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MARKET WATCH 07 MAY, 2021

NATIONAL

 

INTERNATIONAL

India, EU looking at comprehensive FTA, no early harvest

The previous EU-India summit was held in July 2020, via video conference, with EU and India adopting a joint statement, a five-year roadmap for the EU-India strategic partnership and a joint declaration on resource efficiency and circular economy. India and the European Union (EU) are set to revive the much-procrastinated talks on a comprehensive free trade agreement after a hiatus of 6 years as the two partners seek to deepen economic ties and cooperation in battling Covid 19, strengthening connectivity and securing a rules-based Indo-Pacific at the India-EU leaders’ Meeting on 8 May. Prime Minister Narendra Modi will participate in the EU-India virtual summit in Porto on Saturday which will be attended by leaders of all the 27 member countries of the EU, Charles Michel, President of the European Council and Ursula von der Leyen, President of the European Commission. previous EU-India summit was held in July 2020, via video conference, with EU and India adopting a joint statement, a five-year roadmap for the EU-India strategic partnership and a joint declaration on resource efficiency and circular economy. The positive momentum in ties between India and the EU which is the largest trading partner of India and one of its largest sources of FDI has led to a wide expectation of the leaders endorsing the launch of negotiations towards an FTA on trade, investment promotion and geographical indications. India and EU talks on FTA were suspended in 2013 amid disagreements over tariff rules for car parts and free-movement rights for professionals. Officials of the EU said on Thursday that the India-EU relationship has developed positively in recent years, giving optimism that the differences in trade negotiations would be ironed out to pave way for a conclusive end to discussions on the FTA. “The talks will cover all areas of trade and we are not looking at an early harvest. We are looking at a full, ambitious and comprehensive set of negotiations,” an EU official said. The other key agenda of the summit are reforms in the UN, G-20, and WTO, green and digital transitions, operationalisation of a joint task force on artificial intelligence and a partnership on connectivity. The India-EU meet comes amidst expanding India-EU cooperation as the 27- member bloc steps up medical aid to help India battle a dangerous surge in Covid-19 cases, oxygen shortages and rising fatalities. The European Commission has announced a €2.2 million in emergency funding to respond to the drastic surge in Covid-19 cases in India and member states have already mobilised supplies of urgently needed oxygen, ventilators and medicines from Austria, Belgium, Czechia, Denmark, Finland, France, Germany, Ireland, Italy, Luxembourg, Netherlands, Portugal, Romania, Spain and Sweden to India over the last week via the EU Civil Protection Mechanism.

Source: Financial Express

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Dollar forward rates normalise after carry traders unwind positions

The spike in near-term dollar-rupee forward premium has normalised after carry traders unwound some of their positions and arbitrageurs set in to take advantage of the peculiar rise in cash-spot rates. The premium for May has fallen to around its normal level of 30-32 paise, from 50-54 paise on Monday. The cash-spot premium, which is used by banks for swaps, had indicated a forward premium rate of 16 per cent. The rates had also jumped as dollars accumulated in the system following the initial public offering of PowerGrid’s infrastructure investment trust (InvIT). Foreign investors converted their dollars for rupees to invest in the IPO. Most of that dollar has gone back after the IPO closed, say experts, easing the pressure on the system. According to currency dealers, the Reserve Bank of India’s (RBI) unannounced policy measures on Wednesday put out a signal that the central bank was watching the markets and will take care of the volatility. The central bank was also seen doing some intervention in the markets to ease out the forward rates.

The RBI calmed down the nerves by sending a strong signal in the favour of further flattening of the yield curve, said Amit Pabari, MD and CEO of CR Forex, a currency consultant. “The relief measures could support the ongoing chaos regarding Covid disruptions in the financial activity and hence volatility in the rupee could be under the RBI’s control,” he said. The fall in the premium has normalised hedging cost, aiding importers in hedging their near-term exposures. Currency dealers are also advising exporters to cover a part of their near-term exposure. However, there has been no change in the large exposure framework limitations of local branches of foreign banks. The rules now say that they cannot repatriate dollars beyond a point from their local operations to their head-office. Therefore, when forward contracts mature, especially at the month-end, there could be issues of dollar excesses and such spikes in overnight or near-term forward contracts cannot be ruled out, dealers say.

