|
Item |
Price |
Unit |
Fluctuation |
|
PSF |
1122.24 |
USD/Ton |
0% |
|
VSF |
2125.51 |
USD/Ton |
0% |
|
ASF |
2471.99 |
USD/Ton |
0% |
|
Polyester POY |
1069.19 |
USD/Ton |
0% |
|
Nylon FDY |
2733.26 |
USD/Ton |
0% |
|
40D Spandex |
5948.86 |
USD/Ton |
0% |
|
Nylon DTY |
2664.93 |
USD/Ton |
0% |
|
Viscose Long Filament |
1270.16 |
USD/Ton |
-0.63% |
|
Polyester DTY |
2958.35 |
USD/Ton |
0% |
|
Nylon POY |
5940.82 |
USD/Ton |
0% |
|
Acrylic Top 3D |
1345.73 |
USD/Ton |
0% |
|
Polyester FDY |
2524.25 |
USD/Ton |
0% |
|
30S Spun Rayon Yarn |
2733.26 |
USD/Ton |
0% |
|
32S Polyester Yarn |
1784.66 |
USD/Ton |
0% |
|
45S T/C Yarn |
2877.96 |
USD/Ton |
0% |
|
45S Polyester Yarn |
1977.59 |
USD/Ton |
0% |
|
T/C Yarn 65/35 32S |
2427.78 |
USD/Ton |
0% |
|
40S Rayon Yarn |
2910.12 |
USD/Ton |
0% |
|
T/R Yarn 65/35 32S |
2620.71 |
USD/Ton |
0% |
|
10S Denim Fabric |
1.13 |
USD/Meter |
0% |
|
32S Twill Fabric |
0.95 |
USD/Meter |
0% |
|
40S Combed Poplin |
1.05 |
USD/Meter |
0% |
|
30S Rayon Fabric |
0.76 |
USD/Meter |
0% |
|
45S T/C Fabric |
0.77 |
USD/Meter |
0% |
SOURCE: The Global Textiles
Note: The above prices are Chinese Price (1 CNY = 0.16078 USD dtd. 11/08/2015)
The prices given above are as quoted from Global Textiles.com. SRTEPC is not responsible for the correctness of the same.
A three-member faculty team from UK consisting of Carswell Elaine, Thomson Sandra and Wood Anne from Glasgow Kelvin College is on an exchange visit to Government Polytechnic College for Women, Gujjangundla, to share their knowledge and experience in fashion designing and also explore the Indian apparel and textile designs. The five day visit has been made possible after the Government Polytechnic College for Women, Community College, here has entered into a Memorandum of Understanding (MoU) with Glasgow Kelvin College, UK, as part of a community college project under the UK-India Education Research Initiatives (UKIERI).
The UK India Education and Research Initiative (UKIERI) was started in April 2006 with the aim of enhancing educational links between India and the UK. In the last five years, the UKIERI has played a pivotal role in establishing a change in the educational relations between the two countries. Diploma and graduate Courses in garment designing and technology are being offered to students (girls) who pass Class 10 in the college since 2013. A six-month diploma course is also offered in the academic year 2015-2016. The team from UK evinced a keen interest in learning about the textile techniques, styles of printing, various zardosi works and Indian traditional embroidery works. Head, Department of Garment Technology and Coordinator of Community College, B. Nagamani said that they have also taken them around a few apparel and textile units in and around Guntur. The team began their visit by seeing an exhibition of various fashion designs organized by the students of community college. Appreciating the students and faculty members for coming up with innovative designs, the UK team said that traditional Indian designs were unique and were a blend of tradition and modernity. Six polytechnic colleges in Andhra Pradesh and Telangana have been enrolled in the community college programmes in fashion designing, garment technology, construction and industry funded by the respective governments. All India Council for Technical Education (AICTE) is the sponsor for colleges in India.
SOURCE: Yarns&Fibers
About 500 mills affiliated to South India Spinners Association (SISPA) have decided not to sell or deliver yarns for one week from third week of this month to avoid the traders from creating a situation to source yarn at lower prices. The decision, applicable only for this month, was taken at an emergency meeting to discuss the crisis facing the entire textiles industry, SISPA president C Varatharajan told reporters here today. In difficult times of producers, some yarn traders have been found to take undue advantage by quoting less prices for certain varieties of yarns, thus creating a panic situation to source yarns at lower prices, which affected mills' realisations, Varatharajan said.
