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MARKET WATCH 15 JUNE, 2021

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Finmin asks ministries to work out govt guarantee plan for FY'22

 The finance ministry has asked all ministries and departments to assess the government guarantee requirement for the current fiscal and submit a prioritised list. The finance ministry has asked all ministries and departments to assess the government guarantee requirement for the current fiscal and submit a prioritised list. Fiscal Responsibility and Budget Management (FRBM) rules stipulate that the government cannot guarantee more than 0.5 per cent of the GDP of the respective financial year to Central Public Sector Enterprises (CPSEs) or entities. "All the ministries or departments are requested that prioritized guarantee requirement for FY 2021-22 may be worked out and only such proposals where the loan agreement can be signed and guarantee agreements can be executed during the current financial year may be included," the finance ministry said in a circular dated June 7, 2021. The guarantee already approved by the Budget Division under the Department of Economic Affairs but not executed till March 31, 2021 also needs to be revalidated, it said. Therefore, such proposals may also be included in the total guarantee for 2021-22, it added. The government guarantee helps the departments, CPSEs or entities to borrow funds at cheaper rate as the instruments are backed by the Centre. "The information sought is only to have overall picture of guarantee requirement for 2021-22 and to allocate guarantee space. Mere projection of the guarantee requirement and allocation of space should not be construed that the guarantee has been approved by the Competent Authority," it said. Information in this regard in the prescribed format is required to be submitted by June 15, it added.

Source: Business Standard

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CM Rawat discusses various issues with Union Ministers

Chief minister Tirath Singh Rawat disussed various issues of the state with a number of union ministers in the national Capital on Monday.Meeting the union Finance minister Nirmala Sitharaman, he said that work on various development schemes is underway at a swift pace under Prime Minister Narendra Modi’s guidance in Uttarakhand. He said that the state had to suffer revenue loss following implementation of Goods and Services Tax (GST) due to which the centre had approved GST compensation for the state. However, the duration of this compensation is to end in 2022. Considering the effect of Covid-19 on the state’s economy and its limited financial resources, he requested Sitharaman to extend the compensation period by five years from June 2022. Rawat also meet the union Textiles, Women and Child Development minister Smriti Irani. The duo had a special discussion on the folk art of Aipan. Irani said that focus should be laid on developing Aipan on the lines of Madhubani art. Linking it with textile, special focus should be laid on exporting it too, she said. There was also talk of encouraging the state’s organic products.Further, handloom fairs should be held in each district from August 1 to 7 which should be linked to local products and e-commerce. Similarly, textile fairs should also be held from August 1 to 15 to benefit the local craftsmen. The union minister said that she would herself visit the textile fair. Rawat also informed her about the Mukhyamantri Vatsalya Yojana and the various schemes implemented in the state for women and child development. Appreciating the importance of one-stop centre, she said that all those in need should benefit from it. While meeting the Union minister of Petroleum and Natural Gas, Dharmendra Pradhan the chief minister requested that the city gas distribution project be extended to Dehradun, Haridwar, Udham Singh Nagar and Nainital city areas. He also sought upgradation of the ONGC hospital in Dehradun to a 500-bed facility. The minister directed officials of the ministry to look into this possibility. Rawat also cited the difficult geographic terrain of the state’s mountainous areas to request the monthly demand of kerosene allocation of 1,185 KL. Pradhan assured all possible assistance to the state. Meeting the Union minister of State for Sports and Youth Affairs, Kiren Rijiju, the chief minister discussed the subject of sports development in Uttarakhand in detail. He requested that under the Khelo India scheme, the Khelo India state level centre and sports science centre be constructed at the sports college in Dehradun. At least one Khelo India small centre should be opened in each of the 13 districts, he said. A high altitude training centre will be established at the Ransi stadium in Pauri district while a Yoga centre will be established at the summer capital Gairsain. Further, sports training centres will be established at Dharchula in Pithoragarh district and Nanakmatta in Udham Singh Nagar district. Chief secretary Om Prakash, secretaries Amit Singh Negi, Radhika Jha, Shailesh Bagauli and Brijesh Sant were also present with the chief minister during the meetings.

