India is open to the idea of a preferential trade agreement with the EU to get faster outcomes before hammering out a more ambitious free trade agreement (FTA) that is being negotiated since 2007. Addressing a session on EU-India Collaborative Economic Growth on Wednesday, commerce and industry minister Piyush Goyal said India is hopeful of working with the EU towards an FTA, “possibly starting with a preferential trade agreement for an early harvest to get faster outcomes”, according to an official statement. At the India-EU Summit in July, Prime Minister Narendra Modi had called for further bolstering ties with the EU, cutting across several areas of mutual interests, including trade, investment and climate change. After 16 rounds of talks between 2007 and 2013, negotiations for an India-EU FTA were stuck due to differences, including on EU’s insistence that India cut import duties on auto parts and wine and strengthen intellectual property rights regime and Indian demand for more liberalisation in services and greater flexibility on data privacy. India also feels the flexibility shown by it in further opening up to foreign investments in dozens of sectors in recent years should be considered positively by the EU. Both the sides, however, were trying to revive the trade talks earlier this year when the Covid-19 hit, forcing authorities to shift focus to tackling the pandemic. A duty-free access to the EU will make Indian exporters highly competitive there. For instance, Indian yarn, fabrics and garments attract export duties of 4%, 5% and 9.6%, respectively, in the EU, while competitors like Bangladesh and Pakistan export there at zero duty. Of course, a EU without a major market like the UK doesn’t hold the same promise as in the pre-Brexit era. Nevertheless, a potential PTA, to start with, seems like the recognition of the fact that instead of waiting for the resolution of all the contentious issues to ink a full-fledged FTA, it’s better to clinch a limited deal on the points of convergence and then move on to a more ambitious one. The EU is of great strategic importance to India and was New Delhi’s largest trading partner (as a bloc) in 2018. India’s bilateral trade with the EU in 2018-19 stood at $115.6 billion with exports valued at $57.17 billion and imports worth $58.42 billion. Trade in services was valued at $40 billion, with India enjoying a slight surplus.
Source: Financial Express
Non-availability of containers for the export sector is causing a concern for meeting delivery commitments of foreign buyers, apex exporters' body FIEO said on Wednesday. Federation of Indian Export Organisations (FIEO) President Sharad Kumar Saraf said that from the past couple of months, in spite of offering space for three to four weeks ahead, shipping lines are shutting out the containers abruptly giving reasons that the vessels are full. He also said sea freights have started increasing gradually since July and all the shipping lines have increased the freights by 20 per cent to 40 per cent depending on the destinations. There is a need for a regulatory agency for the shipping sector and "we expect that the proposed National Logistics Efficiency Advancement Predictability and Safety (NLEAPS) Act would be formulated and implemented soon to protect the exim (export-import) sector from such sudden and abrupt changes", he said. He added that exports have started picking up and "therefore, this important component of export logistics needs immediate attention, else our exporters would not be able to capitalise on the new opportunities". Saraf also said the government order to pay terminal handling charges to ports directly should be implemented across ports, as it will bring down logistics costs for the export sector and make them more competitive.
Source: Business Standard
Confederation of Indian Industry (CII) President Uday Kotak on Wednesday termed the recent high frequency data as “promising signs” of recovery in various sectors and hoped these, coupled with reforms in areas like labour and agriculture, will lead to a faster-than-expected rebound in economic activities. “Though still early, these are indeed promising signs, pointing towards some semblance of a recovery taking shape in various sectors. We expect economic activity to continue to normalise in the coming months,” said Kotak. Specifically, resilience in the rural economy, helped by a buoyant monsoon and government spending, and an accommodative monetary policy environment is expected to spur economic activity, he said. However, he cautioned, “Our expectation hinges on the fact that there will be no second wave of the pandemic in the ensuing months”. In what was seen as a departure from the despondent mood earlier, industry now sees sectors witnessing better pick-up and capacity utilisation than what was projected in March. While the pick-up in the first few weeks after the lockdown was attributed to pent-up demand, its sustenance, particularly in some non-essential sectors, has raised hopes. “The determination by the government to meet the challenges by pushing through some long-pending reforms like the labour reforms and those for the farm sector, apart from the call for an Atmanirbhar Bharat, have helped improve the confidence of the industry,” he said. Kotak referred to indicators such as goods and services tax (GST) collections, e-way bills, exports, purchasing managers’ index, consumption of petroleum products, and power. With the easing of restrictions from June, most high frequency data points have shown normalisation, compared to the multi-year lows seen in April, he said. On the farm sector, the CII president said, “This year, the agriculture sector has emerged as a beacon of hope for India’s economy, with a normal and largely well-distributed monsoon and record foodgrain production cushioning the rebooting of the economy. A concerted action plan from the government to support the rural sector in the form of agri-infrastructure fund and other key reforms in the sector has also supported the sector”.
