New Delhi: Commerce and industry minister Piyush Goyal informed Lok Sabha on Monday that the government has implemented several measures including tariff and non-tariff measures to safeguard the interest of the country’s private and public sector firms and to enable them to sell their products in global markets at competitive prices. “Tariff and non-tariff measures have been taken to regulate nonessential import of goods and services. Appropriate use of trade remedies by way of safeguard, countervailing and anti-dumping duties have been used to protect domestic manufacturers,” Goyal said in a written reply to a question on decline in India’s manufacturing sector. “The sudden outbreak of Covid-19 has severely impacted more than 196 countries across the globe including some of the major players like the USA, European Union, UK, and India,” he said. A common digital platform for Certificate of Origin has been launched to facilitate trade and increase Free Trade Agreements utilization by exporters. He also said the government is promoting districts as export hubs. In a separate reply, he said Indian pharma companies have secured 31% of the market authorizations granted by USFDA in 2019 -20, which shows that Indian companies continue to be able to introduce new products.
TEA EXPORTS
The export of organic tea has declined marginally by 99.78 M.T (4.63%) during April- August 2020-21 over the corresponding period of the previous year due to the Covid-19 pandemic, Parliament was informed Monday. India exported $ 16.9 million worth organic tea in the April-August period of FY21. Exports were $49.71 million in FY20. “It is estimated that with the improvement in the Covid situation worldwide, the demand for tea and export of organic tea will improve significantly,” Goyal said.
ECOMM POLICY
Comments from over 100 stakeholders (companies both Indian and foreign, Industry associations, think tanks, foreign governments) have been received on the draft e-Commerce Policy that was made public on February 23, 2019. Goyal said that comments are received from time to time, on aspects of definition of e-commerce, role of customs in exports, anti-counterfeit and anti-piracy provisions, free cross border flow of data and related liability on e-commerce companies. In a separate reply, the minister said that FDI from China was $743 million including investments in Startups through FDI Equity Inflow during from FY18 to FY20.
Source: Economic Times
New Delhi: Opposition-ruled states have hardened their stance on centre's borrowing options to meet goods and services tax compensation cess decit with some threatening legalrecourse. While Kerala has asked the centre to convene a meeting of the GST Council immediately, Chhatisgarh said it is open to taking a legal recourse. The centre has on Sunday indicated that 21 states and union territories had opted for the rst option, entailing a borrowing of Rs 97,000 crore, and that states not choosing any of the two others will not receive any compensation till June 22. Incidentally, Congress-ruled Puducherry has opted for the rst option. This means that number (21 states) was adequate to pass any resolution in the GST Council if it is put to vote. States say the centre cannot force its decision on states that have rejected the borrowing options.
Source: Economic Times
Insolvency proceedings suspended for fresh defaults after March 25 The Rajya Sabha on Saturday approved a Bill to suspend insolvency proceedings for up to a maximum of one year against fresh Covid-related default from March 25. The Bill seeks to replace an ordinance that was promulgated in June to provide relief to thousands of firms battered by the pandemic. Once the Insolvency and Bankruptcy Code (Second Amendment) Bill, 2020, gets passed in the Lok Sabha as well, it will be made into law with Presidential assent. Replying to a debate on the Bill in the Upper House, finance minister Nirmala Sitharaman said the aim of the IBC is to “keep the companies as going concern rather than liquidating them”. Since the pandemic has hit every industry, it’s difficult to find suitors if a large number of companies are put on the block for resolution, hence the move to suspend insolvency against Covid-related default. The minister, however, made it clear that insolvency applications filed for default before March 25 (when a national lockdown was imposed) are being entertained. The government had sought to suspend invocation of three sections — 7, 8 and 10 — of the IBC for fresh default from March 25. These sections deal with the initiation of the insolvency proceedings by financial and operational creditors and corporate debtors. Explaining the reason behind not allowing even the debtors to seek their own insolvency proceedings under Section 10 of the IBC, the minister said: “The restraint that we put was because of difficulty in finding enough resolution applicants as well as resolution professionals. So, irrespective of who initiates the process, the outcome will be the same— liquidation of the company. The Code actually balances the interests of creditors with debtors’, and we can’t allow only the debtors to initiate (insolvency proceedings) while denying the option to the creditors.” Citing RBI data, the minister said in FY19, the recovery under the IBC was as much as 42.5% of the admitted claims, way better than that through other tools, such as Lok Adalat (5.3%) , Debt Recovery Tribunals (3.5%) and the SARFAESI Act (14.5%). The cut-off date of March 25 (for filing insolvency application) also came as a relief for the lenders who had filed applications or intended to do so against stressed firms that had defaulted before the pandemic started to spread, in sync with the central bank’s June 7, 2019, circular. According to this circular, a default case will have to be referred to the NCLT under the IBC if no other resolution plan is firmed up within six months. However, as some analysts have pointed out, the breather will potentially hit financial and operational creditors hard and bleed their balance sheet, apart from temporarily depriving them of a credible mode of bad debt resolution. Commenting on the Bill’s passage, Daizy Chawla, senior partner at Singh & Associates, said: “To give formal approval to the ordinance passed was the need of the order as the economy has still not recovered. Further, limiting the suspension to one year only is also the need of the hour, as extending the suspension for more than one year will defeat the overall purpose of the Code.”
Source: Financial Express
The two Bills would give farmers freedom from middlemen and help in doubling their income, he says Prime Minister Narendra Modi on Sunday said the system of minimum support price and government procurement of crops would continue, after the passage…..
Source: The Hindu
Difficult decoupling
According to a report by ET, India is looking to plug loopholes as it seeks to reduce import dependence on China but it is going to prove to be inordinately difficult as households and industry still rely primarily on cheap Chinese goods.
Source problem
Most of India’s exports to China have been of primary goods and raw materials including petroleum products, organic chemicals, iron ore, cotton and plastic raw materials, while imports have been mainly intermediate and finished goods such as telecom instruments, electronic components, consumer electronics, active pharmaceutical ingredients and machinery.
