INTERNATIONAL
The manufacturing sector has played a stellar role in growth and development of any industrialised country. The emerging and developing countries place manufacturing at the driver’s seat in their journey of economic growth. The share of manufacturing in GDP is therefore a basic indicator of the significance of the sector in a country’s economy.
Also, the traditional stages of development of any country from primary sector to secondary and then to tertiary sector determine the different stages of growth of manufacturing from low to peak and then sliding down, although there remains variations in the growth trajectory as the development process may pursue different routes for economic progress of individual country.
In the recent period, manufacturing holds a share of 14% in India’s GDP. For advanced and developed nations like Germany, the US, South Korea and Japan, the comparable figures are 19%, 11%, 25% and 21%, respectively. For emerging and developing countries like China, Turkey, Indonesia, Russia, Brazil, the corresponding figures are 27%, 19%, 20%, 13%, 9%, respectively, and for low income countries the share is 8%.
Indian policy planners (The Manufacturing Council) had earlier set a target of raising the share of manufacturing to 25% by 2022, but it could remain well-nigh difficult to achieve in two years.
Looking back, it was not a healthy journey for Indian manufacturers consisting of a large group of MSMEs. The thrust on product development by initiating new technologies, new processes for a large group of manufacturers, instead, paved the way for the simple task of assembling the products from the key components imported from abroad.
Technology transfer suffered as well as the initiatives required to pursue the multinationals to set up manufacturing bases in India. It is a fact that the appropriate policy incentives for technology transfer and setting up of new facilities were not available as exemplified by difficulties of doing business in India. In this context, the call for ‘Atmanirbhar Bharat’, ‘Make in India’,’ Vocal for Local’ appear to set the tone, striking the right chord.
It must, however, be appreciated that replacement of imports by indigenising domestic manufacturing of the items requires a definite time-bound policy with necessary nurturing by the government in the initial phases.
Notwithstanding the sincere efforts put in by domestic steel manufacturers, a number of critical steel items continue to be imported. These include casing and line pipes conforming to API=>X 70 for high- premium thread casing pipes and accessories, premium connection tubing with attachments and crossover of sizes 16 or lower.
These pipes, needed for oil drilling operations, are regular requirement by the oil sector. There is also irregular availability of API grades HRC/Plates especially in grades>=X 70 grade in the domestic market. Other steel items regularly getting imported belong to AHSS grades of CR sheets/coils for auto sector, CRGO steel sheets for the transformers, over dimension plates, SS HR/CR width >1250 mm, a number of alloy steel items required for the auto sector, GP sheets with 500 gsm for Grain Silos, to name the major ones.
Solar energy, as a part of renewable energy, is another thrust area of the government. The government is encouraging domestic production of panels. However, reducing imports of wafers, ingots and cells from China is a must and it would necessitate the setting up of polysilicon manufacturing plant to be able to undertake integrated manufacturing of solar panels.
The defence sector has rightly revised the Defence Acquisition Procedure (DAP) to rewrite the offset guidelines, encouraging the domestic units at DRDO, DPSU and ordnance factories and bringing necessary changes in Buy, Buy and Make and Make -I, II and III provisions.
DRDO has identified 108 military systems for domestic production of UAVs, mountain footbridge, modular bridge, armoured and anti-terrorist vehicle, navigation radars and other items.
The realisation of export targets would always enable the domestic manufacturers to explore participation in the Global Value Chain and minimise the threat of economy of scale issues for the new units set up to replace imports.
A list of 101 defence items is facing import ban, of which 69 are to stop imports by December’20.
It is gratifying to note that Indian manufacturers are developing head-hardened rails (JSPL and SAIL), while high value grades R-260/350 and R-1080 grades rails have been developed for high speed and heavy rails.
Recently, the Department of Heavy Industry has increased local content for public procurement of automobiles based on IC Engines (passenger cars, commercial vehicles, two- and three- wheelers) for class-1 local suppliers to 65% and for automobile components (brake linings and pads, helical springs, gas compressors, bearings, air purifiers, horns, safety seat belts, radiators and silencers, suspension and braking parts etc) for IC Engine vehicles to 60% from the earlier 50%.