Besides, to bring the attention of the Centre and state governments to understand the difficulties faced by industry and to extend appropriate support through policy decisions to the textile industry, all member mills have agreed to a one day production stoppage, date of which will be announced in consultation with other associations. The spinners have been finding it difficult to sell at profitable prices due to frequent fluctuations in cotton prices, yarn price depreciation due to piling up of stocks caused due to closure of dyeing units in certain North Indian processing centres, high cotton prices, inconsistent Polyester Fiber supplies, Varatharajan said. He added that due to these factors, a large number of spinning mills across Tamil Nadu are faced with the burden of carrying huge quantities of yarn stocks. One of the reasons for the difficulties faced by spinning mills was inconsistent textile policies of the central government, he said, requesting the government to frame an industry-friendly policy.
SOURCE: The Economic Times
India Ratings and Research (Ind-Ra) said India's exports which have contracted for seven straight months until June 2015 are likely to come under further pressure from Chinese exports, after Chinese economy which has high trade linkages to growth, in a surprise move devalued its currency. However, the near 2% devaluation of the Yuan alone is unlikely to help Chinese exporters faced with rising surplus capacity and moderating global demand. Although the People's Bank of China has stated that this is a one-off move, however, history shows that currency devaluations are followed by a series of such moves.
China is also among the top five countries for Indian exports and India's exports to China declined 19.5% y-o-y to $11.9bn in FY15. Items whose exports were over $1bn included cotton, copper and its articles, mineral fuels and oils and organic chemicals. Chinese demand for Indian goods is likely to contract further due to the decline in the overall demand in the world's second largest economy. Indian corporates have been setting up shop in China to explore growth opportunities and 36 Indian companies have subsidiaries or representative offices for doing business in various provinces of China, mainly Beijing, Shanghai and Guangzhou. Among the large corporates are Reliance, Tata, Infosys, Satyam, Lupin, Ranbaxy, Aurobindo, Raymond, SBI, Essel packaging, Jindal Strips. While the threat to these companies isn't apparent, the overall slowdown is likely to take a toll on companies which have links to the Chinese economy.
SOURCE: The Economic Times
China's unexpected decision to devalue the yuan in a bid to boost sluggish overseas sales has come at a particularly bad time for India, experts said. It's also raised the possibility of a currency war as countries battle for a share of the slow-growing global export market. India's exports have contracted for the past eight months amid an erosion of competitiveness, impacting domestic recovery and also potentially threatening the Narendra Modi government's Make in India programme. This aims to turn India into an export-led manufacturing centre to create jobs, lift incomes and hasten growth.
On Tuesday, China's central bank cut the yuan's daily-fixing rate by a record 1.9%, leaving Indian exporters a worried lot. "This is not good news for Indian exports. This will further dent the competitiveness of Indian exports," said Ajay Sahai, director general and CEO of the Federation of Indian Export Organisations lobby group, echoing frustrations over the "oneoff depreciation" by the Chinese central bank that has taken the yuan to a three-year low. "It will not just hurt Indian exports to China but largely to third countries. India already has a trade deficit of close to $50 billion with China," Sahai said. Finance secretary Rajiv Mehrishi said the move seems to suggest that China is moving toward a flexible exchange rate. "In my opinion, it should have some impact on our exports. Exports from China would be cheaper," he said, adding that it was difficult to quantify the impact.