Source: Business Standard
The government should continue with the stimulus to revive the economy for three years and it should not be one off, Pranob Sen, the chairman of the Standing Committee on Statistics, ministry of statistics and programme implementation, said on Wednesday. The improvement in economic activity at the moment is due to the pent up demand, he said at a webinar organised by Bharat Chamber of Commerce. "What is happening at the moment is due to the pent up demand which has come to the market and has led to certain increase in economic activity," Sen, the former chief statistician of India, said. According to him, "The government gameplan should be to continue with the stimulus for three years and not be one off". He said when COVID-19 struck India and the lockdown began, there was already a negative momentum in the economy and capacity utilisation had gone down. The government should immediately pay off the dues of the states, beneficiaries of social sector schemes and clean its budget, he said. On monetization of deficit, he said according to the RBI the central bank is not in a position to do that. A clause was inserted in the RBI Act on monetisation of deficit and the government can only come out with an ordinance to change it. "This (ordinance) will allow RBI to monetize the deficit for a limited period of time. But then there is a fear of rise in inflation", he said. Sen said, "When we talk about inflation we talk about consumer price index (CPI). But the relevant index to track is wholesale price index (WPI) which is in the negative territory for the last five months".
Source: Business Standard
India’s goods export will be exempt from new provision of tax collected at source (TCS), according to the finance ministry, which said it is not an additional tax. Fresh provision of TCS applicability for sale consideration of ₹50 lakh or more came into effect from October 8. This was made in the union budget this year. The rate of TCS would be 0.1 per cent. In a detailed clarification, the ministry mentioned various points apart from the exemption for export. In cases other than export, it said, TCS will be applicable only on the amount received on or after October 1. Further, the seller in most of the cases maintains a running account of the buyer, in which payments are generally not linked with a particular sale invoice. Therefore, to simplify and ease the compliance of the collector, this provision shall be applicable on the amount of all sale consideration received on or after October 1 this year without making any adjustment for the amount received in respect of sales made before the said date. To reduce the compliance burden, TCS is made applicable to only those sellers whose business turnover exceeds ₹10 crore. In other words, those having turnover of less than ₹10 crore will not be required to collect TCS.
Source : Fibre2fashion
Union Minister Smriti Irani on Wednesday launched the ''Kasturi'' brand for Indian cotton and said efforts are underway for phased introduction of a certification system for organic cotton across the entire value chain. The Minister for Textiles and Women and Child Development said the certification system for cotton will help promote its use and enable India to become a world leader in cotton products and manufacturing. She was speaking at a webinar jointly organised by the Confederation of Indian Textile Industries, Cotton Corporation of India and Cotton Textiles Export Promotion Council, under the guidance of Ministry of Textiles, to commemorate World Cotton Day 2020. "Ministry of Textiles in pursuit of the agenda of cotton farmers and cotton product manufacturers has pursued with the Ministry of Commerce and Industry a certification system for organic cotton to be introduced in phases in the entire value chain," Irani said. Textiles Secretary Ravi Capoor said certain "markers" have been developed in conjunction with the Agricultural and Processed Food Products Export Development Authority (APEDA) for branding Indian organic cotton, and it is in the last stages of finalisation. Notably, 51 per cent of the total organic cotton production of the world is led by India. Launching the ''Kasturi'' brand, the minister said it signifies everything that is Indian about our cotton, including its brightness, purity and potential to go to greater heights. "We are looking at prospects in emerging fields like PPE where we can leverage cotton from across the dimension of technical textiles," she said. Irani also said she was hopeful that the agricultural reform bills passed recently passed by the Parliament will strengthen cotton growing opportunities for Indian farmers. Highlighting that the Cotton Corporation of India undertook one of the largest procurement at minimum support price in the previous season, Irani said she is hopeful of even better prospects for farmers this year, when cotton procurement season begins, with over 430 centres operational across the country.
