This implies the government may look at expanding the budget size for the year from the estimated Rs 30.4 lakh crore, though a precise estimate of the expansion will be clear only later. Amid a crash in tax collection and calls for more fiscal stimulus to soften the Covid-19 blow and spur growth, finance minister Nirmala Sitharaman on Monday sought Parliament’s approval for an additional spending of Rs 2,35,852.87 crore during the current fiscal. This implies the government may look at expanding the budget size for the year from the estimated Rs 30.4 lakh crore, though a precise estimate of the expansion will be clear only later. This first batch of supplementary demand includes Rs 20,000 crore to shore up the capital base of state-run banks (infusion was not part of the FY21 Budget) to facilitate further lending and Rs 40,000 crore towards enhanced expenditure under the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS). “Of this, the proposals involving net cash outgo aggregate to Rs 1,66,983.91 crore and gross additional expenditure, matched by savings of the ministries/ departments or by enhanced receipts/recoveries aggregates to Rs 68,868.33 crore”. The supplementary demand includes a total of 54 grants and one appropriation. Demand for certain new items of expenditure, including the extra allocation for MGNREGS and Rs 4,000 crore for the credit guarantee scheme for MSMEs, had to be made to provide for the relief package announced earlier this year. The Centre has sought Rs 46,602.43 crore to provide additional allocation under the postdevolution revenue deficit grant to states, in accordance with the recommendations of the Fifteenth Finance Commission. Some analysts have said the revenue shortfall and extra stimulus requirements could warrant an additional resource mobilistion of Rs 8.5-9.5 lakh crore over and above the likely Budget revenue receipts in FY21. Given the massive plunge in revenue, the Centre was forced to raise its FY21 borrowing by Rs 4.2 lakh crore from the budgeted level to Rs 12 lakh crore. Of this, it has already raised Rs 7.1 lakh crore from the market, which is 73% higher than a year earlier. Nevertheless, mindful of its fragile fiscal position, the government of late applied brakes on certain spending. Its expenditure in July grew just 6% on year, compared with 46% growth achieved in June and the budgeted spending growth of 13.2% for the whole of FY21. The capex in July at Rs 23,576 crore was down a sharp 47% on year. With net tax revenues declining 40% on year in April-July (the budgeted growth was 21% in FY21 over the actual of FY20), analysts see fiscal deficit more than doubling from the budgeted target of Rs 8 lakh crore. Meanwhile, the April-July fiscal deficit has exceeded the Budgeted target for the full year. Commenting on the supplementary demand, Icra Ratings principal economist Aditi Nayar said: “The extent to which savings can be found vide the expenditure management measures that were put in place, will contribute to determining the eventual fiscal outcome for FY21 in light of the ongoing revenue shock of around Rs 6 lakh crore. Our baseline expectation is now that the Centre’s fiscal deficit will widen to at least Rs 14 lakh crore, or 7.4% of GDP in FY21.” The government’s budgeted fiscal deficit target for FY21 was 3.5% of GDP.
Source: Financial Express
The Ministry of MSME implements various schemes and programmes for growth and development of MSME Sector in the country. These schemes and programmes include Prime Minister’s Employment Generation programme (PMEGP), Scheme of Fund for Regeneration of Traditional Industries (SFURTI), A Scheme for Promoting Innovation, Rural Industry & Entrepreneurship (ASPIRE), Interest Subvention Scheme for Incremental Credit to MSMEs, Credit Guarantee Scheme for Micro and Small Enterprises, Micro and Small Enterprises Cluster Development Programme (MSE-CDP), Credit Linked Capital Subsidy and Technology Upgradation Scheme (CLCS-TUS). Recently, Post Covid-19, Government has taken a number of initiatives under Aatma Nirbhar Bharat Abhiyan to support the MSME Sector in the country especially in Covid-19 pandemic. Some of them are:
No global tenders for procurement up to Rs. 200 crores, this will help MSME. An online Portal “Champions” has been launched on 01.06.2020 by the Prime Minister. This covers many aspects of e-governance including grievance redressal and handholding of MSMEs. Through the portal, total 18,723 grievances have been redressed upto 09.09.2020. RBI has also announced several measures to Reduce Financial Stress of MSMEs. This information was given by Shri Nitin Gadkari, Union Minister for Micro, Small and Medium Enterprises in written reply to a question in Rajya Sabha today
Source : PIB
The government has infused Rs 3.5 trillion in PSBs in the last few years, with the previous round of recapitalisation taking place in September 2019 The Union government may infuse Rs 20,000 crore through recapitalisation of bonds into state-owned banks in the fourth quarter of the fiscal year. On Monday, the government sought Parliament nod for “meeting additional expenditure of Rs 20,000 crore towards recapitalisation of public sector banks (PSBs) through issue of government securities”. Even as a senior government official said that the funds would be sufficient to take care of the capital needs of PSBs this fiscal year, experts feel otherwise. Reserve Bank of India (RBI) Governor Shaktikanta Das had said in July that a recapitalisation plan for banks had “become necessary” and called for lenders to raise money in advance to “build resilience” in the financial system. According to the RBI, the gross non-performing asset (NPA) ratio of PSBs will surge to 15.2 per cent by March 2021, from 11.3 per cent a year back under a baseline scenario. But the RBI’s assessment was done in its Financial Stability Report of July, which had not factored in the loan restructuring scheme announced