The way out
While correcting the inverted duty structure in dual-use products such as steel may be difficult, experts suggested empowering customs officials to detain unnecessary imports but paying demurrage in cases where import substitution is key, could be helpful. “We are looking at ways to curb the import surge as this cripples the domestic installed production capacity,” an official said, adding that this would be done using all kinds of tariff and nontariff instruments such as anti-dumping duty, countervailing duty, safeguard duty and quality control measures.
An unequal balance
India’s trade dependence on China is huge. Being one of the leading trade partners of India, China’s share in India’s total export and import are 9% and 18% respectively in 2019-20. The input-output table of India indicates that India tends to export raw material or ingredients to China’s manufacturing sector, and imports more of final products with higher value-added. The principal imports from China are electrical machinery, nuclear reactor, organic chemicals, articles of iron and steel, fertilisers, medical or surgical equipment, and auto components.
Tough times ahead
The issue has compounded as China has granted deeper duty cuts to India’s competitors including Peru, Pakistan, Australia, South Korea and Asean in its FTAs with them, which has displaced some of India’s exports. “One can only imagine the plight of our domestic industry had India joined the Regional Comprehensive Economic Partnership. Even thinking of these measures would not have been possible in that case,” said a Delhi-based expert on trade issues.
Source: Economic Times
More than 3.8 lakh companies have been struck off from official records under the companies law during the past three years, according to the government. In a written reply to the Rajya Sabha, Minister of State for Corporate Affairs Anurag Singh Thakur also said the term "shell company" is not defined under the Companies Act. "It normally refers to a company without active business operation or significant assets, which in some cases are used for illegal purpose such as tax evasion, money laundering, obscuring ownership, benami properties etc," he noted. The Special Task Force set up by the government to look into the issue of shell companies has recommended the use of certain red flag indicators as alerts for identification of shell companies. According to the minister, the government has undertaken a special drive for identification and then to strike off shell companies. Based on non-filing of financial statements consecutively for two years or more, companies were identified and after following due process of law, "3,82,581 number of companies were struck off during the last three years", Thakur said. This was done as provided under Section 248 of the Companies Act, 2013, read with the Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016. In a separate written reply, the minister said that under Section 182 of the Companies Act, companies, other than government companies and companies less than three years old, are allowed directly or indirectly to contribute to any political party with the approval of their boards of directors. "Such companies shall have to disclose in its profit and loss account the total amount contributed by them during the financial year to which the account relates and the name of the party is not required to be disclosed. Therefore, political party-wise data is not maintained," he said.
Source: Economic Times
NEW DELHI: The first ever Cargo Ferry Service between India and the Maldives was jointly launched on Monday opening a new chapter in connectivity initiatives in the Indian Ocean Region. Mansukh L. Mandaviya, Minister of State for Shipping (Independent Charge) and Aishath Nahula, Minister of Transport and Civil Aviation of the Maldives in a virtual ceremony. The ceremony was also attended by representatives from Tuticorin and Cochin ports, as well as officials from the Maldives Ports Limited (MPL) and the Foreign Ministry of Maldives. The Cargo Ferry Vessel MCP Linz operated by the Shipping Corporation of India (SCI) will connect Tuticorin and Cochin ports in India with Kulhudhuhfushi and Male ports in the Maldives. The vessel is expected to arrive in Kulhudhuhfushi on September 26 and Male on September 28. The MCP Linz is a combination vessel which can carry 380 TEUs and 3000 MT on bulk cargo, and will have a turnaround time of 10-12 days for its voyages, officials said. This vessel provides direct cargo connectivity between India and the Maldives on a predictable and affordable basis for the first time, and will lower costs and times for traders in both countries. In his address to the People’s Majlis during his State Visit to the Maldives in June 2019, PM Narendra Modi announced India’s commitment to start a ferry service connecting India and the Maldives. An MoU was signed between the Ministry of Shipping in India and the Ministry of Transport and Civil Aviation, Maldives, on the sidelines of the State Visit. A team from SCI had visited Maldives in July 2019 to undertake preliminary studies. Thereafter, FICCI undertook a feasibility study on a cargo ferry service between India and the Maldives, earlier this year. The decision to commence the Cargo Ferry Service between the two nations was announced during a virtual meeting between Foreign Minister Dr. S. Jaishankar and Foreign Minister Abdulla Shahid on August 13. To begin with, India will subsidise the service at approximately $ three million. Nourished by close historical and cultural ties, Indians and Maldivians have traded for centuries. Yet, India is only the fourth largest trading partner of the Maldives today. The Cargo Ferry Service is visioned as a key instrument to upgrade the trade partnership and unfetter logistics on both sides. Alongside the expansion of the Hanimaadhoo Airport (through an Indian Line of Credit), the Cargo Ferry Service connectivity to the northern port of Kulhudhuhfushi will underpin the economic development of northern Maldives and facilitate investments in tourism and other engines of prosperity. Beside the expansion of markets for MSMEs in India, the Cargo Ferry service will provide an opportunity to Maldivian exporters of tuna and other marine products to scope the vast Indian market and springboardto Europe through Cochin and Tuticorin ports. For instance, Cochin Port has weekly connectivity to Europe through a 6500 TEU vessel. The Cargo Ferry Service is another commitment delivered by India to connect Indian and Maldivian markets, unlock the trade and investment potential between the two nations, and, strengthen people-to-people contacts for mutual prosperity, officials pointed out. The ferry service will run twice a month. It will be operated by Shipping Corporation of India on a vessel with a capacity of 380 TEUs, sources added. Maldives imports more from UAE, China and Singapore implying that bilateral trade with India is not commensurate with it’s potential. India’s bilateral trade with Maldives has hovered around US$ 280 million annually for some years now and stood at US$ 286.85 million in 2019. Direct ferry will reduce transportation cost, provide a timely, short and cost effective means of transportation for goods from India to Maldives and thereby incentivize more trade between the two countries. The ferry has a cold storage facility, which will also allow more exports from Maldives of tuna fish and other marine food items which are a specialty of Maldives, sources informed. Since Maldives is a 100% import dependent country, improved connectivity between India and Maldives will help boost bilateral trade and help economic acitivity in Maldives, already reeling under the disruption brought about by Covid-19. The Covid-19 crisis has drawn the attention of the world towards resilient supply chains. In May-June this year, while Maldivian imports have fallen 50%, India has become the 2nd largest exporter to Maldives. India has, therefore, proven that it can provide supply side security to the Maldives during such uncertain times. A number of bilateral projects are in the pipeline, owing to which export of construction material and other commodities from India to Maldives is bound to rise in the coming months. This includes the Greater Male Connectivity Project (under $ 400 million LOC and $ 100 million grant), projects under the US$ 800 million Line of Credit, sources informed. There is great enthusiasm on both the sides for the launch of this service. FICCI organized three virtual roadshows in Tuticorin, Kochi and Mumbai to publicize this service. The response from exporters has been positive. During its maiden journey the ferry will make a stop at Kulhudhuffushi port in North Maldives, before it reaches Male on 29 September 2020. Maldives is making concerted efforts to revitalize the economy of Northern Maldives, sources informed. It is understood that in order to give financial incentives, the Maldives Majlis has approved a 50% reduction in custom duties for import items cleared at Kulhudhuffushi port. India has also been assisting GoM in developing its Northern region, through a number of bilateral projects/ initiatives. This service will improve regional connectivity. India has been working to promote a number of initiatives and projects in order to increase regional connectivity in the Indian Ocean Region.
