Months after it was unveiled by Prime Minister Narendra Modi, the income-tax appeals are all set to go faceless from Friday. The income tax department has already rolled out pan-India faceless assessment facilities for all taxpayers from August 13. The Centre hopes that the faceless system will ease compliance and widen the tax base. India introduced a faceless assessment of tax on a pilot basis in October 2019, taking up about 58,000 cases. Of these cases, orders were passed in 11,000 cases and about 4,000-5,000 orders will be issued soon. Faceless assessments will require a structural change for tax authorities as well as significant infrastructure support. The new regime calls for fresh training of officers in a bid to streamline assessments. Under faceless scrutiny assessment, a central computer picks up tax returns for scrutiny based on risk parameters and mismatch and then allots them randomly to a team of officers.
Why do we need faceless assessment?
The objectives sought to be achieved are exponentially faster clearance, a reduced interface between taxpayers and officers, and enhanced ease of doing business. Under the new regime, all cases other than those assigned to the central charges (serious frauds, major tax evasion, sensitive and search matters, black money and benami cases) and international tax charges are to be done through faceless assessment. Implementation of a faceless scheme would eliminate the interface between the income tax authority and the assessees. It would also optimise utilisation of the resources through economies of scale and functional specialisation.
Extension of faceless assessment to all IT proceedings
The government had proposed to extend the faceless assessment scheme to almost all proceedings under the income tax law, including for collection and recovery of tax and gathering of information. The Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Bill, 2020 proposed to extend the faceless assessment scheme to at least eight processes in income tax law. Besides, faceless collection and recovery of tax, faceless revision, and effect of orders and faceless approval or registration are proposed. The legislation also proposes faceless inquiry or valuation and a faceless collection of information. The Bill also proposes to formulate a scheme for 'faceless jurisdiction of income-tax authorities' which would "impart greater efficiency, transparency, and accountability". Currently, the faceless scheme is already implemented for scrutiny assessment and would be extended to appeal cases beginning September 25.
Safeguard measures in place for e-assessment
The income tax department has put in place in-built safeguard mechanisms to address the rise in ad hoc additions in demand by tax officers due to a gap in understanding or inadequate submissions. Any additions in demand made by a tax officer under the faceless assessment process for over Rs 5 lakh of income will undergo a rigorous review process before a final demand order is passed. With the department expected to carry out close to 200,000 faceless assessments by March 31, 2021, the in-built check is aimed at ensuring that no one-sided or ex-parte assessment goes unchecked. The review unit will see if the addition being made or tax being levied is genuine or not. Under Section 144 of the Income Tax Act, the assessing officer can carry out ex-parte or one-sided assessment after serving a notice on the non-filer to the best of his judgement.
Appeals will be filed in assessee's state, clarifies CBDT
Senior officials at the Central Board of Direct Taxes (CBDT) have clarified that the appeals at the tribunal or high court will be filed in the state where the assessee resides. Though all appeals till the Commissioner of Income Tax (Appeals) level will go faceless, personal hearing might be allowed via video-conferencing in some cases after approvals from designated senior officers. CIT (Appeals) is the first level of appeal against a demand raised by the assessing officer. Appeals against orders at the CIT level can be filed at the Income Tax Appellate Tribunal (ITAT) and later in high courts and the Supreme Court.
Source: Business Standard
"Yes. The government proposes to formulate National Retail Trade Policy," he said in reply to a question. Replying to a separate question, he said the government is in the process of nalising a National Logistics Policy which will help bring down logistics cost signfiicantly. The government has proposed to formulate a National Retail Trade Policy and stakeholder consultations are being held for the same, Parliament was informed on Wednesday. In a written reply in the Rajya Sabha, Commerce and Industry Minister Piyush Goyal said that the government has set up a National Traders' Welfare Board with the objectives of welfare of traders and their employees, simplication of the Acts and rules applicable to traders, reduction of compliance burden and improvement in access to funds. "Yes. The government proposes to formulate National Retail Trade Policy," he said in reply to a question. Replying to a separate question, he said the government is in the process of nalising a National Logistics Policy which will help bring down logistics cost signicantly. He also said 24 sub-sectors (such as agro-food processing, steel, agro chemicals, electronics products, furniture, leather, auto parts and textiles) in manufacturing have been identied in consultation with industry based on export potential, import substitution and employment generation capacity, where attention would be given to make India a self-reliant country and a global supplier. In another reply, the minister informed the Upper House that Make in India is now focusing on 27 sectors under Make in India 2.0. "DPIIT (Department for Promotion of Industry and Internal Trade) is coordinating action plans for 15 manufacturing sectors, such as aerospace and defence, food processing, capital goods, leather, pharmaceutical and medical devices, etc, while the Department of Commerce is coordinating for 12 service sectors," he added.
