPIIT) is working on two schemes -- credit guarantee and seed funds -- to support startups in the country, a top government official has said. DPIIT Secretary Guruprasad Mohapatra said that an interministerial consultation process is on to work out the contours of the two schemes. "We are working on a credit guarantee scheme and a seed fund scheme. Both are under interministerial consultations," the secretary told PTI. He said there would be a corpus in the credit guarantee scheme which would be given to banks and they will leverage that to lend to startups. This scheme would give banks a comfort to lend, he said adding that it is for credit not for venture capital. "This is for capex credit," Mohapatra added. On the seed fund scheme, Mohapatra said that most startups actually face problems in raising finance or funds in the ideation to the proof of concept stage. Some states like Gujarat and Kerala already have schemes like seed funds, but they are small, he said. "The central government ministries also have, but we want to put a pan India scheme," the secretary said. Both the schemes would require the approval of the finance ministry and then the DPIIT would seek the nod of the Union Cabinet for these two schemes. He also said that certain startups have raised some issues pertaining to ESOPs (employee stock option plans) and "that we have forwarded to the revenue department". Talking about the next edition of the ranking of states and union territories (UTs) on their startup ecosystem, the secretary  said that the department has already started the process for that. The department is encouraging states to develop their startup policy to promote budding entrepreneurs. In the 2019 rankings, Gujarat has again emerged as the best performer in developing startup ecosystems for budding entrepreneurs. The government had launched the Startup India Action Plan in January 2016 to promote budding entrepreneurs in the country. The plan aims to give incentives such as tax holiday and inspector raj-free regime and capital gains tax exemption.

Source: Times Now

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Land acquisition: New portal to help industry, but govt must fix high registration-costs, green nod delays  

The new portal to make land acquisition easier will help industry, but govt must fix high registration-costs, green nod delays, etc In 2009, India ranked 93 for property registration in the Ease of Doing Business; by 2020, the country had slipped further to 154. So, while it took less time and cost less to register a property in India in 2009, by 2020, both the cost and time had doubled. The problem is perhaps rooted in the difficulty in acquiring land. Though the government hasn’t had much progress on easing land acquisition, it has now come out with a convenient way for businesses to acquire land. The commerce and industry ministry recently launched a website to facilitate land acquisition. The website will also provide details of nearest available raw material source, land- and airtransportation routes, etc. The portal, a ministry release highlighted, has mapped out 4.2 lakh hectares of land across 31 states, of which 1.13 lakh hectares is readily available. Apart from the problem of land availability, a big deterrent for investors is the fact that green nods and various other clearances take a lot of time. While the government has experimented with a singlewindow clearance system for environmental clearances and the commerce & industry minister recently talked about a single-window clearance system for all government permissions required, the fact is that obtaining green approval is a notoriously complicated process. The government seems to be looking to ease the process with the draft Environmental Impact Assessment norms that have come under a cloud over allegations of favouring industry at grave costs to environment. For the land portal to be truly meaningful, the government needs to ensure that along with fixing high registration costs, the various approval processes are made easier.

Source: Financial Express

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Textile units in Tirupur searched

 Coimbatore: The officers of directorate general of GST Intelligence, zonal unit, Coimbatore, conducted simultaneous searches at the offices, warehouses and residences of two manufacturers of knitted fabrics in Tirupur on September 10. During the search operation, it was found that the taxpayers have made sales for which no GST invoice or bill was raised. The approximate value of sales without bills or invoices was around Rs 40-45 crore. The unaccounted stock of knitted fabrics valued at Rs 2.70 crore were also detected and seized from four of their premises. Two of the warehouses were not declared to the GST department. Incriminating documents have been recovered. An amount of Rs 2.2 crore has been recovered towards past GST liabilities.

Source: Times of India

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Textile, garment exports of China keep rising

The Ministry of Industry and Information Technology (MIIT) said that the exports of textiles and garments of China expanded 5.26 percent since a year ago to set at USD187.41 billion in the starting 8 months of the current year. The expansion rate increased 0.05 percent since the January-July period, according to the MIIT data. The textiles exports of China came in at USD104.8 billion in the period, rising 31.99 percent since a year ago, as the garment exports declined 15.74 percent to set at USD82.61 billion. In August, the garment exports came in at a total of USD16.21 billion, rising 3.23 percent since a year ago, the first monthly expansion since the start of the year.

