MARKET WATCH 16 NOV, 2020

NATIONAL

INTERNATIONAL

Cotton leads Indian textile sector recovery: Ind-Ra

The prices of textile products in India gained traction in October, with an incremental and gradual demand recovery due to the festive season and unlocking. While cotton prices continued to gain by 2-4 per cent month on month (MoM) in October on account of the resumption in demand from the casual wear, knitted and home textile segments, they were lower by about 5 per cent year on year (YoY), according to the October edition of India Ratings and Research’s (Ind-Ra) credit news digest on India’s textile sector.

With the United States Department of Agriculture’s Foreign Agricultural Service (USDA-FAS) estimating a steady cotton production for the current season, it would lead to an oversupply in the Indian market, affecting prices further. However, the Cotton Corporation of India had taken steps to liquidate its inventory during July-September 2020 which would lead to a substantial lower inventory, Ind-Ra said.

Cotton yarn prices continued their recovery in October and remained stronger than blended yarn prices, on due to a higher demand from export markets. Large cotton spinners using the inventories purchased prior to COVID-19 have written-down/inventory losses during the second quarter (Q2) of this fiscal, which is likely to have affected the first half operating margins.

The smaller spinners, having lower cotton inventory and exposure into knitted casual wear, have reported a stellar performance for the second quarter over woven and blended segments, Ind-Ra said in a press release.

Yarn exporters continued to witness an uptick in demand during August, with production resuming to pre-COVID levels and flattish on YoY levels. Yarn exports in tonnage terms grew by 38 per cent YoY during August.

Ind-Ra expects it to have improved further during September-October. The recovery in yarn demand with unlocking and resumption of production by mills in neighbouring countries would lead to a rise in shipments.

Man-made fibre (MMF) prices fluctuated due to crude oil price volatility, with a lag during October by 2 per cent MoM. While imported purified terephthalic acid (PTA) prices fell by 2 per cent MoM following the crude oil price volatility partially, the domestic prices remained stagnant on the back of lower supplies.

Ind-Ra expects MMF volumes to take longer to recover than cotton/blended spinners on account of the domestic preference to cotton over MMF. The players should start benefitting from low raw material prices in the third quarter (Q3) of this fiscal; however, players with healthy liquidity have resumed to pre-COVID production levels.

Fabric and apparel prices declined during September-October, led by an oversupply and weak prices. While cotton knitted fabrics production remained at an all-time high of around 16.6 million tonnes during August-September on account of an increased export and domestic demand, cotton woven fabrics production remained weak.

Fabric exports recovered with over 24 per cent growth in August-September. Ind-Ra continues to expect apparel prices to remain benign in the second half of this fiscal to entice inventory liquidation. Fabric players reported substantial operating losses compared to readymade garment players due to the closure of retail stores, malls and would remain weak for the second half, given the social distancing and fear of a second-wave of pandemic.

Readymade garment players managed to partially recover in the second quarter, reporting a weaker performance on a YoY basis.

Home textiles players continued to witness a sharper recovery among textile segments during the second quarter of this fiscal, by being part of wellness and hygiene products. Wholesale price index levels for September remained steady compared to August.

Production levels of key players are running at pre-COVID levels and at cent per cent for key segments like spun-lace, wipes and rugs.

The rating agency continues to expect a healthy and sustained demand improvement for home textile players in their export markets, led by the restoration of retail store inventories. It expects the players to increase their already strong market share in terry towels and bed linens, led by supply chain diversification away from China.

Source:Fibre2Fashion News Desk (DS)

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Misplaced focus: Surging export aids fail to boost shipments

Even as India’s export promotion schemes have been under attack for several years in multilateral forums for their subsidy content, these have also been a disincentive for firms to grow. Consider the latest variant, the Merchandise Exports From India Scheme (MEIS), which is already on its way out. Between FY17 and FY19, while exports covered under the MEIS grew just 14.2% in rupee term, non-MEIS shipments rose at a much faster pace of 31.6%, according to an FE analysis.

