MARKET WATCH 16 OCT, 2020

 

NATIONAL

INTERNATIONAL

GST shortfall: Govt issues fresh borrowing calendar with extra Rs 1.1 trn

With the Centre deciding to borrow Rs 1.1 trillion on behalf of states to help them meet the GST revenue shortfall, the government on Thursday issued a fresh borrowing plan by including the additional amount in its calendar for the second half. To operationalise the special window to states for meeting the GST compensation cess shortfall of Rs 1,10,000 crore, the Government of India (GoI) borrowing calendar is being modified in consultation with Reserve Bank of India (RBI), an official statement said. "For the remaining period of the fiscal year 2020-21 (October 19, 2020 to March 31, 2021) GoI will borrow an aggregate amount of Rs 4,88,000 crore. The additional amount for meeting the GST compensation shortfall shall be raised equally at the rate of Rs 55,000 crore under the 3 year and 5 year tenors," it said. Last month, the Finance Ministry had said the government will borrow Rs 4.34 trillion in the second half of the current fiscal to meet its expenditure requirement amid the Covid-19 crisis. With the addition, the total borrowing in the second half will increase to Rs 5.44 trillion. As per the earlier announcement, the borrowing was to done in 16 weekly auctions at Rs 27,000-28,000 crore and the tenures will be the same as the first half -- of 2, 5, 10, 14, 30 and 40 years. The new weekly auctions range from Rs 17,000 crore to Rs 31,000 crore with addition of 3 years and 5 years government papers. However, with the revision, Rs 5.44 trillion borrowing would be done over 22 weeks. Of this, Rs 56,000 crore has already been mobilised by the government, so the remaining Rs 4.88 trillion would be raised in the remaining 20 weeks. The Finance Ministry, in a statement later, said all the auctions covered by calendar will have the facility of non-competitive bidding scheme under which 5 per cent of the notified amount will be reserved for the specified retail investors. "Like in the past, the RBI in consultation with the Government, will continue to have the flexibility to bring about modifications in the calendar in terms of notified amount, maturities, etc. and to issue different types of instruments, including Floating Rate Bonds (FRBs), including CPI linked inflation-linked bonds, depending upon the requirement of the Union government, evolving market conditions and other relevant factors," it added. The RBI reserves the right to exercise the green-shoe option to retain additional subscription up to Rs 2,000 crore each against any one or more of the above security, which will be indicated in the auction notification. The RBI will also be conducting switches of dated securities through auction on every third Monday of the month. In case third Monday is a holiday, switch auction will be conducted on fourth Monday of the month, it said. Earlier in the day, the Finance Ministry said the Centre will borrow up to Rs 1.1 trillion on behalf of the states to bridge the shortfall in GST collections. A slowdown in the economy since last fiscal has resulted in a drop in the Goods and Services Tax (GST) collections, upsetting the budgets of states which had given up their right to levy local taxes such as sales tax or VAT when GST was introduced in July 2017. To make up for the shortfall, borrowing from the market was proposed. "Under the Special Window, the estimated shortfall of Rs 1.1 trillion (assuming all States join) will be borrowed by Government of India in appropriate tranches," the statement said. "The amount so borrowed will be passed on to the States as a back-to-back loan in lieu of GST Compensation Cess releases." The Centre borrowing on behalf of states is likely to ensure that a single rate of borrowing is charged and this would also be easy to administer.

Source: Business Standard

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India witnessing V-shaped recovery, govt steps to spur economic growth: FM