Source: Economic Times
Among manufactured goods, only drugs & pharmaceuticals and plastic and linoleum have shown positive growth Exports have grown from a low of $10.27 billion in April to $19.18 billion, $21.91 billion, $23.64 billion, and $22.70 billion in the subsequent months. The pick-up in growth seen after the severe lockdown in April seems to have run out of steam. Exports for the April-August period this year at $97.66 billion showed a negative growth of 26.65 per cent in dollar terms compared to April-August last year. During this period, positive export growth is seen mostly in primary products/ commodities such as iron ore, oil meals, oil seeds, fruits and vegetables, meat, dairy and poultry ...
Source: Business Standard
A Bill to amend the Foreign Contribution (Regulation) Act, 2010, proposes to include “public servants” and “corporations owned or controlled by the government” among the list of entities who are not eligible to receive funds from abroad. The Aadhaar numbers of the oice-bearers of NGOs will be mandatory for registration. The draft bill states that not more than 20% of the total foreign funds received could be spent on administrative expenses. Presently, the limit is 50%. The Bill, namely, the Foreign Contribution Regulation (Amendment) 2020, was introduced in the Lok Sabha on Sunday. The government described the move as a step to ensure compliance, enhance transparency and accountability in the receipt and utilisation of foreign contribution worth thousands of crores of rupees every year. The bill, if passed, will empower the government to ask a violator to not use the funds by holding a “summary inquiry”. Earlier, it was done only after the person or association has been “found guilty” of violation of the Act. Amendment of Section 17 of the Act has sought to provide that every person who has been granted certicate or prior permission under Section 12 shall receive foreign contribution only in an account designated as ‘‘FCRA Account’’ which shall be opened in such branch of the SBI at New Delhi, as the Central Government may, by notication, specify. It has, however, allowed the organisation to transfer these funds to another account for utilisation. According to the home ministry, the annual inow of foreign contribution has almost doubled between 2010 and 2019. “But many recipients of foreign contributions have not utilised the same for the purpose for which they were registered or granted prior permission under the said Act. Many of them were found wanting in ensuring basic statutory compliances such as submission of annual returns and maintenance of proper accounts. This has led to a situation where the Central government had to cancel certicates of registration of more than 19,000 recipient organisations, including non-governmental organisations, during the period between 2011 and 2019,” the proposed Bill says. The home ministry had agged alleged misuse of foreign donation by several prominent NGOs including Greenpeace, Amnesty International, Teesta Setalvad’s NGO, Citizen for Justice and Peace (CJP), Compassion International, Lawyers Collective, among others. While proposing the amendments, union home minister Amit Shah, in the statement and objects, stated that this will facilitate “genuine” non-Governmental organisations or associations who are working for the welfare of society. Last year, the home ministry had brought rules to discourage NGOs involved in conversion and had said that each functionary and member of NGOs will have to le an aidavit declaring that the individual has not been involved in any act of religious conversion or prosecuted for communal disharmony. The 2020 amendments cleared by the Union cabinet states “amendment of clause (c) of sub-section (1) of section 3 to include “public servant” within its ambit, to provide that no foreign contribution shall be accepted by any public servant.” Earlier, the Act restricted politicians, political parties, members of the legislature, journalists, printers or publishers of a registered newspaper, government servants or employees of any corporation or any other body controlled or owned by the government, from receiving foreign donations.