Companies see the move squeezing margins. "It could increase margin pressure on India's exports where we compete with China," said Anil Bhardwaj, secretary general, Federation of Indian Small and Medium Enterprises. The Chinese central bank devalued the yaun after data showed growing trouble for the world's second biggest economy that has been hit hard by the near 15% trade-weighted appreciation over the past one year. China's exports fell 8.3% in July suggesting further weakness in the economy that's likely to grow at a 25-year low of below 7% this year. Attempts to revive the Chinese economy through devaluation spells trouble for everybody else. India is battling a loss of competitiveness because of the relative appreciation of its currency against those of its competitors. "Today's move also has significant implications for the rest of the region. To a large extent, the CNY (yuan) operates as a regional anchor, limiting the ability of the other regional currencies to fall against the US dollar," said Richard Illey, chief economist, emerging markets, BNP ParibasBSE -1.56 %. Sonal Varma, executive director and India economist at Nomura, said the impact will depend on future action. "If it's a one-off move then besides some short-term impact it would not have much effect. One day's move would not change the dynamics," she said. "If it's the start of a trend then at the margin it would start eroding India's competitiveness." HDFC Bank's chief economist Abheek Barua expects some sort of currency sparring. "We would need to ensure that we don't overreact but keep on intervening and not be seen out of whack with Asian peers," he said, but added that the move may not be overtly negative for the current account.
"We supply a lot of raw material to China... If its domestic situation gains, then it could benefit us," he said. Aggressive intervention is an option but panic reaction should be avoided, he said. Some sectors may be especially vulnerable. The devaluation will benefit steel exporters, for instance, but if they choose to retain the additional margin, this would not have any significant incremental impact on international prices, said Jayanta Roy, senior vice president, ICRA. "However, if they drop their export price in order to push volumes, this would lead to a further softening of international steel prices, impacting the competitiveness of Indian steel manufacturers," he said.
SOURCE: The Economic Times
The General Insurance Council, a self-regulatory body of non-life insurance companies in India, has strongly protested the initiation of action against 16 insurance companies on the charge of wrongly utilising Cenvat credit of nearly ₹2,500 crore on bogus invoices of car dealers, by the Directorate-General of Central Excise Intelligence, Ministry of Finance. R Chandrasekaran, Secretary General, GI Council expressed deep disappointment that such charges were made against insurance companies without giving them an opportunity to explain their side of the case. He said the insurance companies should not be tarred with such charges for what may be the work of a few errant auto dealers. Pointing out that the general insurance industry pays over ₹10,000 crore as service tax, Chandrasekaran rebutted the ministry’s claim that insurance companies were circumventing regulations that capped commission payable for selling policies at 10 per cent. Drawing a distinction between selling activity (for which there is a cap on commission for procuring the business) and policy servicing (which involves administrative and clerical activity), he said some payments are made for such work (policy servicing) according to the guidelines provided by the regulator, IRDA. He further pointed out that input credit for such service tax payments was allowed for insurance companies from 2004 onwards. The GI council has written to the CBEC chairman seeking an opportunity to present its point of view. Chandrasekaran said that he had also appealed to the IRDA to intervene in the matter.
SOURCE: The Hindu Business Line
The finance ministry still hopes to implement goods and services tax (GST) from April 1, 2016 even if the constitution amendment Bill is not passed by the Rajya Sabha in the monsoon session, which is slated to end on Thursday. However, independent experts are not as sure. Sources in the finance ministry said there would be tremendous pressure on the ministry if the Bill is not cleared by the Rajya Sabha in the ongoing session, but it is not impossible to meet the deadline of introducing GST. "A window to pass the constitution amendment and GST Bills between December and March would be narrower. It would be difficult, but it is not impossible to clear them," a key official said. Meanwhile, Empowered committee of state finance ministers Chairman K M Mani said implementation of GST from April 1, 2016 would be very difficult if the Bill is not cleared by Parliament in the current session, but all those concerned will try to overcome them and introduce the new indirect tax system from the targeted date. Mani met Finance Minister Arun Jaitley earlier in the day. After the constitution Bill is cleared by Parliament, it has to be ratified by at least half the states - 15 out of the 29. After this, a GST council has to be set up which would approve GST Bills, to be passed by Parliament and each state legislature later.