by the regulator in September. “Given the capital infusion announcement is at the lower end of estimates, we maintain that the capital cushion for PSBs will remain low above regulatory levels unless these banks are able to raise some capital from markets or the RBI defers peak capital requirements, which are scheduled to increase from September 30,” said Anil Gupta, sector head-financial sector ratings, ICRA. ICRA had in August estimated that PSBs would require capital to the tune of Rs 20,000- 55,000 crore for 2020-21 (FY21) as fresh NPAs would reduce after the restructuring of stressed loans. It had earlier estimated higher capital requirements of Rs 46,000-82,600 crore before the RBI announced loan restructuring. ICRA estimates that the gross slippage rate (of good loans into bad) will be around 3-4 per cent, from its earlier assessment of 5-5.5 per cent. “We will not front-load capital into state-owned banks. The capital requirements for banks have been changing. We wanted to ensure we secured Parliament nod in case we needed to infuse capital into banks after assessing their needs later this year,” said a senior government official. The official added that the provision coverage ratio — provisions made against bad loans — stood at 80 per cent for banks. The recapitalisation money would go towards meeting the Covid-19-related provisioning requirements of banks and a fair assessment would be possible after the impact of loan moratorium was visible on the books of banks in the third quarter, added the official. “The good part is that the recapitalisation needs of banks will not be big this fiscal year after the loan restructuring announcement by the RBI,” the official added. Gupta added that the government may rely on banks to raise capital from the markets. This will reduce the overall capital infusion requirements from the government. The government has infused Rs 3.5 trillion into PSBs in the past few years, with the previous round of recapitalisation taking place in September 2019, when the government decided to front-load a major share of the Rs 70,000-crore into banks. Most of the capital infusion has taken place through issuance of bonds, which does not have an immediate impact on the government’s finances, but it becomes a liability in the years to come due to interest payment. Finance Minister Nirmala Sitharaman had, during her Union Budget speech for FY21 in February, avoided announcing recapitalisation of PSBs this fiscal year. The government had infused Rs 80,000 crore into PSBs in 2017-18 and Rs 1.06 trillion in 2018-19 through recapitalisation bonds. Bankers had told Business Standard last month that the capital requirement in this fiscal year may not be big for lenders due to a host of measures taken by the government and the RBI. The state-owned banks also expect a delinquency, or the proportion of slippage of good loans into bad, of 5 per cent as was seen in the past two-three years. The provisioning requirement for PSBs would be Rs 1 trillion if the overall credit in the system is Rs 100 trillion and banks make an annual operating profit of Rs 1.5 trillion.
Source: Business Standard
With regard to outow from India, Minister of State for Finance Anurag Singh Thakur said, it was USD 20.63 million in calendar year 2020 as against USD 27.57 million in the corresponding period last year. To curb opportunistic takeovers or acquisitions of Indian companies due to the current COVID-19 pandemic, the government issued Press Note 3 earlier this year, he said There has been decline in foreign direct inow from China in the last three years with FDI coming down to USD 163.77 million in 2019-20, Minister of State for Finance Anurag Singh Thakur informed Lok Sabha on Monday. Giving details of the total foreign directinvestment (FDI) inow from Chinese companies in India, he said, it was USD 350.22 million in 2017-18, while it declined to USD 229 million in the following year. During 2019-20, FDI further came down to USD 163.77 million, he said in a written reply on the rst day of the monsoon session. With regard to outow from India, he said, it was USD 20.63 million in calendar year 2020 as against USD 27.57 million in the corresponding period last year. To curb opportunistic takeovers or acquisitions of Indian companies due to the current COVID-19 pandemic, the government issued Press Note 3 earlier this year, he said. "A non-resident entity can invest in India, subject to the FDI policy except in those sectors/activities which are prohibited. "However, an entity of a country, which shares land border with India or where the benecial owner of an investment into India is situated in or is a citizen of any such country, can invest only under the government route," he said quoting the Press Note 3. Further, he said, "a citizen of Pakistan or an entity incorporated in Pakistan can invest, only under the government route, in sectors/activities other than defence, space, atomic energy and sectors/activities prohibited for foreign investment." Replying to another question, Thakur said, the Department of Expenditure has released the central share of State Disaster Response Fund (SDRF) to the states including Maharashtra in the rst week of April 2020 in the view of the pandemic. Further, to provide additional resources to states to ght against COVID-19 and considering the request of the states for relaxation of the existing Fiscal Responsibility and Budget Management Act (FRBM) limit of 3 per cent of gross state domestic product (GSDP), additional borrowing limit of up to 2 percent of GSDP has been allowed to states for the year 2020-21, he said. Out of the additional borrowing limit of 2 per cent of GSDP allowed to states, consent of 0.50 per cent of GSDP amounting to Rs 1,06,830 crore has already been issued to the states including the consent of Rs 15,394 crore to the state of Maharashtra to raise open market borrowing (OMB) during the year 2020-21, he added.