Source: Economic Times
Instead of demoralizing the prudent decisions of the banks the RBI should allow the banks to employ one-time loan restructuring scheme to help harrowed borrowers. Banks should be given freedom to fabricate their own internal standards and strategies. To alleviate the financial anxiety of impoverished business entities and persons transpired due to lockdown to exterminate the lethal corona virus, during the last week of March 2020, the Apex bank of India had offered a three-month freeze or moratorium for installments of all term loans and advances. Although the amenity was protracted till the end of August 2020, considering the enduring monetary and economic crisis, the RBI has decided to permit banks to restructure of advances of fiscally strained organizations and assigned the task of solemnizing the structure of restructuring of loans to the professional committee. The committee was headed by former CEO of ICICI K.V. Kamath. Other members of the committee are former State Bank of India executive Diwakar Gupta, current Canara Bank chairman TN Manoharan, consultant Ashvin Parekh and Sunil Mehta CEO of Indian Banks' Association. The committee was formed to scrutinize loans of more than ₹1500 crore. The tenure of the committee has been extended till 30th June 2021. The committee has now delivered the finer facts of dealing with stressed lends throughout 26 trade sectors. The expert committee has reported that approximately 72 per cent of banking sector debt has been adversely affected till now. However, around 42 per cent or 22.20 lakh crore rupees of debts were under trauma much earlier and 30 per cent or 15.50 lakh crore rupees of debts have been wedged by the epidemic. Out of Rs 15.50 lakh crore loans impacted by the pandemic, the largest chunk of loan of Rs.5.42 lakh crore relates to retail trade and wholesale trade. Loans amounting to Rs.1.94 lakh crore and Rs.1.89 lakh crore pertain to the roads and textile sector respectively. Miscellaneous industries to which banks have considerable exposure include engineering (Rs 1.18 lakh crore), petroleum and coal production (Rs 73,000 crore), ports (Rs 64,000 crore), cements (Rs 57,000 crore), chemicals (Rs 54,000 crore) and hotels and restaurants (Rs 46,000 crore). Rs.2.1 lakh crore of loans relates to the retail borrowers and small units. Debtors or borrowers of the banks which were categorized as standard and with an amount outstanding below 30 days as at March 1, 2020 fit under the frame. The resolution agenda should be appealed before December 31, 2020 and the strategy has to be instigated within 180 days from the date of invocation.
Rickety boat rocked again
When the confidence of depositors of banks is fading, the regulator is not able to restore the power-packed banking system and flood of financial scams are present far and wide, relief offered to borrowers by the RBI by letting moneylenders to offer 180 days moratorium on loan settlement may prove ruinous to the financial solidity of the banking edifice. It will be unjust treatment for banks and even depositors’ return on investment will be at peril. Similarly, the apex bank may land in a pickle. Additionally, the petition pursuing interest relinquishment on loan moratorium has not yet been addressed by the Supremfe Court of India and pulled on since March 2020. A bench led by Justice Ashok Bhushan was hearing petitions requesting a postponement of the loan moratorium and renunciation of accruing interest. The moratorium measure was proposed to provide temporary relief to the borrowers. Nevertheless interest charged on loans during the deferral time period has augmented the burden on borrowers all moratoriums work in that fashion. For example, the Central government’s credit guarantee scheme provides one year moratorium on the principal excluding interest thereon. While under United States Fed’s Main Street Lending Programme, no principal is paid in the first or second year, but the deferred interest is capitalized and added to the principal amount. Moratorium, by definition, is the momentary deferment of payment of interest or principal or installments, and not a waiver of loan repayments. So the appeal for waiving interest payment under moratorium is not defensible. Of late, the Apex Court deferred the hearing in the loan moratorium and interest waiver case to September 28 and instructed banks not to state any loan as non-performing asset due to failure to pay installments during the period. Now all eyes are starring at the Supreme Court of India to know whether the verdict will provide tonic or toxic to banks. Pandemics trouble all from governor to gardener and president to servant. The novel corona virus disease is not an exception to this and brought on astonishing apprehension to all. Therefore, why only banks have to bear the heat? How does one guarantee that depositors’ interests are secured while banks sacrifice a major ration of their revenue? Due to alarming rise in bad loans banks have become partly lifeless and the waiver of interest on loans under moratorium gravely hurt depositors. If a big share of the moratorium book goes bad, then banks’ aptitude to pay depositors would enervate further. There will be cash flow mismatch for many banks too. The other issue raised by the Supreme Court is waiving of just the interest on the interest accrued. Although it may have an impact of about ₹3,000-4,000 crore to banks’ interest income, the burden could me more for few banks. Large ticket long-term loans such as housing loan where the low percentage of principal repaid in the early years and the interest burden is more. Therefore, in such instances waiver of interest on interest certainly tweak banks and would wreck the credit behavior.
Stringent compliance
Notwithstanding the central bank mentioned the restructure plans are flexible, industry pundits are of the opinion that the plan has many strict compliance regulations. As per the instructions of the committee five financial ratios have to be considered while choosing a recast blueprint namely, debt service coverage ratio, total outstanding liabilities to adjusted tangible net worth, total debt to EBITDA, current ratio, and average debt service coverage ratio. The RBI has stipulated either a lower limit or an upper limit for each of these considerations relating to 26 sectors. Unfortunately few of the ratios are very stringent. For example, Current ratio and Debt Service Coverage ratio should be 1.0 in all the cases. Adjusted Service coverage ratio should be 1.2.Banks have to assure that the ratio of the total outside liabilities to the adjusted tangible Net Worth is observed with when the recast is executed. As per the strategy, all other vital ratios shall have to be maintained by 31st March 2022 and on a continuing basis afterwards. If there is equity introduction, the relevant ratios should be appropriately phased-in. Moreover, many questions remain unanswered are whether the industries view these ratios with accurate or inaccurate conviction? Whether lenders are exhibiting coercing attitude towards maintenance of ratios? Whether the borrowers now manipulate presentations to meet these parameters? Also the committee fixes time period of 180 days to execute the scheme and makes an Inter Creditor Agreement compulsory. A review period of 30 days will be activated and at the end of the evaluation period, if the borrower and countersigners to the inter credit agreement are in default, the asset category of the borrower with all lending establishments shall be considered as non-performing. Earlier of the date of enactment of the plan or the date from which the borrower had been grouped as NPA before execution of the plan will be taken into account. Organizations who did not authorize the inter credit agreement will also be included for the purpose.