The below-par performance of the scheme can also be gauged from the fact that while MEIS beneficiaries comprised a vast majority of the exporter community (86% in FY18), their exports stagnated at just about half of the overall outbound merchandise shipments. The overwhelming number of MEIS beneficiaries has obviously been on account of the scheme’s misplaced focus on small and marginal ones in ‘job-sensitive sectors”.

It is worth noting that MEIS benefits (export scrips) more than doubled to Rs 39,298 crore in FY19 from Rs 18,117 crore in FY17.

Not for nothing that the government is shifting away from the long-standing MSME bias in its export strategy; its new product-linked incentives (PLI) – which are estimated to be worth Rs 2 lakh crore over a five-year period – are targeted mainly at large corporations in 13 critical sectors with massive export potential.

Exports from seven key labour-intensive sectors, ranging from textiles & garments to agriculture and gem & jewellery, barely grew — from $120.6 billion in FY17 to $124.6 billion in FY19. In FY20, these exports, in fact, dropped to just $114.1 billion.

The Niti Aayog has argued that the MEIS is a “highly-fragmented” scheme that doesn’t incentivise high-volume and high-value production, nor does it boost exports significantly. Finance ministry officials, too, have endorsed such a view.

The lacklustre performance of the MEIS has warranted a change in the way the compensation structure for boosting exports is designed. The government has already announced that it will roll out the so-called Remission of Duties and Taxes on Exported Products (RoDTEP) scheme from January 2021 to replace the MEIS and make the outbound shipments zero-rated. The scheme is essentially aimed at reimbursing even embedded taxes (that are not subsumed by the GST) paid on inputs consumed in exports.

The production-linked incentives are aimed at promoting manufacturing and exports in 13 sectors, including electronics/mobile phones, auto, battery cell, pharma, telecom networking, food and textiles. Through the PLI schemes, the government also marks a renewed focus on Make in India and a shift away from a long-standing MSME bias; while local manufacturing is the ostensible objective, there will be implicit impetus for large-scale exports.

The Niti Aayog, which has mooted the PLI concept, has been pitching for boosting exports through the creation of champion sectors under the PLI schemes.

The broader export community, meanwhile, feels that while a focussed approach may be desirable, the government must not leave out a vast number of exporters in the lurch by scrapping incentives to them once MEIS is phased out. Therefore, the RoDTEP must not just be launched once the MEIS is scrapped but its coverage must not be narrowed. After all, exports must be zero-rated, in sync with global best practices and the incentives, be it under the MEIS and the RoDTEP, aren’t strictly subsidies, they argue.

A Niti Aayog proposal in August had pegged the potential outgo under the proposed RoDTEP scheme to just about Rs 10,000 crore a year. Niti had suggested that once the RoDTEP scheme replaced the MEIS, the annual “savings” of Rs 40,000 crore be utilised to roll out PLI schemes in “sectors of strength to create global champions”.

But Niti’s estimate of the RoDTEP outlay is only a fraction of the annual benefits of Rs 50,000 crore that the government had envisaged when the government had announced this scheme in September last year.

Of course, a committee set up under former commerce secretary GK Pillai to suggest RoDTEP benefit rates is yet to finalise its report. However, exporters say any massive reduction in either the coverage of sectors or the reimbursement rates under this scheme may dent export recovery, especially at a time when external demand remains fragile in the wake of the Covid-19 pandemic.

SOURCE: The Financial Express

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As world signs mega FTAs, India simply can't afford to turn protectionist

After almost a decade of “negotiating with blood, sweat and tears,” as Malaysia’s trade minister put it, the Regional Comprehensive Economic Partnership was signed this weekend at the conclusion of an Association of Southeast Asian Nations summit. Fifteen countries — all of ASEAN, alongside Japan, South Korea, Australia, New Zealand and China — will be part of this giant trading bloc. Sixteen countries were due to join, of course, until India withdrew from negotiations.