Source: Outlook India
The new labour codes will promote harmonious industrial relations, higher productivity and generate more jobs, according to Santosh Kumar Gangwar, minister of state (independent charge) for labour and employment, who recently told a webinar the codes will establish a transparent, answerable and simple mechanism along with one registration, one license and less return filing. The webinar was organised as part of the 86th annual general meeting of the All India Organisation of Employers (AIOE), an allied body of the Federation of Indian Chambers of Commerce and Industry. The minister said the codes will cover over 50 crore workers from the organized and unorganised sectors for minimum wages and social security. “Fixed term employment has been introduced and fixed term employee will get same service conditions as regular employees”, he was quoted as saying by an official release. He emphasised that to discourage flash strike in any unit, provision of a 14-day notice has been introduced in the Industrial Relations Code. To remove inspector raj from the system, he said, an inspector will now be called inspector-cum-facilitator. To bring in transparency, effectiveness and accountability, the ministry has also made provisions for setting up a web-based inspection system. The government is also streamlining the process of compounding of offences to ensure early settlement of the cases, he added.
Source: Fibre2fashion
Union Finance Minister Nirmala Sitharaman said here on Wednesday that revival of the nations economy post-Covid lockdown was clearly visible and the indicators looked positive. “We are getting good positive marks from high frequency indicators. And, indicators from all states show a revival,” she pointed out. “I have been speaking with industry leaders directly who say we reached pre-Covid capacity utilisation. So revival is clearly visible,” Sitharaman told a press conference during a visit to Vijayawada. On GST compensation that has become a contentious issue with some states, the Finance Minister said the GST Council would meet again on the 12th. “We had a seven-hour long discussion with all states. Again we are going to meet on the 12th. That will decide how things are on compensation related matters,” she said. The GST Council was already in agreement that the compensation cess collection should go beyond five years. “It was only meant to be collected for five yearsthe transition five years. But the GST Council decided to continue collecting the cess. So that is very clear,” Sitharaman noted. On the three farm-related laws recently enacted by the Centre, Sitharaman said the protests being carried out in various states were based only on “political motives”. “They are opposing the laws only for politics, even forgetting their own promises made in their 2019 election manifesto,” she said, referring to the Congress manifesto. “We feel they included that in their manifesto only to hoodwink the voters and grab votes. Did you tell lies then or telling them now?” she asked. Sitharaman recalled that the BJP too made the promises in its election manifesto and fulfilled them as Prime Minister Narendra Modi desired those reforms for the benefit of the farmers. The Finance Minister wondered why the opposition leaders did not speak in Parliament when the Bills were being discussed. “When the Bills came up for discussion in the Rajya Sabha, upon clearance in Lok Sabha, the opposition did not raise any questions. They did not display their leadership and merrily sat behind some fringe groups that created trouble in the Rajya Sabha, or joined the ruckus in tearing off the Bills. But they did not raise any questions,” Sitharaman lashed out. Asked if contract farmers would be brought under the Income Tax net, the Finance Minister said they had not given any such thought so far. “Please do not make any issue of it,” she said. Earlier in the day, Sitharaman interacted with farmers at a field in Jakkula Nekkalam village near Gannavaram airport and elicited feedback on various farm-related issues. She took part in a programme in the evening, organised by the BJP to educate farmers on the new farm-related laws enacted by the Centre.
Source : Financial Express
Agreeing that the dispute raging between the Centre and the Andhra Pradesh government over payment of revenue deficit grant for over five years now still remained unresolved, Union Finance Minister Nirmala Sitharaman, however, said it was for the 15th Finance Commission to take a call on the issue and not the Finance Ministry. She asked the state government to discuss the issue with the 15th Finance Commission and let the latter decide. “It is unresolved. But its for the 15th Finance Commission to decide, not the Finance Ministry. I said this also to the state government when the Finance Minister met me,” Sitharaman told a press conference in Vijayawada on Wednesday evening. During his recent trip to New Delhi, Andhra Pradesh Chief Minister Y S Jagan Mohan Reddy submitted a memorandum to the Centre stating that a sum of Rs 18,830.87 crore was still overdue in the form of revenue deficit grant to the state. Post-bifurcation of the state in 2014, the Centre agreed to bridge the revenue gap but pegged the amount at Rs 4,117.89 crore for the financial year 2014-15 whereas the state government, citing a CAG report, claimed the amount was Rs 22,948.76 crore. Even out of the Rs 4,117.89 crore, the Centre so far paid only Rs 3,979.50 crore, leaving a gap of Rs 138.39 crore, according to the state government. “I dont know about the amount and what is unresolved is something which the Ministry has to work, considering that it was based on the 14th Finance Commissions recommendations. The 14th FCs term is over.So it is an issue which has to be discussed,” Sitharaman said, replying to questions. Maintaining that she was not questioning the state governments claims on the issue, the Union Finance Minister remarked, “I dont know what kind of solutions I can offer. This is something which I have told the minister concerned who met me to speak about it.” She pointed out that the one-year report of the 15th Finance Commission has already come and was being implemented. “And, the 15th FC will give for the rest of the 4-5 years.You are talking about a recommendation of the 14th FC, so it has to be discussed,” Sitharaman added.