Final words
The Indian experience with restructuring arrangements post the international financial disaster of 2008 has raised worries this time also. Loan restructuring announcements made during the fiscal year 2008 to 2011 and 2013 to 2019 had given birth to numerous trepidations due to most of the restructured assets ultimately skidded into the zone of non-performing assets. The RBI terminated the Corporate Debt Restructuring scheme from April 1, 2015. It is open secret that gigantic corporate tycoons were tapping off bank funds though their units wriggled. Many of these business barons knocked the door of banks to get their loans recast under the scheme. Few of them distorted the scheme are in the bankruptcy Court. As well, some of loan recast schemes introduced by the RBI either persisted largely on paper or were ill-treated by borrowers. Novel rules prescribed by the RBI largely depend on the substantial reinforcement of the economy. Disastrous decline of GDP in the first quarter of current financial year is likely to show its ugly face in the enduring quarter. Therefore, banks may check the rise of nonperforming assets but the inheritance of bad loans of around to Rs 9 lakh crore will remain within the system. Instead of demoralizing the prudent decisions of the banks the RBI should allow the banks to employ one-time loan restructuring scheme to help harrowed borrowers. Banks should be given freedom to fabricate their own internal standards and strategies. This may eradicate felonies and muted credit growth. With this, banks may regularize the recovery in the economy through augmented lending.
Source: Business World
Latest quarterly survey shows capacity utilization improving, but firms worried over low profits, weak domestic demands and rising inflation As economic activity returns to normalcy, higher expectations on sales and exports in the second quarter have boosted the overall sentiment, according to the latest Business Confidence Index (BCI) of the Confederation of Indian Industry (CII). Released on Sunday, the BCI surged to the level of 50.3 in the July-September quarter. It bounced back from the historic low of 41 recorded in the April-June quarter, during the initial days of the pandemic and lockdown. The BCI is made up of two major components, the Current Situations Index (CSI) for the April-June 2020 quarter, and the Expectation Index (EI) for the July-September 2020 quarter. Recovery of the BCI in the July-September quarter was driven by the notable increase in EI, which rose 46 per cent quarter-on-quarter to the level of 55.2, as the nationwide lockdown restrictions were lifted. The CSI, on the other hand, was recorded below the psychological level of 50, at 40.6. This is because stringent lockdown restrictions led to complete shutdown of most business operations for a larger part of the quarter. The survey, conducted during August-September, saw the participation of more than 150 firms of all sizes from across industry sectors. It showed that nearly half the respondents anticipate an increase in new orders (49 per cent) and sales (46 per cent) during the second quarter, even though a majority of them witnessed decline in sales and new orders in the preceding quarter. As a result, capacity utilisation levels are also expected to improve. A major share of the respondents (41 per cent) foresee higher utilisation levels of 50-75 per cent in the JulySeptember quarter, closely followed by 37 per cent, who anticipate capacity utilisation at 75-100 per cent. “It is heartening to note the recovery in CII’s Business Confidence Index for the JulySeptember quarter that indicates an improvement in business conditions during the period. However, while a recovery is under way, it could be tremendously expedited through continued government support and handholding of businesses during this crisis,” said Chandrajit Banerjee, director-general of the CII.
Major worries remain
With regard to general economic prospects, more than a third of the respondents (35 per cent) foresee a contraction higher than 4 per cent in India’s gross domestic product (GDP) in fiscal year 2020-21. On the inflation front, nearly half the respondents (46 per cent) feel that inflation may inch up further in the current fiscal year as supply-side disruptions, caused by the lockdown-led business shutdowns, have stoked pricing pressures. As a result, a large proportion of the respondents (37 per cent) feel the Reserve Bank of India (RBI) may keep policy rates unchanged in the remaining part of FY21. The continued strain on economic activity will dissuade the central bank from raising rates despite inflation overshooting the target range for the fifth consecutive month, the respondents felt. Profitability was flagged as harder to achieve during the pandemic as nearly half the respondents continued to expect a decline in profits in the July-September quarter after a majority of them (76 per cent) experienced this in the preceding quarter. As businesses still struggle to recover from the pandemic, more than half of the respondents (51 per cent) have indicated that the weakness in domestic demand is likely to be the topmost risk to business confidence in the next six months. Moreover, nearly 30 per cent feel that business activity may return to the pre-pandemic levels only by Q1 FY22. The heightened uncertainty led by the recurrent lockdown in certain states is impacting operations and lengthening the recovery time. This is despite a majority of the workforce returning to the place of work, said 42 per cent of the respondents.
Source: Business Standard
Move aimed at boosting industrial sector, exports Adviser to the Prime Minister on Commerce and Investment, Abdul Razak Dawood on Saturday said that a common Expo Centre would be established in four cities of Punjab to boost the industrial sector. A Common Expo Centre would be established for Sialkot, Gujrat, Wazirabad and Gujranwala. This was agreed, in principle, by the adviser during an official visit to the Gujrat Chamber of Commerce and Industries (GTCCI) on Saturday. Appreciating the role of the industry in these cities and their contribution to the overall exports of Pakistan, Dawood assured full support to the exporters and industrialists. He stressed that to ensure sustainable growth in exports, we need to diversify our products and find new markets such as Africa and the Middle East. During his visit, the adviser also discussed the development of fans, furniture and pottery industries with the representatives. The Pakistan Electric Fan Manufacturers Association officials shared different issues related to export of fans and discussed practical and constructive solutions for the development of industry and resolution of problems. The association members also appreciated the Ministry of Commerce for various measures and interventions to boost exports and promote the engineering sector, especially the recent move for revision of rates of duty drawbacks for electric fans. In the meetings with industry representatives, the adviser said that Pakistan has been able to successfully deal with the health and economic challenges posed by the Covid-19 pandemic because of the effective coordination between the federal and provincial authorities, as well as the private sector. Dawood underscored that due to these joint efforts and proper implementation of SOPs, Pakistan was able to bounce back quickly, in terms of exports, as compared to its regional competitors. The commerce adviser also informed the industry officials of the various cost-cutting measures, like tariff rationalisation on raw materials and intermediaries, taken by the Ministry of Commerce, to enable the industry to manufacture their products on globally competitive rates and ensure value-addition. He reiterated that these measures are essential for strengthening the economy by promoting ‘Make in Pakistan’, export-led growth and import substitution. The advisor added that the government has already done tariff rationalisation for 41% of the raw materials and intermediaries, while the next measures are also under consideration for different sectors, including chemicals, engineering, pharmaceuticals, leather, food processing and textiles, under the three years tariff rationalisation plan of the Ministry of Commerce.
