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MARKET WATCH 17 DEC, 2020

NATIONAL

INTERNATIONAL

Fashion economy could be worth $5 trillion

Though a relatively new concept in clothing production, the potential value of fashion’s circular economy is vast, says a new report

Over the past few years, the concept of "circular fashion" has been used widely in the industry, indicating an increased interest towards reusing and recycling all raw materials.

Now, a new report by lablaco, in partnership with Vogue Business, PwC, sustainable consultancy Anthesis, Rödl & Partner law firm, Startupbootcamp and ESSEC Business School, Wageningen University & Research, says the estimated value of fashion’s circular economy could be valued at $5 trillion.

The market value constitutes an existing $3 trillion global fashion industry, and includes the $6 billion virtual fitting room market, $16 billion 3D-printing market and $40 billion eco-fibre market. There is also the the second-hand sector, including resale and clothing alterations.

Since circular fashion is a relatively new industry, the report tries to lay groundwork on defining it, and stipulates that its economy cannot be fully leveraged upon without digitization. It says, “Circular fashion addresses a series of collaborative inputs enabled by a digitized and connected system, where circularity in materials, design and (re)use are interlinked.”

The fashion sector is the world's second most polluting industry, after oil. For years, it's been facing heavy pressure to reduce carbon emissions and waste, especially from the growing number of conscious consumers. This has given added impetus to the argument for circularity.

The report urges for a more product-centric than consumer-centric approach to fashion, underwired by digital landscape for seamless functionality and efficiency. The aim is to make fashion traceable for everyone.

SOURCE: The Mint

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Disinvestment will now gain lot of momentum, says Finance Minister Nirmala Sitharaman

Finance Minister Nirmala Sitharaman on Tuesday said the pace of disinvestment will now gain a lot of momentum, and those which have already found cabinet approval will be taken up with all earnestness. Speaking on Day 1 of ASSOCHAM Foundation Week, via video conferencing, Sitharaman said: "You would have seen in the last two months the pace in which the two major disinvestment related activities, and also the others which are relatively bringing down the government share in some of the big public sector undertakings, are also simultaneously happening. The pace of disinvestment will now gain a lot of momentum and those which have already found cabinet approval will be taken up with all earnestness."

"Disinvestment will be happening, corporatisation of not just the defence, DRDO related labs but also banks - where I want them to run a lot more professional, they should also be able to raise money from the market," she said.

Sitharaman said that the Union Budget for 2021-22 would emphasise on sustaining high public expenditure on infrastructure to revive the economy.

"We shall definitely sustain the momentum on public spending in infrastructure. The budget-related inputs which you gave me... I am quite happy and eager to take on board... Something that certainly will feature is we shall definitely sustain the momentum on public spending on infrastructure because that is the one way we are sure that multipliers will work and the economic revival will be sustainable," she said.

The Finance Minister said that this has been an unusual year and borrowing has been kept at levels so that the government can quickly put the money back in projects. "This emphasis that the public infrastructure spending should have to be kept up has been fully recognised," she added.

She further asserted that the National Investment and Infrastructure Fund (NIIF) is doing its best to attract foreign money.

SOURCE: The Economic Times

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Government all set to launch ‘Brand India’ mission

The government is all set to launch a ‘Brand India’ mission, focused on the promotion of quality products that are manufactured in the country. The move, being piloted by the Piyush Goyal-led commerce and industry ministry, is based on similar policies in other countries, including the US, Switzerland, Germany and France, which regulate claims made to goods produced in their jurisdiction.

The idea is linked to the extent of local production with countries such as Switzerland offering the tag to service sector companies if they are headquartered there. In case of food products, the requirement is 80% local production. Goyal’s plan, discussed with the Quality Council of India and other agencies last week, is looking at country of origin certificates, which will be voluntary with self-certification to be vetted by certain entities. It will be applicable to natural as well as manufactured goods.

Sources said the entire certification process is proposed to be completed within six to 10 days of an application being filed, with monitoring expected to start after six months. Once a decision is taken, the mission can be launched in around a year with the initial plan to be tested through a few pilots.

Those who opt for the scheme may be given recognition by the government emarketplace and other platforms, preference in public purchase and other benefits, including those under trade agreements, sources familiar with the deliberations told TOI, adding that the plan is still to be firmed up.

After the recent tension with China, the government has shifted to an Atmanirbhar Bharat strategy, where it is seeking to get Indian companies to be part of the global value chain, in addition to produce for the domestic market. Along with import curbs on some products such as TV sets and tyres, the Centre is also insisting on disclosing the country of origin of goods, especially in case of ecommerce. A host of products, from electronics to automobiles and defence equipment have been identified  as potential focus areas..