Source: Economic Times

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Export orders healthy, demand rising: FIEO

Indian exporters are expecting a continuous growth in the country’s outbound shipments despite an increase in COVID-19 cases as their order books are encouraging and there is a pickup in demand in rich markets. Federation of Indian Export Organisations (FIEO) President S.K. Saraf said that in most of the States, manufacturing and export- related services have been exempted from restrictions and inter-State movement of cargo is permitted by the central government. “However, a pandemic of such magnitude does cause disruptions since various stakeholders are not operating with full manpower, including the industry. “We expect the peak to come before mid-May and the situation should improve thereafter,” he said. “With such assumptions, we expect exports to continue on the growth trajectory as the order-booking position of exporters is very encouraging,” he added. India’s exports in April jumped almost threefold to $30.2 billion even as trade deficit widened to $15.24 billion, according to the Commerce Ministry’s data.

Source: The Hindu

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RBI's relief: Hit by second Covid wave, MSMEs call for more support

Micro, small & medium enterprises (MSMEs), which have been hit badly by the second wave of Covid, have said that the Reserve Bank of India’s (RBI’s) steps to ensure liquidity and provide support are not enough. According to them, measures such as revisiting classification of bad loans and clearing pending dues from government agencies are also required. “The RBI has most correctly recognised how small businesses and financial entities at the grassroots level are bearing the considerable burden of the pandemic. It has, thus, unveiled measures to help them,” said Deepak Sood, secretary general of ASSOCHAM. “It’s a great move and will boost the confidence of businesses. But the problem with loan restructuring is that it is difficult for businesses to prove the viability of a business on paper at this time due to the uncertainty caused by the second wave,” said Mukesh Gupta, president, Chamber of Indian Micro, Small and Medium Enterprises. Gupta further said that restructuring should be allowed for loans that have been categorised as non-performing assets (NPAs). According to RBI norms, a borrower’s account has to be a standard asset. “In fact, after restructuring, the account should be categorised as a standard account, if the bank thinks that the project is viable,” he said, adding that delayed payment to MSMEs by various government agencies and large corporates continues to remain a challenge. The RBI on Wednesday announced measures to ensure liquidity and provide support to small businesses that have been hit by the second wave of Covid. It allowed re-opening of one-time restructuring for individuals and MSMEs till September 30. In cases where individual borrowers and MSMEs have availed restructuring of loans that provided a moratorium of less than two years, banks are being allowed to modify the moratorium period up to two years. For MSMEs restructured earlier, banks are allowed to review working capital sanctioned limits based on a reassessment. The imposition of lockdown across several states has hurt small businesses the most. It is felt that support to small businesses is crucial. as they are major job creators. Last week, the Federation of Indian Micro, Small and Medium Enterprises (FISME), in a letter to the finance ministry, said that more than the requirement of additional funds, the greatest need for MSMEs is flexibility in assigning NPAs.

Source: Business Standard

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COVID-19 resurgence bringing renewed challenges for India; GDP growth seen at 9.5 pc: Fitch

While containment measures will weigh on India's ongoing economic recovery, the localised nature of restrictions means that the actual impact is likely to be much less severe relative to April-June 2020. The spiralling crisis from resurgence of COVID-19 cases in India has dented support for the ruling BJP but voter support for Prime Minister Narendra Modi and his party will remain strong over the coming quarters and through this humanitarian crisis, Fitch Solutions said Thursday. The sudden and steep surge in the number of coronavirus cases, the highest-ever 4,12,262 new infections and a record 3,980 daily death toll in a day, has swamped the health system, which seemed to have collapsed. While containment measures will weigh on India’s ongoing economic recovery, the localised nature of restrictions means that the actual impact is likely to be much less severe relative to April-June 2020 when a strict nationwide lockdown was imposed, Fitch Solutions said. It forecasted real GDP to grow 9.5 per cent in 2021-22 (April 2021 to March 2022). Risks to this forecast are to the downside, as the surge in new daily COVID-19 caseloads will most likely see an extension and expansion of lockdowns, it said adding that the resurgence of COVID-19 cases exposed cracks in the Indian healthcare system. “While there appears to be signs that the spiralling COVID-19 crisis in India has dented support for the ruling BJP, we maintain our view that voter support for Prime Minister Modi and the BJP will remain strong over the coming quarters and through this humanitarian crisis,” Fitch Solutions said. This second wave in India has been widely attributed to the B.1.1.7 variant, first identified in the UK, which had ramped up cases in Punjab. Another possible culprit is a homegrown variant, B.1.617, with two worrying mutations that originated in Maharashtra, the worst affected state. “In addition to this, in India, a year of COVID-19 fatigue gave way to an ill-advised euphoria over herd immunity as cases began to dip in January 2021. “Inadequate government measures and people not adhering to public health guidelines, such as wearing face masks and maintaining social distancing, are also the main reasons for India’s upward tick in infections,” it said. It added that a number of political, social and religious events and elections for local bodies in multiple states and preparation for Assembly elections in others also created an opportunity for the virus to move fast. Fitch Solutions said that in March this year, a few weeks before the new surge, Health Minister Harsh Vardhan, who is also a physician, asserted that India was in the “endgame” of the COVID-19 pandemic, justifying the government’s decision to export medical resources to other countries.

