INTERNATIONAL
Amid the government hiking import duties on a slew of products to help boost local manufacturing, a report on Monday pitched for lowering such levies, saying higher duties will not promote competitive manufacturing but may lead to inefficiency.
Since the beginning of 2000, successive governments have been eyeing a quarter of the GDP to come from manufacturing by 2025 but not much has moved in that direction.
Between 2004 and 2017, the incremental gain in the country’s manufacturing global share is a low 1.5 percentage points to 3 per cent, while China has gained a whopping 18 per cent share, SBI Research said in a report on Monday.
The report also noted that even with such a negligible gain, the country is the sixth-largest manufacturing economy globally, controlling 3 per cent of global output.
“If we were to build self-reliance, increasing tariffs is not the way to go. Rather, the focus should be on building the right infrastructure that can help make our manufacturing more efficient, which can make our exports more competitive. Also, the government should focus more on easing the processes for businesses to function easily,” the report said.
To accelerate the progress towards local manufacturing, the report said, “We need to reduce import tariffs as we have one of the highest weighted average tariffs in the world on manufacturing. Higher duties do not improve productivity but are tantamount to taking the easy route and ignoring efficiency and quality”.
A mere 1 per cent hike in import duties leads to a USD 2 billion worth decline in imports on average, the report said.
In the export basket, the highest share is of consumer goods, followed by intermediate goods and these two attract the highest tariffs in the import basket, thus making a case against the fact that higher import tariffs have not protected these industries, according to the report.
On the contrary, the report said, other countries with much lower tariff structures than ours have built strong manufacturing bases, which have helped them in exports. High tariffs are impacting the country’s position in global value chains, wherein both backward and forward integration is needed.
Though our higher import duties are primarily due to poor forward supply chain linkages, it can actually boomerang on us creating a self-sustaining manufacturing base. This is because only by enhancing manufacturing competitiveness, we can increase our exports and not by raising tariffs, it noted.
Further, the report said successive data-prints show manufacturing production growth has been dismal in the late 1990s through the early 2000s.
Barring three years from 2005-08, “we have never experienced double-digit manufacturing growth as a result the share of manufacturing in overall GDP has also stayed in the 15-18 per cent range over the past several years,” it said.
SOURCE: The Financial Express
The extension will allow more time to MSMEs as well as professionals like doctors or chartered accountants, the intended beneficiaries of the scheme that is backed by official guarantee on the loans, to avail of the facility.
With one-third of the Rs 3-lakh-crore loan limit yet to be exhausted, the government has extended the validity of its Emergency Credit Line Guarantee Scheme (ECLGS) by one month through November 30 or until the limit is used up, whichever is earlier.
The extension will allow more time to MSMEs as well as professionals like doctors or chartered accountants, the intended beneficiaries of the scheme that is backed by official guarantee on the loans, to avail of the facility.
The scheme is extended until November 30 or until “such time that an amount of Rs 3 lakh crore is sanctioned under the scheme, whichever is earlier, in view of the opening up of various sectors in the economy and the expected increase in demand during the ongoing festive season”, according to a finance ministry statement.
Loans of Rs 2.03 lakh crore have been sanctioned so far under the ECLGS since its rollout on June 1 to 60.67 lakh borrowers, the ministry said on Monday. Of this, an amount of Rs 1.48 lakh crore has been disbursed.
Under the ECLGS, announced as part of the government’s Rs 21 lakh-crore relief package in May, the Centre has pledged full guarantee for up to 20% extra, collateral-free working capital loans, subject to the Rs 3-lakh-crore limit. While the scheme was initially meant for only MSMEs, the government, in August, decided to relax the eligibility criteria to cover professionals and enable a wider pool of businesses to benefit from it.
As part of its expanded coverage, companies with an annual turnover limit of up to Rs 250 crore are now eligible to tap the scheme, against that of Rs 100 crore earlier, in sync with the revised definition of MSMEs. Even individuals such as doctors, chartered accountants, lawyers, among others, who wish to take loans for professional purposes, are now covered under the scheme.