Source: The Express Tribune
|
Item |
Price |
Unit |
Fluctuation |
Date |
|
PSF |
801.37 |
USD/Ton |
0% |
22-09-2020 |
|
VSF |
1311.06 |
USD/Ton |
0% |
22-09-2020 |
|
ASF |
1739.73 |
USD/Ton |
0% |
22-09-2020 |
|
Polyester POY |
729.18 |
USD/Ton |
0% |
22-09-2020 |
|
Nylon FDY |
1988.69 |
USD/Ton |
0% |
22-09-2020 |
|
40D Spandex |
4242.53 |
USD/Ton |
0.35% |
22-09-2020 |
|
Nylon POY |
5303.16 |
USD/Ton |
0% |
22-09-2020 |
|
Acrylic Top 3D |
950.15 |
USD/Ton |
0% |
22-09-2020 |
|
Polyester FDY |
1841.38 |
USD/Ton |
-0.79% |
22-09-2020 |
|
Nylon DTY |
1915.03 |
USD/Ton |
0% |
22-09-2020 |
|
Viscose Long Filament |
898.59 |
USD/Ton |
0% |
22-09-2020 |
|
Polyester DTY |
2231.75 |
USD/Ton |
0% |
22-09-2020 |
|
30S Spun Rayon Yarn |
1782.45 |
USD/Ton |
0.58% |
22-09-2020 |
|
32S Polyester Yarn |
1392.08 |
USD/Ton |
0% |
22-09-2020 |
|
45S T/C Yarn |
2224.38 |
USD/Ton |
0% |
22-09-2020 |
|
40S Rayon Yarn |
1944.49 |
USD/Ton |
0.76% |
22-09-2020 |
|
T/R Yarn 65/35 32S |
1716.16 |
USD/Ton |
0% |
22-09-2020 |
|
45S Polyester Yarn |
1561.49 |
USD/Ton |
0% |
22-09-2020 |
|
T/C Yarn 65/35 32S |
2091.80 |
USD/Ton |
0% |
22-09-2020 |
|
10S Denim Fabric |
1.16 |
USD/Meter |
0% |
22-09-2020 |
|
32S Twill Fabric |
0.65 |
USD/Meter |
0.23% |
22-09-2020 |
|
40S Combed Poplin |
0.95 |
USD/Meter |
0.16% |
22-09-2020 |
|
30S Rayon Fabric |
0.48 |
USD/Meter |
0.31% |
22-09-2020 |
|
45S T/C Fabric |
0.66 |
USD/Meter |
0% |
22-09-2020 |
Source: Global Textiles
Note: The above prices are Chinese Price (1 CNY = 0.14731 USD dtd. 22/09/2020). The prices given above are as quoted from Global Textiles.com. SRTEPC is not responsible for the correctness of the same.
SAPM Nadeem Babar discusses GIDC and other issues with Aptma officials The federal government is committed to making the textile industry competitive and realise its true export potential, said Special Assistant to Prime Minister (SAPM) on Petroleum Nadeem Babar. Talking to the media at All Pakistan Textile Mills Association (Aptma) Punjab office on Saturday, he pointed out that the purpose of his visit to the association was to understand the issues of the textile sector. He said that the meeting with Aptma’s leadership and members was highly constructive and focused on the issue of Gas Infrastructure Development Cess (GIDC). “The government will ensure maximum relief to the industry within the ambit of the GIDC verdict announced by the apex court,” he said. He said that the textile industry was looking for a stable textile policy while the government was committed to introduce it at the earliest to help the industry attract foreign exchange, create jobs and bring investment in the country. "The government will ensure supply of gas to the industry during the winter season," Babar assured. Speaking on the occasion, Aptma Chairman Adil Bashir said that the textile sector had recovered completely due to the export-friendly policies of the current government. He pointed out that the idle capacity has become operational and the textile exports have started rising over the past two months. “In addition, exports are projected to grow 14% during the ongoing month of September,” he added. He highlighted that the association was working with the government for a viable textile policy. Earlier in his presentation to Babar, Bashir called for determination of realistic energy efficiency benchmarks in consultation with the industry, experts and technical data. The energy audit should be suspended till re-determination of efficiency benchmarks, he stressed. He suggested that industries using gas for in-house consumption should be exempted from GIDC charges at captive tariff. “Since textile industry has not passed on the incidence of GIDC, therefore GIDC arrears should not be recovered from it till the decision by superior courts are announced,” he stressed. Adil lamented that the Sui Northern Gas Pipelines Limited (SNGPL) had issued GIDC arrears bills at captive connection tariff without determining passing of incidence. “The Lahore High Court vide order dated September 14, 2020 has ordered stay on recovery of arrears prior to 2015 and the difference of industrial and captive tariff,” he added. Highlighting that the textile sector had not passed on GIDC to consumers, he said that the Supreme Court’s decision was not applicable on textile sector. The recovery of GIDC arrears may be suspended till final outcome of the review petition. The official demanded the government to fix all-inclusive energy tariffs ie electricity at 7.5 cents per kWh and gas at $6.5 per mmbtu for the next five years. He further recommended that a billing mechanism should be devised for disbursement of subsidy to SNGPL for providing gas to the five export-oriented sectors at $6.5 per mmbtu. Subsidy for all the surcharges and costs above $6.5 per mmbtu from October 2018 to July 2020 should be released to SNGPL, Bashir suggested. He has also urged Babar to allot zero rating to new electricity and gas connections of the industry, which were not previously listed as zero rated. “In October 2018, the government had announced an all-inclusive energy package for the five export-oriented sectors under which electricity was charged at 7.5 cents per kWh and gas at $6.5 per mmbtu,” he said. “This package enabled the industry of Punjab to compete with domestic and regional competitors.”