Source: Economic Times
‘Over the long term, (the) focus will be on capacity augmentation, getting into the areas of niche petrochemicals with further forward integration into textiles,' Indian Oil chief SM Vaidya said, describing this as 'key for sustaining our competitiveness margins and growth trajectory' Indian Oil Corp will expand its petrochemicals capacity and integrate it with its textile business to help offset the impact of low refining margins, the chairman of India's largest refiner said on Monday. "We see petrochemical integration as the way forward...Petrochemicals gives us that ability to de-risk from low cracks (refining margins)," S.M. Vaidya said at the online Asia Pacific Petroleum Conference (APPEC). India's per capita consumption of petrochemicals is one of the lowest in the world, but consumption is expected to rise with rising income levels. "Over the long term, (the) focus will be on capacity augmentation, getting into the areas of niche petrochemicals with further forward integration into textiles," Vaidya said, describing this as "key for sustaining our competitiveness margins and growth trajectory". IOC is expanding its petrochemical capacity by more than 70% from its current 3.2 million tonnes a year. Asia's refinery margins are currently negative, with refiners running at low output to cope with oversupply. Jet fuel is among the worst hit due to air travel restrictions to curb the spread of the coronavirus. Vaidya said IOC is working on an oil-to-chemical technology to use cheaper grades for producing petrochemicals. India, the world's third-biggest oil importer and consumer, has experienced a sharp decline in fuel demand, mirroring a global trend following the coronavirus outbreak. However, Vaidya said a recent uptick in local sales of automobiles, including tractors, and the forthcoming festive season may lift fuel demand towards pre-COVID-19 levels by the end of the year. "We also expect motor spirit and diesel demand to catch up to the pre-COVID level in the first half of 2021-22 as the pandemic probably should be under control by then," Vaidya added. Consultancy Energy Aspects in a recent note lowered its fourth-quarter forecast for oil demand in India by 0.43 million barrels per day. India has consistently reported more than 1,000 COVID-19 deaths daily this month and has recorded 78,586 in total. It is second to the United States in its overall number of infections, but it has been adding more daily cases than the United States since mid-August.
Source: Reuters/ Live Mint
New Delhi: The Goods and Services Tax (GST) Council is empowered to ask the Central government to permit the states to borrow for meeting GST compensation shortfall, the attorney general has said in his opinion to the government on the matter. The borrowing by states, citing laws laid down in the Constitution. “The GST Council can, in the exercise of its duties under Article 279A (4)(h) of the Constitution, recommend to the central government to permit the states to borrow money, as a measure for meeting the compensation gap,” Thakur said. “It would, however, be for the central government to take nal decision in the matter, in exercise of its authority under Article 293(3) of the Constitution,” he added. As per the reply, the AG has also said that the GST Council can recommend continuance of cess beyond the transition period of ve years – that is beyond 2022 – to raise funds for paying compensation in the event of a shortfall during the transition period. "The step to be taken on account of any ‘extra ordinary circumstances causing a steep fall in GST revenues and shortfall in the fund’ move can be made under Section 8(1) of the Act, but would “require a decision by a three-fourth majority of the weighted votes,” the AG had added in his opinion
Source: Economic Times
In a separate reply, the minister also clarified that the government is not considering increasing the stipend payable to apprentices. Funds spent by the skills development ministry on its agship skilling programme has dropped by over 13% in 2019-20 compared to the previous scal, the lowest in last three years, shows data from the skills ministry. The government had spent Rs 1648.25 crore for skilling youth under the Pradhan Mantri Kaushal Vikas Yojana (PMKVY 2.0) compared to Rs 1909.19 spent in the previous scal, RK Singh, minister of state for skills development said in a written reply in the Lok Sabha. The money spent under the scheme in 2017-18 stood at Rs 1721.18. Under PMKVY 2.0, as on 94.17 lakhs candidates have been trained or oriented until April 1, 2020. Under the SkillIndia mission, the ministry of skill development and entrepreneurship imparts employable skills to the youth through long term and short term training.While the Pradhan Mantri Kaushal Vikas Yojana (PMKVY 2.0) and Jan Shikshan Sansthan (JSS) is being used for short term training, long-term training to the youth is being provided through industrial training institutes (ITIs). Meanwhile, the ministry has collaborated with the ministry of education to impart vocational training to students under the umbrella scheme SamagraShiksha, which is an integrated scheme for school education to children in classes IX and XII along with the general education. “The National Skill Development Corporation under the Ministry has signed memorandum of understanding (MOUs) with eight countries including Japan, UAE, Sweden, Saudi Arabia, Sweden, Russia, Finland and Morocco for cooperation in the eld of vocational education and training,” the minister said in a separate reply. Besides, the ministry had in June this year entered into an MoU with IBM in for a free digital learning platform “Skills Build Reignite” to provide job seekers and entrepreneurs access to free online coursework and mentoring support designed to help them reinvent their careers and businesses. “Multifaceted digital skill training in the area of cloud computing and artificial intelligence (AI) is provided to students and trainers across the nation in the National Skill Training Institutes (NSTIs),” the minister added. In a separate reply, the minister also clarified that the government is not considering increasing the stipend payable to apprentices.