India exported around 193 million doses of vaccines. Fitch Solutions said “the perception that Prime Minister Narendra Modi’s administration has considerably mismanaged the COVID-19 crisis will weigh on his and the Bharatiya Janata Party’s (BJP) popularity somewhat. Some of this erosion in popularity is evidenced in the state elections”. “A less-than-stellar performance at these polls adds to the political challenges the BJP had been facing in recent months, which include the anti-farm reform protests by farmers and anti-BJP government sentiment on social media platform Twitter amid the resurgence in COVID-19 cases, which the government has sought to suppress. “For now, however, we are cautious against concluding that the BJP’s support has weakened across the country, given Modi’s strong personality-led support across the country, which we believe can still sustain through this humanitarian crisis,” it said. With 8.5 hospital beds per 10,000 population and eight physicians per 10,000, the country’s healthcare sector is not equipped for such a crisis. Hospitals across the country have filled to capacity and in addition to oxygen running out, intensive care units are operating at full capacity and nearly all in the country ventilators are in use. “Despite surging infections, an overburdened healthcare system, and non-stop burial and crematorium activity, the Modi administration remains resistant to imposing a stringent sweeping nationwide lockdown the likes of Q1FY21 (April 2020-March 2021). “This was due to considerations around the economic damage another such lockdown would cause,” it said. The onus of the pandemic containment has hence been shifted to the state governments, Fitch added. As of early May 2021, at least 11 states and Union Territories have imposed some level of lockdowns in localised high-risk areas, ranging from night curfews, weekend lockdowns and strict lockdowns over a multi-week period, in an attempt to slow the spread of the virus.

Source: Financial Express

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Raymond has transitioned to more advanced digital value chain: Gautam Hari Singhania

New Delhi: Raymond has today transitioned to a more advanced digital value chain based on demand side economy and adoption with agility, says its Chairman and Managing Director Gautam Hari Singhania. In an interview with IANS, Singhania said: "Until the second wave swamped us sometime around February end, we were witnessing healthy signs of recovery and moving towards pre-pandemic levels. However, varied localised restrictions across states to curtail the spread of pandemic has resulted in the industry facing similar issues that we faced last year."

"Overall, with the spike in cases in leading metros like Mumbai, Delhi, Bengaluru, the consumer sentiments are subdued and once again the weddings are being postponed," he added. Singhania said presently, for everybody, the immediate priority is health and safety of family and friends, and, shopping has taken a back seat. "We expect this scenario likely to continue till the second wave subsides," he added. "We clearly have moved away from conventional supply chain of manufacturing large volumes and distributing and stocking inventories way ahead in advance from the season. Today Raymond has transitioned to a more advanced digital value chain based on demand side economy and adoption with agility," Singhania said.

Here are excerpts from the interview.

Q: What are the challenges for retail industry given the new wave of the pandemic?

A: Until the second wave swamped us sometime around February end, we were witnessing healthy signs of recovery and moving towards pre-pandemic levels. However, varied localised restrictions across states to curtail the spread of pandemic, has resulted in the industry facing similar issues that we faced last year.

The textile and apparel industry was impacted as a result of lockdowns in several states with supply chain and business getting affected. For retailers, closure of malls and customers not stepping out due to the fear of the pandemic is the biggest challenge. The restricted movement of delivery agents, for online platforms are also highly affected as currently only essential goods and services are allowed to be delivered. Overall, with the spike in cases in leading metros like Mumbai, Delhi, Bengaluru, the consumer sentiments are subdued and once again the weddings are being postponed.