Source: MENAFN

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Pakistan: The rise and fall

Rapid industrialisation and economic uplift of masses, which should be the cherished goal of any government, cannot be achieved without having a strong engineering base, particularly heavy engineering industry. The need for developing such industry is so vital that it received special attention of many developed and newly-industrialised countries. The notable examples are of Japan, China and South Korea, and of India, Malaysia, Thailand and Turkey, which have seen the fastest economic growth over recent years. Rapid industrialisation and economic uplift of masses, which should be the cherished goal of any government, cannot be achieved without having a strong engineering base, particularly heavy engineering industry. The need for developing such industry is so vital that it received special attention of many developed and newly-industrialised countries. The notable examples are of Japan, China and South Korea, and of India, Malaysia, Thailand and Turkey, which have seen the fastest economic growth over recent years. Despite being capital intensive and having lower profitability due to continuous technological improvements in methods, processes and products, and use of new and advanced materials, heavy engineering, also known as capital goods industry, has always received government support the world over. The value of heavy engineering industry can be determined through its linkages and services it provides to manufacturing and infrastructure sectors, in particular, and to the economy, in general. Other benefits of a strong heavy engineering base include self-reliance, large-scale employment, enhancement in defense capabilities, increase in export earnings etc. The general pattern of the development of capital goods industry in any country is almost identical. Initially, the process industries are developed with simultaneous building-up of light engineering industry to provide services to the process industries. When the demand for process industries, like sugar, cement, chemical, fertiliser, paper and pulp plants, iron and steel industry, power plants and others, sufficiently develops, the requirement for self-reliance in plant manufacturing is compulsory. This leads to evolving heavy engineering industry for manufacturing of a variety of capital goods including heavy metal fabrication and machine industry for process plants and energy-related equipment, machine tools manufacturing, equipment for land development, road construction and material handling, machinery for power generation, oil and gas, textiles, automobiles and iron and steel industries. Pakistan followed the same strategy to develop heavy engineering industry. After the emergence of Pakistan, the Pakistan Industrial Development Corporation (PIDC) created a self-sustained growth in industrial sector, having established over sixty industrial units across the country within a short span of less than two decades. These included cement, sugar, jute, chemicals, petrochemical, fertiliser, steel and other process industries. Looking back, the development of engineering industry in the early years was slow and unsatisfactory. Only a few light engineering units in the private sector, Railways Workshop and some facilities in defense area existed. Karachi Shipyard and Engineering Works was established by the PIDC in 1957, where manufacturing of equipment for material handling and machinery for sugar mills and cement plants was also undertaken, besides the ship-building. The Second (1960-1965) Five-Year Plan placed highest priority to developing heavy engineering industry. In order to increase value-added content in the manufacturing, associated with transfer of technology and technical know-how, the PIDC was entrusted with developing capital goods industry in public sector with high technological level. Main reason for setting up heavy engineering units in public sector was the reluctance of the private investor as it requires long–gestation period, heavy capital investment, lower profits, and requirement of infrastructure. A Heavy Engineering Division was thus established at the PIDC with a nucleus of experts in metallurgical, mechanical and electrical engineering to plan setting up steel mills and capital goods industry. Construction of the first steel mill was already on the cards. A number of capital goods manufacturing units were envisaged in public sector. But the plans were delayed due to political conditions and financial constraints. Thus, physical work on the capital goods industry projects was started in the Third (1965-1970) Five-Year Plan period when emphasis was shifted from consumer goods to capital goods industry. Light and medium-size engineering sector grew in private sector, mainly during the 2nd and the 3rd Plan periods with lower technological levels. Pakistan Machine Tool Factory (PMTF) was established by the PIDC at Karachi in 1968 in collaboration with the Swiss to produce machine tools of international standards. Simultaneously, construction of two heavy engineering units namely Heavy Mechanical Complex (HMC) and Heavy Foundry & Forge (HFF) at Taxila was launched, during 1966-1970, with the Chinese technical and economic assistance. Negotiations with the western sources for setting up the Heavy Electrical Complex in collaboration with the transformer manufacturer however did not materialise, and the project was delayed inordinately. In 1973, State Heavy Engineering & Machine Tool Corporation (later named as State Engineering Corporation) came into being as one of the successors of the PIDC. The nationalised steel and engineering units also became part of the corporation that managed Pakistan Engineering Co Ltd, Pioneer Steel Mills at Lahore, Metropolitan Steel Corporation, Quality Steel Mills, Karachi Pipe Mills and People’s Steel Mills at Karachi. The strategy complimented heavy engineering and light engineering industry at national level to promote and strengthen the industrial base. During this period, the heavy engineering units produced machine tools, sugar mills, cement plants, chemical plants, equipment for oil and gas industry, road rollers, asphalt mixing plants, crushers, overhead and gantry cranes, components for steel and mining projects, components for automobile industry, equipment for thermal and hydropower plants, power transformers, weapons and armaments for the defense industry, and other engineering goods. Pakistan exported sugar mills, cement plants, road construction machinery, armaments and a variety of other engineering goods to various countries in competition with the Chinese and other sources. During the government of Prime Minister ZA Bhutto, the promotion of capital goods industry received the highest priority. Two units for the manufacturing of textile machinery were established---Textile Machinery Company at Karachi, and Spinning Machinery Company at Lahore. Both industrial units were completed in 1975 and commenced production of cone winders, high drafting system, ring spinning frames and spares for textile industry. The base of heavy engineering over the years had developed to a degree that it could rightly be stated to be on threshold of technological breakthrough in many areas of its endeavour. Nonetheless, at a time when heavy engineering industry needed more pronounced attention so that it could enter into diversified and high-tech areas, the government decided to privatise these industrial units. During the first phase of privatisation, Karachi Pipe Mills, Pioneer Steel Mills, Metropolitan Steel Corporation, Pakistan Switchgear, Quality Steel Works and Textile Machinery Co were disinvested during 1992-1995. Unfortunately, all these industries, except Pioneer Steel Mills, ceased their production operations and were closed down by the new owners. In the second phase, privatisation of Heavy Mechanical Complex, Heavy Electrical Complex and Pakistan Machine Tool Factory was announced. Plans for rehabilitation and replacement of old plant machinery, diversification of products and services, induction of new technology at heavy engineering units were therefore shelved. As number of privatisation and divestment efforts for these units failed, primarily due to inept and myopic policies of the government, plant machinery at these units continued to dilapidate, and their competitive edge was eroded. During this period the orders dwindled and qualified and skilled engineers and technicians left the companies. Financially, these companies became a burden on the exchequer. Today, Heavy Mechanical Complex (along Heavy Foundry & Forge) has been transferred to a strategic organisation. It is reported that Pakistan Machine Tool Factory, which was again on the privatisation list, has also been taken over by the same organisation. Heavy Electrical Complex is for sale once again, and is in shambles.

