Merchandise exports fell for the sixth straight month in May, plunging 20.19 per cent to $22.34 billion, compared with $28 billion in the corresponding period last year, owing to weak global demand and a fall in crude oil prices. Exports had declined 13.96 per cent in April and 21.06 per cent in March. But the headline number might be overstating the actual fall. Part of the decline is due to currency fluctuations. In rupee terms, exports declined 14.1 per cent in May. For the first two months of this financial year, exports contracted 17.21 per cent to $44.4 billion, compared with $53.63 billion in the year-ago period, according to data released by the Ministry of Commerce and Industry on Tuesday. India’s exports have been falling since December, the longest period of decline since 2009. The subdued global economy has hit exports of other countries, too. For China, however, exports fell only 2.5 per cent in May. The low global demand also hit India’s services exports, which fell for the second consecutive month in April. These exports declined 4.5 per cent year-on-year to $13.1 billion in April.
Merchandise imports stood at $32.75 billion in May, down 16.52 per cent compared with $39.23 billion in the corresponding month last year. As such, the trade deficit stood at $10.4 billion in May, against $11 billion in April. “The softening of the merchandise trade deficit in May relative to the year-ago period primarily benefits from the decline in the value of net oil imports and, therefore, conceals the continuing weakness in export momentum. The contraction in export of high value-added items such as engineering and electronic goods in May is a cause for concern,” said Aditi Nayar, senior economist, ICRA.
In April, India recorded a surplus in services, as imports stood at $7.32 billion, resulting in a trade balance of $5.7 billion, against $5.6 billion in the year-ago period.This will help India narrow its current account deficit (CAD) further. YES Bank chief economist Shubhada Rao cautioned against risks to CAD from rising oil prices and shrinking exports. She, however, said the deficit would remain at a comfortable level.In May, exports of petroleum, gems & jewellery, electronic goods and engineering products fell 59.10 per cent, 12.94 per cent, 17.08 per cent and 8.02 per cent, respectively. The decline in exports in May was broad-based and its growth was likely to remain weak, according to an analysis by CRISIL. “On the exports front, two segments that have primarily contributed to the decline in recent months are petroleum and gems & jewellery. While the decline in the former can largely be attributed to subdued oil prices, the weakness related to gems & jewellery exports signals lack of external demand,” said a report by YES Bank. It added 38 per cent of India’s jewellery exports were accounted for by the US and demand in that country would be subdued, as buyers would stay away due to concern over income growth and an impending rate increase by the US Federal Reserve later this year.
Exporters expressed concern at the decline in exports. “It is matter of serious and grave concern…The government should take note and act fast to arrest the decline,” said S C Ralhan, president and chief executive of the Federation of Indian Export Organisations. The government had announced a new foreign trade policy in April. In 2014-15, exports contracted 1.23 per cent to $310.5 billion from $314.4 billion the previous year. For April-May, overall imports stood at $65.8 billion, against $74.95 billion in the corresponding period last year, a fall of 12.21 per cent. Consequently, the trade deficit for the first two months of this financial year widened to $21.39 billion from $21.32 billion in the year-ago period. In May, gold imports rose 10.47 per cent to $2.42 billion from $2.19 billion in May 2014. However, economists expect demand for the commodity to moderate.
SOURCE: The Business Standard
The Gujarat government today said that a Chinese business association has decided to set up a textile industrial park in the state in near future. A delegation of China Association of Small and Medium Enterprizes Industry (CASMEI) met Gujarat Chief Minister Anandiben Patel at Gandhinagar and discussed various aspects related to the setting up of park in Gujarat, an official release said. The meeting between CASMEI delegation, led by its vice chairman Shen Gaohua and deputy secretary general Guo Zhixin, and Patel is the result of her recent China visit where state government's Enterprise iNDEXTb (industrial extension bureau) signed an MoU worth Rs 1.6 billion with CASMEI in the presence of Prime Minister Narendra Modi. Patel told the delegation that during her China visit, she was impressed with the Chinese model of industrial parks, where the selling points for the goods produced in the industrial park, are created within the park. She showed keen interest to replicate this business model in the upcoming industrial park in Gujarat, the release added. As per the release, Patel assured all the cooperation needed from the government in acquiring land as well as other permissions and facilities for the industrial park.