Sources said 80 per cent work on GST laws has been complete. "We hope to finish that by this month-end. So, the draft Bill will be ready by the month-end," they said. Model GST laws will relate to central GST, state GST and integrated GST, which will be imposed on the interstate movement of goods. After the Empowered Committee of State Finance Ministers approve the GST Bills, part of it comprising business processes relating to requisitions, return, payments would be put up for comments on the public domain. However, the ultimate Bills have to be okayed by the proposed GST council. The ministry has not prepared any plan to defer the rollout of GST beyond April 1, 2016. But, if the constitution amendment Bill does not get cleared even in the winter session and is delayed further, there could be a problem as far as the deadline of April 1, 2016, is concerned, sources conceded. Then, the ministry in consultation with the Empowered Committee would decide on the next timeline. It could be April 2017 or mid 2016-17. The mid-year could be a possibility then, but the accounting procedures will be required to be changed accordingly, sources said, adding it will again not be a problem. "However, we are not looking at that situation, as of now," an official clarified.
The Bill, as passed by the Lok Sabha, clearly states that the GST council has to be constituted by the President within two months of enacting the constitution amendment Bill. The council will be a body comprising Union finance minister, state finance ministers and would be empowered to take key decisions relating to GST. If the constitution Bill, in fact, gets cleared in the winter session, the government will have to persuade half of the states to ratify it, constitute the council, put up GST Bills there, and get them passed by Parliament and each of the state legislatures within December-March. Sources in the finance ministry said most of the state assemblies are also meeting at in December-January for the winter session and others may call a special session of their assemblies to ratify the constitution amendment Bill. However, experts have their own doubts. For instance, Amit Kumar Sarkar, partner, Grant Thornton India LLP said, "In the event the constitution amendment Bill is not passed in the Rajya Sabha in this present session, it is extremely difficult for the government to introduce GST in India effective from April 1, 2016." He said April 1, 2016 is a very ambitious target to introduce the GST. "Realistically, the government should be looking at April 1, 2017 or maybe July 1, 2017 as the effective date for introducing GST in India, in case the Bill is not passed in this session." The winter session of Parliament is slated to come to close on Thursday.
GST TO MISS DEADLINE?
SOURCE: The Business Standard
China has emerged as India’s toughest adversary at the on-going Regional Comprehensive Economic Partnership pact being negotiated between 16 countries including the 10-member ASEAN. Beijing blocked a preliminary agreement on goods market liberalisation at last week’s round in Nay Pyi Taw, insisting that New Delhi and Tokyo improve their initial offers in the area, a government official told BusinessLine. “New Delhi managed to convince all other members, including the ASEAN, of its need to keep initial offers low because of the sensitivity of a number of industrial sectors, but Beijing was not willing to listen,” an official familiar with the development said.
Chinese threat
India, especially, has to be careful about what it offers to China as the local industry is apprehensive about a flood of cheap goods from the country once duties are lowered. While the RCEP would also incorporate agreements on opening up markets in services and liberalising investments and also pacts in other areas such as government procurement and e-commerce, the focus is on goods as it is the trickiest issue and other areas are expected to fall in place once it does. “All eyes are on China now. If it agrees to the initial offers on the table at the moment, then the meeting of trade ministers later this month will be successful and a formal agreement in goods could be worked at by the next round in October based on what the ministers announce,” the official said.
China is upset because India has chosen to offer it preferential duties on less than half of the items traded between the two countries. India is willing to offer the maximum tariff relaxation to the ASEAN (going beyond what has been offered in the India-ASEAN FTA), followed by its other FTA partners Japan and South Korea. New Delhi is also not keen to offer generous concessions to Australia and New Zealand, with which it is yet to sign FTAs. “Since China doesn’t have FTAs with both India and Japan, it was hopeful of getting some concessions in both the markets through the RCEP agreement. But if it wants a deal, it has to be less ambitious,” the official said. The RCEP, which also includes Australia, New Zealand and South Korea, once operationalised, could result in the largest trading bloc in the world as its 16 members account for 45 per cent of the world population and a combined GDP of $21.4 trillion.
SOURCE: The Hindu Business Line
Issues related to WTO, solar energy and visas are expected to figure at a meeting between senior trade officials of India and the US here tomorrow. US Under Secretary of Commerce for International Trade Stefan M Selig will meet Commerce Secretary Rita Teaotia and also discuss ways to further enhance bilateral trade and investments. The meeting will also prepare ground for Prime Minister Narendra Modi's visit to the US, planned for next month. “This is also a preparatory meeting for the India-US Commercial Dialogue which is scheduled on September 22. All the issues such as trade facilitation agreement of the WTO among others would be discussed in the meeting," an official said.