Source: Economic Times
While stating that the problems faced by the textile industry due to Covid-19 would be shorter, Textile Commissioner Roop Rashi said, “the structural issues on the raw material front would be addressed soon. But, it is for the industry to utilise the opportunities, diversify, innovate, scale-up and build global brands.” Speaking at the 14th CEO Conference of the Southern India Mills Association (SIMA) – SIMA TEXPIN 2020, (held virtually), Rashi, while affirming that the government would extend support to the industry, categorically stated “as a facilitator”. Reiterating that the government would extend only policy support, the Textile Commissioner observed that the domestic market is strong and that the industry should gear itself on the value addition front. Bangladesh and Vietnam are emerging stronger despite India having large production base, the Commissioner observed, before adding “India should grab the space left by China’. Highlighting some of the issues confronting the textile industry, Ashwin Chandran, Chairman, SIMA, appealed for release of a major portion of the TUF subsidy against bank guarantee. “Over ₹10,000 crore of TUF subsidy under various schemes are blocked due to procedural issues,” he said, requesting for simplification of guidelines and protocols and making the scheme industry-friendly.
Covid challenges
While hailing the relief measures announced by the government to mitigate Covid-19 challenges, “the debt restructuring facilities for non-MSMEs are available only when the accounts are standard as on March 1, 2020. As the textile and clothing has been facing long drawn recession, the government should take a relook and extension of the moratorium. The association has impressed upon the need for a special package to boost cotton consumption by including all the cotton textile products under IES, MEIS and RoSCTL/ RoDTEP, besides announcing special incentive of 4 per cent for cotton yarn, 5 per cent for fabric and 6 per cent for garments and made-ups to boost exports and increase cotton consumption. Earlier, Chinmaya Goyal, Senior Manager, Ernst & Young LLP, Gurgaon made a presentation on “Competitiveness of the Indian Textile Industry in the Global Market.
Source: Financial Express
The report adds that garments & apparels exports faced a great demand-shock from the western markets during a good part of the first half of the year. India’s exports are gaining momentum and showing signs of a V-shaped recovery, while imports remain subdued with an expectation of L-shaped recovery, Maersk, the world’s number one container line, said on Thursday. The shipping giant said that during Q22020 (April to June), the Indian containerised trade contracted by almost 30% as compared to the same period last year. Exports out of India were down by over 24% while imports suffered a greater shock with a fall of almost 34%. Maersk said that the containerised trade has started showing signs of recovery from one of the biggest slumps in the modern times as the economies around the world started opening in a staggered manner. According to the report, which is a combination of market intelligence and Maersk data, despite the overall drop in exports from India, commodities such as plastic & rubber have been in great demand and their exports, especially to China have seen a tremendous growth, up by 70%, during Q2 of 2020. The plastic industry has a huge potential with the growth of end-user industries such as packaging, textile fibre and electronics. At the same time, tyre industry is one of the rare sectors which has not seen as much contraction as the others, giving a boost to the rubber exports, sources said. Vegetable exports have also seen a rise, especially to markets in the West Asia. Vegetable exports to the UAE have more than doubled in the said period as compared to 2019. The agricultural sector is expected to grow by 3% in 2020-21 while exports are expected to grow between 4% and 6% with minimal impact of Covid-19 pandemic. The report adds that garments & apparels exports faced a great demand-shock from the western markets during a good part of the first half of the year. On the import side, the container data shows that imports into India witnessed a great decline across all commodities, except for chemicals which form a very small portion of overall imports. Paper, appliances, kitchenware and metal imports have slid to almost half volumes in the second quarter as compared to 2019. Hike in import duty, import dependence on China and production stoppage across the country have hit imports in the short term. While there is an expectation of the import market to recover in 2021, it will surely be a longdrawn-out process that is further slowed down by government’s Atmanirbhar campaign, the report said. Steve Felder, managing director, Maersk South Asia, said that it is also extremely important to reduce the cost of logistics in India which stands at 14% as compared to 9-10% in more developed countries. “Besides digital transformation, what the logistics sector really needs is agility and reduction of inefficiencies. Supply chains are complex by nature; however, we need to simplify them by focusing on customer needs and building solutions with a straight goal of reducing complexities,” he added.
Source: Financial Express
CAG suggested DGFT to insist on CA certificate on exact classification of service with Central Product Classification (CPC) code and the mode under which it falls, rather than simply stating the serial number of the list of eligible service so as to avoid ambiguity and bring in more clarity on eligible services. The Comptroller And Auditor General Of India (CAG) on Wednesday hauled up the Directorate General of Foreign Trade (DGFT) for giving export benefits worth Rs 172.72 crore in cases where services were misclassified under the Service Exports from India Scheme (SEIS) and for delaying export benefits worth Rs 5.52 crore to e-commerce exports by almost four years under the Merchandise Exports from India Scheme (MEIS). It asked the directorate to review the procedure of granting MEIS/SEIS scrips and lay down an appropriate checklist for grant of scrips both electronically and in manual environment. It suggested the entire system of administration of Foreign Trade Promotion schemes to be automated by rolling out a fool proof system, duly mapped to Scheme provisions and also leveraging information already available in linked /base systems such as ICES, SEZ online so that it becomes Single Source of Truth. Under the two schemes, the government provides duty benefits depending on product and country and rewards under the schemes are payable as duty credit scrips which can be transferred or used for payment of a number of duties. As per a CAG report on the performance of the two export schemes, exporters got rewards worth Rs 172.72 crore in cases where the services were misclassified though actual services rendered were not specified in 37 cases, by placing reliance on Chartered Accountant (CA) certificates. CAG suggested DGFT to insist on CA certificate on exact classification of service with Central Product Classification (CPC) code and the mode under which it falls, rather than simply stating the serial number of the list of eligible service so as to avoid ambiguity and bring in more clarity on eligible services. “Invoking penal provisions may be made mandatory on shortcomings found in applicant’s declarations and CA certificates,” it said and favoured a mechanism wherein Jurisdictional Development Commissioners verify the validity of classification of service being reported by the service providers to different authorities (DGFT, RBI, Customs) for the same exports. The classification of services by various agencies (DGFT, RBI, Customs etc.) needs to be aligned to the Central Product Classification (CPC) code of UNSD to avoid any misuse of incentives which is based on CPC codes, it said. In case of MEIS, it said the extension of the benefits to e-commerce exports worth Rs 5.52 crore was delayed by almost four years due to delay in amending the regulations and operationalization of e-commerce module. “The substantial delays in issue of MEIS and SEIS scrips indicated failure of the automated system in achieving the objective of simplification of procedures and ease of doing business,” CAG said in its report and suggested DGFT to develop an inbuilt system for grievance redressal for ease of doing business. It also suggested DGFT to commission a mid-term evaluation study of the achievements of such schemes introduced visà-vis the main objectives of the scheme.