Source: Financial Express
NDO - Vietnam’s manufacturing sector rebounded in September, raising hopes of an early recovery and rapid growth in the remainder of the year after months under the impact of the coronavirus pandemic.
Difficulties remain
According to the Ministry of Industry and Trade (MOIT), the Index of Industrial Production in September rose 2.3% against August and 3.8% year-on-year, signifying a gradual recovery, albeit slow as many key manufacturing industries are still struggling. Garment, footwear, aviation and tourism were the sectors hit hardest by the coronavirus. Global textile demand in 2020 has fallen sharply. Last year’s global garment imports were estimated at US$775 billion but the coronavirus is expected to reduce the turnover by 15-20%, or even up to 25%, in 2020. Unlike in previous years when most Vietnamese enterprises had already secured orders for the final months of the year and even the early months of next year, for now they only receive orders for the next month or even week. Vietnam’s key products such as jackets and premium shirts have seen virtually no orders for the final quarter. The market for footwear products is also expected to continue facing difficulties as it is heavily affected by the pandemic situation in the US and Europe. The largest driver for the sector is the EU-Vietnam Free Trade Agreement (EVFTA), which took effect in August. To capitalise on the trade pact, local companies have taken various measures, including restructuring their organisation, getting factories and materials ready and increasing investment in machinery to improve product quality. Manufacturing’s rare bright spot is the production of computers, electronic and optical products, which maintained growth at 8.6%. In August alone phone exports brought in US$5.3 billion, up 23.7% from the previous month, raising the total export revenue in the first eight months of 2020 to US$31.5 billion. But experts have predicted that the electronics industry could still be affected in the next quarter as the ongoing pandemic reduces demand for electronic products in the US and the EU.
Key measures
In order to remove difficulties for businesses and bolster the economy in the final months of 2020, the Ministry of Industry and Trade has said it will continue to implement a wide range of measures to revive growth in industrial production. Firstly, the ministry will focus on accelerating the progress of key industrial projects. Specifically, it will work with the Committee for the Management of State Capital at Enterprises to resolve the obstacles to major important power generation projects such as Long Phu 1, Song Hau 1 and Thai Binh 2. The ministry will also work with local governments to develop production areas, industrial parks and economic zones in order to proactively secure the supply of materials at home. It will put forward appropriate incentive measures, especially for sectors hit hard by the coronavirus, and introduce policies to encourage the production of spare parts and intermediary products to replace imports. For the textile industry, the MOIT has taken steps to encourage local manufacturers to switch from clothes to anti-droplet, antibacterial and common masks to meet the domestic demand for coronavirus prevention as well as for export, helping to maintain jobs for garment workers during the decline in orders for clothes. At the same time, various measures are being implemented to promote the restructuring of industrial production, particularly supply chains for several key manufacturing sectors, in a more sustainable way with partners from Japan, India and the Republic of Korea in order to avoid heavy reliance on one or a few markets. The MOIT is cooperating closely with some multinational companies such as Samsung and Toyota to look for domestic enterprises capable of producing items to replace imports. The Vietnam Trade Promotion Agency has said it will step up the implementation of online trade promotion activities to boost exports to markets likely to recover soon from the coronavirus, and to gradually expand to other markets depending on their virus situation. More research will also be conducted to gather information about new consumption trends in order to introduce appropriate measures.