Bangladesh: CPB(M) announces siege of textile and jute ministry on Sept 15

Communist Party of Bangladesh (Marxist) -- CPB (M) -- today announced a siege of the Ministry of Textiles and Jute on September 15 to realise its three-point demand, including the resignation of Jute Minister Golam Dastagir Gazi for his failure in protecting the country's jute industry. The two other demands are reopening of all closed jute mills and reinstating jute mill workers and paying all arrears. General Secretary of Communist Party of Bangladesh (Marxist) MA Samad announced the programme today through a release. Instead of modernising the jute mills and stopping looting and irregularities in the jute sector, the government has decided to close down state-run jute factories, which is not acceptable, Samad said in a release. He also said thousands of workers in this industry have become unemployed as a result of the closure of jute mills. Besides, millions of workers in other sectors are unemployed today due to the impact of coronavirus. Unemployed workers are also returning from abroad. "But the government has no headache in this regard," the CPB(M) GS added. He said there is no alternative to waging movements against the government to protest such injustice.

Source: The Daily Star

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One-third SMEs face closure in less than three months

About 33.9 per cent of SMEs can remain open for less than three months under the current circumstances as businesses continue to suffer the brunt of Covid-19. A survey by the United Nations Capital Development Fund (UNCDF), the International Chamber of Commerce (ICC) and a number of institutions show that in the least developed countries, including Sub-Saharan Africa, 87.9 per cent SMEs are operating on less than 75 per cent business capacity. Kenya is among countries where SMEs have been hard hit by the effects of Covid-19, forcing the government to intervene to try and cushion them. Data collected between July 1 and August 21, in the SME impact survey, show some 37 per cent of SMEs have already laid-off staff due to a reduction in business operations. The main sectors represented in the survey were hotel and catering, textile and craft and industrials. “There are notable sectoral differences in the impact of Covid, with textile and craft, personal care and energy sectors affected more in terms of business operations compared to finance, professional and technology services,” the survey reads in part. Lay-offs have been recorded high overall, but textile and craft, utilities and energy and catering and tourism are the most affected. “SMEs in the Asia-Pacific LDCs seem to be fairing better than SMEs in Sub-Saharan Africa in terms of operational capacity and anticipated revenue loss,” the survey notes. This comes amid little or no support from governments, according to the survey with only about 47.5 per cent reporting having received some type of government support. About 58.5 per cent are said not to be aware of any government support. Access to customers and suppliers are reported as major challenges. For those that have received government support, the relief is mainly on subsidies. “We have found higher effectiveness of government support strongly associated with positive revenue outlooks and better operation capacity,” the survey notes. Kenya is among countries that have put in place measures to try and cushion the SMEs, including a Credit Guarantee Scheme to enhance access to credit. A cabinet meeting at State House, Nairobi, chaired by President Uhuru Kenyatta last week, approved the establishment of a Credit Guarantee Scheme with an initial seed capital of Sh10 billion. This will be capitalized in two tranches of Sh5 billion in financial year 2020/21 and financial year 2021/22. “The State’s contributions are expected to be followed by contributions from development finance institutions and participating commercial financial institutions, which are expected to boost the finding for the scheme to at least Sh100 billion,” the Executive Office of the President said in a release. The Credit Guarantee Scheme is expected to be operationalized by mid next month. The survey has shows while Covid-19 seems to have impacted all SMEs, female-led SMEs have reported higher rates of