Source :Economic Times
The new four labour codes seek to replace 44 central labour laws, and that is welcome. However, employers and workers still have to contend with 200 or so state-level labour laws. Of the four codes, the one on industrial relations is best formulated, replacing, as it does, just three Acts, making for easier standardisation of definitions. The Industrial Relations Code provides a broad balance between the needs of industry and the rights of workers. While workers in India’s organised sector enjoyed, in theory, extensive rights and privileges, very few establishments accorded, in practice, such rights and privileges, and these are virtually non-existent in the vast informal sector. The present code seeks to formalise all employment by recognising fixed-term contracts, and by defining industry as any systematic activity carried on by cooperation between the employer and workers for the production, supply or distribution of goods or services. This is welcome. It provides for minimum dues for retrenched workers, treats termination of employment as an industrial dispute and creates a reskilling fund. It makes it obligatory for establishments to give first preference to retrenched workers while rehiring. To improve compliance and help establishments, the code has increased the threshold for applicability of standing orders on matters such as classification of workers, manner of informing workers on issues relating to pay, holidays and termination of employment to 300 workers, from 100 at present. It has plugged another loophole: exploiting the multiplicity of unions in an organisation by introducing the concept ‘negotiating union’. It has done away with a multiplicity of tribunals, and increased the number of members in grievance redressal committees. While flash strikes have to be strictly banned, the right to strike must be honoured. The Industrial Relations Code 2020 gives a sound starting point, especially as India seeks to rebuild its economy post-Covid by encouraging greater economic activity and enterprise.
Source: Economic Times
The report adds that garments & apparels exports faced a great demand-shock from the western markets during a good part of the first half of the year. India’s exports are gaining momentum and showing signs of a V-shaped recovery, while imports remain subdued with an expectation of L-shaped recovery, Maersk, the world’s number one container line, said on Thursday. The shipping giant said that during Q22020 (April to June), the Indian containerised trade contracted by almost 30% as compared to the same period last year. Exports out of India were down by over 24% while imports suffered a greater shock with a fall of almost 34%. Maersk said that the containerised trade has started showing signs of recovery from one of the biggest slumps in the modern times as the economies around the world started opening in a staggered manner. According to the report, which is a combination of market intelligence and Maersk data, despite the overall drop in exports from India, commodities such as plastic & rubber have been in great demand and their exports, especially to China have seen a tremendous growth, up by 70%, during Q2 of 2020. The plastic industry has a huge potential with the growth of end-user industries such as packaging, textile fibre and electronics. At the same time, tyre industry is one of the rare sectors which has not seen as much contraction as the others, giving a boost to the rubber exports, sources said. Vegetable exports have also seen a rise, especially to markets in the West Asia. Vegetable exports to the UAE have more than doubled in the said period as compared to 2019. The agricultural sector is expected to grow by 3% in 2020-21 while exports are expected to grow between 4% and 6% with minimal impact of Covid-19 pandemic. The report adds that garments & apparels exports faced a great demand-shock from the western markets during a good part of the first half of the year. On the import side, the container data shows that imports into India witnessed a great decline across all commodities, except for chemicals which form a very small portion of overall imports. Paper, appliances, kitchenware and metal imports have slid to almost half volumes in the second quarter as compared to 2019. Hike in import duty, import dependence on China and production stoppage across the country have hit imports in the short term. While there is an expectation of the import market to recover in 2021, it will surely be a longdrawn-out process that is further slowed down by government’s Atmanirbhar campaign, the report said. Steve Felder, managing director, Maersk South Asia, said that it is also extremely important to reduce the cost of logistics in India which stands at 14% as compared to 9-10% in more developed countries. “Besides digital transformation, what the logistics sector really needs is agility and reduction of inefficiencies. Supply chains are complex by nature; however, we need to simplify them by focusing on customer needs and building solutions with a straight goal of reducing complexities,” he added.