SOURCE: The Economic Times
Sale of khadi products have increased by over 60 per cent after Prime Minister Narendra Modi's appeal to buy atleast one khadi garment, MSME Minister Kalraj Mishra said today. "The appeal made by the Prime Minister in his radio address 'Mann Ki Baat' to buy atleast one khadi garment. As a result of the appeal, the sale of Khadi increased over 60 per cent," an official statement quoting the minister today said. On October 3 last year, Modi had advocated for use of khadi products as a homage to Mahatma Gandhi. He had impressed upon people to use at least one khadi product, may it be a handkerchief or even a bedsheet. Mishra said this while inaugurating the khadi denim exhibition here. He has also inaugurated Northeast PMEGP exhibition. Emphasising on the need to manufacture not only market oriented but also product oriented khadi, he said there is growing demand of khadi in foreign countries as well. The products displayed in the PMEGP exhibition are produced by the artisans of North East region.
SOURCE: The Economic Times
Ahead of the start of the two-day meeting of the Federal Open Market Committee (FOMC), the rupee weakened to a 21-month low despite the intervention of the Reserve Bank of India (RBI). The rupee might weaken further and touch 65 to a dollar if the the US Federal Reserve sounds hawkish, said foreign exchange market dealers. The rupee ended at 64.25, compared with its previous close of 64.17 a dollar after touching a low of 64.30. The rupee had opened at 64.08. It had touched 65.25 on September 6, 2013, when the currency was reeling under the fear of US tapering. In May 2013, Ben Bernanke, the then chairman of the US Federal Reserve, had hinted at tapering due to which the rupee had weakened significantly. “It is possible that the rupee may even touch 65 in the future. Today the supply of dollar was very less compared to that there was a lot of demand,” said Sandeep Gonsalves, forex consultant and dealer, Mecklai & Mecklai.
Foreign institutional investors (FIIs) have been selling domestic equities and even that is dampening sentiments for the rupee. So far this month, FIIs emerged as net sellers to the tune of Rs 3,671 crore. The situation on the debt buying front is different as FIIs bought debt worth Rs 9,384 crore on Monday and this was close to the buying last seen on August 20, 2014, worth Rs 16,072 crore.
According to Suresh Nair, director, Admisi Forex India, even the Greece crisis is putting pressure on the rupee. Though talks with Greece’s international creditors are stuck, anger and concerns are mounting in Europe about the outcome of the crisis. A Business Standard poll last week showed the rupee would touch 64.50 a month down the line. But Tuesday’s weakness has triggered the concern that the rupee might touch this level probably this week itself. “The reason why the US Fed should normalise monetary policy is that they are creating a huge moral hazard on the whole assumption that the central bank will always be there to support asset prices. There are very little reasons in front of the US Fed for not being hawkish because the economic growth in US is picking up,” said Anindya Banerjee, currency analyst, Kotak Securities. Though RBI is sitting on huge foreign exchange reserves, most of it is being saved for times when the US Fed starts with the actual rate hikes as volatility might increase more with rate hikes. The country’s foreign exchange reserves rose $239.4 million in the week ending June 5 to $352.71 billion, showed data released on Friday.