An incentive scheme for setting up import replacing items at least for the initial phase is very much necessary across different segments to escalate the role of the manufacturing sector. The products rolled must be comparable in quality and cost to penetrate the global market.
SOURCE: The Financial Express
India’s economy stands poised to recover at a fast pace and reach pre-Covid levels by the end of this fiscal unless a second wave of cases is triggered by a fatigue with social distancing, the finance ministry said on Wednesday.
In its report for October, the department of economic affairs also said: “The continuous improvement in forward looking RBI indices of consumption and business sentiment for the next year augurs hope of a strong economic rebound.”
This is also corroborated by the International Monetary Fund’s (IMF’s) October 2020 projection of 8.8% real GDP growth for India in FY22, highest globally, it added.
For the current fiscal, however, the IMF has forecast a record 10.3% contraction for India.
The rise in high frequency indicators in October points towards “broad-based resurgence of economic activity”, the report said, citing healthy Kharif output, power consumption, rail freight, auto sales, vehicle registrations, highway toll collections, e-way bills, rebound in GST collections and record digital transactions.
“Rural consumption has stayed strong, in part helped by sustained MSP procurement of food grains by government at higher prices,” it said.
The report says a steady contraction of active Covid-19 cases and a low case fatality rate has “instilled measured optimism in India that the worst is behind us”.
At the same time, a second wave of the pandemic in advanced nations is a grim reminder of how reality hits back when caution is compromised.
The expected current account surplus during the year is likely to provide a cushion to increased spending in the economy.
Econmic affairs secretary Tarun Bajaj on Tuesday exuded confidence that the surge in a clutch of high-frequency indicators over the past two months will likely last beyond the festival season, seeking to remove doubts over its durability.
SOURCE: The Business Standard
MSME Minister Nitin Gadkari on Thursday suggested businesses to adopt cost-effective methods and modes such as waterways to bring down the logistics cost for bamboo products originating from India’s Northeast. Inaugurating a virtual bamboo exhibition, Gadkari also stressed on the need for more intensive use of bamboo resources in India that are already used in multiple fields such as handicrafts, agarbatti making, garments, buildings and interiors, bio-fuel resource, etc. For the same, he also asked the Ministry of Development of North Eastern Region (DoNER) to come up with a Bamboo Policy since maximum bamboo production happens in the Northeast.
Further, in order to boost employment in bamboo-related activities, Gadkari called for producing high yielding bamboo varieties, for instance, 200 tonnes per acre yield instead of around 40 tonnes per acre in case of few varieties for industrial use. The greater yield and wider bamboo usage will open up more employment generation especially in Northeast India, said a statement by the MSME Ministry citing Gadkari as saying. The minister further stressed that bamboo sticks may be reduced to bamboo bales for moisture to be removed in order to ease transportation and make it cheaper. He suggested seeking the support of IITs for its pilot project.
SOURCE: The Financial Express
INTERNATIONAL
Vietnamese companies are struggling to fully benefit from the European Union (EU)-Vietnam Free Trade Agreement (EVFTA) as the country does not produce enough or competitively-priced raw materials for its textile industry. Businesses are unable to meet rules of origin requirements to enjoy tax incentives, according to the country’s SSI Securities Corporation.
To do so, they need to use fabrics either domestically produced or imported from countries that have free trade deals with the EU.
Vietnam depends on China for 60-70 per cent of its textile feedstock and fabrics imported from South Korea account for only 15 per cent of its total requirement.
Under EVFTA provisions, 77.3 per cent of Vietnam's textile exports to it will enjoy zero per cent tax within the first five years while the rest follow a seven-year road map. EFVTA will see Vietnam eliminate 99 per cent of its import duties over 10 years and the EU doing the same over seven.