Finance Minister Nirmala Sitharaman on Thursday said V-shaped pattern of recovery is being seen in several high-frequency indicators, driven by various measures taken by the government to revive economic growth, hit hard by the outbreak of Covid-19 pandemic. In her address to the plenary meeting of the International Monetary and Financial Committee (IMFC), the ministerial-level committee of the International Monetary Fund (IMF), through video conference, she said several low-income and developing countries are confronted with the challenge to protect and ensure livelihood for millions slipping below the poverty line. Sitharaman mentioned that recovery and rehabilitation efforts in these countries must not be allowed to be undermined in any manner, a Finance Ministry statement said. She outlined the measures under the 'Aatmanirbhar Bharat' package to foster a quick and more robust economic recovery in India. "She mentioned that the V-shaped pattern of recovery is being seen in several high-frequency indicators, including manufacturing PMI that reached the highest level in last eight years in the month of September 2020, presenting a strong recovery prospect for the manufacturing sector," it said. To stimulate consumer spending, she said measures worth USD 10 billion have been announced recently. Earlier this week, the government announced a Rs 73,000 crore package, including advance payment of a part of wages to central government employees and cash in lieu of leave travel concession (LTC), to stimulate consumer demand and investment in the economy damaged by the coronavirus pandemic. The minister also complimented IMF's Managing Director Kristalina Georgieva and the IMF for providing wise counsel to the economies across the globe and felt that IMF's assertion that a premature withdrawal of policy support could trigger liquidity shortfalls and insolvencies is relevant, the statement said. The discussions at the meeting were based on IMF Managing Director's Global Policy Agenda titled "Catalyzing a Resilient Recovery", it added. The members of IMFC updated the committee on the actions and measures taken by member countries to combat Covid-19 and its adverse impacts, it said. The IMFC meets twice a year, once during the fund-bank spring meetings in April, and again during the annual meetings in October. It discusses matters of common concern affecting the global economy and advises the IMF on the direction of its work. This year, due to the Covid-19 outbreak, both the spring and annual meetings took place through video conference.

Source: Business Standard

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Aatmanirbhar mission to make India hub of manufacturing, services: Thakur

The Atmanirbhar Bharat Abhiyan package is aimed at making India a global hub of manufacturing and services, Minister of State for Finance Anurag Singh Thakur said on Thursday. The government announced the Rs 20.97 lakh crore package in May largely focussed on supply side and long-term reforms in agriculture, labour, mining and defence sector to attract private sector investment. "Prime Minister Modi gave us a clarion call when he talked about the Aatmanirbhar Bharat, or self-reliant India. Becoming more self reliant does not mean going back to the Nehruvian era of closing our economy and import substitution. "In fact, it means that India can be connected to the global supply chain in the same way it was but will focus on making India a global hub of manufacturing and services, and our focus primarily will be on advancing our economy and making it an export hub," he said at a virtual conference organised by industry chamber Ficci.India needs to adopt to the motto of 'vocal for local' as well as 'vocal for global', he said, adding, "we need to produce locally and support the country's demand and we need to export globally, which will help us to get into the virtuous cycle." Under the Aatmanirbhar Bharat package, the government has identified certain sectors that will get a boost and introduced various schemes to benefit businesses, Thakur said. To boost consumption during the festival season, the minister said the government earlier this week announced measures of close to Rs 73,000 crore to stimulate consumer spending in an effort to rein in slowdown due to the COVID-19 pandemic. This is the third stimulus package since the outbreak of the pandemic. The government had announced a Rs 1.70 lakh crore Pradhan Mantri Garib Kalyan Yojana (PMGKP) in March to protect the poor and vulnerable from the impact of coronavirus crisis. It was followed by the Aatmanirbhar Bharat Abhiyan package of Rs 20.97 lakh crore in May. "These measures will act as catalysts in reviving the economy, which has already begun seeing the green shoots. Speaking of green shoots. I would now like to emphasise how the economy has started responding to the gradual unlocking," he said. Citing some high frequency data, he said the GST collections in September stood at Rs 95,480 crore, which was much higher than the collections in the preceding months. India's exports posted a 5.27 per cent yearly growth in September to USD 27.4 billion, with crucial sectors such as readymade garments, engineering goods, petroleum products, pharmaceuticals and carpets on an upswing, he said. "So, we have seen our forex reserve jump up to a record high of USD 545 billion. Our FDI inflows have not reduced. We have received inflow of USD 74 billion in 2019-20. The trend continues in this year despite the pandemic. Between April to July, India attracted almost USD 22 billion," he emphasised. In September, consumption of steel, toll collections and sales of tractors and passenger vehicles surpassed pre-COVID levels seen in the month of February, he added.