The US had filed a case in the WTO against India. It had alleged that India's programme appears to discriminate against US solar equipment makers by requiring solar energy producers to use locally manufactured cells and by offering subsidies to those developers who use domestic equipment. In a recent meeting between Teaotia and US Deputy USTR Ambassador Robert Holleyman last month here, India had pressed for setting up a high-level committee to look into a range of issues including American Totalisation and non-tariff barrier, as also the Social Security Act that discriminates Indians working in the US.
India had also raised the issue of high visa costs in the US which is impacting Indian IT professionals working there and market access issues of agrarian products including rice, mangoes, pomegranates and table grapes in the US. India wants early conclusion of the totalisation pact or Social Security Agreement with the US. It aims to protect interests of professionals of Indian-origin who contribute more than US$ 1 billion each year to the US social security. Under this pact, professionals of both the countries would be exempted from social security taxes when they go to work for a short period in the other country. The India-US bilateral trade was US$ 64.26 billion in 2014-15.
SOURCE: The Economic Times
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$ 49.80 per barrel (bbl) on 11.08.2015. This was higher than the price of US$ 49.11 per bbl on previous publishing day of 10.08.2015.
In rupee terms, the price of Indian Basket increased to Rs 3195.67 per bbl on 11.08.2015 as compared to Rs 3131.25 per bbl on 10.08.2015. Rupee closed weaker at Rs 64.17 per US$ on 11.08.2015 as against Rs 63.76 per US$ on 10.08.2015. The table below gives details in this regard:
|
Particulars |
Unit |
Price on August 11, 2015 (Previous trading day i.e. 10.08.2015) |
Pricing Fortnight for 01.08.2015 (July 14 to July 29, 2015) |
|
Crude Oil (Indian Basket) |
($/bbl) |
49.80 (49.11) |
55.15 |
|
(Rs/bbl |
3195.67 (3131.25) |
3511.95 |
|
|
Exchange Rate |
(Rs/$) |
64.17 (63.76) |
63.68 |
SOURCE: PIB
The new Union Customs Code, which aims to streamline legislation and procedures across the EU, comes into force on May 1, 2016. Under it, wholesalers, distributors and retailers that import goods will need to obtain Authorised Economic Operator status in order to avail themselves of the EU’s duty suspensions scheme. The scheme allows the duty-free importation into the EU of raw materials and semi-finished products that cannot be supplied (or supplied in sufficient quantities) from EU or Turkish manufacturers and are used to make another product. AEO status is given to companies that have passed a robust supply chain inspection and can show their customs controls and procedures are compliant. In some cases it allows firms to fast-track shipments through certain HMRC safety and security procedures. Ian Carpenter, head of indirect taxes at accountancy firm Baker Tilly, said: “Some importers will find they will need to change the way they manage their supply chain; others will need to obtain AEO authorisation. “Careful preparation is required as any mistakes in customs duty can have a significant impact on margins. This can be from incorrect valuations on products leading to a deficit of duty being paid or from reliefs for rejected or returned goods not being appropriately claimed.”
SOURCE: The Drapers Online
Both the BGMEA and the BTMA leaders demand gas connections for the country's largest foreign currency earner on a priority basis as the readymade garment factory owners, especially those who want to shift their non-compliant units from the capital city and adjacent to it, are facing difficulties due to non-availability of gas for the last couple of years. Some 64 non-compliant readymade garment factories, mostly located in shared or rented buildings, failed to relocate their units only because they are not allowed to shift their existing gas connection to the new destinations, according to the Bangladesh Garment Manufacturers and Exporters Association (BGMEA). About 86 factories applied for increasing gas load while 83 more applied for new connections, the BGMEA said.