Source: Nhan Dan
The Cambodian government recently announced another round of support measures to aid the garment, textile, footwear and travelling bag industries and the tourism and aviation sectors until the end of the year. This is the sixth such round of support measures for the private sector, which has been severely affected by the novel coronavirus pandemic. According to an official statement, the government will pay $40 per month for a worker who has been laid off from work in the garment and textile, footwear, travel bag and tourism industries for another three months until the year end. However, the garment factory owners must add another $30 per month, so that each laid-off worker will receive $70 a month. The government will continue to implement its relief cash support programme for poor and vulnerable families from October to December and will allow them to delay paying a fixed levy to the National Social Security Fund until the year end. The government has also exempted the payment of patent tax and tax on branding. As of September 10, the government has distributed $78 million to poor families hit by the pandemic.
Source: Fibre2fashion
The International Monetary Fund (IMF) recently urged member governments to seize a low interest rate opportunity to invest in infrastructure to drive recovery from the COVID-19 pandemic and a shift toward greener energy. Its research shows public investment in infrastructure, including health care systems, digital infrastructure, and addressing climate change can pay back more than two to one in economic growth within two years. IMF said in its fiscal monitor that increasing public investment by 1 per cent of gross domestic product (GDP) in advanced and developing economies would grow their GDP by 2.7 per cent, creating 7 million jobs directly, and between 20 million and 33 million jobs overall when considering the indirect macroeconomic effects. "Even before the pandemic, global investment had been weak for over a decade, despite crumbling roads and bridges in some advanced economies and massive infrastructure needs for transportation, clean water, sanitation, and more in most emerging and developing economies," IMF fiscal affairs director Vitor Gaspar said in a blog post. He added that ‘low interest rates globally also signal that the time is right to invest’ despite the IMF’s frequent warnings about a massive buildup of debt in developing countries. Some countries with tighter financing conditions will have to take a more gradual approach to scaling up infrastructure development, but the improved growth prospects could pay off if projects are well-managed and set the stage for future growth, the report said. "Investment is now urgently required in sectors critical to controlling the pandemic, such as health care, schools, safe buildings, safe transportation, and digital infrastructure," a global newswire quoted IMF as saying in its report. The fund said public investment in infrastructure is feasible and can be delivered quickly if governments invest in maintenance of infrastructure, review and restart projects that were shelved at the start of the pandemic, speed up projects in the pipeline and plan immediately for post-pandemic investments. It added that official aid for adaptation to climate change would pay back more than 100 per cent in growth, and there is a need to double a currently planned $10 billion to adapt countries to climate change to around $25 billion.
Source : Fibre2fashion
On World Cotton Day 2020, the Better Cotton Initiative (BCI) is celebrating the cotton farming communities. Various cotton farmers from across the globe have shared their stories and details on how they are embedding sustainability into their farming practices. BCI is a non-profit organisation and the largest cotton sustainability programme in the world. “Promoting and embedding sustainability within cotton farming is more essential than ever. The Better Cotton Initiative exists to improve farmer livelihoods through the adoption of more sustainable practices. This past year has been challenging, but every crisis carries an opportunity. I applaud all the cotton farming communities around the globe that have adapted and persevered, and on World Cotton Day, I would like to thank them for their invaluable contributions to the sector,” Alan McClay, CEO, Better Cotton Initiative. “It all began back in 2012, when a group of us BCI Farmers in Kanakya village set up a committee to help other farmers in our community use pesticides and fertilisers more efficiently. We wanted to promote plant-based natural alternatives, but they weren’t readily available locally, so we had to find a way to make it easier for farmers to gain access to these products at reasonable prices. And we also had to convince them to change their ways by showing them the results in the field,” BCI farmer Balubhai Parmar from India said in a press release. “Through BCI, we have supported women farmers in multiple ways, from more efficient harvesting techniques to raising their awareness of the importance of equal pay through special role play sketches for radio and television. We have also trained more than 2,000 women in leadership, which has given rise to the emergence of women leaders capable of promoting the interests of women in the cotton sector,” BCI darmer Mustafa Bülbül from Turkey said. “Preventing child labour is a priority. In the past, families in our region have not traditionally considered child labour to be a problem, but through the ‘Toward Decent Working Conditions in Cotton Farms in Sanliurfa’ project, we’ve learnt how important it is to address social issues in Sanliurfa. We require our labour contractors to ensure the workers are not below the legal minimum age, and we deliver training to seasonal migrant workers so they know they can’t bring their children to work with them,” agronomist Tata Djire from Mali said.