Source: Daily Pioneer

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UN Trade Forum event: Decouple trade policy from green goals: Goyal

Speaking at a virtual event of the UN Trade Forum, Goyal said: “I do believe we have to decouple trade policy and green goals. Let the trade policy look for more inclusive growth all over the world and let us all work towards what my Prime Minister has said climate justice and sustainable lifestyle.” Commerce and industry minister Piyush Goyal on Monday pitched for decoupling trade policy from environmental goals, and called on the developed world to not use trade “as a means to foist conditionalities” on poor and developing nations. Speaking at a virtual event of the UN Trade Forum, Goyal said: “I do believe we have to decouple trade policy and green goals. Let the trade policy look for more inclusive growth all over the world and let us all work towards what my Prime Minister has said climate justice and sustainable lifestyle.” He hoped that the developed world “would not use the interplay of trade and climate challenges too much”. Trade, Goyal stressed, should allow all countries to prosper and there should be no barriers in it. The United Nations and other multilateral agencies should, instead, focus on getting the world together to fulfil their commitments around climate change. Pushing for “differentiated responsibilities” towards climate change, Goyal highlighted how developed countries have long used the carbons space to produce low-cost energy, which helped them develop infrastructure and bring prosperity to their people. India, on the contrary, has had very little per-capita contribution to the global carbon emissions, he asserted. “I think it’s important that there should be differentiated responsibilities when it comes to the less-developed or the developing world and the developed countries,” he said. Still, India, which played an important role in gathering a climate goal consensus in Paris, “would love to do better than what we have committed there”. “We are confident we would exceed our commitment.” India has been maintaining that it is not a polluter and the cause of climate change. It has voluntarily committed to trimming greenhouse gas emission intensity of its GDP by 33- 35% below 2005 levels by 2030.

Source: Financial Express

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'GST laws vague on export of exempted goods through third party'

The current Foreign Exchange Management (Export of Goods and Services) Regulations, 2015 does not have such an exemption. Q. We were exporting goods of value up to Rs 25,000 without furnishing any declaration or GR waiver. Our new bankers say that we must take GR waiver for such shipments. What is the correct position? The exemption from furnishing declaration regarding realisation of export proceeds for exports up to Rs 25,000 value existed in the Foreign Exchange Management (Export of Goods and Services) Regulations, 2000. The current Foreign Exchange Management (Export of Goods and Services) Regulations, 2015 does not have such an exemption. (Please see this link). Q. We manufacture exempted and taxable products. So, we take input tax credit (ITC) of GST paid on all inputs and inputs services. Exports of our taxable as well as exempted products are zero-rated and section 16(2) of IGST Act, 2017 allows us to take ITC against zero-rated exports also. When we export in our own name, the GST paid on inputs and input services used for making zero-rated exports, including exports of exempted products, are also attributed to the purposes of effecting taxable supplies in the manner prescribed under the Rules 42 and 43 of the CGST Rules, 2017. Now, we have received an order for export of exempted products from a merchant exporter. Can we supply at 0.1 per cent GST under notification 41/2017-IT (Rate) dated October 23, 2017? If not, how to prove that we have made zerorated supplies of the exempted products and how to claim refund of unutilised ITC? Notification 41/2017-IT (Rate) applies to taxable goods and therefore, you cannot use it for supply of exempted products to the merchant exporter. The supplies you make to a merchant exporter are not zero-rated and therefore, the normal provisions for refund of unutilised input tax credit against export without payment of GST under letter of undertaking do not come into play. The present dispensations are not clear on how to deal with this situation and claim refund of the unutilised ITC. You can write to the Central Board of Indirect Taxes and Customs (CBIC) and ask for suitable provisions to be made in the laws. Q. We have imported some goods and deposited them in the bonded warehouse by filing the bill of entry for warehousing. Now, Section 61(2) of the Customs Act, 1962, says that if warehoused goods remain in a warehouse beyond a period of 90 days, interest is payable on the amount of duty payable at the time of clearance of the goods on the warehoused goods, for the period from the expiry of 90 days until the date of payment of duty on the warehoused goods. When will the 90-day period commence -- the in-bond bill of entry date, or the date when the goods are deposited in the bonded warehouse? The 90-day period will commence from the date of deposit of the goods in the bonded warehouse. Please refer to CBEC Circular 39/2013-Cus dated October 1, 2013.

Source: Business Standard

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India, Africa must strive together for decentralised globalisation: EAM