Source: Economic Times
He said both viscose staplefi bre (VSF) and chemicals businesses of Grasim are now operating at about 80% of pre-Covid capacity, after a low of 23% witnessed in April. “We expect to be back to pre-Covid capacity by Q4,” Birla said. India’s economic activity levels are normalising after a steep fall in the rst quarter due to Covid-19 setback, underlining that the country’s long-term growth potential remains intact, Aditya Birla Group chairman Kumar Mangalam Birla said on Monday. “Both the Reserve Bank of India (RBI) and the Government of India have announced several policy measures to provide relief to the affected sections of the economy and to support the process of recovery,” Birla told shareholders of Grasim Industries at the group flagship’s 73rd annual general meeting held through videoconference. He said both viscose staple fibre (VSF) and chemicals businesses of Grasim are now operating at about 80% of pre-Covid capacity, after a low of 23% witnessed in April. “We expect to be back to pre-Covid capacity by Q4,” Birla said. He said the company has decided to go ahead with its Rs 3,523-crore VSF browneld expansion in Gujarat with R revised timelines. “The company’s cape plan for FY21 has been calibrated to Rs 1,615 crore as of now,” he said. India’s gross domestic product (GDP) contracted a record 23.9% year on year in the rst quarter ended June when most of the country was under lockdown to contain the spread of the Covid-19 pandemic. Birla, however, pointed out that the economic activity levels have been gradually normalising since then. “The IMF (International Monetary Fund) also has estimated that the Indian economy will rebound to 6% in FY22,” he said. “The government’s move to promote domestic champions through the Atmanirbhar Bharat programme is commendable. To overcome the slowdown in the economy, Grasim has initiated measures to optimise operations across plants, reduce xed costs and conserve cash to overcome the slowdown in business activity. “Given the uncertain business environment, Grasim’s current strategic focus is built on four pillars – demand creation through innovative products, cost rationalisation, agility, and cash ow focus,” Birla said. Across the businesses, the company's xed costs have reduced by 35%, which amounts to savings of Rs 256 crore compared to the FY20 quarterly average, he said. The company has businesses as diverse as cement, chemicals and VSF. Grasim had reported a 72% year-on-year decline in its consolidated net prot for the quarter ended June at Rs 353 crore against Rs 1,294 crore a year earlier. “Based on your company’s performance and future outlook, your directors have recommended a dividend of Rs 4 per equity share of face value of Rs 2 each for FY20. This entails a cash outgo of Rs 263 crore," Birla told the shareholders. Its consolidated revenue from operations stood at Rs 77,625 crore for 2019-20 while its consolidated Ebitda was at Rs 13,846 crore. Almost all of Grasim’s plants and corporate offices were shut for several weeks in compliance with the government directives as part of a national lockdown starting from the last week of March to contain the spread of the pandemic. The Indian economy delivered a subdued performance in the last fiscal year when GDP growth slipped to 4.2% from 6.1% in 2018-19, primarily led by manufacturing and construction sector weakness.
Source: Economic Times
The banking system continues to remain flush with liquidity, and the Reserve Bank of India (RBI) is in a no hurry to neutralise it. High system liquidity is generally a cause for concern as it can stroke inflation, but the situation now is quite different. Instead of pushing up inflation, the huge surplus liquidity, bordering at around Rs 7 trillion daily, is helping in policy rate transmission and aiding the government to borrow at a cheaper rate. Therefore, analysts expect this liquidty surplus mode to continue well into the next year as well, till such time the economy starts ...
Source: Business Standard
The Reserve Bank of India (RBI) on Tuesday proposed to introduce exchange-traded and over-the-counter (OTC) interest rate derivatives products that would be accessible to both foreign investors and retail participants. Retail participants can, however, only use the product for hedging, while non-retail participants can use it for any purpose. In a draft guideline released on its website, the central bank said retail participants can be allowed to trade on Forward Rate Agreement (FRA), Interest Rate Swap (IRS), and European Interest Rate Options (IRO), including caps, floors, collars and reverse collars, while non-retail traders can take exposure in swaptions and structured derivative products, excluding leveraged derivatives and derivatives on derivatives. Presently, only interest rate futures and interest rate options are allowed on government securities. With the introduction of many more IRF products, corporate debt could also be incorporated for making derivatives over time, say experts. Foreign Portfolio Investors (FPIs) would be allowed to transact in permitted exchange-traded interest rate derivatives (IRD) for a collective Rs 5,000 crore in net long positions. Additionally, “the net short position of an FPI on exchange-traded IRDs shall not exceed its long position in government securities and other rupee debt securities,” the RBI said. Such IRD transactions can be carried out on exchanges as standardised products. The exchanges will be allowed to come up with their own product design, eligible participants, and other details of the IRD. In the OTC markets, banks and primary dealers would act as market makers. Foreign counterparts of market-makers in India may offer rupee IRD transactions to non-residents but such transactions have to be undertaken directly with a market-maker in India, or by way of a ‘back-to-back’ arrangement through a foreign counterpart of the market-maker in India. “Every rupee interest rate derivatives transaction undertaken offshore by any related entity of a market-maker in India shall be accounted for individually in the books of the market-maker in India,” the RBI said. Resident Indian companies with a minimum net worth of Rs 500 crore will be eligible to trade in these products. The products should be benchmarked to any floating interest rate benchmark published by the Financial Benchmark Administrator (FBA) or price or index used in IRDs in OTC markets shall be a benchmark published by an FBA or approved by The Fixed Income Money Market and Derivatives Association of India (FIMMDA) for this purpose. The IRD transactions will be settled bilaterally or through any clearing arrangement approved by the Reserve Bank for the purpose, and any transactions will have to be reported back within 30 minutes to the trade repository of Clearing Corporation of India (CCIL), clearly indicating whether the trade is for hedging or other purposes.