Source: Business Standard

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Exports grow 6% in September, first rise since February

Merchandise exports grew 6% year on year in September, the first rise since February, and a contraction in imports narrowed to 19.6% from 26% in the previous month, suggesting a gradual return towards normalcy. Consequently, trade deficit narrowed to just $2.78 billion in September from $6.77 billion in the previous month, showed the quick estimate of the trade data released by the commerce ministry on Thursday. Importantly, the outbound shipment of core products (goods excluding petroleum and gems & jewellery), which reflects the economy’s competitiveness, grew as much as 11.9% in September, against a 3.2% fall in August. The growth in core exports indicates a nascent recovery in external demand. Exports in September rose to $27.58 billion from $26 billion a year before. Imports shrank to $30.31 billion last month from $37.69 billion a year earlier. As many as 22 of the 30 major product groups witnessed growth in September, a first in the current fiscal. Earlier this month, the ministry had released a “preliminary estimate” of trade data, according to which merchandise exports had grown by 5.3%, year on year, in September. Interestingly, core exports have accelerated at a quicker rate than that of overall merchandise exports month after month since May 2019, according to an FE analysis, based on the data from the Directorate General of Commercial Intelligence and Statistics. Among the well-performing segments, exports of rice jumped by more than 94% year on year in September to $725 million, while those of drugs and pharmaceuticals surged by 24.4% to $2.24 billion, iron ore by 110% to $304 million. Engineering goods exports rose by 5.4% to $6.9 billion, while petroleum shipment rose 5% to $3.6 billion last month. Analysts have said these are still early days, although the rebound in core exports in September points at a potential pick-up in external demand in the build-up to the crucial Christmas season, when orders from the key western markets—the US and the UK—flow in large volumes. Of course, some pent-up demand and despatches against orders firmed up before the pandemic may also have contributed to the decent rise. Nevertheless, these are encouraging signs, they concur. Already, presenting a less gloomy picture, the World Trade Organisation this month expected global merchandise trade to fall by 9.2% in 2020 from last year, compared with the 12.9% drop projected in April. This will augur well for India’s trade as well. Sharad Kumar Saraf, president of the exporters’ body FIEO, said the performance of the labour-intensive sector of exports, especially drugs & pharmaceuticals, engineering goods, RMG of all textiles, carpet, jute manufacturing, including floor covering, and handicrafts has been impressive; some of them have even witnessed a double-digit expansion. He said the growth in September shows “signs of revival, as gradual lifting of local lockdowns have further improved the business climate”. “Anti-China sentiments across the globe have also been one of the reasons for the improved performance in exports,” he added. Mahesh Desai, chairman of the engineering goods exporters’ body EEPC, said the reversal of a slide in September is a matter of relief, but challenges to external trade continue due to the Covid-19 pandemic. India’s exports had witnessed a record 61% crash in April in the wake of the lockdown, although the contraction subsequently narrowed to 12.7% in August.

Source: Financial Express

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Special GST window: Centre to borrow, extend back-to-back loans to states