Source: The Tribune
An online conference saw Brazilians and Egyptians discuss the numbers resulting from the Mercosur-Egypt agreement. The Arab Brazilian Chamber of Commerce’s president and secretary-general were featured. A webinar this Sunday (20) addressed the Egypt-Mercosur free trade agreement, which provides for a gradual easing of import tariffs on a bevy of items and is currently going on its fourth year. Hosted by the Federation of Egyptian Chambers of Commerce and by the Agreements and Foreign Trade division of Egypt’s Ministry of Trade and Industry, the event saw Brazilian and Arab experts discuss the advances brought about by the treaty. Alaa Ezz (pictured above), the secretary-general of the Federation of Egyptian Chambers of Commerce, said the agreement made it possible for his organization to work across South America, instead of taking a country-by-country approach. “What we are going for here isn’t just bilateral cooperation,” he said, adding that he hopes a bilateral revolution will take place. Ezz said Egypt’s economy is performing well, with Gross Domestic Product (GDP) and foreign trade numbers going up. “We are one of a handful of countries in the world whose exports are increasing” – by 2%, he said. Rubem Mendes de Oliveira, the minister-counselor at the Embassy of Brazil in Cairo, said that while sales from Brazil to Egypt used to be significant even prior to the agreement, that wasn’t the case the other way around. “Within three years, exports from Egypt increased by over 200%. Why such a big number? Because the basis for comparison was low, but I don’t think many other countries in the world have increased their trade with any given partner in three years’ time.” Arab Brazilian Chamber of Commerce (ABCC) secretary-general Tamer Mansour pointed out that customs tariffs have been lifted on products such as plants, mineral oils, quicklime and cement as a result of the treaty. He went on to discuss numbers pertaining to Egypt-Brazil trade. Mansour said 38% have purchased Arab products at some point, especially food, textiles and décor items. The ABCC secretary-general said ensuring swift responses to the Covid-19 pandemic is a priority at this time. He mentioned actions rolled out by the ABCC since the pandemic broke out, including implementing online certification, creating the ABCC Lab, creating a parliamentary group to advocate the interests of Arab countries, and working to host the Economic Forum Brazil & Arab Countries next October in a fully digital environment. The director-general for Bilateral Trade Agreements at the Egyptian Ministry of Trade and Industry, Michael Gamal Kaddes, discussed Egypt’s export potential. He said key sectors as pertains to the Mercosur agreement are pharmaceuticals, machinery and mechanical equipment, building material, metal products, and food preparations. ABCC president Rubens Hannun went over the progress that the Egypt-Mercosur agreement has brought about, and said the organization is available to support cooperation between the regions involved. Also featured in the webinar were Ashraf Moukhtar, head of the Agreements and Foreign Trade division of Egypt’s Ministry of trade and Industry; Yasser Korani, of the Egyptian Commercial Service (ECS). Cesar Simas Teles, the agricultural attaché at the Embassy of Brazil in Cairo, listened in on discussions.
Source: Brazil Arab News Agency
When a recession hits, economies tend to become more protective by putting up trade barriers. But that isn’t an advisable option for trade-dependent Southeast Asia. If anything, now is the time for ASEAN members to open up further by joining multilateral trade deals such as CPTPP and RCEP. As Southeast Asia cautiously emerges from lockdown, the policy focus is shifting from triage to kick-starting their economies. In its June forecast, the IMF estimated that Southeast Asia’s five biggest economies will shrink by 2 per cent in 2020, which is better than the global average of -5 percent, but it will still be a severe shock for a region that has experienced growth every year since the 1960s. Rebuilding Southeast Asia’s growth engine will be a challenge. The region’s Big Three trade sectors – commodities, electronics and textiles – all face economic uncertainty as demand stalls. And investment, which has historically been an important economic growth driver, is set to fall dramatically across Southeast Asia, stunting the region’s manufacturing growth. The temptation at times of global economic uncertainty is to pull up the drawbridge and try to isolate the economy. Even before COVID-19, there is evidence that Southeast Asia was retreating from internationalism as the global economy wobbled. In April 2019, the EU-ASEAN Business Council estimated that the 10 members of the Association of South East Asian Nations had imposed some 6,000 separate nontariff barriers to trade across the region. But giving in to the temptation of more protectionism would be a mistake. Barriers built in an attempt to isolate an economy from uncertainty have a tendency to become barriers to growth. Recovery from the pandemic is a challenge, but it is also an opportunity for a policy reset: a new chance to create a transparent, coordinated low-tariff trade environment which facilitates short-term recovery and sets the stage for long-term prosperity. The key lies in Free Trade Agreements, specifically the Regional Comprehensive Economic Partnership (RCEP) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). RCEP accounts for 30 percent of the world’s population and 29 of global GDP. CPTPP is a comprehensive, high- standard regional free-trade pact which brings together 11 economies from both sides of the Pacific, representing a little under 14 percent of the global economy. At a time of increased protectionism and economic headwinds, these agreements promise to open the door to a new era of trade and investment integration and certainty between nations, maintain a rules-based order, and create a level playing field for large and small countries. RCEP – which includes the ten ASEAN nations, China, Japan, South Korea, Australia and New Zealand – is reportedly down to the “last mile” details after almost a decade of negotiations. Obviously, a finalized RCEP agreement will be a welcome and timely economic boost for businesses seeking to offset the impact of the coronavirus outbreak. HSBC encourages ASEAN members to conclude these negotiations ahead of the RCEP summit later this year. RCEP members also have explicitly stated that they will “leave the door open” for India to rejoin. FTAs can also create a hedge for Southeast Asian markets who may otherwise be exposed and vulnerable to trade barriers from traditional trade partners. Thailand, Indonesia and the Philippines have been weighing up the cost and rewards of joining Singapore, Malaysia, Vietnam and Brunei in the CPTPP. But with global economic prospects not as bright as they were nine months ago, these markets may need to choose pragmatism over perfection when assessing the viability of CPTPP. The risks of missing out may prove costly. Regional FTAs like RCEP and CPTPP are also driving important domestic regulatory reforms, including in areas like labor laws (links to labor productivity), investment liberalization, cybersecurity, cross-border data rules and intellectual property protection. These reforms create less visible but material commercial incentives for trade and investment from member partners. This is only going to accelerate as we see supply chain dynamics change. For example, HSBC’s July 2020 Navigator research found that companies are seeking greater control, transparency and confidence in their supply chain production. Suppliers that can offer assurances that come under an FTA framework could find themselves with a competitive edge. This scenario could very well be applied to Southeast Asia’s electronics manufacturing ecosystem. Currently Malaysia, Philippines, Vietnam, and Thailand all vie for the lower-value electronics assembly. As producers begin to revisit their supply chain locations, in this COVID-19 environment, future locations could be selected based on which countries provide the most attractive ‘pull’ factors. Of course, completing an FTA does not happen overnight - largely because these agreements are complex and have knock-on implications for domestic economies. Achieving success will require these Southeast Asian governments to deliver strong and compelling messages to their constituents about the benefits that these agreements will bring. They will also need to complement trade policy with domestic programs aimed at re-skilling or re-deploying workers who may be adversely affected by increased foreign competition. While it may seem counter-intuitive, the current challenging economic outlook could actually be the perfect time for Southeast Asian countries to make strong and far-reaching economic and trade policy action such as finalizing the RCEP or joining the CPTPP. In more precarious times, such as we have now, the choice is made clearer: either we recognize, accept and embrace change and put ourselves in a position to seize opportunities, or we face being left behind.