SOURCE: The Business Standard
A Rajya Sabha committee on Tuesday demanded greater clarity from the government on the one per cent additional tax, proposed over the Goods and Services Tax (GST) in the Constitution amendment Bill to benefit manufacturing states. Revenue department officials have assured the Rajya Sabha’s select committee members that the empowered committee of state finance ministers was seized of the matter and would be submitting its report in a month. An additional one per cent tax is proposed in the Bill to help manufacturing states. As GST is a destination-based tax system, manufacturing states such as Gujarat and Tamil Nadu have reservations over it. However, this tax to help GST might have a cascading effect since there is no provision of input credit. Recently, Chief Economic Advisor Arvind Subramanian criticised the provision, suggesting the government reconsider it. Meanwhile, Chairman of the empowered committee K M Mani submitted views of the states to the select committee, asking for full compensation to states for any loss due to proposed GST for first five years. The Constitution amendment Bill too provided for compensation, but with tapering from fourth year onwards. The Centre would give full compensation for the first three years, 75 per cent in the fourth year and 100 per cent in the fifth year, according to the Bill. The states within empowered committee are also divided over one per cent tax, meant for manufacturing states. The consuming states are opposed to the tax and its cascading effect.
The 21-member select committee also heard out representatives from industry association such as Nasscom and COAI. While, in principle, they were in support of the GST, several of their representatives raised the issue of the one per cent additional tax which is of major concern to non-manufacturing states, sources said. The committee members will next tour metropolitan cities of Kolkata, Chennai to get the views of the most important stakeholders of the GST-states on board. States are crucial for even enacting the Constitution amendment Bill as half of the 29 states have to approve the Bill, if passed by Parliament.
SOURCE: The Business Standard
The International Labour Organization (ILO) has flayed some of the recent labour reforms proposed by the Narendra Modi government, saying these would take away a chunk of workers from the protection of basic laws. As the trade unions' confrontation with the government is set to escalate, the ILO is helping them prepare a position paper on the recent labour law reforms, industrial relations and industry development. "For some time now, a concerted campaign by the government was on to create an impression that nearly 40 central and nearly 150 state labour laws were redundant. The labour reforms, trade unions have voiced, are aimed at making hiring and firing simpler and they are not devised to protect labour," said a draft concept note sent by the ILO to the central trade union leaders recently.
The ILO has invited various central trade unions leaders to its Delhi office on Thursday to present the final inputs of the position papers, incorporating their views. This would be followed by a national-level trade union conference on June 29-30 in Delhi where these position papers would be discussed in detail. The conference would be organised by the Bureau of Workers' Activities of the ILO, along with the Centre for Informal Sector and Labour Studies of the Jawaharlal Nehru University, Delhi. "The conference will discuss the trade union position papers on labour law reforms, industrial relations and industry development. The papers will be finalised, which will serve as a reference toolkit for the trade unions' future actions," said the invitation letter extended to five leaders of each trade unions, including the Bharatiya Mazdoor Sangh, the Indian National Trade Union Congress, and the Centre of Indian Trade Unions.
The ILO said instead of taking into account unions' recommendations to simplify the laws, a separate law for small-scale industries was proposed, exempting factories with 40 workers from the ambit of 14 labour laws. "This, in effect, has taken away a large chunk of workers from the protection of basic labour laws," said a draft concept note for the national trade union conference sent by the ILO. This is the first time the ILO has hit out at the Union government and highlighted the trade unions' concerns after a slew of labour law reforms were proposed. "Unions feel that they have not been sufficiently consulted on the process...The strong statements issued by all trade unions indicate there is not an iota of doubt in their minds about what these reforms are all about and who stood to gain from them," the draft note said. "Most of the new laws announced are not in favour of workers or unions."
In the last two months, the ILO has organised regional seminars with the unions as well, discussing the issues of the labour law reforms and understanding their perspective on the reforms. On March 31-April 2, a conference organised in Chennai was attended by 36 senior trade union leaders and on May 4-6, the regional meeting was attended by 24 union leaders. Recently, the Union labour ministry had proposed a slew of labour law changes, including allowing more flexibility to employers to retrench workers, restricting formation of trade unions and tightening norms for declaring a strike. The trade unions have unanimously opposed these and are set to go on a nationwide strike on September 2 against the proposals.