The Indian government had at least one good reason for staying out of RCEP. New Delhi’s consistent geo-economic goal has been to prevent Asian supply chains from growing more China-centric than they already are. To the extent that RCEP will reinforce China’s central position in the web of intra-Asian trade, and membership would have signaled India’s willingness to join a new Beijing-led economic order, Indian doubts about the agreement were justified.

Sadly, those factors probably aren’t what really motivated India’s withdrawal. We have to face facts: In spite of its pro-globalisation, business-friendly rhetoric, the current Indian government has turned sharply protectionist in the past few years, reminiscent of the closed, faux-socialist 1970s when imports were strictly controlled and growth slowed to a crawl. Recent federal budgets have seen the government raise import tariffs across the board, something that hasn’t been done since the country began opening up to the world in 1991.

This is why, incidentally, so many observers are worried by the government’s latest buzzword: “self-reliant India” or, in Hindi, “aatmanirbhar Bharat.” Self-reliance is a concept with a long history in India, running from Mahatma Gandhi’s resistance to foreign manufactured goods in the 1930s to strict import substitution in the decades before 1991. Autarky is almost a reflex for Indian bureaucrats and politicians, who deep down remain convinced that if you buy something from abroad you are somehow cheating your own country.

When India walked out of RCEP, those bureaucrats and politicians justified the decision by claiming that previous free-trade agreements had “hurt” India. This has been the government’s attitude since it was first elected in 2014; shortly after it took office, it launched a re-evaluation of every free-trade agreement India had signed. Officials — and lobby groups from politically powerful domestic industries — argue that several of those trade pacts wound up, in the first few years, increasing imports into India rather than exports from India.

There are, of course, two problems with this line of reasoning. First, as the government itself has pointed out, Indian exporters simply aren’t as aware of free-trade benefits as they should be. (Last year, the government set up an “FTA utilisation mission” to correct that.)

Second, just because imports have increased more than exports doesn’t mean India has been hurt. India is Indians and, through free trade, Indians have gained access to more and cheaper goods. In the past, the volatile price of edible oils, for example, used to be a constant source of tension for Indian households and one of the most important drivers of consumer price inflation. Thanks to easy imports, that’s no longer true.

India simply can’t afford to turn its back on trade in this way. For one thing, domestic demand is not great enough to power India’s growth. The Indian market may be huge, but, as Modi’s former chief economic adviser put it in a recent co-authored op-ed, “foreign demand will always be bigger than domestic demand,” which means India needs to resist “the misleading allure of the domestic market.”

At the same time, whether we like it or not, the global trading order has been disrupted by the pandemic and by U.S.-China tensions. New supply chains are being explored; new connections are being made; trading infrastructure that will last for decades is being built. If India misses out on attracting some of that infrastructure, it could be locked out of several years of growth.

While it may be hard for India to rejoin RCEP, there are other free-trade agreements worth exploring. One with the European Union is overdue, for example. Geopolitical considerations, India’s history and economic common sense all say that’s a deal worth signing. If India holds back, somebody else will benefit; Vietnam signed its own pact with the EU this year. Protectionism, not openness, is what will really “hurt” India.

SOURCE: The Business Standard

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Labour Min gives 45 days for feedback on Social security code draft rules

The Ministry of Labour and Employment has sought feedback from stakeholders on draft rules under the Code on Social Security, 2020.

The feedback is required to be provided within 45 days from November 13, 2020.

Union Ministry of Labour and Employment has notified the draft rules under the Code on Social Security, 2020 on November 13, 2020, inviting objections and suggestions, if any, from the stakeholders, the ministry said in a statement.

The draft rules provide for operationalisation of provisions in the Code on Social Security, 2020 relating to Employees' Provident Fund Organisation (EPFO), Employees' State Insurance Corporation (ESIC), gratuity, maternity benefit, social security and cess in respect of building and other construction workers, social security for unorganised workers, gig workers and platform workers.

 

The draft rules also provide for Aadhaar-based registration including self-registration by unorganised workers, gig workers and platform workers on the portal of the Central government, the statement said.