Similarly, eligible businesses with up to Rs 50 crore outstanding as of February 29, instead of Rs 25 crore earlier, can avail of the additional guaranteed loans. The government has earmarked a corpus of Rs 41,600 crore over the current and the next three financial years to implement the ECLGS.
Interest rates under the scheme are capped at 9.25% for banks and other financial institutions, and 14% for NBFCs. Tenor of loans provided under the scheme is four years, including a moratorium of one year on principle repayment.
SOURCE: The Financial Express
India’s manufacturing may be back on track, rebalancing itself from the Covid-19 impact, the purchasing managers’ index (PMI) data, released by IHS Markit on Monday, shows.
India’s manufacturing PMI rose to 58.9 in October, the highest it has achieved in more than a decade.
Driven by robust sales, the pace gathered by manufacturing output--a crucial component of the headline PMI--was the quickest since October 2007, contributing to the PMI’s gains, the monthly report by IHS Markit said.
Headline PMI went past 56.8, seen in September, which was an eight-year high.
A PMI value above 50 indicates that activity expanded in a month over the previous one. But it should be noted that the PMI is a month-over-month indicator, showing improvement over the previous month, and not over the previous year.
In addition, manufacturers spent more on buying inputs in October too. The reopening of sectors took overall confidence to a 50-month high.
But on employment, the payroll numbers are still low, and in fact, lower than in the previous month, due to pandemic-related restrictions on companies.
Many high-frequency real macroeconomic indicators — such as power demand, traffic, rail freight, and goods and services tax collection — in September and October tell a revival story. The October PMI also bodes well for gross domestic product of the October-December quarter (Q3 FY21), especially when manufacturing value added has been contracting for more than a year.
Pollyanna De Lima, economics associate director at IHS Markit, said companies were convinced that the resurgence in sales would be sustained in coming months, as indicated by a strong upturn in input buying amid restocking effort.
“Levels of new orders and output at Indian manufacturers continued to recover from the Covid-19 induced contractions seen earlier in the year, with the PMI results for October highlighting historically sharp monthly rates of expansion,” she wrote in the note.
Growth was led primarily by the intermediate goods category, suggesting that demand for their inventories might have sprung back to life after a period of lull.
But consumer goods and investment goods also showed a robust expansion this time, the report said.
The monthly upturn in sales was the strongest in 12 years, while new export orders were the most the pronounced in close to six years.
The impact of compliance with government guidelines on employment is still strong, causing the employment situation to deteriorate for the seventh consecutive month.
“There was disappointing news on the employment front though, with October seeing another reduction in payroll numbers,” the note said.
The main difference between the improvement in high-frequency indicators such as goods and services tax and power demand, and the improvement in the PMI, is that the latter is tracked as month-over-month growth, as distinct from year-on-year growth in the former. As the economy is gradually reviving every month, the PMI is inching up faster than the regular monthly indicators.
“The month-over-month nature of the PMI makes its correlation with other improving indicators inaccurate. But revival would be also be evident from the numbers, if they sustain at a good level for months in a row, rather than one-off,” said Devendra Pant, chief economist at India Ratings.
As for inflation, the report said that most firms kept their output charges unchanged even though there was an uptick in input costs. Inflation remained moderate due to this.
SOURCE: The Business Standard
INTERNATIONAL
The Spanish fashion house, Mango aims to eliminate all plastic packaging within its supply chain. The set goal is estimated to reduce plastic of over 160 million plastic bags per year from its supply chain.
The company states that it hopes the target will put the company on track towards becoming the first Spanish brand in the industry to take direct action against plastic packaging circulation.
Toni Ruiz, the CEO of Mango, Stated that they were very pleased to implement the project that helped them advance towards a more sustainable fashion industry that in turn will allow them to implement a suitable transformation of the company.
The projected targets are all set to commence shortly with local production folded garments and in the retailer’s online channel. The company has successfully implemented their pilot trials in Morocco, China and Turkey. The rattlers further plan to expand the project to all its garments by the end of 2021.