Source: Financial Express
The onset of the pandemic and the recession fears have put shackles on the $3 trillion Indian economy as FY 21 growth numbers could be -5% after the growth story has lost steam in the last 2 years. The ICOR( lower the better) has risen to 4.6 from 3 in the last 10 years which is not well for the fastest growing economy during 2013-2017. The Harrod Domar model thus fits lower growth numbers given the savings rate too has deteriorated to 30%. So efficiency, competitiveness, and productivity have taken a hit. The marginal productivity of capital has plummeted due to excessive capex and FDI inflows. Labor productivity has risen from 3 % in 2003 to 6.7% in 2010 and declined to 5.2% in 2019. This is due to the ever-growing workforce in the organized sector. Technology progress parameters like the contribution of IT sector growth to total GDP growth have slightly improved but most of it has gone to exports. So in the last decade, the finer threads of the economy from micro angle have deteriorated. Asia’s 3rd biggest economy has grown from $ 700 bn in 2002 to $ 1.8 trillion in 2010 and much slowly to $ 3 trillion in the last decade. The present scenario of the Indian economy from macro angle doesnt appear good either. The global economies too are murkier. The investment is interest inelastic causing monetary policies ineffective and speculative demand for money is little causing fiscal stimulus ineffective. As Q1 growth is likely to be -10 to -15% this translates to a loss of Rs 70000 crores in Q1. What can the governments do then? It is a catch 22 like scenario and one can expect that if unlocking begins quickly H2 FY21 will see above 5% growth and the FY21 growth would likely be -5 to 1% growth. The recovery is likely to be slow and U shaped. In 2012, risk aversion was seen in Europe, Dow Jones was rallying while CAC was stagnant. So Dollar appreciation was seen and Euro, Pound, Yen and Rupee depreciated. Since 2014 risk appetite started improving. Green shoots in global economies were seen. The monetary easing and fiscal stimulus had yielded results. In the last 2 years, global growth has dropped again, re-ratings of the economies are happening and money is moving into US as a safe haven on rising risk aversion. In the last month, the sovereign currency ratings on rupee had been cut to a lower grade after several years. The recession and Covid crisis are giving jitters to the markets each day. In the next 2 years, the rupee is going to depreciate to 80 -82 levels on Dollar appreciation, benign macro data and recession, Covid crisis, higher forward premia rates, and declining interest rates. Also if inflation rises on supply-demand imbalances, the $ 3 trillion economy will see further depreciation of the domestic currency, thanks to Purchasing Power Parity theory. A worst-case scenario is if the Covid crisis does not lose steam, Rupee could see further steep depreciation in the next few years to come. Indian benchmark 10-year gsec yield was 9% in 2012, declined to 7.5% in 2014 and climbed to 9% again in 2015. In 2016 the yield dropped to 6.2% and spiked to 8.5% in 2018 and then plummeted to 6.2% in 2020. So bond markets too have been hit. In the US, Dollar appreciated 1.12 levels and the Dollar Index rose to 97 levels as investors moved to safe-haven due to the Pandemic crisis all across the board. Since this trend will exist for some time in the future, long Dollar would be the correct strategy in the currency market. The $ 25 trillion economy would be reeling into recession for the next 2 years and recovery is going to be very slow. The government and the private sector will try to provide some stimulus.
Source: Economic Times
The Virtual Bilateral Summit between PM Narendra Modi and Prime Minister Mahinda Rajapaksa on Saturday will enable to push economic partnership including Indian investments in the island nation particularly manufacturing sector. The Virtual Bilateral Summit will be Modi’s first such virtual engagement with a neighbouring country and also Rajapaksa’s first diplomatic engagement with a leader of a foreign country after he was sworn in as PM on August 9. The Summit could provide momentum to mutual cooperation and ties which are multi-dimensional in nature and cut across spheres such as commerce, security, defence, culture, tourism etc. Modi has maintained regular interaction with both the President and Prime Minister of Sri Lanka. The Virtual Bilateral Summit is preceded by the State visits of President Gotabaya Rajapaksa and Prime Minister Mahinda Rajapaksa to India in November 2019 and February 2020 respectively. Since then also, leaders have kept in close touch and spoken to each other on telephone on several occasions including in the context of cooperation to tackle the health and economic impact of the prevailing COVID-1 . Following the election victory of PM Rajapaksa led Sri Lanka Podujana Peramuna (SLPP), PM Modi was the first leader to congratulate Rajapaksa over telephone on 06 August 2020. Most recently, Both President Gotabaya Rajapaksa and Prime Minister Mahinda Rajapaksa called PM on September 17 to wish him on his birthday. Earlier on May 27, Prime Minister Modi had spoken to Prime Minister Mahinda Rajapaksa to congratulate him on having completed 50 years since first entering the Parliament of Sri Lanka. A Virtual Bilateral Summit under challenging circumstances posed by COVID-19, testifies to the deep-rooted civilizational ties and shared heritage between the two neighbouring countries. This is also a reflection of India’s ‘Neighbourhood First’ approach and SAGAR doctrine, according to a MEA statement. The Virtual Bilateral Summit will give an opportunity to the two leaders to comprehensively review the broad framework of the bilateral relationship in the context of the time-tested friendly ties between the two countries and give broad political direction for a strengthened and deepened collaborative partnership on key issues of mutual interest, the statement added. There is a growing interest for Indian investments in Sri Lanka including the private sector.