Source: Business Standard
The rupee strengthened by 15 paise to 73.33 against the US dollar in opening trade on Tuesday as weak American currency and positive domestic equities strengthened investor sentiment. At the interbank forex market, the domestic unit opened at 73.33 against the US dollar, registering a rise of 15 paise over its previous close. On Monday, the rupee had settled at 73.48 against the US dollar. Forex traders said news related to coronavirus vaccine and sustained foreign fund inflows aided to positive sentiment. "Global risk sentiment is holding up on hopes of a vaccine becoming available by the end of 2020. US equities ended the session with gains of around 1 per cent," said Abhishek Goenka, Founder and CEO, IFA Global. Meanwhile, retail inflation softened slightly to 6.69 per cent in August as price rise in some food items eased. "Domestic consumer prices rose 6.69 per cent in August, lower than market expectations but still higher than the RBI upper limit of its tolerance band of 4-6 per cent. Since a higher print was already expected, the bond market should take the data in its stride," Goenka said. The dollar index, which gauges the greenback's strength against a basket of six currencies, fell 0.18 per cent to 92.88. On the domestic equity market front, the 30-share BSE benchmark Sensex was trading 141.59 points higher at 38,898.22, and the broader NSE Nifty advanced 43 points to 11,483.05. Foreign institutional investors were net buyers in the capital market as they purchased shares worth Rs 298.22 crore on a net basis on Monday, according to exchange data.Brent crude futures, the global oil benchmark, fell 0.08 per cent to USD 39.58 per barrel.
Source: Business Standard
The agency said although industrial activity is witnessing a faster recovery than services, leading economic indicators suggest that output is still lower than a year before. Global rating agency Standard and Poor’s (S&P) on Monday revised down its forecast of a contraction in India’s real gross domestic product (GDP) to a record 9% in FY21 from 5% announced earlier, suggesting that the continued escalation of the Covid-19 pandemic will likely keep a leash on both private spending and investment for a longer-thanexpected period. With this, S&P joins its peers – Moody’s and Fitch — and other established agencies in predicting a sharper slide in India’s GDP, after the government announced a record 23.9% contraction, the steepest among the G-20 economies, in the June quarter. Last week, Moody’s forecast India’s GDP to shrink by 11.5% in FY21, while Fitch predicted a fall of 10.5% and Goldman Sachs 14.8%. While most agencies have predicted a recovery in FY22 (S&P projects a 10% expansion next fiscal), some of them have cautioned that it will be greatly aided by a favourable base and a meaningful rebound will take time to materialise. S&P expects a permanent loss of 13% in output over the next three years. India’s elevated deficits will limit the scope for large fiscal stimulus, while the potential for further support monetary support is curbed by inflation worries, the rating agency said. S&P said: “While fiscal spending increased during the March-June quarter, the targeted fiscal stimulus measures announced so far amounts to about 1.2% of GDP. This magnitude is lower compared with global averages. The International Monetary Fund estimates that on average comparable stimulus measures across global emerging markets have been about 3.1% of GDP.” The Reserve Bank of India has trimmed the benchmark lending rate by as much as 115 basis points so far in 2020 to 4%. However, retail inflation remained above the Monetary Policy Committee’s tolerance band of 4 (+/-2)% for seven out of the past eight months through July, complicating the central bank’s job. Despite easing of lockdown curbs since June, the pandemic will continue to weigh on economic activity and that recovery has been more gradual than anticipated, according to the agency. New cases per day in India averaged nearly 90,000 in the week ended September 11, according to data from the World Health Organization. This is up from an average of about 70,000 per day in August. “As long as the virus spread remains uncontained, consumers will be cautious in going out and spending and firms will be under strain,” it pointed out. The agency said although industrial activity is witnessing a faster recovery than services, leading economic indicators suggest that output is still lower than a year before, so growth for the September quarter will also be negative. “The larger adverse shock to growth will be driven by corporate balance sheet damage, with small and midsize enterprises closing shop, and larger firms holding back capital expenditure, which will constrain their growth capacity,” it added.
Source: Financial Express
Inflation in the vegetables basket stood at 11.41 percent in August as against 11.29 percent in July. India's retail inflation for the month of August stood at 6.69 percent, according to data released by the National Statistical Office (NSO) on September 14. The consumer price index (CPI)-based inflation rate for July has been revised to 6.73 percent from 6.93 percent. The combined food price inflation (CFPI) for August stood at 9.05 percent, against 9.27 percent (revised) in July. Inflation in the vegetables basket came in at 11.41 percent in August, against 11.29 percent in July. In the fuel and light segment, inflation for the same month was 3.10 percent, against 2.80 percent in July. In cereals and related products, inflation stood at 5.92 percent in August against 6.96 percent in July. In meat and fish, it stood at 16.50 percent against 18.81 percent a month ago. For pulses and products, it stood at 14.44 percent in August, against 15.92 percent in July. The consumer price index (CPI) data for the months of April and May were not released by the Centre due to insufficient data collection amid the coronavirus pandemic and the lockdown that followed. In the last two consecutive quarters (January - March of FY 2019-20 and April - June of FY 2020-21), the average consumer price index-based inflation breached 6 percent. The Monetary Policy Committee (MPC) needs to target inflation to keep it within 4 percent, within a band of +/- 2 percent. During its policy announcement last month month, the Reserve Bank of India (RBI) said it expects headline inflation to remain elevated in the second quarter of FY 2020-21. RBI Governor Shaktikanta Das said food prices are expected to increase in the near term, due to broken supply chains as a fallout of the COVID pandemic. Overall inflation is expected to remain elevated in the near term because of costly petrol and diesel prices. The central bank's Monetary Policy Committee had kept the repo rate unchanged at 4 percent and maintained its accommodative stance. Repo rate is the rate at which the RBI lends funds to commercial banks.