On the other hand, investment in 30 spinning mills remained unused while many more could not go for expansion due to gas scarcity for some years, according to the leaders of the Bangladesh Textile Mills Association (BTMA). They want to relocate their existing units mainly to improve its workplace and other safety requirements, he said. But the government does not allow transfer of their existing gas connections. Industry insiders alleged that more than 250 textile and garment factories failed to go into production and expansion mainly due to non-availability of gas for the last couple of years. Md Abdullah, managing director of Al Muslim Group alleged that he failed to shift one of his units located at a shared building at Savar. He explained that he can operate the unit where it is now but buyers have warned that they would not place orders unless the unit meets safety requirements. But it is not possible to meet compliance issues in the existing place, he said adding, he don't understand why the government is not allowing them to shift the existing gas connection to the new place the distance of which is not more than one kilometre.
After the Rana Plaza building collapse, manufacturers frantically tried to relocate their units in shared or rented buildings to sustain business but scarcity of gas is hindering the process, he added. The group shifted machines and workers to its another unit but failed to shift boiler and generator of its washing and dying units. They are paying Tk 0.35 million charge per month. New investment is a must to achieve the $50 billion apparel export target but entrepreneurs now fail to make proper utilisation of the existing investment, said Siddiqur Rahman, another entrepreneur, who also applied for gas connection. The BGMEA president said that 233 RMG units need 50.92 cft gas for relocation, expansion and to operate the new ones. These units can create employment for additional thousands of workers and $1.0 billion more to the export earnings. Fazlul Hoque, vice president of the BTMA, said that many textile factories failed to go into production as they are not getting gas connection for the last few years, while some 30 spinning mills are waiting for gas connection though they have invested a huge amount of money.
SOURCE: Yarns&Fibers
According to the Customs, in Jul, export value of textile and apparel totaled around 27.25 billion USD, down 10.20% y-o-y, of which textile export value totaled around 9.51 billion USD, down 5.86% while apparel export value totaled at 17.74 billion USD, down 12.36% y-o-y. In Jan-Jul, 2015, China textile and apparel export values totaled around 155.63 billion USD, down 4.41% y-o-y, of which textile export value was at 62.42 billion USD, down 1.50% y-o-y while apparel export value was at 93.20 billion USD, down 6.20% y-o-y. The decrement enlarged further, partly because of high cardinal number of last year, partly dragged down by the firmer US dollars. Euro, Japanese yen and ruble has been depreciated sharply since last year, deteriorating China’s export markets. In fact, the depreciation of currencies in the developed countries slashed the local people’s purchasing power, which cast great impact on China’s textile and apparel exports. However, the sharp fall of currency of emerging economies, like India, Brazil and Middle East, also posed significant impact on China’s exports, especially on the polyester textiles, which were mainly exported to ASEAN, Latin America and Middle East.
I. Chinese yuan weakened to a 3-year low against US dollar
China's central bank would improve its central parity system to better reflect market development in the exchange rate of the Chinese currency renminbi against the U.S. dollar, the People's Bank of China (PBOC) said today. The central parity rate of the Chinese currency renminbi, or the yuan, weakened by 1,136 basis points to 6.2298 against the US dollar on Tuesday, the lowest level since April 25, 2013, according to the China Foreign Exchange Trading System. Actually, the depreciation of the central parity rate of RMB might be under the pressure of exports and domestic economy.
II. The depreciation of Indian Rupee has seized China’s market shares
Indian Rupee exchange rate against US dollars kept down by 4.4% in 2015, which was partly promoted by the Indian government, who wanted to stimulate exports. The labor costs of India were only about one fifth of China’s and its electricity charge and feedstock costs were also lower than China. The sharp depreciation of Indian Rupee made it more competitive. It is understood that more Indian manufacturers purchased second-hand warp knitting looms and circular looms in Zhejiang and Jiangsu, indicating the shift of textile and apparel processing industry.
III. Brazilian real hit a 12-year low against US dollar
Brazilian real has been depreciating by 24% against US dollar in 2015 and in Jul, 2015, it has declined by 8.6%. On Aug 6, the exchange rate of real against US dollar dropped to 3.5386, a new low since Mar, 2003. The fluctuated exchange rate whittled down the exporters’ profits and increased the management risks. Therefore, traders and export-dominated enterprises were timid at taking orders. In Changshu of Jiangsu, most producers reflected that the business activities weakened evidently this year with meager new orders, especially big orders.