The finance ministry on Thursday said that the Centre will borrow for paying GST compensation to states in FY21 and the funds will be passed on to the state governments as back-to-back loans, in lieu of the GST compensation cess disbursal. The borrowings will not reflect on the Centre’s fiscal deficit and will appear as capital receipts for state governments, as part of financing of their respective fiscal deficits, it added. The ministry said that process under the special window would avoid differential rates of interest that individual states would have been charged if they themselves hit the market via issuance of state development loans (SDLs). Also, the mechanism would be administratively easier. The Centre’s latest move on the face of it addresses the dispute being raised by eight states over the states being asked to borrow for the GST shortfall. Earlier in the day, Kerala finance minister Thomas Isaac tweeted that “some of the States are likely to approach the Supreme Court against discriminatory and illegal action of Centre regarding GST Compensation”. However, the uncertainty over whether the entire GST revenue shortfall that states are estimated to incur this year will be compensated sans any cost to them could still be sore point for the dissenting states. Clearly, the Centre is playing the role of intermediary to ensure that the general government borrowing costs don’t rise. It is relying on the proceeds from an extended cess to service the debt due to the special window to the states, as it has promised that the states don’t have to bear any cost. It is not immediately clear whether the Centre’s additional borrowing for this facility will be shown on the Centre’s books as part of the extra-budgetary resources, and as a part of the total capex. As many as 22 states and the UT of Jammu and Kashmir have agreed to use the Option 1 proposed by the Centre to bridge part of their GST revenue shortfall. They have been hence given additional unconditional borrowing freedom of 0.5% of the gross state domestic product (G-SDP) in FY21. The decision meant these states and UTs could raise 4% of G-SDP via OMBs this fiscal, even if they don’t fulfil any of the reform conditions set out by the Centre in May, as it raised the FY21 borrowing ceiling for states. The ceiling was then raised from 3% of G-SDP to 5% of G-SDP or by about Rs 4.28 lakh crore in aggregate. “It may also be clarified that the general government (states+Centre) borrowings will not increase by this (special window) step. The states that get the benefit from the special window are likely to borrow a considerably lesser amount from the additional borrowing facility of 2% of G-SDP (from 3% to 5%) under the Aatmanirbhar package,” the finance ministry said. Under the borrowing Option 1, the Centre had put the upper limit of combined borrowing by all states at Rs 1.1 lakh crore. In addition to additional open market borrowings of 0.5% of G-SDP sans conditions, the states opting for this window are also eligible to carry forward their unutilised borrowing space to the next financial year. The amount is related entirely to losses due to implementation of GST while it is estimated that total shortfall, which includes impact due to pandemic, would be Rs 2.35 lakh crore for the current fiscal.Justifying an earlier decision to ask the states borrow for GST compensation, the Centre had said that no state has so far breached even the original 3% of G-SDP borrowing target this fiscal. The Centre, in contrast, borrowed as much as Rs 7.66 lakh crore, or close to 4% of the country’s GDP, from the market in H1. So, the states have much leeway to borrow, the Centre had then said. Already, the gross State Development Loan issuance expanded by a substantial 56.8% to Rs 3.53 lakh crore in H1FY21 from Rs 2.25 lakh crore in H1FY20. The net SDL issuance rose by an even higher 91.4% on year in H1FY21 to Rs 3.02 lakh crore.The weighted average yield of state government dated securities (across states and tenures) auctioned October 6 was at 6.80%, 23 bps higher than week ago and 31 bps higher than that in the first week of September.

Source: Financial Express

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Government’s demand boosting measures provide limited boost to economy, highlight fiscal constraints

The government’s second round of stimulus will spur consumer spending in the near term but support to economic growth will be minimal, Moody’s Investors Service said on Thursday. After a long clamour for fiscal stimulus, the government had on October 12 come up with measures with direct fiscal support to people and states and to generate demand. These included a leave travel concession (LTC) cash voucher scheme and special festival advance for government employees and Rs 12,000 crore interest-free loan to states and Rs 25,000 crore additional capex. The stimulus, amounting to Rs 46,700 crore, or about 0.2 per cent of real gross domestic product (GDP) forecast for FY 2021, “highlights limited budgetary firepower to support the economy during a very sharp contraction,” Moody’s said. The new stimulus aims to boost consumer spending during the festive season and to increase capital expenditures. “Even when combined with the government’s fiscal stimulus earlier in 2020, the size of the measures remains modest. In total, the two rounds of stimulus bring the government’s direct spending on coronavirus-related fiscal support to around 1.2 per cent of GDP,” the rating agency said. This compares with an average of around 2.5 per cent of GDP for BAA-rated peers as of mid-June. “India’s very weak fiscal position has constrained its scope for discretionary stimulus spending in response to the coronavirus shock,” Moody’s said projecting general government debt burden to peak at around 90 per cent of GDP this year, up from about 72 per cent of GDP last year. The large debt burden is driven by chronically wide fiscal deficits. Moody’s said weaker government revenue, driven by the economic contraction and reduced corporate tax rates announced in September 2019, would widen the general government deficit to around 12 per cent of GDP in the current fiscal. “While the latest stimulus will spur consumer spending over the near term as coronavirus-related restrictions continue to be eased and India’s festive season begins, the support to growth will be minimal,” it said. The government expects the new stimulus to add around 0.5 per cent of GDP — a small boost compared with the forecasted 11.5 per cent drop in real GDP in 2020-21, it said. Moody’s said consumer confidence has remained subdued even as India has emerged from a very stringent nationwide lockdown, which drove a 24.5 per cent contraction in private consumption in the April-June quarter, compared with the previous year. The number of coronavirus cases in India is still elevated and the relaxation of restrictions on educational establishments, entertainment facilities and gatherings from October 15 raises the risk of spread, which could weigh further on consumer sentiment. As part of the latest stimulus, the LTC Cash Voucher Scheme will provide cash payments to public sector employees and applicable private-sector employees in place of annual leave encashment (money received in exchange for a period of leave) and travel reimbursements available to them. The purchases must be made on goods subject to a consumption tax of at least 12 per cent, and transactions must be digital and fall within 2020-21 fiscal. In addition, the Special Festival Advance Scheme will offer Rs 10,000 interest-free advances to central government employees, with the same spending deadline, and will require repayment over a maximum of 10 instalments over 2021-22. To boost public investment, state governments will receive 50-year interest-free loans amounting to Rs 12,000 crore, with the loan amount varying by state. The loans may be used for capital projects and must be utilised within 2020-21. The government will also commit an additional Rs 25,000 crore for infrastructure projects and domestically made capital equipment, on top of the Rs 4.1 lakh crore allocated for infrastructure expenditure in the 2020-21 budget, it said. “We forecast growth to rebound to 10.6 per cent in fiscal 2021-22, reflecting the comparison with the low GDP levels of 2020 as economic activity gradually normalises,” Moody’s said. Over the medium term, Moody’s expect growth to settle around 6 per cent, with downside risks due in part to ongoing stress within the financial system. Moody’s said a series of the recent agricultural sector and labour law reforms, which were announced as part of broader structural reforms and approved by Parliament in September, could provide support to medium-term growth if implemented effectively. The agriculture reforms aim to increase efficiencies in the fragmented supply chain by expanding farmers’ direct access to produce markets. The labour law reforms consolidate and amend laws related to trade unions, conditions of employment in industrial establishments, and settlement of industrial disputes. “Of particular significance is the raising of the threshold at which an employer must seek government approval for layoffs, to 300 from 100 workers, which provides some increased flexibility to employers and could help to increase India’s competitiveness,” it said.