Jaishankar on Monday said that India and Africa must strive together for "decentralised globalisation" to enhance capacities and overcome challenges posed by the Covid-19 pandemic Noting that the vulnerable gets "short changed" when supply chains are disrupted, External Affairs Minister S Jaishankar on Monday said that India and Africa must strive together for "decentralised globalisation" to enhance capacities and overcome challenges posed by the COVID-19 pandemic. Jaishankar made the comments during the inauguration of the renovated Mahatma Gandhi Memorial Library in the prestigious University of Nairobi here. He arrived in Kenya on Saturday on a three-day visit to strengthen India's relations with the major East African country. He said that the COVID-19 pandemic has brought home the dangers of relying on "limited geographies". "When supply chains are disrupted and demand outstrips supply, the more vulnerable will inevitably get short changed. "Africa cannot afford that to continue. And this goes against the very spirit of South-South cooperation. The direct lesson from the pandemic is the need today, pressing need I would say, for decentralised globalisation," he said. "India and Africa must strive together for decentralised globalisation," Jaishankar said in a tweet. "First and foremost in that context is our thinking on globalisation. There is no doubt that the world is much more interlinked and inter-dependent. But it should not be that globalisation should apply only to resources and markets while production centres remain concentrated in the hands of a few," he said. Many countries, including India, faced difficulties getting medical equipment during the pandemic and faced disruption in a number of areas - such as a computer chip shortage and stalling automobile production. South-South cooperation refers to the technical cooperation among developing countries in the Global South. It is a tool used by the states, international organisations, academics, civil society and the private sector to collaborate and share knowledge, skills and successful initiatives in specific areas such as agricultural development, human rights, urbanization, health, climate change etc. "The memory of the Mahatma (Gandhi) underlines our strong solidarity, now expressed as practical South-South cooperation," he tweeted. Underlining that due to the pandemic, the sense of security has also undergone a radical change, Jaishankar said that health and food security have become far more central which makes a compelling case for enhancing capacities in Africa. "And that would only happen when partnerships genuinely aimed at Africa's welfare deliver more extensively on development projects. Indeed, development itself will only unfold when it is based on deeper capacities," Jaishankar said, adding, "we have seen the powerful impact of collaborations that can make this happen.

Source: Business Standard

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I-T Dept Allows Manual Filing of Tax Forms for Foreign Remittance as New E-filing Portal Continues to Face Glitches