IV. Turkish lira has collapsed
In 2015, Turkish lira also saw large depreciation and by Aug 11, the decrement has reached 18.8%. The fluctuation is bound to reduce the local demand for China’s apparels. Though the market shares of Turkey only scored at around 0.7%, China’s export volumes of polyester textiles, such as abaya, headscarf and table cloths, were large. It is known that position of Turkey takes a good geographical position, which crosses European and Asian continents. The textile and apparel trades between China and Turkey exist for a long time.
V. Forecast
The depreciation of currencies in emerging economies is not only affected by firmer US dollar and outflow of capital, the most important factor is their economic structure. If RMB continues to depreciate and US dollar keeps the momentum, the depreciation may enlarge further. Therefore, China’s textile and apparel exports may continue to slide.
SOURCE: CCF Group
As China contends with an economic slowdown and a stock market slump, the authorities on Tuesday sharply devalued the country's currency, the renminbi, a move that could raise geopolitical tensions and weigh on growth elsewhere. The central bank set the official value of the renminbi nearly 2 per cent weaker against the dollar. The devaluation is the largest since China's modern exchange-rate system was introduced at the start of 1994. China's abrupt devaluation is the clearest sign yet of mounting concern in Beijing that the country could fall short of its goal of roughly 7 per cent economic growth this year. Growth is faltering despite heavy pressure on state-owned banks to lend money readily to companies willing to invest in new factories and equipment, and despite a stepped-up tempo of government spending on high-speed rail lines and other infrastructure projects. A steep drop in the Shanghai and Shenzhen stock markets in late June and early July, only halted by aggressive government actions, appears to have dented consumer demand within China. Automakers, typically the earliest bellwethers of lower demand, have announced declines in sales last month; Ford China, for example, said last Friday that its sales had fallen 6 per cent last month compared with July of last year.
China's devaluation represents a difficult dilemma for the Obama administration. The United States Treasury has tried to use quiet diplomacy in recent years to encourage China to free up its currency policies, while blocking efforts in Congress to punish China for major intervention in currency markets over the past decade to slow the rise of the renminbi. Many in Congress have long accused China of unfairly building up its manufacturing sector at the expense of American jobs by undervaluing the renminbi, and the Chinese devaluation could fan those criticisms. In a seeming nod to such concerns, the central bank said that it would begin to use the market closing, not the previous morning's official setting, to calculate the renminbi's official daily fixing against the dollar. But China's economic weakness now means that further opening up of the currency to market forces could mean a weaker renminbi, not a stronger one. That, in turn, would make Chinese goods even more competitive in the United States and Europe. China's central bank "has finally thrown in the towel on supporting the renminbi," said Eswar S Prasad, a professor of economics at Cornell University. At the same time, he added, easing its grip on the currency's value "has blunted criticism by combining the currency devaluation with a more market-determined exchange rate." The United States and institutions such as the International Monetary Fund have called on China to be more hands-off in managing the renminbi.
The Chinese currency has been a global point of contention for nearly a decade. China officially ended the renminbi's fixed peg to the dollar in 2005. Since then, it has risen in two long, slow climbs. The first was from July 2005 until August 2008, when it was interrupted by the global financial crisis. The renminbi then resumed its rise from June 2010 until early last year, when it dipped slightly, then stabilised. The overall increase since 2005 has been more than 25 per cent against the dollar. It has strengthened even more against other major currencies, like the euro and the yen. But the Chinese currency is not freely tradable, and its movements are tightly controlled by the government. Each morning in Shanghai, China's central bank sets a midpoint for the renminbi's value against the dollar and other major currencies. This can be as much as 2 per cent higher or lower than the previous day's value, although the change is almost always a tiny fraction of 1 per cent. But on Tuesday, the central bank fixed the value of the renminbi at 6.2298 per dollar, down 1.9 per cent from Monday's official fixing. In a statement on its website, the central bank said it was seeking "to perfect" the renminbi's exchange rate against the dollar. The bank, the People's Bank of China, said it was reacting to trends in the market, where traders in recent months had been betting on a weaker renminbi. In trading in mainland China on Tuesday, the renminibi weakened further to around 6.32 per dollar by midday. It fell even further in offshore trading, to around 6.35 per dollar at midday.