Source : Economic Times
Shortage of labour in Tirupur, which rakes in Rs 60,000 crore annually through textile business, has prompted manufacturers and exporters to decentralize operations by setting up textile parks in other districts. Manufacturers expect this would cut production costs by about 10%. Tirupur Exporters’ and Manufacturers’ Association (TEMA) has identified Ayakkaranpulam village in Vedaranyam taluk of Nagapattinam to set up the first such park. Similar parks would come up in Ramanathapuram, Tiruvannamalai, Tirunelveli, Tenkasi and Tuticorin districts in future, said TEMA president M P Muthurathinam. Veda Textile Park would be set up on about 50 acres at a cost of Rs 120 crore, of which 67%, would be central and state government subsidies. In the first park, 36 exporters and manufacturers would set up units, which would employ 7,000 people, TEMA estimates. The park will have cutting, sewing, packing and dispatching units. A skill development centre for workers and creche for their children will also be set up. “The state government has given its nod to the project and construction will commence in December,” Muthurathinam said. “Labour shortage is a permanent problem for the industry. We face high labour turnover. Guest workers, who are 40% of the workforce of 6 lakh people, keep changing companies. This puts manufacturers’ delivery deadlines under pressure. Decentralisation will help us find a permanent solution to the problem,” he said. It will be a win-win situation for industry and workers,” said managing partner of DSP Knitting company, Banupriya Senthilkumar. She said industry would be able to save on accommodation and transport of workers. The cost cutting could be about 10%, she said “The textile park will also give employment to rural women,” said Banupriya, who plans to start three units in the first park and employ 500 women. P Shanmugasundaram of Essdee Knitting Mills Private Limited, who plans to engage 150 workers, said, “By reducing cost of manufacturing, we will have a competitive edge.
Source: Times of India
The government’s already strained finances and handling of the economy which has been dented by the Covid-19 pandemic will be put to test as it tries to secure Parliament’s nod for an additional Rs 1.67 trillion for fiscal 2020-21. The money will be used to recapitalise state-owned banks, fight Covid-19 pandemic and fund various schemes announced for vulnerable sections. “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 trillion. Our baseline expectation is now that the Government's fiscal deficit will widen to at least Rs 14 trillion, or 7.4 per cent of gross domestic product (GDP), in FY21,” says Aditi Nayar, vice-president and principal economist at ICRA. The development comes at a time when the economy is limping back to normalcy after a stringent lockdown that lasted over two months. Most research and rating agencies, in this backdrop, have cut the FY21 growth projections as measured by GDP. On Monday, S&P Global Ratings said that it expected India's economy to contract 9 per cent in FY21, much higher than its previous estimate of a 5 per cent contraction. Last week, Fitch and Goldman Sachs had slashed their estimates for FY21 GDP growth. While Fitch now expects the GDP to contract 10.5 per cent in FY21 versus its earlier estimate of 5 per cent contraction in this period, Goldman Sachs has forecasted a sharper contraction at 14.8 per cent (-11.8 per cent forecasted earlier) in FY21 and 11.1 per cent (-9.6 per cent earlier) in calendar year (CY20). “Though there will be an overall increase in the government's borrowing, there is enough liquidity in the system. The Rs 1.67 trillion borrowing if comes though, will increase the FY21 fiscal deficit by around 0.8 per cent of GDP. However, some of these expenses like increased NREGA and Grarib Kalyan Yojana were part of a package earlier and hence would not be beyond what was already buffered in for calculating the fiscal deficit. But, the amount of around Rs 47,000 crore for financing state deficit would be an additional item that was not part of the package and would involve additional borrowing. We could expect the Centre’s fiscal deficit to range between 8 - 8.5 per cent this year allowing for all these expenses,” said Madan Sabnavis, chief economist at CARE Ratings. That said, most analysts now draw some comfort from the fact that economic activity in India is reviving. However, they do caution against the stickiness of this recovery over the medium-to-long term. After briefly plateauing in June-July, the Nomura India Business Resumption Index (NIBRI) – Nomura’s gauge of the pace of economic activity normalisation in the country – has been picking up through August and raced ahead to a post-lockdown high of 81.6 on 13 September, which Nomura believes is on account of increasing retail and recreation mobility, a higher driving mobility index and higher power demand. “The continued acceleration in business resumption in August and September occurred alongside an unabated rise in infections, both quantitatively and geographically. The durability of the recovery remains in question, as rising cases may lead to the re-imposition of localised lockdowns or create more risk-averse consumers, despite current levels of lockdown fatigue,” wrote Sonal Varma, managing director and chief India economist at Nomura in a September 14 co-authored report with Aurodeep Nandi.