Source : Fibre2fashion
The Employer's Federation of Pakistan (EFP) and the Pakistan Readymade Garments Manufacturers and Exporters Association (PRGMEA) recently formed a committee to sensitise the government and other stakeholders on effective lobbying to ensure the European Union (EU) extends its generalised scheme of preferences plus status to Pakistan for another ten years beginning January 1. This was unanimously agreed at a high-level EFP meeting. The meeting nominated Ijaz Khokhar as the chief coordinator of PRGMEA and EFP's director of economic council Masood Naqi as the co-convener of the GSP Plus committee. The committee would include PRGMEA chairman Sohail Afzal, EFP vice president Zaki Ahmed Khan, EFP director Mehnaz Kaludi, who will represent the towels sector. More members would be added later, according to Pakistani media reports. The meeting also approved terms of reference of the committee and decided to increase interaction and communication with seven federal ministries.
Source: Fibre2fashion
There is a new kid on the bloc rising in the shadows of the RMG behemoth. We can call it the next big thing after readymade garments in Bangladesh. It is the primary textiles sector (PTS) that produces yarn and fabrics for garments. To be fair, it always had a dominating presence in our manufacturing sector, but in a different role. It was the largest import substituting industry meeting domestic demand for clothing under high protective tariffs and import quotas (pre-2000). Consequently, its products were not internationally competitive and exports were negligible or non-existent. Bangladesh was not a textile giant worthy of note, like India, Pakistan, or China. All that began to change in the 1990s. The driving force was the confluence of entrepreneurial vision and evolution of complementary public policies that responded effectually to market opportunities created by the meteoric rise of RMG exports from Bangladesh. RMG exports in the 1990s grew from a mere USD 624 million in FY 1990 to USD 4.5 billion by FY 2000, a 600 percent rise in a decade. But while RMG exports galloped ahead, it did so without much reliance on domestic supplies of intermediate inputs like yarn, fabrics and garment accessories. These intermediate inputs—comprising 70 percent of RMG exports—had to be imported from countries like China, South Korea, India, and Pakistan, with imports rising from USD 435 million in FY 1990 to USD 3.2 billion in FY 2000. There was much talk about the low domestic value addition in RMG exports as the industry was largely engaged in cutting and making (C&M), the final stage in apparel production, a highly labour-intensive activity that drove Bangladesh's comparative-advantage-following (CAF) industrialisation. The local textile industry looked askance at the massive business opportunity going overseas… but not for long. The issue was competitiveness. To be globally competitive, RMG exports needed yarn and fabrics of international quality available at competitive prices. The local textile industries were not producing yarn and fabrics of international quality. But the new generation of textile entrepreneurs would not let this opportunity go to waste. Not only did they see the rising demand for textiles, there were also developments in the global market for textiles that drove the RMG exporters to look inwards for sourcing their raw materials. The 1974 Multi-Fibre Arrangement (MFA), which opened global markets for Bangladesh garments, was coming to a close in 2005. The end of MFA quotas created larger market opportunities but also unleashed unbridled competition from well-heeled apparel producers. The premonition that yarn-fabric suppliers would soon divert all supplies into their own apparel production rang alarm bells in Bangladesh apparel sector. Then there was the handicap of higher "lead time to market" for Bangladesh exporters compared to their competitors in East Asia and elsewhere. For RMG producers, local sourcing was always an attractive proposition for "just in time" availability of intermediate inputs that would dramatically cut lead time. Could the local textile industry deliver? As RMG has become a notable player in the global export market, it created the pull-effect of opening up sectors interlinked to the final export product, a process called backward linkage. Starting small, the backward linkage textiles industry is now a close second to the RMG sector in terms of size. How did that happen? Like the first generation of dynamic RMG entrepreneurs, in the mid-1990s there emerged a new generation of textile entrepreneurs who were ready to seize the opportunity created by the RMG industry. They went for new investment in export-oriented textile projects that were to produce yarn and fabrics to feed into RMG exports. Wider access to concessional credit from the banking system, supportive tax and subsidy policies of the government to promote backward linkage activities, all combined to give a boost to backward linkage industries that included (besides textiles) production of accessories like packaging, buttons, zippers, and labels. It turned out to be a policy gamble worth taking. A large industry has grown over the past three decades supplying intermediate inputs to the leading export of Bangladesh—readymade garments. It is the second major development, after