Source: Financial Express

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Indo Count Industries extends rally, stock zooms 230% in 3 months

Shares of Indo Count Industries continued at their northward movement, hitting a fresh 52-week high of Rs 135, up 8 per cent on the BSE on Thursday in an otherwise market. The stock was trading higher for the fifth straight day and has rallied 26 per cent during the period. In the past three months, the market price of the company engaged in textiles business, has zoomed 230 per cent, as against 12.5 per cent rise in the S&P BSE Sensex. In the six months, it has surged 402 per cent, as compared to 35.6 per cent gain in the benchmark index. Last week, on October 5, 2020, ELM Park Fund had acquired an additional 121,666 equity shares or 0.06 per cent stake in the company through open market purchase. Post-acquisition, ELM Park Fund'x stake increased to 5.05 per cent from 4.98 per cent, Indo Count Industries said in exchange filing. In a separate development, CARE Ratings last month reaffirmed the long and short term rating on bank facilities of Indo Count Industries. "The reaffirmation in ratings assigned to the bank facilities of the company continues to derive strength from its robust capital structure, comfortable debt coverage metrics, strong business profile – being one of India's leading home textile suppliers and exporters of bed linen, experienced Promoters in home textiles segment and reputed clientele profile," the rating agency said in rationale. Indian home furnishings comprises of bedspreads, furnishing fabrics, curtains, rugs, durries, carpets, placemats, cushion covers, table covers, linen, kitchen accessories, made-ups, bed spreads, bath linen and other home furnishings accessories. "The demand in the home textile market is governed by the rise in disposable income of the households and improvement in the living standards. United States and Europe are the two major markets in the segment; with India, China, Turkey, Pakistan and Bangladesh being the major suppliers," it said. However, the company's sales dipped in April-June quarter (Q1FY21) to Rs 335.97 crore from Rs 518.46 crore in Q1FY20 as the production was stopped due to lockdown. The manufacturing facilities resumed partial operations from last week of April 2020. However, supply chain and logistics could gradually start operations from June 2020.EBITDA (earnings before interest, taxes, depreciation, and amortization) margin contracted 220 basis points to 11.6 per cent from 13.8 per cent. The company said performance could have been better but production and sales impact on account of lockdown due to Covid-19 pandemic resulted in lower absorption of fixed costs in Q1FY21 thereby impacting EBITDA performance.