SOURCE: The Business Standard
The international crude oil price of Indian Basket as computed/published today by Petroleum Planning and Analysis Cell (PPAC) under the Ministry of Petroleum and Natural Gas was US$ 61.53 per barrel (bbl) on 16.06.2015. This was lower than the price of US$ 61.76 per bbl on previous publishing day of 15.06.2015.
In rupee terms, the price of Indian Basket decreased to Rs 3947.15 per bbl on 16.06.2015 as compared to Rs 3958.20 per bbl on 15.06.2015. Rupee closed weaker at Rs 64.15 per US$ on 16.06.2015 as against Rs 64.09 per US$ on 15.06.2015. The table below gives details in this regard:
|
Particulars |
Unit |
Price on June 16, 2015(Previous trading day i.e. 15.06.2015) |
Pricing Fortnight for 16.06.2015 (May 28 to June 11, 2015) |
|
Crude Oil (Indian Basket) |
($/bbl) |
61.53 (61.76) |
62.08 |
|
(Rs/bbl |
3947.15 (3958.20) |
3966.91 |
|
|
Exchange Rate |
(Rs/$) |
64.15 (64.09) |
63.90 |
SOURCE: PIB
India and Poland have discussed ways to boost economic ties besides aiming to more than double the bilateral trade to USD 5 billion by 2018 from USD 2.3 billion last year. Ways to enhance trade and investment between the two countries were discussed during the meeting of Joint Commission on Economic Cooperation in Warsaw. The meeting was co-chaired by Secretary in the Department of Industrial Policy and Promotion (DIPP) Amitabh Kant and Poland's Secretary of State, Ministry of Economy, Jerzy Pietreiwicz. Both sides "drew a blueprint for stepping up investments and identified a series of actions to raise trade from the 2014 level of USD 2.3 billion, to USD 5 billion by 2018," Commerce and Industry Ministry said in a statement today.
Kant invited Polish investors and asked them to look at programmes like Make in India and smart cities. He said India has become one of the most open economies in the world and it has relaxed FDI policy norms in sectors such as defence, infrastructure and railways. Kant stressed that India has created an enabling environment for foreign investors and was committed to providing hand-holding facilities to them. Further, the statement said that the three co-chairs of the newly created Joint Working Groups on Coal, IT and Food Processing, also presented the outcomes of their first meeting.
In coal and steel sector, both sides have drawn a roadmap to strengthen cooperation in areas such as thick seam underground coal mining, exploitation of highly gassy seams, developing clean coal technologies and transfer of technologies in deep coal mining from Poland to India. In the food processing sector, experts discussed market access, food processing technologies and research and development between scientific institutions. The Polish side showed interest in exporting the latest food processing machinery and technology to India, it said. In the IT and ICT sector, both sides identified areas to strengthen cooperation in entrepreneurship development and support; R&D and innovation in cloud computing; big data analysis; cyber-security, data protection, smart cities projects and accreditation of each other's courses.
SOURCE: The Economic Times
India is under pressure to allow e-commerce to be included in the regional comprehensive economic partnership (RCEP) agreement that it is negotiating with the 10-member Asean, Japan, China, South Korea, Australia and New Zealand. In last week’s negotiating round in Kyoto, most of the participating members, including the Asean countries, Australia and New Zealand, supported Japan’s proposal of bringing the e-commerce sector within the ambit of the negotiations, a government official told BusinessLine . India was also not able to convince other members to have low ambitions in the area of goods, with most members wanting steep duty cuts on a large number of items. It is important for India to ensure that not too many items are subjected to sharp duty cuts as the Indian industry is apprehensive of competition from cheap Chinese products. “Although India managed not to cave in to demands of bringing e-commerce into the ambit of the pact and lowering tariffs on most traded goods, the pressure is only going to grow at the Ministerial meeting of RCEP members in Kuala Lumpur next month,” the official said. Commerce and Industry Minister Nirmala Sitharaman is likely to attend the meeting, which starts on July 13.