Source: The Jakarta Post
Pakistani entrepreneurs have been urged to develop international standard brand products to capture open global markets by fully exploiting indigenous potentials, expertise and resources. Talking to a delegation of exporters and traders, led by Mian Faiz Bukhsh Arain here on Sunday President SAARC Chambers and Chairman United Business Group Iftikhar Ali Malik highlighted the significance of brands and said it was high time for Pakistani entrepreneurs, corporate sector, especially younger business magnates, to focus on developing brands. He said vertical integration and institutional network were to be strengthened on modern scientific lines to meet the future challenges of global marketing. "By the grace of Allah, Pak entrepreneurs have full potential to compete the international markets, but unfortunately they do not develop their own brand like KFC, McDonald s, Guard, Bata , Chenone, etc. He said that private sector had to come forward to develop their own brands on war footing for their survival; otherwise, the neighbouring countries would continue to dominate and sweep international markets. He said Pakistan was producing some of the best products in the world in sports, textile, fruits, vegetables, handicrafts and in several other sectors but not exporting them under its own brands. Iftikhar Malik said "we must not only develop but promote brands through manufacturing the best quality products which is a need of the hour. " He urged the government to conduct market research in an attempt to search new export destinations for Pakistani products, which were considered the best in the world as far as quality and prices were concerned. "Pakistani missions abroad should be duty bound to introduce Pakistani products there and ensure dissemination of trade-related information so that local entrepreneurs could avail trade opportunities to the maximum," he said. He said he always encourages genuine exhibitors and facilitate them at optimum level. He urged the private sector to restore consumer faith and trust by manufacturing best quality products on competitive prices for the promotion of brands. Iftikhar Malik also called upon the government, private sector, academia and civil society to put efforts together to mentor, guide and support youth to unleash immense economic and social potential. "We need a national and sub-national policy framework and develop institutions to assist these young entrepreneurs to grow." He said that youth accounts for over 60 per cent of Pakistan s population and it is essential to encourage them in entrepreneurship so that they could become more productive and contribute positively to the growth of the national economy. Iftikhar Malik, who is also founder chairman of Pak-US Business Council, said they would also try to ensure a business-friendly environment by sharing views with the government and by taking all stakeholders on board on all economy-related issues.
Source: Dunya News
Only 1,632 out of 8,500 textile and clothing units have so far registered with the Department of Textile (DoT), a legal requirement to run business in Bangladesh. Sources said the government in October 2018 made it mandatory for all textile and clothing industries, including subsectors, to be listed with the DoT. According to the textile law, all textile subsectors like primary textiles, ready-made garment (RMG), allied textiles, packaging and accessories manufacturers and buying houses, must get registered. The DoT has been empowered as the 'sponsoring authority' to provide services to the textile and clothing industry. Until last August, officials said, 1,632 industries that included 743 RMG units, 397 buying houses and 492 textile and other industries have so far registered with the department concerned. Data available with the DoT shows an estimated 8,500 textile industries are operating across the country. Of them, some 425 are spinning mills, 796 weaving, knitting and other fabric manufacturing units, and 449 specialised textiles and power looms. About 5,327 exportoriented RMG factories (knit and woven), 955 garment accessory units, 240 dying, printing and finishing units and 104 terry-towel industries are operating here, according to the data. Industry people, however, alleged that DoT registration is nothing but a hindrance with a blizzard of documents and it has nothing to do with business activities. They argued that their business is very much connected with commerce, finance and industries ministries and state-run Export Promotion Bureau, Tariff Commission and other organisations under those ministries. "We've hardly any relations with textiles and jute ministry and DoT. Even during the pandemic, they didn't provide any service or want to know the problems of the industry." Talking to the FE, some terry-towel and textile millers said they opposed the mandatory DoT registration many times before enacting the law. They suspected that bribery and other types of corruption might be involved in completing the registration process with the government organisation. When asked, DoT director general Dilip Kumar Saha said industries are coming and they are giving registration. More industries will get registered with the DoT as the central bank has asked all banks to ensure registration at the time of opening letters of credit, he mentioned. On September 03, the Bangladesh Bank in a circular said some buying houses, and textile and clothing mills have been doing business violating a provision of the textile law. Such malpractice has been tarnishing the country's image abroad, it noted. The regulator advised banks to ensure that the legal requirement of having DoT certification is fulfilled before rendering banking services. The DoT in a letter on July 27 requested the National Board of Revenue for the same.
Source: The Financial Express