The plastic bags are to be replaced with tissue paper bags designed from sustainably managed forests where practices are certified as compliant with FSC (Forest Stewardship Council) international standards.
Mango will work in close proximity with its network of suppliers to ensure goals are implemented across the board to achieve projected targets. Ruiz stated that the large scale project will have a positive impact on the environment as it aims to stop utilising approximately 160 million plastic bags a year. Mango recently became the the first fashion brand in Spain to publish a list of all its Tier 1 suppliers utilised in the year. This proves its engagement with its supply network.
As a part of the signing between Mango and the Comisiones Obreras trade union in 2018 the publication list was released. As the partnership gained momentum the trade union has worked towards guiding Mango in its to strengthen the rights of factory operators to encourage responsibility within the company’s global supply chain network.
Source: Yarns and Fibers
Polygiene® will treat Marks & Spencer’s kitchen towels. The towel is treated with Polygiene stays fresh antimicrobial technology and is part of M&S globally distributed core programs. The yearly forecasted order value of the kitchen towels is USD 75 000. Even if this program started at M&S India and even if the order value is quite modest at this stage, it is part of a bigger international program of treated products – and more products are already under discussion at the time of writing.
“We see this as an exciting start of a partnership with this renowned brand and hope to see growth in their home textile area as well as in other categories going forward. Changed consumer behavior due to the pandemic, with both increased e-commerce as well as more interest in home products, could give an extra push for this kind of products. Additionally, an antimicrobial treatment in home textiles will keep them fresh for longer and make them last for longer as well”, promises Ulrika Björk CEO Polygiene. The British multinational retailer founded in 1884, is listed at the London Stock Exchange (FTSE 250 Index) and had a turnover of over 10 billion GBP in 2019.
Source: Textile Focus
Authorities in both the United Kingdom and Germany have established a fund that will provide subsidies to companies in Ethiopia’s textile and garment manufacturing industry.
An initial £5 million has been invested in the initiative at its launch-stage and will be apportioned to applicants which demonstrate both that they’ve endured an economic shock amidst the COVID-19 pandemic, and that they have a robust recovery plan as to ensure the money isn’t dispersed in vain.
Despite Ethiopia having experienced impressive export growth within its thriving textile and garment industries, it has – like many countries globally – faced set-backs due to subdued demand. The country’s Jobs Creation Commission estimates that between 1.4 and 2.5 million jobs could be lost nationwide in the next three months if safety nets aren’t put in place.
Source: Eco Textile
As the demand for sustainably sourced raw materials rises, World Textile Sourcing (WTS) offers a sustainable product strategy that includes renewable and recycled fibers in an effort to attain circularity. This will also help achieve a closed-loop production cycle made more transparent.
The company aims to make strategies and plans that aim from the supply chain and grow uptown the cultivation of fibers. WTS is known for maintaining ethical production standards throughout its manufacturing process.
The company is established in Peru and has an advantage at the source while launching sustainable initiatives. The country is known for producing 85% of organic cotton in Latin America.
One of the company’s projects comes from the cotton supplier Bergman Rivera. They are commencing their first pilot of regenerative organic cotton certified in Peru.
For every 1000 units, the company regenerates, one acre of soil will be saved for the future. As WTS evolves, Peru is still the most advanced country when it comes to regenerative farming as they have a long-term commitment towards regenerative practices.
This regenerative process is now held keeping in mind official standards. In August, the Regenerative Organic Alliance (ROA) released its standard for Regenerative Organic Certified (ROC) products after the completion of a pilot program in 2019. Consumers can now view their purchase supports farmworkers, soil health and pasture-based animal welfare by choosing a ROC product. The new certification process also has three levels namely, bronze, silver, and gold that require farms and businesses to phase in more meticulous regenerative practices over time.
In order to qualify for the ROC, farms should have acquired USDA organic certification. In doing so they also have to fulfill further criteria by ensuring soil health, animal welfare and social fairness making sure they are practicing the highest standards set for organic agriculture.