Source: Money Control
India's annual rate of inflation, based on monthly wholesale price index (WPI), for August 2020, stood at 0.16 per cent over August 2019. The index for textiles declined by 0.09 per cent and for apparel by 0.44 per cent in August, according to the provisional data released by the Office of the Economic Adviser, ministry of commerce and industry. The official WPI for all commodities (Base: 2011-12 = 100) for the month of August 2020 increased by 0.91 per cent to 121.7, showing positive inflation for the first time since April this year when the economy was hit by COVID-19 pandemic and lockdowns. The index for manufactured products (weight 64.23 per cent) for August 2020 increased by 0.59 per cent to 119.3 from 118.6 for the month of July 2020. The index for ‘Manufacture of Wearing Apparel’ sub-group, however, declined by 0.44 per cent to 136.4. The index for ‘Manufacture of Textiles’ sub-group too decreased by 0.09 per cent to 113.1. The index for primary articles (weight 22.62 per cent) rose by 1.81 per cent to 146.3. The index for fuel and power (weight 13.15 per cent) also increased by 0.77 per cent to 91.4.
The global export of industrial textiles slightly increased 0.24 per cent from $25,840.16 million in the year 2017 to $25,902.05 million in 2019. Total exports declined 5.26 per cent in 2019 over the previous year, according to data from TexPro. However, exports is expected to move up to $26,548.38 million in 2022 with a rate of 2.50 per cent from 2019. The global import value of industrial textiles was $22,348.78 million in 2017, which grew marginally 0.44 per cent to $22,447.00 million in 2019. While, the total imports plunged 4.82 per cent in 2019 over the previous year and is expected to increase to $23,286.52 million in 2022 with a rate of 3.74 per cent from 2019, according to Fibre2Fashion's market analysis tool TexPro. China ($8,054.26 million), Germany ($2,520.19 million) and US ($2,150.13 million) were the key exporters of industrial textiles across the globe in 2019, together comprising 49.13 per cent of total export. These were followed by South Korea ($1,282.67 million), Italy ($1,269.53 million) and Taiwan ($1,012.86 million). From 2016 to 2019, the most notable rate of growth in terms of export value, amongst the main exporting countries, was attained by China (12.94 per cent) and Germany (12.66 per cent). US ($2,664.68 million), Vietnam ($1,863.86 million), China ($1,689.71 million) and Germany ($1,176.54 million) were the key importers of industrial textiles in the globe in 2019, together comprising 32.94 per cent of total import. These were followed by India ($795.04 million), Mexico ($784.06 million) and Indonesia ($724.44 million). From 2016 to 2019, the most notable rate of growth in terms of import value, amongst the main importing countries, was attained by Vietnam (36.22 per cent), US (10.32 per cent) and Germany (3.57 per cent).
While the move is likely to further iname tensions between the United States and China, it stops short of a more sweeping ban on cotton and tomatoes produced in Xinjiang that the administration was poised to announce last week. The Trump administration on Monday announced new restrictions on imports of apparel, hair products and technology goods from certain Chinese companies, saying those entities had used forced labor in the Xinjiang region to make their products. The measure would allow U.S. customs agents to detain and potentially destroy goods brought into the country that are made by the named companies or entities in Xinjiang, a far western region where China has detained as many as 1 million Uighurs and other ethnic minorities in internment camps and prisons. While the move is likely to further iname tensions between the United States and China, it stops short of a more sweeping ban on cotton and tomatoes produced in Xinjiang that the administration was poised to announce last week. That measure had alarmed apparel companies that use Chinese cotton and spurred concern among some administration oicials, who were worried it could hurt economic relations with China and prompt possible retaliation on U.S.-grown cotton, according to people familiar with the internal discussions. In a brieng with reporters Monday, oicials with the Department of Homeland Security said that the broader measure was undergoing further legal analysis, and that more announcements could soon follow. The so-called withhold release orders announced by Customs and Border Protection on Monday target all products made with labor from the Lop County No. 4 Vocational Skills Education and Training Center in Xinjiang, which provides prison labor to nearby manufacturing entities, the border agency said. The orders will also restrict hair products made in the Lop County Hair Product Industrial Park, apparel produced by Yili Zhuowan Garment Manufacturing Co. and Baoding LYSZD Trade and Business Co., cotton produced and processed by Xinjiang Junggar Cotton and Linen Co., and computer parts made by Hefei Bitland Information Technology Co. “These extraordinary human rights violations demand an extraordinary response,” Kenneth T. Cuccinelli II, the acting deputy secretary of Homeland Security, said of China’s actions in Xinjiang. “This is modern-day slavery.” The economic scope of the order was not immediately clear, and border agency oicials declined to specify the dollar value of imports from these companies. Hefei Bitland has said on its website that its cooperative partners include major technology companies such as Google, HP, Haier, iFlytek and Lenovo. Yili Zhuowan has produced gloves for French clothing brand Lacoste, according to the Workers Rights Consortium, a nonprot. Hefei Bitland “is not a direct supplier to HP,” a spokesperson for HP said in a statement. “We have robust policies in place to protect human rights and prohibit the use of involuntary labor of any kind across our supply chain. We are committed to ensuring everyone in our supply chain is treated with dignity and respect.” U.S. law bans the importation of any goods produced with forced labor. But human rights groups say the practice has long been widespread in Xinjiang, where many detainees are recruited into programs that assign them to work in factories, on cotton farms or in textile mills. Xinjiang accounts for about 85% of China’s cotton production, according to the U.S. Agriculture Department, and about one-fth of cotton production globally. Brands including