RMG, in Bangladesh's economic landscape. This is clearly a new phenomenon in the country's economy, called "deemed exports" in local official lexicon. Backward linkage industries to the RMG sector is another popular way of describing this industrial development. They supply yarn, fabrics and accessories embedded in exports of knit and woven garments. Over time, RMG has been relying less and less on imported inputs resulting in rising value addition based on domestic content. The quantum of these domestic supplies is no longer insignificant as BKMEA representatives indicate that knitwear exporters source some 80 percent of their input of yarn from local textile producers. The number of yarn manufacturing mills have more than doubled—from 200 in 2000 to 433 in 2019—while spindle capacity has tripled to 13.5 billion kg of yarn. Much of this growth could be attributed to the rapid expansion of knitwear exports which rose from USD 1.5 billion in FY 2001 to USD 16.9 billion in FY 2019 with a somewhat lesser demand pull coming from woven RMG exports of USD 17.2 billion. But denim is another story. Denim fabric production is an entirely export-oriented activity with 60 percent of the annual denim requirement of 840 million yards supplied by 32 denim mills that have cropped up in the past 20 years or so. In addition, other cotton-based fabrics and those from man-made fibre (MMF) are increasingly catching up with demand to meet some 40-45 percent of requirement by woven garment exporters, according to BGMEA. So, over the past 25 years, the economy has generated another USD 21-plus billion industry group whose contribution to the economy and jobs can no longer be ignored. This is no mean achievement and can no longer be relegated to just a sideshow to the USD 34 billion RMG. It is a major policy success story promoting backward linkage—the evolution of a new internationally competitive textile industry, unlike the old textile sector that still caters to domestic demand (USD 8 billion, according to BTMA) for basic clothing but is not competitive enough to play the export card. What is notable is that this deemed export sector represents import substitution, export expansion, and export diversification all rolled into one. Here is why. First, the import substitution part. Theoretically, a dollar saved by import substitution is equivalent to a dollar earned through exports. As part of the backward linkage industries to the RMG sector, our modern textiles are laser-focused on substituting for the massive amounts of imported yarn and fabrics. And to feed a globally competitive RMG sector with intermediate inputs means they have to be globally competitive too. This is import substitution at its best. Second, the export expansionpart. Quite logically, yarn and fabrics (and accessories) are embedded components of the final export product, knit or woven garments, known as "deemed exports" or indirect exports. It is time to consider them as the next largest export category after RMG. Third, the export diversification part. Export diversification is a policy priority. Export-oriented yarn, fabrics, and garment accessories—principal inputs for the apparel industry, being embedded non-RMG exports—have grown in tandem with the rise of RMG. We can call it export diversification of the Bangladesh kind. This export-oriented primary textile sector is now the predominant part of the textile industry. To conclude, we have come a long way since the days when RMG exports used to raise the spectre of a highly import-intensive activity generating very little foreign exchange net of import content. The strategy of developing backward linkage to the dynamic RMG sector has produced results—another feather in the Bangladesh policy cap. No longer can the primary textile sector be dismissed as a non-competitive domestic market-oriented industry. It is now predominantly an export-oriented sector, a case of import substitution leading to export orientation. This is exactly the import substitution outcome trade economists have been looking for.
Source: The Daily Star
Swedish apparel retailer H&M on Wednesday launched its global loyalty program, H&M Member, in India expecting it to play a significant role in the company's growth considering the transformation in consumer behaviour in the wake of COVID-19 pandemic. The company is launching the programme to coincide with the completion of five years in India, since the opening of its first store in the Capital in 2015. "It (H&M Member) will play a significant role. We know in retail there is a big transformation going on, not only in India but globally where people are preferring to shop more and more on the digital channel," H&M India Country Manager Janne Einola told. He further said, "H&M is working hard to make it possible for every customer to choose their own channel where they feel more confident to buy." The digital membership programme, which is open to everyone who is above 18 years of age, is designed on the principle of relationship-building while focusing on the need for personalization, he added. Online or in-store shoppers who join the H&M Member program will enjoy exclusive benefits and rewards, special member promotions, as well as early access notifications to selected sales, events and experiences, among others, Einola said.
Source: Economic Times