The Vietnam National Textile and Garment Group (Vinatex) said the tax incentives under EVFTA are not attractive enough for businesses to switch from Chinese to Vietnamese fabrics as the former are 10-40 per cent cheaper and delivered faster due to the scale of production, a Vietnamese newspaper reported.
China's textile and dyeing industry has a capacity of 80 billion metres of fabric a year while Vietnam’s is 2.5 billion metres against a demand of 8 billion metres.
But SSI believes that in the long run, Vietnam needs to develop its own industry and ensure sufficient scale to compete on cost with China.
There are around 6,800 textile and garment businesses in the country and their exports were worth $32.85 billion last year.
Source: Fibre2Fashion News Desk (DS)
Even as I sit to pen this editorial, it gives me immense pleasure to note that true to my gut feelings, apparel export from Bangladesh has made a rebound in August.
As a keen observer of the industry for last so many years, I saw it coming and coming soon. Finally, it proved correct; after months of long and protracted slump, garment export growth turned positive in August.
According to figures compiled by the BGMEA from National Board of Revenue data, in the month of August (1-30 August) this year, export earnings from RMG stood at US $ 3.24 billion from what was US $ 2.24 billion in the same period of August in 2019.
Meanwhile, as per the provisional data of the Export Promotion Bureau, readymade garment export in August 2020, however, grew by 2.57 per cent to US $ 2.47 billion from US $ 2.40 billion in the same month of 2019. Despite the difference in the figures (from two different sources), that there has been growth in apparel exports in August is obvious.
Bangladesh’s apparel exports declined severely in the March-May period of 2020 witnessing a 54.79 per cent fall compared to the same period last year. However, with brands and retailers getting back to work and with reinstatement of the cancelled orders, apparel exports made a turnaround of sorts in July by registering earnings of US $ 3.2 billion, which though 14.1 per cent more than the target set by the Commerce Ministry for July, was less than that registered in the same period last year.
In July last year, apparel exports stood at US $ 3.3 billion.
However, having said so, I agree with the BGMEA President that instead of year-on-year-based monthly figures, a 6-month average would be a better depiction of the existing scenario. What makes the case even stronger for Bangladesh is the fact that despite the adverse impact of the coronavirus pandemic, Bangladesh continues to be amongst the top sourcing destinations for global brands and retailers, as has been maintained by a report of QIMA – a leading supply chain compliance solutions provider.
According to the report, which was based on a survey (Evolution of Sourcing in 2020) carried out in July 2020, and which tries to analyse the evolution of global sourcing in response to the ongoing pandemic, the US-China trade tensions and other disruptions to global supply chains, apart from Vietnam, Bangladesh and India, are still among popular alternative sourcing options.
The revival of Bangladesh’s apparel exports is also perhaps evidenced from the fact that business at the country’s prime gateway, Chittagong Port, has attained near normalcy after 5 long months amid the ongoing pandemic.
According to port officials, an average of 4,000 to 4,200 containers are being delivered daily (at the time of writing this piece), which is similar to that in the same period last year, which is a positive development to say the least. So even as we soak in that sense of joy and excitement on account of the export turnaround, it would be pertinent not to lose view of the bigger picture, and continue to build on the momentum gained while also try and exploit the new and emerging opportunities that would present as people and entities get back to business the world over.
Hoping that Bangladesh would continue to better the export performance in the coming months; all the best to the industry!
SOURCE: Apparel Resources
India and Italy are set to sign a number of agreements in the areas of trade, environment, media, film-making, investments and fisheries at the virtual bilateral summit between Prime Minister Narendra Modi and his Italian counterpart Giuseppe Conte on Friday.
“India will explore the possibility of enhancing Italian investments in India, increasing defence cooperation and promoting manufacturing under ‘Make in India’,” according to a source tracking the meeting.
Italy, on its part, is keen to promote greater linkages with India in digital technology and e-governance, get involved in advanced manufacturing, retain the market in India’s defence sector and make India a destination for Italian pension funds, the source said.