Source: Business Standard

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Global Textile Raw Material Price 16-10-2020

Item

Price

Unit

Fluctuation

Date

PSF

846.28

USD/Ton

1.79%

16-10-2020

VSF

1521.82

USD/Ton

1.49%

16-10-2020

ASF

1817.57

USD/Ton

0%

16-10-2020

Polyester    POY

809.16

USD/Ton

0.28%

16-10-2020

Nylon    FDY

1989.50

USD/Ton

0%

16-10-2020

40D    Spandex

4483.79

USD/Ton

0.67%

16-10-2020

Nylon    POY

5344.92

USD/Ton

0%

16-10-2020

Acrylic    Top 3D

1039.29

USD/Ton

1.45%

16-10-2020

Polyester    FDY

1870.72

USD/Ton

0%

16-10-2020

Nylon    DTY

2004.35

USD/Ton

0%

16-10-2020

Viscose    Long Filament

965.06

USD/Ton

0.78%

16-10-2020

Polyester    DTY

2279.01

USD/Ton

0%

16-10-2020

30S    Spun Rayon Yarn

2019.19

USD/Ton

4.21%

16-10-2020

32S    Polyester Yarn

1588.63

USD/Ton

1.90%

16-10-2020

45S    T/C Yarn

2434.91

USD/Ton

1.23%

16-10-2020

40S    Rayon Yarn

2182.51

USD/Ton

2.08%

16-10-2020

T/R    Yarn 65/35 32S

2048.89

USD/Ton

0.73%

16-10-2020

45S    Polyester Yarn

1959.80

USD/Ton

0.76%

16-10-2020

T/C    Yarn 65/35 32S

1648.02

USD/Ton

1.83%

16-10-2020

10S    Denim Fabric

1.19

USD/Meter

0%

16-10-2020

32S    Twill Fabric

0.68

USD/Meter

0%

16-10-2020

40S    Combed Poplin

0.98

USD/Meter

0%

16-10-2020

30S    Rayon Fabric

0.49

USD/Meter

0%

16-10-2020

45S    T/C Fabric

0.67

USD/Meter

0%

16-10-2020

Source: Global Textiles

Note: The above prices are Chinese Price (1 CNY = 0.14847 USD dtd. 16/10/2020). The prices given above are as quoted from Global Textiles.com.  SRTEPC is not responsible for the correctness of the same.

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CBN boosts FG’s support to revamp textile sector

The Central Bank of Nigeria (CBN) on Thursday said it would continue its efforts to support the Federal Government’s economic diversification efforts by focusing on the textile sector. CBN’s Development Finance Department made this known at the stakeholders’ meeting with Cotton Garment and Textile (CTG) players organised by the bank in Abuja. The bank expressed worry that most of the textile factories in Nigeria had folded up in spite of Nigeria’s huge potential in the sector. The Director, Development Finance Department, Yusuf Yila, said that the apex bank was committed to revamping the sector by supporting farmers to cultivate quality cotton lint being the major raw material for the industry.  He said that though a lot had been achieved over the last few years, more still needed to be done.“Between 2018 and 2020, over 340,000 cotton farmers were engaged under the Anchor Borrowers’ Scheme, and they earned over N31.6 billion. “We funded over 12 ginneries, creating over 450,000 jobs under the CTG intervention and we expect to do more,’’ he said.  Mr Yila said that capacities of ginneries also increased within the period, adding that cotton lint produced outweighed the annual requirement of the textile companies, despite COVID-19. “Cotton importation was at zero per cent in 2019, and cotton seeds farming is in full gear. “Ginneries are now working at over 90 per cent capacity and textile companies have sufficient raw materials.’’The director said that though smuggling of textile materials into the country had reduced, more still needed to be done to stop it completely. “Nigeria is still the biggest market for Bangladesh, Turkey, China and India,” he said. Concerned parties, under the aegis of National Cotton Association of Nigeria, were represented at the forum.

Source: Premium Times

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Bangladesh banks asked to deposit money in welfare fund