Source: Business Standard
The rupee depreciated 26 paise to 73.83 against the US dollar in opening trade on Thursday as selloff in domestic equities and significant foreign fund outflows weighed on investor sentiment. At the interbank forex market, the rupee opened on a weak note at 73.82, then fell further to 73.83, registering a fall of 26 paise over its last close. On Wednesday, the rupee appreciated by one paisa to close at 73.57 against the US dollar. "Given the uncertainty to economic outlook from the second wave of COVID-19 cases, US presidential elections and US stimulus package, investors are shunning risky assets. Commodities and equities have sold off," Abhishek Goenka, Founder and CEO, IFA Global. Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, rose 0.03 per cent to 94.41. On the domestic equity market front, the 30-share BSE benchmark Sensex was trading 510.46 points lower at 37,157.96 and broader NSE Nifty plunged 155.45 points to 10,976.40. Foreign institutional investors were net sellers in the capital market as they offloaded shares worth Rs 3,912.44 crore on Wednesday, according to provisional exchange data. Brent crude futures, the global oil benchmark, fell 1.01 per cent to USD 41.35 per barrel.
Source: Business Standard
|
Item |
Price |
Unit |
Fluctuation |
Date |
|
PSF |
795.44 |
USD/Ton |
-0.18% |
25-09-2020 |
|
VSF |
1304.49 |
USD/Ton |
0% |
25-09-2020 |
|
ASF |
1730.05 |
USD/Ton |
0% |
25-09-2020 |
|
Polyester POY |
737.58 |
USD/Ton |
0.90% |
25-09-2020 |
|
Nylon FDY |
1955.64 |
USD/Ton |
0% |
25-09-2020 |
|
40D Spandex |
4248.21 |
USD/Ton |
0% |
25-09-2020 |
|
Nylon POY |
1823.80 |
USD/Ton |
-0.40% |
25-09-2020 |
|
Acrylic Top 3D |
1904.37 |
USD/Ton |
0% |
25-09-2020 |
|
Polyester FDY |
893.59 |
USD/Ton |
0% |
25-09-2020 |
|
Nylon DTY |
2204.67 |
USD/Ton |
-0.33% |
25-09-2020 |
|
Viscose Long Filament |
5273.64 |
USD/Ton |
0% |
25-09-2020 |
|
Polyester DTY |
944.86 |
USD/Ton |
0% |
25-09-2020 |
|
30S Spun Rayon Yarn |
1787.18 |
USD/Ton |
0.83% |
25-09-2020 |
|
32S Polyester Yarn |
1377.01 |
USD/Ton |
-0.53% |
25-09-2020 |
|
45S T/C Yarn |
2219.32 |
USD/Ton |
0.33% |
25-09-2020 |
|
40S Rayon Yarn |
1933.67 |
USD/Ton |
0% |
25-09-2020 |
|
T/R Yarn 65/35 32S |
1706.61 |
USD/Ton |
0% |
25-09-2020 |
|
45S Polyester Yarn |
1560.12 |
USD/Ton |
0.47% |
25-09-2020 |
|
T/C Yarn 65/35 32S |
2080.16 |
USD/Ton |
0% |
25-09-2020 |
|
10S Denim Fabric |
1.15 |
USD/Meter |
0% |
25-09-2020 |
|
32S Twill Fabric |
0.65 |
USD/Meter |
0% |
25-09-2020 |
|
40S Combed Poplin |
0.94 |
USD/Meter |
0% |
25-09-2020 |
|
30S Rayon Fabric |
0.48 |
USD/Meter |
0% |
25-09-2020 |
|
45S T/C Fabric |
0.66 |
USD/Meter |
0% |
25-09-2020 |
Source: Global Textiles
Note: The above prices are Chinese Price (1 CNY = 0.14649 USD dtd. 25/09/2020). The prices given above are as quoted from Global Textiles.com. SRTEPC is not responsible for the correctness of the same.
Processing of garment products at the Tiên Hưng Garment Joint Stock Company in Hưng Yên Province. In 2019, Việt Nam`s textile and garment export value to the EU reached $4.3 billion, 3.8 per cent higher than 2018. A shortage of raw materials remained an obstacle that needed to be removed if Vietnamese textiles and garments enterprises want to seize export opportunities in the EU under the Việt Nam-EU Free Trade Agreement (EVFTA), according to experts. The Ministry of Industry and Trade (MoIT) said the European Union (EU) had the largest demand for textiles and garments in the world with an import value of about US$250 billion per year. In 2019, Việt Nam`s export value to the EU reached $4.3 billion, 3.8 per cent higher than 2018. However, Việt Nam accounted for only about 2 per cent of this market which was very small compared to the demand. The EVFTA, effective from August 2020, was expected to help Việt Nam’s textile and garment industry to increase its exports to the EU by about 67 per cent by 2025 compared to the scenario without this agreement, according to the MoIT. However, according to the commitments of the EVFTA, besides meeting strict quality criteria, to enjoy preferential tariffs local businesses must implement strict origin requirements. Specifically, the EVFTA requires rules of origin to apply from fabric onwards, meaning that exports to the EU must use fabric produced in Việt Nam or the EU. The agreement also allows firms to use fabric from countries which have FTAs with both Việt Nam and the EU. This issue is still a weakness for the local textile and garment industry because most raw materials are imported from countries that have not signed FTAs with the EU. Accordingly, local textile and garment producers should use local material for products that were going to be exported to the EU, but many of them were still unaware of the origin of the raw materials they were using, said Vũ Đức Giang, chairman of the Việt Nam Textile and Apparel Association. Meanwhile, new-generation FTAs such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and EVFTA had very strict regulations on materials and manufacturing processes. Bùi Kim Thùy, a former member of Việt Nam`s negotiation delegation for FTAs and country representative on the US-ASEAN Business Council, said to solve this issue, the textile and garment industry could initially use fabrics imported from countries that had FTAs with the EU such as South Korea to enjoy the preferential tax rates of the EVFTA. But the amount of fabric imported from South Korea was low due to distance and price. Therefore, in the long term, Việt Nam needed a comprehensive strategy to seize opportunities