 SOURCE: The Economic Times

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MSME Minister Nitin Gadkari mulls award to businesses paying MSMEs on time

Credit and Finance for MSMEs: The MSME Ministry is looking to recognise businesses and organisations that have been making on-time payments to MSMEs for goods and services purchased. MSME Minister Nitin Gadkari during a webinar organised by a pro-entrepreneurship alliance of organisations — Global Alliance for Mass Entrepreneurship (GAME) on Wednesday also thanked such buyers for making timely payments. “My special thanks to all CEOs who are promptly paying. The idea is now coming to my mind that we should create some awards for those who are very punctual and giving time-bound payment to MSMEs,” Gadkari said. The MSME Ministry had written to over 2,800 corporates in October, after writing to 500 such businesses in September, to settle MSME payments..

The minister stressed developing technologies from existing resources to create products of global standards. This comes amid PM Modi’s Vocal for Local and Atmanirbhar Bharat campaigns to boost manufacturing among small businesses in India and promote entrepreneurship for doing so. The government already runs multiple initiatives around encouraging entrepreneurship such as Startup India, Standup India, Entrepreneurship Skill Development Programme, etc. “Mass entrepreneurship is very important. We have institutes of management, financial management, human resources but we don’t have institute of entrepreneurship. Conversion of knowledge into wealth is the future of the country but the conversion of waste into wealth is equally important. We need to find out a small technology by using available raw material in that area and we can make products of international standards,” Gadkari added.

Source: The Financial Express

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India making efforts to deregulate economy to attract greater investments: Goyal

The government is making efforts to deregulate the economy with an aim to attract greater investments from across the world, Commerce and Industry Minister Piyush Goyal said on Wednesday.

He said the government has opened up defence, manufacturing, mining, finance and capital market sectors.

The government has further liberalised agricultural laws to encourage more investments in agri-processing and open up markets so as to increase the income of farmers, he said at CII's Partnership Summit .

"India is making efforts to deregulate its economy for greater investments from other parts of the world," he said.

Goyal further said India provides huge opportunity for investments, and procurement of goods and services.

"India is looking forward for working with friends and neighbours, and having a global footprint. India is working to turn the COVID crisis into an opportunity, and is confident of reaching the target of USD 5 trillion economy by 2025, and USD 10 trillion in another 7-10 years," the minister said.

SOURCE: The Economic Times

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Mistry’s removal as Tata Sons chairman ‘illegal and oppressive’: SP Group to SC

The Shapoorji Pallonji Group on Wednesday told the Supreme Court that the removal of Cyrus Mistry as the chairman of Tata Sons was illegal and oppressive. Senior counsel Shyam Divan told a bench led by Chief Justice SA Bobde that the removal was also against good faith and trust and the long relationship which Tata and Shapoorji Pallonji group had developed over five decades. The SP group said Mistry had served in an exemplary manner for 24 years in the group and wants just directorship.

The SP group alleged that due procedure wasn’t followed in 2016 when Mistry was removed from his post as the chairperson. “There was no agenda for removal of Mistry at the October 24, 2016, board meeting. No notice of intended removal was given to Mistry. His removal had nothing to do with any lack of performance.  No reasons were discussed nor any minutes of the board meeting noted it,” Divan argued.

He further said Ratan Tata was determined to remove Mistry and that is why three people were made trustees on the same day when Mistry was to be removed. He also said the two directors had praised Mistry for his performance as executive chairperson four months before his removal. The senior counsel said various articles of association were breached and that the termination of an MD should not have taken place without a resolution and the same process, which is followed at the time of appointment, should have been followed.

Divan further said the management of company is the board and the most crucial obligation imposed on a director now is that the director is a fiduciary. “A fiduciary’s allegiance is to the company alone… If you are torn between allegiance to company and allegiance to something else, then you cannot act as a director,” he said.

“Director cannot abdicate or yield on his/her independent judgment. Director may consult or take advice but has to act independently and cannot be compelled or coerced,” Divan told the SC. “The relationship was of one utmost trust and good faith. The only thing we asked for was a place on the board which is recognised under the Companies Act of 2013,” he argued. The hearing will continue on Thursday.

Source: The Financial Express

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India and Bangladesh need to move from transactional to natural partnership to exploit market opportunities jointly, say experts

At a time when the coronavirus pandemic has posed all new challenges for the apparel manufacturing sector, there is an increased focus on collaborations and alliances to survive, sustain and excel in the changing global landscape.