The Ministry of Labour and Employment has already initiated action for development of such portal.

For availing any benefit under any of the social security schemes framed under the Code, an unorganised worker or a gig worker or platform worker shall be required to be registered on the portal with details as may be specified in the scheme, it said.

The rules further provide for Aadhaar-based registration of building and other construction workers on the specified portal of the Central government and the state government or the State Welfare Board.

When a building worker migrates from one state to another, he shall be entitled to get benefits in the state where he is currently working, and it shall be the responsibility of the Building Workers Welfare Board of that state to provide benefits to such a worker, the statement added.

Provision has also been made in the rules regarding gratuity to an employee who is on fixed-term employment.

The rules also provide for single electronic registration of an establishment, including cancellation of the registration in case of closure of business activities.

Provision has also been made regarding manner and conditions for exiting of an establishment from EPFO and ESIC coverage, it said.

The procedure for self-assessment and payment of cess in respect of building and other construction workers has been elaborated in the rules.

For the purpose of self-assessment, the employer shall calculate the cost of construction as per the rates specified by the State Public Works Department or Central Public Works Department or on the basis of return or documents submitted to the Real Estate Regulatory Authority, the statement said.

The rate of interest for delayed payment of such cess has been reduced from 2 per cent every month or part of a month to 1 per cent.

Under the existing rules, the Assessing Officer has the power to direct that no material or machinery can be removed or disturbed from the construction site. Such power for indefinitely stopping of construction work has been withdrawn in the draft rules, it added.

Further, under the draft rules, the assessing officer can visit the construction site only with the prior approval of the secretary of the Building and Other Construction Workers Board.

The rules have also provide for the manner of payment of contribution by the aggregators through self-assessment.

The stakeholders can submit objections and suggestions on the rules within a period of 45 days from the date of notification of the draft rules, the statement said.

SOURCE: The Business Standard

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Finance Ministry seeks Ideas/Suggestions/Proposals for Annual Budget 2021-22

Over the years, the Ministry of Finance has been holding pre-budget consultations in North Block with Industry/Commerce Associations, Trade Bodies and Experts to seek ideas for the Annual Budget. Owing to the pandemic situation, the Ministry has received suggestions from various quarters for holding pre-budget consultations in a different format. It has accordingly been decided to create a dedicated email to receive suggestions from various Institutions/Experts. A specific communication to this effect will be sent shortly.

It has also been decided to make the Annual Budget 2021-22 consultations more participatory and democratic by taking it closer to the people of India. Government has launched a micro-site (online portal) on MyGov platform which will go live on15th November 2020 to receive ideas for the budget. General public in their individual capacity need to register on MyGov to submit their ideas for Budget 2021-22. The submissions will be further examined by the concerned Ministries/Departments of Government of India. If required, individuals may be contacted on the email/mobile no. provided at the time of registration to seek clarification on their submissions. The portal will remain open until 30th November 2020.

SOURCE: PIB

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INTERNATIONAL

Yarn manufacturing company FULGAR to produce new Q-SKIN® powered by AMNI® VIRUS-BAC off yarn in association with the RHODIA-SOLVAY group

FULGAR, European distributor and producer of AMNI® VIRUS-BAC OFF technology collaborated with the RHODIA-SOLVAY group for the arrival of the new Q-SKIN® powered by AMNI® VIRUS-BAC off yarn with antiviral and antibacterial.  Amid the lingering threat posed by Covid, the return to offices and schools has created an exponentially risisng demand for garments given anti-bacterial and antiviral protection treatments. This demand among consumers and workers has led many manufacturing companies in Italy and the rest of Europe to prioritise such products.

This is the background to the arrival in Europe of the new Rhodia-Solvay yarn. The Brazilian group has chosen the know-how and expertise provided by Fulgar, a centre of Made in Italy excellence in the development and manufacture of innovative man-made yarn, for the production and European distribution of AMNI® VIRUS-BAC OFF technology, the new antiviral and anti-microbial polyamide yarn introduced in Europe by Fulgar under the name of Q-SKIN® powered by AMNI® VIRUS-BAC OFF.