Muji, Uniqlo, Costco, Caterpillar, Lacoste, Ralph Lauren, Tommy Hilger and Hugo Boss have been named in reports tying them to Xinjiang factories or materials. Some companies have denied the allegations. Amid the tensions of President Donald Trump’s trade war and a growing spotlight on human rights abuses in Xinjiang, some major apparel brands have tried to limit their exposure to the region in recent years, including by moving textile and clothing operations to Bangladesh, Indonesia and Vietnam. In July, sportswear-maker Patagonia announced that it was exiting Xinjiang, and that it had told its global suppliers that using ber made in the region was prohibited. But human rights groups and industry analysts say supply chains in China remain opaque, allowing companies to prot o involuntary labor by Uighurs and other ethnic Muslims. Travel restrictions in Xinjiang can prevent companies from investigating their supply chains there, and companies that carry out audits of their suppliers may see only what the Chinese factories want them to see. Concerns about the prevalence of forced labor in these supply chains led Customs and Border Protection to draw up more sweeping restrictions on products made with cotton and fabric from Xinjiang. On the morning of Sept. 8, an agency oicial told The New York Times that the import bans would cover the supply chains for cotton, from yarn to textiles and apparel made in the Xinjiang autonomous region, as well as tomatoes and tomato paste. But that order was never announced. Oicials from the Agriculture Department, the Treasury Department and the U.S. Trade Representative intervened to raise objections about the measure, saying it could threaten U.S. cotton exports to China, or put the trade deal Trump signed with China in January at risk, people familiar with the matter said. In their call Monday, Homeland Security oicials denied that any intervention prompted the delay, saying the legal review had been “driven by the unique nature” of the policy. “We want to make sure that once we proceed that it will stick,” Cuccinelli said. Under a withhold release order, importers are still allowed to bring their products into the U.S. if they are able to provide proof to customs that the goods were not made with forced labor, for example through an extensive audit of the manufacturing facilities, said John Foote, a partner at Baker & McKenzie who specializes in international trade and forced labor issues. If the importer is not able to produce that proof, the product must be sent back, or it is subject to seizure by U.S. customs. In August, labor and human rights groups including the AFL-CIO and the Uyghur Human Rights Project led a petition asking Customs and Border Protection to issue a withhold release order on all cotton goods from the Xinjiang region. “The system of forced labor is so extensive that there is reason to believe that most cotton-based products linked to the Uyghur Region are a product wholly or in part of forced labor,” the petition read. Customs has issued several withhold release orders in the past against individual companies with ties to Xinjiang, including the Esquel Group, which said it had ties to Ralph Lauren, Tommy Hilger, Hugo Boss and Muji; Hetian Taida Apparel Co.; and Hero Vast Group. Other entities and people in Xinjiang have been subject to sanctions, including the Xinjiang Production and Construction Corps, an economic and paramilitary group that plays an important role in Xinjiang’s development. In July, the departments of State, Treasury, Commerce and Homeland Security issued an advisory jointly warning American companies to monitor their activities in China, particularly in Xinjiang, saying they could face “reputational, economic and legal risks associated with certain types of involvement with entities that engage in human rights abuses.”
Source: Economic Times
The service-sector index stood at minus 18, up from minus 23 in August, but sentiment among wholesalers, transport and utilities weighed on broad business confidence. Japan's manufacturers remained pessimistic for the 14th straight month in September, and though the gloom eased somewhat the broad results of the Reuters Tankan survey pointed to a painfully slow recovery for the coronavirus-stricken economy. The result underlines the huge challenge the country's next leader succeeding Prime Minister Shinzo Abe will face to boost growth and corporate and consumer sentiment after the economy sunk into its deepest recession on record. Monday's poll, which tracks the Bank of Japan's closely watched "tankan" quarterly survey, showed manufacturers' morale mirrored frail sales in key sectors such as auto and the construction industry. "Sales for cars as well as construction machinery are not recovering," a manager of a transportation equipment maker wrote in the Reuters poll of 485 large- and mid-sized companies, in which 256 firms replied on condition of anonymity. The Reuters Tankan sentiment index for manufacturers inched up to minus 29 in September from minus 33 in the previous month, still deeply pessimistic even though it marked the least gloomiest level in six months. The materials industries such as steel, nonferrous metals, textiles and paper put a drag on the overall sentiment index. The service-sector index stood at minus 18, up from minus 23 in August, but sentiment among wholesalers, transport and utilities weighed on broad business confidence. The Reuters Tankan index readings are calculated by subtracting the percentage of respondents who say conditions are poor from those who say they are good. A negative reading means that pessimists outnumber optimists. The BOJ will hold its next policy review on Sept. 16-17, and release its next "tankan" survey results on Oct. 1. The central bank was expected to offer a brighter view next week on the economy, output and exports than in July to signal that they were starting to recover from the COVID-19 crisis, sources familiar with its thinking said. A manager at a machinery maker in the Reuters Tankan survey said that a sharp drop in demand from weak corporate activity due to virus-induced lockdown measures appeared to have bottomed out. "A recovery will take time," the manager said. Manufacturers' sentiment was seen recovering further to minus 19 in December, while that of service-sector firms was expected to tick up to minus 17. "Our corporate performance is improving but it's unclear how long it will hold up," said another manager, at a rubber company said.