The RCEP seeks to lower tariffs on goods, liberalise trade in services, ease flow of investments in the region and also put in place standard intellectual property rules. When the pact is implemented, the RCEP members could become the largest trading bloc in the world. Earlier this year, Japan floated a paper on liberalising the e-commerce sector as part of the pact. India does not allow FDI in business-to-consumer e-retail, but allows 100 per cent FDI in business-to-business e-commerce. “There are a number of Asean countries such as Vietnam and Indonesia that do not individually favour FDI in e-commerce, but at the Kyoto meet, the Asean group as a whole supported its inclusion,” the official said. China spoke neither in favour nor against the move. India argued that it does not have domestic rules for allowing FDI in e-commerce and, therefore, cannot participate in any negotiations that could lead to opening up of the sector. However, its views did not meet with much sympathy, the official added. New Delhi also fought with other members to keep to a minimum the number of goods on which duties would be reduced substantially. It is risky for India to agree to a large list of items for duty cuts as the “deviations’’ that the RCEP would allow to shield certain goods coming from select countries against duty cuts may not be an effective tool to protect a large number of items.
SOURCE: The Hindu Business line
Ethylene market was assessed flat as sluggish trading continued but prices were up in the week ended 12 June 2015 and the diverge trend continued between NE and SE Asia. European spot prices fell as bearish sentiment worked on both supply and demand while derivative, particularly LDPE saw its first fall in three months. In US, ethylene spot slipped as Dow resumes production at Louisiana facility. During the week, paraxylene prices firmed up but fluctuated on sluggish crude oil market and weakening PTA values. In Europe, paraxylene spot rose on firmer crude while June contract price remained unchanged from May leaving spot prices at a 15 per cent discount to ECP. US paraxylene spot tracked Asia hike while the spread between mixed xylene and paraxylene remained negative.
Asian MEG markets were under correction from previous week's bullish rebound as players were mulling the effect of waning polyester demand and reduced operating rates in China’s polyester and PET plants on feedstock MEG and PTA spot prices. European MEG price was stable amid short supply as force majeure continued while downstream derivatives exerted bearish influence on the market. In US, spot MEG price held stable on the week, as fundamentals remained consistent and interest in exporting to Europe increased while supplies were seen tightening. PTA prices moderated in Asian markets as the spate plant issues subsided and attention turned to waning demand for PET and polyester. In Europe, PTA price remained unchanged for the third consecutive week. Polyester chip markets fluctuated as raw material pricing tended to be in uncertain direction.
Sustained weakness in semi dull chip market led to the drop in offers in China amid insipid trading. Both continuous polymerised semi dull and super bright filament grade chip were cheaper in the week of 12 June. Polyester filament yarn markets were quiet prima facie, but pressure existed on producers who intended to expand sales and cut inventory by offering discounts on firm deals. The pressure was also caused by weak cost and limited buying. In India, POY market was range bound and producers pegged offers largely stable. In Pakistan, traders pegged offers for DTYs stable, and a few specs were offered lower. PSF markets were on a decline in China and turned bearish on the whole during the week. Producers pegged most offers stable, and raised a few specs. Prices in India and Pakistan rolled over further dampening market outlook.
SOURCE: Yarns&Fibers
In Vietnam, presently about 200 foreign fashion brands exist holding major 60 percent of the domestic market share. The bestsellers are mid-tier ones such as Giordano and Bossini and high-end ones bearing CK, Mango and D&G brands. Many Vietnamese brands have scaled down their operation in recent years because of an unsatisfactory business performance. For many years, Vietnamese fashion brands have been struggling against Chinese imports and nowadays, they have to compete ferociously with Thai brands in the market segment for average income earners and luxury brands from Europe, the US, Japan and South Korea. Foci, a brand of Nguyen Tam Fashion Company, had opened 60 fashion brands throughout the country, eight years after it debuted in 1999. However, the number have reduced gradually in the last three years. Ninomaxx, a well-known fashion brand for youth, has cut the number of shops from 200 to 50. The closing of a series of Ninomaxx shops in 2013 triggered the rumor that the company was about to go bankrupt. Even high-end fashion brands, which were seen as immune to the effects of recession, have also reported a slowdown in sales. Nguyen Thi Dien, general director of An Phuoc Company, admitted that there were many shops with very low sales, but An Phuoc still must maintain them to polish the image of the brand.