provided by the EU market, Thùy said. To enter the EU, many businesses have invested in factories, technology, machinery and the implementation of technical standards for this export market. Trần Như Tùng, a member of the Thành Công Textile and Investment Joint Stock Company (TCM)’s board of directors, said with benefits from the EVFTA, the company aimed to increase its exports to the EU by 30-50 per cent. It had also built a fabric dyeing factory to meet the demand for production. In the long term, the company planned to open another fabric dyeing factory in the southwest region. That would help to provide enough raw materials for production, Tùng said. Chairman of the Việt Thắng Jean Company’s board of directors Phạm Văn Việt said to meet the EVFTA’s origin requirements, Việt Thắng Jean had signed contracts to purchase raw materials from partners in South Korea and Turkey instead of China. Besides these efforts from businesses, according to experts, the Government should issue a development plan for industry sectors until 2040, including textiles, garments, leather and footwear, to produce raw materials for the textile and garment sector according to the rules of origin set out in the FTAs. At present, the MoIT is completing a development plan for the textile and garment industry until 2040 to develop large-scale textile and dyeing industrial parks with wastewater treatment systems that reach international standards to attract investors. Giang said this plan must focus on building textile industrial zones with modern wastewater treatment to encourage investment and complete the cycle of weaving - dyeing - sewing. That would help the domestic textile and garment industry join the global supply chain and reduce the dependence on imported materials as well as take full advantage of the EVFTA and other FTAs, he said. The State also needed to adjust tax policies on imported goods and raw materials imported for production of export goods, creating more favourable conditions for businesses. Trần Thanh Hải, deputy director of the MoIT’s Import and Export Department, said both the Government and local businesses need to act at the same time to take full advantage of the EVFTA. Accordingly, the Government needed to develop support industries to meet the local demand for raw materials and to increase the localisation rate so export goods met the rules of origin. Initially, Việt Nam should look at attracting investment projects in the textile and dyeing industry, especially projects that used advanced technological equipment and environmentally friendly wastewater treatment processes. For local businesses, Hải said they needed to study the tariffs and rules of origin outlined in the EVFTA and adjust their production processes and sources of raw materials accordingly. In recent years, the MoIT has implemented policies to develop the support industries for various sectors, including textiles and apparel. It has also opened a database on the support industry, including information about 1,400 enterprises in the textile and garment industry.
Source: Pulse News
The first eight months of 2020 have seen few foreign direct investment (FDI) projects in Vietnam's textile industry, a far less lively picture compared to the same period last year, the department of foreign investment under the Ministry of Planning and Investment has reported. The first eight months of 2020 have seen few foreign direct investment (FDI) projects in Vietnam's textile industry, a far less lively picture compared to the same period last year, the department of foreign investment under the Ministry of Planning and Investment has reported. Total FDI registered since the beginning of the year was 19.54 billion USD, just 86.3 percent of the same period last year, the department said. Le Tien Truong, CEO of Vinatex, one of the largest textile companies in Vietnam, said FDI inflow was unlikely to pick up in the near future. "It's not realistic to expect large FDI projects to take place right now, especially textile projects, as major markets including the US and the EU are struggling to recover. Investors are much less eager to start large projects while market demand stays low," said Truong. Industry experts, however, were optimistic about the prospect of Vietnam as an investment destination once the pandemic is controlled. Vu Duc Giang, chairman of the Vietnam Textile and Apparel Association, said the country was among a number of strong candidates to take over FDI investment in textile as traditionally large producers such as China, Japan, the Republic of Korea and Taiwan have seen reduced output in recent years. "We are likely to see FDI investment picking up once vaccines are made available and demand starts to recover," Giang said, "In other words, investors must have reasons to feel assured about their investments to pull the trigger." As a member of numerous trade deals including the EU-Vietnam Free Trade Agreement (EVFTA) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), Vietnam remains an attractive destination for investors who are looking to take advantages of free trade, according to experts. In addition, the country's successful effort in fighting off the novel coronavirus may encourage investment. Having more FDI projects also means faster and stronger localisation of textile productions as the country must stay on course with product origin commitments. Textiles are one of the country's strongest export industries, of which FDI projects play a large part, with total revenue of 39 billion USD recorded last year.