Q: A revival of consumer sentiments has again been impeded?

A: With the pandemic at its peak, consumers are generally more concerned about their and family's safety. Presently, for everybody, the immediate priority is health and safety of family and friends. So, shopping has taken a back seat. We expect this scenario likely to continue till the second wave subsides. Businesses have been impacted because of the curfew, week-end restrictions and curbs on mobility of people. We also don't see any pent-up demand like the last time. The government opening up vaccines for 18+ is a great move that will help in curbing the pandemic and speed up the pace of economic recovery.

Q: How has Raymond adapted to the new normal?

A: We have set together standard protocols and procedures at the stores, which give customers comfort and a safe shopping experience. For consumers who are hesitant to step out of their homes but yet were keen on buying products from us, we showcased them the products through video calls and this service received a good traction with during the wedding season. Today at our 1,500+ stores, we follow stringent hygiene and each staff member has been trained to be compliant to these new working norms. Our stores are at the heart of our Omni channel service model. All products in stores are now available for customers to purchase through e-commerce platforms.

We clearly have moved away from conventional supply chain of manufacturing large volumes and distributing and stocking inventories way ahead in advance from the season. Today Raymond has transitioned to a more advanced Digital Value Chain based on demand side economy and adoption with agility.

Q: How is Raymond coping up with the second wave?

A: We are witnessing localised lockdown or curtailment of movement because of rising Covid cases. Presently, the situation is extremely dynamic. Hence, we have to wait and watch. Employee safety is paramount at Raymond ... we have our staff Working from Home. At some places, even manufacturing plants are shut, impacting the business. At most of our factories, over 90 per cent of the eligible staff has been vaccinated. Additionally, we also arranged for transportation facilities for our employee family members to travel to nearby vaccination camps. The situation seems dynamic and we will have to wait and watch as the situation is evolving.

Q: With the ongoing wedding season, how has been the impact in the suiting sector?

A: FY21 being a Covid year, the suiting sector was impacted however as people started to overcome their fear during the festive season, the sales picked up suddenly. Given our strong brand equity and loyal consumer base, our suiting business displayed resilience. But now with the second wave hitting the country, it is too early to assess the impact. With more states imposing lockdown and while the others still remain open, the impact on the ongoing wedding season will certainly be there... however, it will be premature to comment anything right now.

Q: What are the trends and challenges for retail trade?

A: Organisations are now reinventing themselves to reinstate their relevance to consumers in the new normal. While we see a surge in online shopping during the lockdown, given the nature of the fashion business, brick and mortar retail spaces will always be relevant as experience of touch and feel holds the prominence in this sector. For a textile player, it is very difficult to completely move to digital platforms as compared to other industries. Being one of the largest employment generators, the opening up of the economy is critical for the sector to thrive.

Q: How does apparel score on list of consumer priorities?

A: As per the saying, Roti, Kapda aur Makan, textile and apparel will remain the priority. And just like the first wave, we will recover soon from this phase. Once the pandemic is gone and things coming back to normal, people will dress up for occasions celebrating the life.

Source: Sify

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China indefinitely suspends economic dialogue with Australia

The National Development and Reform Commission (NDRC) of China has announced that it has indefinitely suspended all activities under China-Australia Strategic Economic Dialogue. The economic dialogue is jointly held by the NDRC and relevant ministries of the Australian government. China holds such dialogues with foreign governments to discuss trade disputes. "Recently, some Australian Commonwealth Government officials launched a series of measures to disrupt the normal exchanges and cooperation between China and Australia out of Cold War mindset and ideological discrimination," NDRC said in its statement announcing the suspension of the dialogue. Relations between Australia and China deteriorated after the former supported a probe into the origins of the coronavirus, which first appeared in Central China in late 2019. Subsequently, China blocked imports of most Australian goods last year. However, the immediate trigger for the latest Chinese announcement was the last month decision of Prime Minister Scott Morrison's government to cancel two deals signed by the Victoria state government with China's Belt and Road initiative.