Developed in record time by the Rhodia-Solvay research laboratories in Paulínia and Santo André, Brazil, this extraordinary polyamide yarn acts against bacterial growth and virus transmission. These properties are the result of antiviral and anti-bacterial agent permanently incorporated into the polymer matrix. Electrical affinity with the proteins present in the external structure of the virus enables this agent to prevent the fabric from becoming a host surface enabling the spread of the harmful viruses and bacteria and reducing the risk and speed of contamination. The yarn’s antiviral properties have been tested by an independent laboratory in line with the international textile protocols set out by ISO 18184 standards regarding the determination of the anitiviral activity of textiles.

In the Q-SKIN® powered by AMNI® VIRUS-BAC OFF polyamide the antiviral properties combine with the anti-bacterial properties – certified according to international AATCC100 textile standards – to provide a permanent effect.

The antiviral and anti-bacterial properties of the Q-SKIN® powered by AMNI® VIRUS-BAC OFF polyamide are permanent and uniform, providing benefits for garments that, in contrast to post treatments, remain unaffected even after frequent washes. It provides the same benefits as standard polyamides in terms of softness, thermal comfort, breathability, ease of maintenance and rapid drying.

All the advantages:

  • THE TECHNOLOGY INHIBITS the enveloped viruses (influenza, herpes and the new Coronavirus) and without the envelope, helping to avoid the retransmission of viruses from textile surfaces
  • BLOCKS THE CROSS CONTAMINATION of viruses and bacteria on textile surfaces, thanks to the antibacterial agent present in the polymer matrix
  • INHIBITS BACTERIA, ensuring greater protection
  • NO chemical migration from the fabric to the skin and the environment
  • INCREASES the useful life of fabrics and garments

BREATHABILITY

Q-SKIN® powered by AMNI® VIRUS-BAC OFF is soft and breathable. Its special technology copes efficiently with body moisture, leaving a pleasant sensation of freshness and making its wearer remarkably comfortable. *UNI EN ISO 62

WASHING RESILIENCE

The antiviral and antibacterial activities of Q-SKIN® powered by AMNI® VIRUS-BAC OFF polyamide are permanent, even after unlimited washing cycles, keeping the fuctionality and offering long life to textile articles.

Source:Textile Focus

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Burberry Group H1 FY21 revenue falls 31% to £878 mn

Burberry Group plc, a British luxury fashion house, has announced its first half (H1) results for fiscal 2021 that ended on September 28. Revenue for the six-month period declined 31 per cent to £878 million compared to revenue of £1,281 million in same period previous year. Attributable profit for H1 FY21 fell to £48 million (H1 FY20: £150 million).

“Though the momentum we had built was disrupted by Covid-19 at the start of the year, we were quick to adapt, while making further progress against our strategy. While the virus continues to impact sales in EMEIA, Japan and South Asia Pacific, we are encouraged by our overall recovery and the strong response to our brand and product, particularly among new and younger customers,” Marco Gobbetti, chief executive officer of Burberry Group, said in a press release.

Gross profit during the first half of FY21 slipped to £598 million (£865 million). Operating profit plunged to £88 billion (£202 million). Group’s profit before taxation was £73 million (£193 million).

Regionally, sales in Asia Pacific region decreased 12 per cent to £439 million (£500 million). Sales in EMEIA came down 49 per cent to £251 million (£487 million). While, in Americas sales fell 37 per cent to £170 million (£270 million).

“In an environment which remains uncertain, we will continue to deliver exceptional product, localise plans and shift resources, while leveraging the strength of our digital platform to inspire customers,” Gobbetti said.