Source: Vietnam news Association
Among the business sectors that have thrived in Indonesia during this difficult time is fashion. This creative industry subsector, along with local textile production, has experienced satisfying growth amid the pandemic, as explained by Elis Masitoh, the Industry Ministry’s director of leatherware and footwear, in a webinar that was held in August. “Indonesia ranks third in the world’s integrated textile industry –below China and India- covering from upstream to downstream in terms of fiber, thread and textiles, to fashion design,” said Elis during her presentation at the webinar. She went on to say that the national textile industry is not dependent on imports, as we are actually capable of fulfilling our own needs. Even during the pandemic, she said, the performance of Indonesia’s textile industry was still in the top-five among other industries. However, according to Elis, more textile products are being exported compared with those made for the domestic market. This is due to many reasons such as the volume of cheap imported products flooding the Indonesian market, and a mindset that international products have more prestige than locally made items. The government, together with creative industry players and workers, is attempting to address this issue in several ways. These challenges aside, Elis pointed out that surprisingly, local modest fashion brands were successful at meeting the country’s demand. “Modest fashion consumption saw 3 percent yearly growth in 2013, 2016 and 2018, and we are in the top-five of the world’s modest fashion markets,” said Elis. As well as catering to the local market, Indonesia also has the potential to penetrate into the international market for modest fashion. In terms of ready-to-wear products diversity and designer creativity, Indonesia’s modest fashion currently has a 1.9 percent share of the international market. As a testament to the thriving modest fashion industry, modest wear brand Kami –which celebrated its 11th anniversary this yearacknowledges that its business is going well, sales performance is satisfying, and it is also well-received in foreign markets. Annisa Hanifati, PR manager of Kami, told The Jakarta Post in a telephone interview on Wednesday that Kami fortunately had a strong digital presence, and its online marketing initiatives, as well as collaboration with a strategic partner, namely Disney, had also helped keep sales at a profitable level. “Our online marketing initiatives [such as presenting new collections on the Instagram Live platform], have resulted in good sales,” said Annisa. Although Kami experienced a sales decline during Lebaran, it has picked up again as it has launched new products, including more basic items and its highly sought-after loungewear range, following customer demand. This good news from the modest fashion sector, however, should not stop our fashion and textile industry in general from proceeding with innovations and breakthroughs. Elis said that all stakeholders had to unite to keep leveraging Indonesia’s fashion industry and to strengthen its position on the international stage. “[Fashion] brands have to collaborate with Indonesian designers, as we cannot walk separate ways [to beat the competition],” said Elis. She went on to say that sportswear was a new market that could be explored, and that Indonesia itself was capable of manufacturing all materials needed for sportswear. “Use local materials, choose a market to focus on, because not everyone has to flock into modest fashion. If you want to take part in modest fashion, create what has never been created before, and once your brand is established, maintain the quality,” Elis advised.
Source: The Jakarta Post
“Although we expect a rebound in 2021 in line with the growth rates of the Indian economy in recent years, the contraction registered in 2020 is likely to translate into a permanent income loss,” it said in its Trade and Investment Report 2020. The United Nations Conference on Trade and Development (UNCTAD) on Tuesday said it expects a rebound in the Indian economy in 2021 but the contraction registered in 2020 is likely to translate into a permanent income loss. The agency also said that a sustained and coordinated state-led scal expansion around the globe is needed, instead of a retreat into austerity. “Although we expect a rebound in 2021 in line with the growth rates of the Indian economy in recent years, the contraction registered in 2020 is likely to translate into a permanent income loss,” it said in its Trade and Development Report 2020. As per the report, between 90 million to 120 million people will be pushed into extreme poverty in the developing world, with close to 300 million facing food insecurity- many of these in India. It said the global economy will contract 4.3% this year with South Asia expected to shrink 4.8% in 2020 and recover 3.9% in 2021. Highlighting that the current measures on debt relief are “completely inadequate”, the organisation proposed an expansion of the Special Drawing Rights (SDRs) by at least $1 trillion if not more. The US and India had rejected IMF proposal for $500 billion more SDRs. It also suggested a Marshall Plan for Health Recovery funded through increased oicial development assistance commitments, international tax reform and enhanced multilateral nancing mechanisms. It said in many developing countries, the urgent need for increased health spending to tackle the spread of the virus is running up against declining tax revenues, collapse in export earnings and pending debt payments. Even countries without these constraints (like India) are self-imposing austerity even in the midst of the pandemic. UNCTAD advised an international Public Credit Rating Agency and a Global Debt Authority in the wake of global debtto-GDP ratio rising 10 percentage points to 331% of GDP in the rst few months of the pandemic. In the rst quarter of 2020, global debt stocks reached record levels of $258 trillion. Among G20 countries, Argentina, Brazil, India, Mexico and South Africa have all implemented austerity in the past years but are now struggling to access reliable sources of nance,” it said. While it suggested countries to return to public investment, a major source of infrastructure spending in most countries, the Geneva-based organisation also advised them to raise minimum wages, strengthen collective bargaining institutions and increase employers’ social security contributions. UNCTAD said a “Peace Clause” in the World Trade Organisation and in the free trade agreements (FTA) on pandemicrelated government actions would enable countries to quickly adopt and use emergency measures to overcome intellectual property, data, and informational barriers. An immediate moratorium on investor-state dispute settlement cases by foreign corporations against governments using international treaties, and a permanent restriction on all Covid-19 related claims, would also help, it said.
Source: Economic Times