“Italy’s agenda is also likely to include promotion of two-way investment in areas like green and circular economy, energy transition, health and pharmaceuticals, food processing, infrastructure and advanced manufacturing given the high degree of complementarities between the two economies,” the source added.
India and Italy may hold discussions on their mutual interest in ensuring a progress in the India-EU Broad-based Trade and Investment Agreement (BTIA), stuck for the last few years, as it could potentially benefit both countries.
After Brexit, Italy is the third-largest EU economy holding immense potential for partnership for Make in India, the source said. It is India’s fifth-largest trading partner in the EU with bilateral trade at €9.52 billion in 2019. India ranks No 16 as the country of origin of Italian imports, accounting for 1.2 per cent of the country’s imports.
G20 Troika
At the summit, India will thank Italy for agreeing to host the G20 summit in 2021 at the country’s request, in exchange for India hosting it in 2022.
India will join the G20 Troika with Italy and Saudi Arabia from January 1, 2021; India and Italy will be part of the Troika for two years, 2021 and 2022, when India takes over as the G-20 chair.
SOURCE: The Hindu Business Line
Foreign Secretary Harsh Vardhan Shringla held consultations with Permanent Under-Secretary at the UK’s Foreign, Commonwealth and Development Office, Philip R Barton in London on Wednesday on strengthening India-UK cooperation, and exchanged views on global and regional issues and the Covid-19 pandemic response.
SOURCE: The Hindu Business Line
A full economic recovery is unlikely until people are confident that it's safe to resume their normal activities, US' central bank chief has said, noting that all Americans can play a role in the nation's response to the pandemic by wearing masks and following social distancing guidelines in order to ensure the economy can fully recover. The US has so far recorded 9,606,645 coronavirus cases and 1,232,516 deaths due to the disease -- both the figures highest in the world.
"All of us have a role to play in our nation's response to the pandemic. Following the advice of public health professionals to keep appropriate social distances and to wear a mask in public will help get the economy back to full strength," Federal Reserve Chairman Jerome Powell said on Thursday. "A full economic recovery is unlikely until people are confident that it's safe to re-engage in a broad range of activities," he told a news conference here. The Federal Reserve's response to the economic crisis has been guided by its mandate to promote maximum employment and stable prices for Americans, along with its responsibilities to promote the stability of the financial system, he said.
Noting that the coronavirus pandemic has left a major impact on the US economy, Powell said economic activity in the country has continued to recover from its depressed second-quarter level. The reopening of the economy has led to a rapid rebound in activity and real GDP rose at an annual rate of 33 per cent in the third quarter. In recent months, however, the pace of improvement has moderated, he said.
While the housing sector has fully recovered from the downturn, supported in part by low mortgage interest rates, business investment has also picked up. However, Powell cautioned that the overall economic activity remains well below its level before the pandemic and the path ahead remains highly uncertain. In the labour market, roughly half of the 22 million jobs that were lost in March and April have been regained as many people were able to return to work, he said. As with overall economic activity, the pace of improvement in the labour market has moderated; the unemployment rate declined over the past five months but remained elevated at 7.9 per cent as of September. Still millions of Americans remain out of work, he said.
"The economic downturn has not fallen equally on all Americans, and those least able to shoulder the burden have been hardest hit. In particular, the high level of joblessness has been especially severe for lower-wage workers in the services sector for women and for African-Americans and Hispanics. The economic dislocation has upended many lives and created great uncertainty about the future," the Fed chairman noted. Powell said the coronavirus pandemic has also left a significant imprint on inflation. Following large declines in the spring, consumer prices picked up over the summer, in part reflecting a rise in durable goods prices. However, for those sectors that have been most affected by the pandemic, prices remain particularly soft. Overall on a 12-month basis, inflation remains below its two percent longer-run objective, he said.
"We will have a stronger recovery if we can just get at least some more fiscal support when it's appropriate...when it's appropriate in that size Congress thinks it's appropriate," Powell said.
SOURCE: https://www.devdiscourse.com/