WTS participates in various collaborative initiatives with many industry experts to further achieve attain their sustainability goals. WTS is an esteemed member of Textile Exchange and BCI (Better Cotton Initiative) that encourages industry leaders to source 100% organic cotton.
Source:Yarns and Fibers
The International Monetary Fund on Monday warned Group of 20 major economies that the coronavirus crisis is not over and called on the United States, Britain and other countries to increase the amount of fiscal spending currently planned.
Premature withdrawal of fiscal support at a time of continued high rates of unemployment would "impose further harm on livelihoods and heighten the likelihood of widespread bankruptcies, which in turn could jeopardize the recovery," senior IMF officials warned in a blog published Monday.
The blog, entitled, "The Crisis is Not Over, Keep Spending (Wisely)," said swift and unprecedented action by G20 and emerging market economies had averted an even deeper crisis, with G20 countries alone providing $11 trillion in support.
The IMF last month forecast a 2020 global contraction of 4.4% and a return to growth of 5.2% in 2021 but warned that the situation remained dire and governments should not withdraw stimulus prematurely.
On Monday, it said COVID infections were continuing to spread, but much of the fiscal support provided was now winding down, with cash transfers to households, deferred tax payments, and temporary loans to businesses either having expired or being set to do so by year-end.
In economies where deficits dropped by 10% of gross domestic product this year, fiscal balances are expected to narrow by more than 5% of GDP in 2021, largely due to a sharp withdrawal of relief measures, they said.
"Larger support than currently projected is desirable next year in some economies," the IMF said in a longer report to G20 countries also published Monday. It singled out Brazil, Mexico, Britain, and the United States, citing large drops in employment in these economies and projected fiscal contractions.
Democratic lawmakers and Republican President Donald Trump have been unable to reach an agreement on a new stimulus package for the United States, the world's largest economy. New spending may not be agreed until early 2021, depending on the outcome of the presidential election on Tuesday.
The IMF said countries should maintain support for poor and vulnerable groups hit disproportionately hard by the crisis, as well as targeted support for viable firms to maintain employment relationships. It listed India, Mexico, Russia, Saudi Arabia, Turkey, and the United States as examples.
However, it warned against providing support for firms that hindered a transfer of resources from sectors that may permanently shrink to those sectors that will be expanding.
SOURCE: The Business Standard
Both China and India have reported manufacturing PMI at over a decade high in October 2020 and are quickly recovering the lost ground in the manufacturing sector.
While many countries in the world are struggling with the resurgence of the coronavirus pandemic, India and China are at the pole position of economic recovery. Both China and India have reported manufacturing PMI at over a decade high in October 2020 and are quickly recovering the lost ground in the manufacturing sector. While the dragon’s factory output expanded at 53.6, the growth was much more significant in India. India’s manufacturing PMI grew at 58.9, according to the IHS Markit report. Though the improvement in the factory outputs of China, South Korea, Japan, etc indicates slight ease in the global headwind, countries such as Russia are still struggling to moderate the blow caused by the pandemic. Russia’s manufacturing PMI fell to a 5-month low in October.
RBI in its latest report on ‘Minutes of the Monetary Policy Committee Meeting’ underlined that the incoming data point to a recovery in global economic activity in the July-September quarter in sequential terms, although downside risks have risen with the renewed surge in infections in many countries. While the global trade is expected to be subdued, the rebound could turn out to be stronger among advanced economies than in emerging market economies, it added.
Further, the substantial expansion in the manufacturing activity has spread optimism about economic recovery. However, the revival process is likely to need a continuous push from the government. Lack of adequate financial support will likely impede the pace of economic recovery, and the GDP may contract by 6 percent on-year in FY2020-21, said a report by Barclays.
Meanwhile, the new export orders in India rose at a nearly six-year high pace and the upturn in sales was the strongest since mid-2008 in October 2020. In response to strong sales gains and softer containment measures, firms lifted production at the strongest pace recorded since late-2007. Adding to the delight, the outlook of the manufacturing sector is also bright in the country. The level of confidence is at a 50-month high.
SOURCE: The Financial Express