lay-offs and relatively less resources to sustain their business in the short- to mid-term compared to male-led businesses. “Female businesses seem to be involved in business sectors that are affected more by Covid than male businesses,” the survey indicates. In May, Central Bank of Kenya governor Patrick Njoroge has indicated that at least 75 per cent of SMEs were facing closure by end of June due to lack of funds, calling for an urgent move to cushion them as they contribute hugely to the country's employment and GDP. Statistical data estimates that Kenya’s MSMEs contribute approximately 40 per cent of the GDP with the majority falling in the informal sector. The pandemic has taken a toll on businesses, lowering the GDP and worsening unemployment, where the latest Kenya National Bureau of Statistics report shows the rate of joblessness doubled between April and June to 10.4 per cent from 5.2 per cent in the same period last year. It is estimated at least 1.7 million have lost jobs during this period. Earlier in June, data compiled by the Kenya Private Sector Alliance(Kepsa), and shared with the government, indicated more than 5.9 million jobs had been affected since the first case of Covid-19 was reported in the country in March. The most affected sectors included tourism and hospitality, public transport, construction, manufacturing, real estate and trade. A report by the United Nations Industrial Development Organisation (UNIDO)- the Competitive Industrial Performance (CIP) Index 2020, has ranked Kenya 115 out of 152 countries in terms of competitiveness. The report launched in partnership with the Kenya Association of Manufacturers benchmarks the ability of countries to produce and export manufactured goods competitively. It provides a yardstick against which Kenya can compare its manufacturing competitiveness on a global level.

Source: The Star Kenya

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Fabric and apparel accessory manufacturers want furnace oil price reduced

The Fabric and Apparel Accessory Manufacturers Association (FAAMA) is urging the Government to reduce prices of furnace oil as it impacts competitiveness and deprives the country from saving valuable foreign exchange. FAAMA made this request at a recently held forum on Sri Lanka’s Export Development and Way Forward, chaired by Trade Minister Bandula Gunawardena at NSBM Green University in Homagama. FAAMA pointed out that Sri Lanka needs at least $3.3 billion worth of fabric and accessories to cater to the $5.1 billion export market, but the country only produces $550 million worth of fabric and accessories at present. Therefore, fabrics and accessories worth $ 2.8 billion are still dependent on imports (under CH Code 50 to 60). This is further classified into apparel manufacturing for export and for domestic purposes with associated imports of $ 1.6 billion and $ 1.2 billion, respectively. "This shows that Sri Lanka has the opportunity to save foreign exchange to the extent of $ 2.8 billion annually," the FAAMA said. It also estimates that the capability in the local textile and apparel accessories industry can cater to around $ 2 billion annually. This can be possible if adequate infrastructure is in place and a competitive utility cost is afforded to the industry. Utility/energy accounts for 30% of the total cost in textile manufacturing. “Processing of fabric and accessories requires a large amount of furnace oil, but it is very expensive in Sri Lanka compared to other regional markets like India and Pakistan. This is a major challenge for our competitiveness,” FAAMA stressed. Currently many manufacturers are using Biomass Boilers, which have a higher carbon footprint, but are cheap. Accordingly, biomass boilers only require Rs. 500,000 worth of wood while furnace oil requirement is Rs. 3 million. They requested the Government to discuss with the Ceylon Petroleum Corporation (CPC) and provide furnace oil at a better rate. The industry is also calling for cost-effective and sustainable waste disposal methodology, including a central incineration facility, and to redress limitations in infrastructure and waste management capabilities in the Biyagama and Avissawella industrial parks.

Source: Financial Times

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