Keeping this vital issue in perspective, ASW Marketplace organised a panel discussion on Wednesday (16 December 2020) to discuss and deliberate on the ways forward in terms of creating fruitful and mutually beneficial collaborations for business sustainability.

Living up to its promise of organising targeted panel discussions, webinars and workshops that would help the industry get a new direction and perspective in these times of pandemic-induced upheaval, ASW’s first panel discussion of the day titled ‘Re-Inventing Supply Chain Collaborations Between Bangladesh And India’, was attended by experts and stakeholders from both India and Bangladesh, all of whom stressed on the need to make a tectonic shift from transactional relationship to natural partnership to address the supply chain challenges and boost garment trade.

Strongly endorsing the view on natural collaboration, Srihari Balakrishnan underlined the need for digital transformation of supply chain to attain versatility and cut time and cost, aligning with the changed sourcing strategy of the retailers.

In line with the same, KG Fabriks recently did virtual supply chain integration akin to that of Amazon Prime, which is expected to benefit factories that it supplies to in Bangladesh, immensely.

“We’ve been doing business in Bangladesh for around 3 decades now and, I can say, this country has grown phenomenally in its apparel manufacturing,” said Srihari while adding that when the world is talking about near shoring, focus should be on smart shoring amidst the changing retail scene and called upon the stakeholders to focus on D2C business model.

“Since there is a boom in D2C business model, India and Bangladesh need to focus on ‘Smart Shoring’ to enhance their joint efforts in garment business,” he said even as Arshad Jamal who is also the Vice President of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) identified logistics, design development and IT-enabled services as some major areas of collaboration between the two countries.

“I think one of the challenges both India and Bangladesh should work together is towards eliminating logistical bottlenecks as there is an urgent need to improve in this area,” mentioned Arshad, adding, “India is strong in IT-enabled services and Bangladesh must take benefit of this strength, while another aim for positive collaboration should be in the area of design and development.”

Arshad is open to taking help from a third entity jointly in the field of design development to take the mutual collaboration between the two countries to the next level.

“COVID-19 uncertainty has led buyers to buy smartly as the consumer’s spending has dried up. So, the companies in India as well as in Bangladesh need to adopt new ways and shifts to stay relevant and to dig better sourcing opportunities,” asserted Sandeep.

All the participants unanimously agreed that collaboration in textile value chain between the two countries is a must not only to stave off competition from China but also to put up a joint front to attract the global buyers as a region, to exploit the emerging opportunities.

Mukesh Bansal too supported the joint efforts of both the countries and said once the same country, India and Bangladesh are now two separate entities but the thoughts, ethos, culture and people on both sides of the border are still the same.

This commonality is a great catalyst in defining the future path of collaborative efforts between us, said Mukesh even as Sandeep Golam maintained that retailers operating in India need to exploit more the sourcing opportunities from Bangladesh.

SOURCE: Apparel Online

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Industry demands to reduce GST on garments having MRP of Rs. 1,000 and more

Apparel industry has urged the Government to reduce GST rate from 12 per cent to 5 per cent on all readymade garments having MRP of Rs. 1,000 and more.

The industry has also demanded to keep uniform GST rate of 5 per cent on all types of cotton yarn, synthetic yarn, fabrics, made ups and garments.

Babubhai S. Ayar, Chairman of the Ashish Domestic Garments Manufacturers Association, Mumbai and immediate Past Vice President of The Clothing Manufacturers Association of India (CMAI) has sent pre-budget memorandum to the Central Government in this regard.

“In order to achieve the textile and clothing industry target of US $ 280 billion by 2025 from present US $ 140 billion, the Government should bring in progressive, export-oriented, labour-oriented as well as production-oriented textile policies,” he said.

He also insisted on supporting small-scale industries and garment trade in Mumbai.

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INTERNATIONAL

Europe lockdown hits sales of H&M and Inditex

As the year is coming to an end, there seems to be no respite from the deadly pandemic!

The fashion retail world is still suffering as much as it was all through the year. Swedish retail giant H&M saw its sales slump by 22 per cent from late October to November.

While substantiating further on the same, the retailer said that the pandemic-induced lockdown forced people to stay indoors in November and the first week of December, thereby impacting its sales.

Zara owner Inditex too shared the same thoughts and said that the Group witnessed its sales fall by 19 per cent in November.

The first 10 days of December have been even worse for the Spanish retailer as it posted a drop of 13 per cent in sales.

Notably, Inditex’s sales have declined for the ninth successive month.