Source: Business World
The largest sourcing event on the east coast returns to the Javits Center in January 2021 with new dates, a new name, and three ways to participate. After the successful premiere of a virtual edition in July, Messe Frankfurt North America is bridging the gap between physical and virtual events by introducing a Pop-Up Sourcing Showcase at its New York Textile shows. The announcement comes with even greater changes for these shows. Along with earlier dates for the Winter edition, Texworld and Apparel Sourcing USA are now Texworld New York City and Apparel Sourcing New York City. The virtual platform will take place January 12-14, 2021, along with the Pop-Up Sourcing Showcase that will join the traditional trade show floor presentation at the Javits Center to collectively create the largest sourcing event of the season. New concept brings new opportunities The newest concept, “Pop-up Sourcing Showcase” is a dedicated area on the show floor that will feature a unique display of the highest quality fabrics and garments provided by mills from around the globe who cannot be present at the event. Suppliers will submit the best of their collections to be curated by New York-based trend agency, The Doneger Group. The “Pop-up Sourcing Showcase” is streamlined and integrated with the Virtual Platform giving visitors a unique and interactive sourcing experience. Guided by textile and apparel experts on-site, visitors will be able to touch and feel the fabrics, receive detailed product information through the virtual platform and communicate with participating exhibitors virtually. “We are eager to introduce the Pop-up Sourcing Showcase to the textile community. The show has evolved tremendously since its inception. From the quality of the suppliers to the educational offerings, Texworld and Apparel Sourcing have become a staple in the market,” shares Jennifer Bacon, Show Director. “As the world faces economic, trade, and political crisis, our events have consistently adapted to the ever-changing industry for over 15 years now,” Bacon continued. “The current sourcing environment has only accelerated the execution of our vision to reimagine the future of our events and we are thrilled to see it come to fruition.” As we open businesses to a new normal, global manufacturers will be welcomed to exhibit face-to-face. The “Traditional Exhibition” will operate in a typical trade show setting enabling local visitors to meet and source fabrics with exhibiting companies in-person, while adhering to all safety regulations set forth by the show organizer, the Javits Center as well as the state of New York. “In consideration of our current global business climate and travel restrictions we look forward to increased participation from domestic suppliers and with the safety of our exhibitors, visitors and staff as a key focus, we are confident that the procedures put in place will support a strong health strategy for face-to-face interaction,” stated President and CEO, Konstantin von Vieregge. The mainstay features such as the Lenzing Seminar Series, Textile Talks and the Texworld Trend will remain in place for the Traditional Exhibition as anchors of the event. The third sourcing opportunity available to the attendees of the Winter Edition is the Virtual Platform. Following the success of the first-ever virtual edition this July, the wellreceived “Virtual Platform” will be reintroduced for those who are not able to attend the physical event. With features like AI-powered matchmaking, video calling, chat functions an advanced scheduling tool and access to the full complimentary educational program, the virtual platform provides an additional option to stay relevant and connected in the industry. Summing up the introduction of new concepts, Konstantin von Vieregge continues, “Messe Frankfurt has a long tradition in being open to innovation and agile during challenging times and it is in this same spirit that we are excited to present a multitude of opportunities for our New York events to continue serving the textile sourcing community.” Registration for the Winter 2021 edition opens in the coming weeks. For more detailed information on either of these events, please visit us online.
Source: Textile World
A sustainability ‘toolkit' produced by clothing manufacturer Gap is to be made available industry-wide, in a bid to make it easier for companies to source sustainable textiles. The Preferred Fiber Toolkit (PFT) is a resource for sourcing and design teams that is designed to make it easier to identify sustainable fibres and support the pursuit of corporate sustainability goals. Gap announced last week that it has teamed up with Textile Exchange, a global non-profit that promotes sustainable clothes, to adapt the PFT for wider use across the fashion industry. The resource is based on the Sustainable Apparel Coalition's (SAC) Higg Materials Sustainability Index and promotes the consideration of "holistic indicators" when selecting new fibers, including biodiversity, land-use change, and waste-elimination. Launching the PFT, Gap Inc and Textile Exchange said the industry currently struggled to "cohesively measure and explain sourcing material choices" and as such they hoped the PFT could help the sector shift away from a company-by-company approach to sustainable sourcing that can be "subjective and opaque". Gap Inc's product sustainability manager, Diana Rosenberg, said the PFT had been integral to helping the company meet its environmental targets. "The development of the PFT has been crucial to Gap Inc's ability to set goals and develop internal awareness on how to design better products and set fiber strategies," Rosenberg said. "A rigorous and data-driven approach allows for greater confidence in our sustainable materials sourcing decisions, while creating an incentive to select more planet-friendly raw materials." The updated toolkit, developed by Textile Exchange, includes refined methodology and an independent review process. The organisation will also update the resource with a broader set of sustainable materials, which it will encourage the industry to use. Liesl Truscott, director of Europe and materials strategy at Textile Exchange, added. "We will continue to improve upon the foundational work of Gap Inc. to create a tool that combines quantitative and qualitative data from materials into a decision-making tool for the industry. This tool will drive the work of Textile Exchange to meet our 2030 Climate+ goals."
Source: Business Green