The move also jolted the currencies of countries that depend heavily on China as a market for exports. The Australian dollar fell more than 1 per cent against the dollar on Tuesday, as did the South Korean won. "While China's policy makers have long suggested that foreign exchange reforms would happen, the abrupt nature of today's announcement has injected considerable volatility into the renminbi and other Asian currencies," analysts at HSBC wrote Tuesday in a research note. The central bank also said it would seek to prevent what it described as "abnormal" capital flows. Weaker economic growth has prompted sizable outflows from China in recent months, which have likely been exacerbated by the country's stock market volatility.
SOURCE: The Business Standard
Pakistan Textile Exporters Association (PTEA) has sought the government's immediate intervention to boost the textile industry which it says has lost its viability against the regional competitors, the Pakistani media has reported. Sohail Pasha, chairman and Rizwan Riaz Saigal, vice chairman of PTEA said that due to inefficient and unfriendly socio-economic environment, the cost of doing business in Pakistan has escalated enormously. Intermittent rise in the prices of raw materials and production inputs has rendered Pakistani exports uncompetitive in international market, they said. The PTEA brass said rival countries have been increasing their presence in Pakistan's traditional markets for textiles. The textile industry, particularly in Punjab has been in the grip of unprecedented crisis for many years and is struggling hard for its survival. Energy constraints have halted the industrial wheel and high production cost has disrupted the competitive edge of textile exports in international market. On the other hand, regional rivals backed by their governments, have accelerated export growth and have increased their market share in global textile trade.
Quoting the growth rate, Pasha said that from 2008 to 2013, Bangladesh achieved 160 per cent growth in textile exports. Similarly, China gained 97 per cent and India 94 per cent while Pakistan's textile export growth remained static at 22 per cent in the same period. With its high growth, Bangladesh has increased its share in global textile trade from 1.09 per cent in 2006 to 3.30 per cent in 2013. Similarly, India increased its share from 3.4 per cent to 4.70 per cent, China from 27 per cent to 37 per cent while Pakistan has dropped from 2.20 per cent to 1.80 per cent. Terming energy shortage a major hurdle in export growth, the PTEA chairman said that textile industry particularly in Punjab, faced 27 per cent gas load shedding in 2010. The figure has since spiraled to 70 per cent in 2014. Similarly, the textile industry suffered 37 days average power load shedding in 2011 and the figure rose to 122 in 2014. In contrast, Pakistan's competitors made heavy investment made in terms of machinery mainly due to conducive policies. During 2008-13, China added 35.29 million spindles, while India added 14.20 million and Bangladesh added 1.98 million spindles in textile sector. In Pakistan, only 1.02 million spindles were added during the same period. (SH)
SOURCE: Fibre2fashion
All Pakistan Textile Mills Association (APTMA) Chairman SM Tanveer has said the government should either devalue Pakistani rupee by 15% or withdraw taxes, surcharges and gas infrastructure development cess (GIDC) worth Rs175 billion from the textile industry. He said this while addressing a press conference along with APTMA Punjab Chairman Muhammad Akbar at the APTMA Punjab House on Tuesday. He said the association has deferred its countrywide strike for a month on the request of Finance Minister Ishaq Dar, adding that APTMA has so far held four important meetings with the government. He said he was holding the press conference to apprise the media about the progress on discussions with the government on weekly basis. Tanveer maintained that the APTMA was satisfied with the developments on negotiations with the government. “APTMA was unable to pay Rs72 billion surcharge on the electricity bills and Rs 38 billion GIDC,” he added. He said the latest exports data suggests that the overall exports of Pakistan have declined by 17% in value terms during July against the corresponding period of last year. “Textile industry exports are a major component of the country’s exports and it is likely to be dropped by $4 billion in case no immediate step to redress the situation is taken,” he stressed. The APTMA chairman appealed to the Prime Minister Nawaz Sharif, Chief Minister Punjab Shahbaz Sharif and Finance Minister Ishaq Dar to act immediately and save the textile industry from a total collapse. “We are with the government on its economic agenda but we want to make it clear to the government that the industry was not in a position to pay electricity bills carrying the surcharge and GIDC in the current monthly bills,” he said.
SOURCE: The Daily Times