The Bangladesh Bank recently asked banks to deposit 0.03 per cent of the encashed export earnings in the central fund for the readymade garment (RMG) sector workers. In June 2016, the central bank instructed lenders to deposit the money in the fund but as some allegedly have not followed suit, the fund size has not increased as expected initially. As the parliamentary standing committee on the ministry of labour and employment recently alleged that the volume of the fund has not increased in keeping with the country's export earnings due to the negligence of some lenders, the labour secretary requested Bangladesh Bank governor Fazle Kabir to take measures. Banks have been asked to send information about the deposited money to the ministry as well, according to Bangla media reports. This is not the first time the central bank has issued such circular. On May 29, 2018, following a letter from the labour and employment ministry, the Bangladesh bank issued a similar instruction to banks. The account of the central fund for the garment sector is maintained at the Ramna corporate branch of Sonali Bank in Dhaka. A garment worker or his legal heirs would get Tk 3 lakh from the fund in case of death or grave injuries at the workplace. In case of illness or injury that render them disable or death outside workplaces, a worker or their beneficiaries would get Tk 2 lakh. A worker will receive Tk 1 lakh if he faces any workplace injury, which causes mutilation but not a permanent disability. The children of workers will get Tk 20,000 in stipend if they manage a cumulative grade point average of 4.5 and above in the secondary school certificate examination. Female workers are entitled to Tk 25,000 as maternity benefits from the fund.

Source: Fibre2fashion

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Yangon garment units reopen to protect foreign investment

Despite the spread of COVID-19 in Yangon being not under control, Myanmar’s ministry of health and sports has allowed the city’s garment units to reopen. State Counselor Daw Aung San Suu Kyi said in a televised speech foreign investors may stay away if orders are not met for long. The factories were initially ordered to cease operations until October 21. Suu Kyi said the resumption of factory operations is necessary for the long-term health of the country’s economy. The health ministry said allowing operations would prevent employees from losing their jobs and sustain economic growth, according to Myanmarese media reports. On October 13, about 400 Yangon factories, including drinking water suppliers and cold storages, were allowed to resume operations. Myanmar has more than 7,000 factories, 6,632 of which are in Yangon along with 680,000 workers, according to the ministry of labour.

Source: Fibre2fashion

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PRC Yarn Company Texhong shifts production line to Vietnam

Chinese yarn company Texhong is shifting its production line to Vietnam, partly due to the US boycott of cotton items originating in China’s Xinjiang province. It recently started recruiting labourers in the Quang Ninh province for its latest $214-million project, Texhong Knitting Vietnam Ltd, part of its $500 million investment plan in Vietnam this year. The first phase will get operational in late 2021, and the second phase will be constructed 20 months after that. The Quang Ninh Economic Zones Management Authority granted investment certificates in May to the company, which will have an estimated annual production capacity of 82,500 tonnes. According to Texhong Vietnam Industrial Zone (IZ), the company simultaneously went ahead with land clearance, infrastructure development and investment, a Vietnamese media outlet reported. In Xinjiang, the yarn producer has been running a subsidiary named Xinjiang Texhong Foundation Textile Co., Ltd. Moreover, most of Texhong’s Chinese cotton supplies are reportedly sourced from Xinjiang. Hence, under the US ban, cancelled orders for Texhong are a strong probability. Texhong is also operating a garment company named Texhong Thai Binh Garment Co Ltd, whose current production capacity is 35 per cent of that seen last year. In September, the company manufactured about 400,000 items, far less than the previous average of 900,000. Since the health crisis broke out, its earnings have dropped by 30 per cent compared to previous years. The establishment of Texhong’s new garment manufacturing hub in Vietnam could aim to solve the origin issue of its garment products, for easier export to other markets.

Source: Fibre2fashion

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No RD, extra ADC on import of many textile items in Pak

Pakistan’s Federal Board of Revenue (FBR) will not charge additional customs duty (ADC) and regulatory duty (RD) on the import of many textile items. The board issued a notification to this effect recently. It also abolished regulatory duty on import of a few other items. Regulatory duty would not be applied on woven fabrics of artificial filament yarn and artificial staple fibre. The items not subject to the additional customs duty include yarn (other than sewing thread) of synthetic staple fibres, not put up for retail sale; other woven fabrics of synthetic staple fibres; waste of wool or of fine or coarse animal hair, including yarn waste but excluding garneted stock; garneted stock of wool or of fine or coarse animal hair; wool and fine or coarse animal hair, carded or combed (including combed wool in fragments). Other items not subjected to the ADC included sewing thread of man-made filaments, whether or not put up for retail sale of synthetic filaments/artificial filaments and synthetic filament yarn (other than sewing thread), not put up for retail sale, including synthetic monofilament of less than 67 decitex and woven fabrics of synthetic staple fibres, containing 85 percent or more by weight of synthetic staple fibres, according to Pakistani media reports.

Source: Fibre2fashion

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