Despite great efforts made, Vietnamese businesses still find it difficult to compete with foreign brands. Canifa, a brand of Hoang Duong Trade & Service Company, is an example. Canifa turned up in the domestic market in 1997 as a brand of wool-made products for domestic consumption and export. The brand made a breakthrough in 2014 when it launched many products into the market with diverse designs. Canifa’s products have become a favorite in the domestic market. However, Canifa, starting as a wool product maker, cannot develop strongly because its products can be sold only in autumn and winter, while Canifa shops are deserted in summer. According to branding expert, if Vietnamese business focuses only on making seasonal products, its production costs will be high, and they will not be able to compete with other rivals, especially foreign brands.
SOURCE: Yarns&Fibers
Pakistani commerce Minister Khurram Dastgir Khan has said that Islamabad is negotiating free trade agreements (FTAs) with Thailand, Turkey, and Korea in search of new markets to boost exports, according to media reports. His comments to the media came after a meeting with Pakistan Carpet Manufactures and Exporters Association (PCMEA) and All Pakistan Textile Mills Association (APTMA). The minister assured the carpet industry as well as the textile exporters of full support in restoring the zero-rating sales tax regime and expeditious clearance of refund claims in order to give a boost to exports. “The export-oriented sector is the bread winner for the country and the government is trying its best to facilitate it,” Khan said. He said export diversification was widely recognised as a positive trade policy objective in sustaining the economic growth. He said the ministry realises the need to expand export markets and enhance its share in regional trade. “Pakistan has signed free trade agreements with China, Sri Lanka and Malaysia. There are also ongoing Free Trade Agreement discussions with Thailand, Turkey and Korea,” he said.
The minister highlighted major reforms that the government intended to undertake to radically enhance the competitiveness of Pakistani products. The far-reaching structural reforms, and stabilisation measures carried out in the past two years have put the economy on the right track. The minister said that in order to improve transparency, enhance competitiveness and remove anti-export bias, the commerce ministry and Federal Board of Revenue (FBR) have undertaken a tariff rationalisation exercise. APTMA chairman SM Tanveer said that billions of rupees of textile exporters were blocked in sales tax and customs rebate and other schemes introduced in the textile policy for 2009-14. He said the zero-rating sales tax facility was intended to save them from the hassle of claiming refunds. Pakistan’s textile exports could soar to $25 billion if the government took the stakeholders on board and framed policies in consultation with them, Tanveer added.
SOURCE: Fibre2fashion
Pakistan’s national tariff commission (NTC) has initiated an inquiry on import of pure terephthalic acid (PTA) in order to increase custom duty from four to five per cent, say media reports. According to details, the applicant, M/s Lotte Chemical Pakistan Ltd, a manufacturer of PTA, approached the NTC and requested to increase the customs duty on the import of PTA from four per cent to five per cent. The request is based on the grounds that the applicant is the only manufacturer of PTA in Pakistan. At present PTA is subjected to customs duty of four percent, which does not provide the required protection to the domestic industry, as the landing cost of imported PTA decreased during 2014. The industry margins at international prices of PTA and its raw materials have significantly declined due to huge oversupply of PTA in Asia.
New production capacities installed in China, India and other countries are based on the latest technology and have much lower cost of production, which have contributed towards reduction in industrial margins, which are not likely to return to previous level in the short term. On the other hand, the conversion cost of the PTA has increased due to increase in the energy cost. According to a public notice dated June 11, 2015, NTC has initiated an inquiry and would welcome views, suggestions and proposals from all parties having an interest in the business relating to or associated with the exports, manufacturing, marketing and use of PTA. A public hearing on the issue is scheduled to be held on June 22, the reports said.
SOURCE: Fibre2fashion