Source:Fibre2Fashion News Desk (JL)

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Trade Winds: RCEP pact clinched, seen as coup for China; India may join later

China and 14 other countries agreed on Sunday to set up the world’s largest trading bloc, encompassing nearly a third of all economic activity, in a deal many in Asia are hoping will help hasten a recovery from the shocks of the pandemic, AP reported from Hanoi. The Regional Comprehensive Economic Partnership, or RCEP, was signed virtually on Sunday on the sidelines of the annual summit of the 10-nation Association of Southeast Asian Nations.

Tough India surprised participants late last year by abandoning the agreement, the partners have made it clear New Delhi is welcome to rejoin the pact. Prime Minister Narendra Modi said he pulled out over concerns about how RCEP would affect the livelihoods of Indians, particularly the most vulnerable. “The clause allowing India to join at a later date is symbolic and shows China’s desire to build economic bridges with the region’s third-largest economy,” Bloomberg quoted Shaun Roache, Asia Pacific chief economist at S&P Global Ratings, as saying. Malaysia recognizes the difficulties India is facing, Prime Minister Muhyiddin Yassin said in a speech on Sunday, it added.

The pact will which cover 2.2 billion people with a combined GDP of $26.2 trillion. It is expected to give a fillip to the partner economies by reducing tariffs, strengthening supply chains with defined rules of origin, and framing of new e-commerce rules.

The accord is also a coup for China, by far the biggest market in the region with more than 1.3 billion people, allowing Beijing to cast itself as a “champion of globalisation and multilateral cooperation” and giving it greater influence over rules governing regional trade, Gareth Leather, senior Asian economist for Capital Economics, said in a report.

Among the benefits of the agreement include a tariff elimination of at least 92% on traded goods among participating countries, as well as stronger provisions to address non-tariff measures, and enhancements in areas such as online consumer and personal information protection, transparency and paperless trading, according to a statement issued on Sunday by Singapore’s Ministry of Trade and Industry. It also includes simplified customs procedures while at least 65% of services sectors will be fully open with increased foreign shareholding limits.

 

Bloomberg added: “Whether RCEP changes regional dynamics in favor of China depends on the U.S. response, experts said. The agreement underscores how U.S. President Donald Trump’s 2017 decision to withdraw from a different Asia Pacific trade pact – the Trans-Pacific Partnership or TPP – diminished America’s ability to offer a counterbalance to China’s growing regional economic influence.”

According to AP, “The accord will take already low tariffs on trade between member countries still lower, over time, and is less comprehensive than an 11-nation trans-Pacific trade deal that President Donald Trump pulled out of shortly after taking office. Apart from the 10-member Association of Southeast Asian Nations, it includes China, Japan, South Korea, Australia and New Zealand, but not the US. (The bloc) is not expected to go as far as the European Union in integrating member economies but does build on existing free trade arrangements. The deal has powerful symbolic ramifications, showing that nearly four years after Trump launched his “America First” policy of forging trade deals with individual countries, Asia remains committed to multi-nation efforts toward freer trade that are seen as a formula for future prosperity,” AP reported.

It added: China’s official Xinhua News Agency quoted Premier Li Keqiang hailing the agreement as a victory against protectionism, in remarks delivered via a video link.Now that Trump’s opponent Joe Biden has been declared president-elect, the region is watching to see how US policy on trade and other issues will evolve.

Analysts are sceptical Biden will push hard to rejoin the trans-Pacific trade pact or to roll back many of the US trade sanctions imposed on China by the Trump administration given widespread frustration with Beijing’s trade and human rights records and accusations of spying and technology theft.

Critics of free trade agreements say they tend to encourage companies to move manufacturing jobs overseas. So, having won over disaffected rust-belt voters in Michigan and western Pennsylvania in the November 3 election, Biden is “not going to squander that by going back into TPP”, Michael Jonathan Green of the Centre for Strategic and International Studies said in a web seminar.

But given concerns over China’s growing influence, Biden is likely to seek much more engagement with Southeast Asia to protect US interests, he said.

The fast-growing and increasingly affluent Southeast Asian market of 650 million people has been hit hard by the pandemic and is urgently seeking fresh drivers for growth.

SOURCE: The Financial Express

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