Source: Fibre2fashion

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Taiwanese apparel exports to increase in 1st half of 2021: TexPro

 

The apparel exports of Taiwan are expected to increase in the period between January 2021 and July 2021 to reach a monthly average of $33.02 million. The country exported apparel worth $423.68 million in 2019, which dropped by 14.05 per cent to $364.13 million to reach a monthly average of $30.34 million in 2020 due to the COVID-19 pandemic. The drop was not as significant as compared to the downfall in other major countries due to the efficient policies introduced by the government and industry stakeholders. Taiwan is one of the major exporters of technical textiles across the world. The manufacturers use technologically advanced machineries and equipment in their textiles and apparel plants. With new innovations, Taiwanese textiles industry is a major supplier for the world’s sportwear industry. Accessories, socks, trousers/shorts, and shirts/t-shirts accounted for 40.82 per cent, 16.34 per cent, 7.12 per cent and 8.17 per cent in 2019, and 38.69 per cent, 14.55 per cent, 7.17 per cent and 6.93 per cent in 2020, respectively. These items collectively account for more than 65 per cent of total apparel exports of the country, according to Fibre2Fashion’s market analysis tool TexPro.  Taiwan’s exports of accessories declined in 2020 by 18.55 per cent. But they are expected to increase significantly by 33.97 per cent to a monthly average of $15.73 million during January 2021 to July 2021 from a monthly average of $11.74 million in 2020. Exports of socks and jerseys are expected to decrease in 2021. On the other hand, exports of trousers/shorts and shirts/t-shirts are expected to rise in the coming months. China, the US, Vietnam, Indonesia and Hong Kong are the major export destinations, accounting for more than 60 per cent of Taiwan’s total apparel exports.

 

Source: Fibre2fashion

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US firm Swatchbook & Coloro to develop intelligent colour system

 

Swatchbook has partnered with Coloro, provider of a unique 1.6 million colour system. The companies aims to build an industry-first fully integrated, intelligent material and colour system allowing fabric suppliers, tanneries, material developers, and designers to develop materials with accurate colour description and feasibility in all digital form. By integrating Swatchbook’s digital material and Coloro’s colour design and knowledge platforms users will have the ability to design new material and colour combinations right the first time, by validating feasibility and accuracy in all digital form, thus eliminating long lead times and reducing cost and waste in dyeing and production. Using the Swatchbook material platform as well as Swatchbook mix to develop new material and colour combinations on latest product lines will provide designers with an unprecedented digital toolset in 3D, even on mobile, without the need of any expert knowledge, according to a media statement by Swatchbook. Combining this knowledge platform with real materials coming from suppliers will allow everyone involved in the design and product development process work with accurate colours and materials and the confidence of a manufactural result. This will significantly reduce design and production cycles, while dramatically improving the sustainability aspects of the entire development process by reducing unnecessary waste of materials and energy, Swatchbook said. All 3,500 Coloro standard colours are available to every Swatchbook subscriber, brand as well as supplier. They can create their own season colour palettes to share with their team and suppliers. The platform also includes Coloro colours as part of the digital material. It allows re-colouring of existing materials using seasonal colour palettes and AI enabled search of closest colours and materials, according to Swatchbook. Coloro has spent years in developing their unique system reflecting human colour vision and building an extensive knowledge base of analysing colour in the context of feasibility, dye-ability and sustainability for different materials and processes. The goal is to offer a fully integrated application and knowledge system that will provide the necessary information to designers at design-time, rather than after the fact as it is standard today. Coloro colours are immediately available to all Swatchbook subscribers by simply logging into their user account. All Coloro colours are identified by their unique seven-digit code which makes it easy to find the colour you are looking for. Search by Coloro codes for colours and materials are also automatically enabled. “This is a natural partnership as Coloro and Swatchbook share a future forward approach to more sustainable product development supported by digital data and visualisation. Integrating the Coloro standard library into Swatchbook’s platform gives users the ability to visualise two critical elements of product design, colour and materials, more accurately in 3D,” Coloro’s international managing director, Sansan Chen said in a statement. “Partnering with Coloro and being able to provide accurate Coloro colour standards to Swatchbook users gives both material as well as apparel and footwear designers the next level of digitals tools they need to create new designs with absolute confidence. These new designs provide both visual accuracy, feasibility and manufacturing information inside Swatchbook, the single source of truth, which can be accessed anywhere, anytime, on any device,” Yazan Malkosh, founder and CEO of Swatchbook said.

Source: Fibre2fashion

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