While retailers have been putting their efforts to restore their old charm despite all constraints, the return of lockdown in Europe has shown how unstable the recovery has been.

Both H&M and Inditex know their worries are only going to increase in the coming days. While there are reports of fresh lockdown in Germany, Italy too is mulling Christmas lockdown. In the UK too, Government has imposed strict restrictions in some areas.

It’s indeed a tough quarter ahead for both the retail giants.

RETAIL BRAND

SOURCE: Apparel Online

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Fed vows to buy bonds until it sees 'substantial' economic progress

The Federal Reserve on Wednesday vowed to keep funneling cash into financial markets until the U.S. economic recovery is secure, a promise of long-term help that fell short of hopes of an immediate move to shore up a recent pandemic-related slide.

Following a policy meeting that took stock of both the short-term risks to the economy and the new promise of a coronavirus vaccine, Fed Chair Jerome Powell acknowledged the U.S. central bank’s suite of tools is not well-suited to the most pressing needs faced by households and businesses today.

“The parts of the economy that are weak are the service-sector businesses that involve close contact,” such as restaurants and the travel industry, Powell said in a news conference following the two-day meeting.

“Those are not being held back by financial conditions, but rather by the spread of the virus” that is now intensifying across the country, he said.

Unemployed households or struggling businesses are more in need of immediate cash, Powell added, something top lawmakers in Congress were working to provide in talks towards a new $900 billion pandemic relief bill.

For the Fed, the more relevant horizon is the middle of next year, when Powell said the central bank is hopeful the country may approach widespread immunity from the coronavirus, and see economic activity surge.

“The issue is the next four, five, six months,” Powell told reporters. “You have to think some time in the middle of next year you will see people feeling comfortable going out engaging in a broader range of activities.”

His comments seemed to diminish what some market analysts had taken as a given - that the Fed would at some point either increase the pace or type of government bonds it is buying currently at a rate of $120 billion per month.

But the rollout of a vaccine in the United States has added to hopes the economy may continue pulling steadily out of a recession that began in March and which had elicited talk of a second Great Depression.

In quarterly projections issued along with the policy statement, Fed officials boosted their outlook for the economy’s performance this year and in 2021.

They now see just a 2.4% hit to gross domestic product in 2020 - compared to projections in June of a 6.5% gash. GDP growth next year is projected to be 4.2% at the median, instead of the 4% projected in September. Policymakers also lowered their expected year-end unemployment rate for 2021 to 5% from 5.5%.

With interest rates anchored at zero likely for years to come, the Fed added a more explicit promise to continue the current bond-buying program until there is “substantial further progress” in restoring full employment and hitting its 2% inflation target.

Between those two props for the economy, “our current policy stance is appropriate,” Powell said, while adding that the Fed would consider altering its bond purchases if economic conditions changed.

The vote on the policy statement was unanimous, and for the first time links the Fed’s monthly purchases of U.S. Treasury bonds and government-backed securities to a set of economic conditions. It had previously pledged to make those purchases only “over coming months,” with no firm guidance about when the recession-fighting program might stop.

“We had expected perhaps an extension of the maturities of the asset purchases. They didn’t do that,” said Kathy Bostjancic, chief U.S. financial economist at Oxford Economics. “But this guidance, forward guidance on QE (quantitative easing) is pretty powerful ... that gives some clarity, which is good.”

U.S. stocks traded largely higher on Wednesday, with the Nasdaq Composite closing at a record high. The Treasury yield curve steepened slightly while the dollar edged up against major trading partner currencies.

STIMULUS NEGOTIATIONS

The conclusion of the Fed’s last policy meeting of 2020 capped a tumultuous year in which it slashed interest rates, ramped up bond purchases and took other extraordinary measures to stem the economic carnage of the coronavirus pandemic.

Fed officials, however, have urged the federal government in recent months to step in with more pandemic-related relief to bolster the economic recovery at a time when a surge in COVID-19 infections has led to more lockdowns and restrictions on businesses across the country.

U.S. retail sales fell more than expected in November, the Commerce Department reported on Wednesday, adding to growing signs of a slowdown in the economic recovery.

More than 304,000 people in the United States have died from COVID-19 since the start of the pandemic, according to a Reuters tally.

Lawmakers in Congress are “closing in on” a $900 billion COVID-19 aid bill that would include $600 to $700 stimulus checks and extended unemployment benefits. Barring more aid from Washington, millions of unemployed Americans were slated to lose unemployment benefits the day after Christmas.

Powell told reporters that despite some progress in the economic recovery and unemployment rate, the pace of improvement is slowing and the share of people who are either working or looking for work remains below pre-pandemic levels.

“Although there has been much progress in the labor market since the spring, we will not lose sight of the millions of Americans who remain out of work,” he said.

ADB approves $0.5m in grant to improve Bangladesh’s business competitiveness

The Asian Development Bank (ADB) has approved $0.5 million in grant assistance for supporting knowledge works to promote business competitiveness and intraregional trade of Bangladesh.

The assistance is additional to an earlier grant of $2 million approved in 2018 for creating innovative knowledge solutions on strategic issues for Bangladesh’s economic transformation, UNB reports citing a press release.

“In addition to export diversification and enhanced domestic resource mobilisation, Bangladesh needs to significantly increase foreign direct investment and intraregional trade to further propel the ongoing growth and development,” said Country Director Manmohan Parkash.

He said that Bangladesh has immense opportunities to make significant progress in the Doing Business indicators since its current ranking is only 168 out of 190 economies.

The countries that score high on doing business rankings have several common features such as sound business regulation with a high degree of transparency, and widespread use of digital systems,” said Parkash.

"Bangladesh can gain significantly by modernising its property registration system, as well as improving online business incorporation procedures, tax filing system, and contract enforcement system.”

Noting that the government is keen to improve its Doing Business ranking, Parkash said, “The knowledge assistance will help prepare actionable policy recommendations for improving the Doing Business ranking of Bangladesh to attract companies, industries, and foreign direct investments.”

He mentioned that it will also help develop high quality knowledge and policy tools to identify investment, and supply chain opportunities for Bangladesh to promote intraregional trade with the countries under the South Asia Subregional Economic Cooperation (SASEC) initiative.

Conceived through extensive consultations with the government, business community and other stakeholders, the comprehensive policy interventions will deal with critical issues such as starting up a business, getting construction permits, accessing electricity connections, registering property, accessing credit, tax payment, and contract enforcement.

Studies on economic corridor development, augmenting the capacity of the investment development agency and related government departments as well as the business community will be prioritised for support under the assistance.

Bangladesh needs to significantly improve in many indicators of the Doing Business ranking in order to catch up with other regional countries, including China and India, that have progressed in their rankings in recent years.

The indicators that need immediate attention for improvement in Bangladesh include enforcing contracts (rank 189), registering property (184), getting electricity (176), trading across borders (176), resolving insolvency (154), paying taxes (151), dealing with construction permits (135), starting a business (131), and getting credit (rank 119).

Source: The Financial Express, Bangladesh

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PM Modi, Dominic Raab discuss post-Brexit relations

British Foreign Secretary Dominic Raab on Wednesday called on Prime Minister Narendra Modi during which they discussed the vast potential of the India-UK partnership in the post-COVID and post-Brexit world.

In a tweet after the meeting, Modi said he was looking forward to UK Prime Minister Boris Johnson's visit to India to be the Chief Guest at the Republic Day celebrations next month.

"Excellent meeting with @DominicRaab, UK Secretary of State of @FCDOGovUK. Discussed the vast potential of the India-UK partnership in the post-COVID, post-BREXIT world," Modi tweeted.

Ministry of External Affairs Spokesperson Anurag Srivastava said the UK Foreign Secretary called on Prime Minister Modi and the discussions during the meeting covered various facets of the two country's strategic partnership.

Today I saw how innovative UK-India collaboration is helping to end #COVID19. The @UniofOxford/@AstraZeneca vaccine developed in the UK is being manufactured @SerumInstIndia

We are bringing our brightest minds together to develop vaccines against COVID-19 and future pandemics. pic.twitter.com/KXoY2g9BYb

— Dominic Raab (@DominicRaab) December 16, 2020

British Prime Minister Johnson will visit India next month to attend the Republic Day celebrations as the chief guest, UK Foreign Secretary Raab had announced on Tuesday after holding talks with External Affairs Minister S. Jaishankar during which the two sides agreed on the key elements of an ambitious 10-year roadmap to further broaden ties, and also boost strategic cooperation in the Indo-Pacific region.

In their wide-ranging talks, Jaishankar and Raab had also discussed having an 'Enhanced Trade Partnership' by next year that could be a stepping stone towards a future free trade agreement.

Raab's three-day visit to India from December 14-17 comes at a time the UK is holding complex negotiations with the European Union on reaching a post-Brexit trade deal.

In the wake of Brexit, the UK has been looking at ramping up trade cooperation with leading economies like India. There have been apprehensions that its separation from the European Union without a trade deal could severely cripple its financial markets and may have long-term implications for its economy. 

Source: The Week

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