 The income tax department on Monday allowed manual filing of certain forms after the new tax filing portal continued to face tech glitches even after a week of its launch. The IT department issued a circular allowing manual filing of Form 15CA/15CB (required for foreign remittances) with banks till June 30, so that business transactions may go on. The forms will be uploaded online on the efiling portal later, it added. The new portal, www.incometax.gov.in, was launched last Monday (June 7), with the tax department as well as the government saying it was aimed at making compliance more taxpayerfriendly. But users complained of technical issues from the very first day and not everything has been fixed even after a week, chartered accountants (CAs) said, adding that taxpayers are unable to view past efiled returns and many features/ facilities continue to be marked 'coming soon'. In a statement, the income tax department said, "In view of the difficulties reported by taxpayers in electronic filing of Income Tax Forms 15CA/15CB on the portal www.incometax.gov.in, it has been decided that taxpayers can submit the aforesaid Forms in manual format to the authorised dealers till June 30, 2021." The IT department also advised authorised dealers to accept such forms till June 30, 2021 for the purpose of foreign remittances. "A facility will be provided on the new efiling portal to upload these forms at a later date for the purpose of generation of the Document Identification Number," the statement added. Any person who needs to make a foreign outward remittance, needs to file an online form/ declaration in Form 15CA specifying nature of transaction and amount of income tax deducted on such foreign remittance. In certain cases, this Form 15CA is also backed by a chartered accountant's certificate in Form 15CB, who certifies that appropriate income tax has been deducted on such remittance. Such forms (15CA and 15CB) were required to be filled online using income tax efiling portal. Nangia & Co LLP Partner Shailesh Kumar said due to shutdown of old efiling portal post May 31, 2021 and technical snags being faced with the new portal, filing of online Forms 15CA and 15CB has not been possible till now. "This had created a significant hardship for businesses, which required payment to be made outside India, for placing the orders or for obtaining licenses or meeting their commercial obligations. "However, banks were not permitting foreign remittance, for want of Form 15CA/15CB. This practical problem had brought many business transactions on a standstill," Kumar said. Realising the hardships of businesses, the government has issued this circular allowing manual filing of Form 15CA/15CB with banks till June 30, so that business transactions may go on despite the technical snags in new efiling portal, he added. Finance Minister Nirmala Sitharaman herself had asked Infosys the vendor which created the portal and its Chairman Nandan Nilekani to fix the technical glitches. A day after the launch of the portal, social media users had flagged glitches in the new efiling website to the finance minister. Following that, Sitharaman took to Twitter and asked Infosys and its chairman to fix the problem. Replying to the tweet, Nilekani had said Infosys is working to fix the glitches. Infosys was in 2019 awarded a contract to develop the nextgeneration income tax filing system to reduce processing time for returns from 63 days to one day and expedite refunds. Kumar said starting from the struggle to log in to the portal to important features such 'eproceedings' tabs being unavailable with a message displayed 'coming soon', there is anxiousness among the taxpayers and tax professionals with respect to orders being passed and noncompliance of notices without getting a sufficient opportunity to present a case. "The taxpayers could face penalty consequences for reasons beyond their control. Also, taxpayers are facing a major challenge for remitting funds abroad as they are unable to issue Form 15CA/ CB. "Even after one week of going live, the aforesaid are not minor glitches and require immediate attention/ resolution," Kumar said. The new IT portal, rather than being userfriendly, is turning out to be a nightmare presently, he added. AMRG & Associates Senior Partner Rajat Mohan said the common issues frequently faced on the portal since last week includes login taking 1015 minutes, inability to file responses to the assessment notices, data related to past filings not being visible on the portal and eproceedings module not being fully functional. "New income tax portal needs to be fixed at the earliest; numerous errors and glitches are causing inconvenience for the taxpayers and tax professionals, Mohan added. Deloitte India Partner Aarti Raote said the new tax portal has raised expectations from all. However, many who accessed the site felt it was slow and several existing features were also not accessible. "Users were faced with access and login challenges. The tax department has also indicated that the Digital Signature would need to be reregistered on account of security reasons. Thus benefits of the new portal would be seen when these initial glitches are addressed," Raote added. Dhruva Advisors LLP Partner Sandeep Bhalla said the classification interface of the new website seems to be user friendly with user manuals for each type of users, but the site itself is pretty slow and takes quite some time for small things like updating of profile. "A basic thing such as changing password could take several minutes. The various forms required to be filed for lower withholding applications... are difficult to find. The data of earlier rectifications etc filed on the earlier eportal does not reflect and throws up error message," Bhalla added. One sometimes wonders on the timing for the new launch when the advance tax timing was round the corner and deadline for completion of assessments is end of the month, which has been extended multiple times only due to pandemic and now timing of this glitch, he said. The income tax department on Monday allowed manual filing of certain forms after the new tax filing portal continued to face tech glitches even after a week of its launch. The IT department issued a circular allowing manual filing of Form 15CA/15CB (required for foreign remittances) with banks till June 30, so that business transactions may go on. The forms will be uploaded online on the e-filing portal later, it added. The new portal, www.incometax.gov.in, was launched last Monday (June 7), with the tax department as well as the government saying it was aimed at making compliance more taxpayer-friendly. But users complained of technical issues from the very first day and not everything has been fixed even after a week, chartered accountants (CAs) said, adding that taxpayers are unable to view past e-filed returns and many features/ facilities continue to be marked ‘coming soon’. In a statement, the income tax department said, “In view of the difficulties reported by taxpayers in electronic filing of Income Tax Forms 15CA/15CB on the portal www.incometax.gov.in, it has been decided that taxpayers can submit the aforesaid Forms in manual format to the authorised dealers till June 30, 2021." The I-T department also advised authorised dealers to accept such forms till June 30, 2021 for the purpose of foreign remittances. “A facility will be provided on the new e-filing portal to upload these forms at a later date for the purpose of generation of the Document Identification Number," the statement added. Any person who needs to make a foreign outward remittance, needs to file an online form/ declaration in Form 15CA specifying nature of transaction and amount of income tax deducted on such foreign remittance. In certain cases, this Form 15CA is also backed by a chartered accountant’s certificate in Form 15CB, who certifies that appropriate income tax has been deducted on such remittance. Such forms (15CA and 15CB) were required to be filled online using income tax e-filing portal. Nangia & Co LLP Partner Shailesh Kumar said due to shutdown of old e-filing portal post May 31, 2021 and technical snags being faced with the new portal, filing of online Forms 15CA and 15CB has not been possible till now. “This had created a significant hardship for businesses, which required payment to be made outside India, for placing the orders or for obtaining licenses or meeting their commercial obligations. “However, banks were not permitting foreign remittance, for want of Form 15CA/15CB. This practical problem had brought many business transactions on a standstill," Kumar said. Realising the hardships of businesses, the government has issued this circular allowing manual filing of Form 15CA/15CB with banks till June 30, so that business transactions may go on despite the technical snags in new e-filing portal, he added. Finance Minister Nirmala Sitharaman herself had asked Infosys — the vendor which created the portal — and its Chairman Nandan Nilekani to fix the technical glitches. A day after the launch of the portal, social media users had flagged glitches in the new e-filing website to the finance minister. Following that, Sitharaman took to Twitter and asked Infosys and its chairman to fix the problem. Replying to the tweet, Nilekani had said Infosys is working to fix the glitches. Infosys was in 2019 awarded a contract to develop the next-generation income tax filing system to reduce processing time for returns from 63 days to one day and expedite refunds. Kumar said starting from the struggle to log in to the portal to important features such ‘e-proceedings’ tabs being unavailable with a message displayed ‘coming soon’, there is anxiousness among the taxpayers and tax professionals with respect to orders being passed and non-compliance of notices without getting a sufficient opportunity to present a case. “The taxpayers could face penalty consequences for reasons beyond their control. Also, taxpayers are facing a major challenge for remitting funds abroad as they are unable to issue Form 15CA/ CB. “Even after one week of going live, the aforesaid are not minor glitches and require immediate attention/ resolution," Kumar said. The new IT portal, rather than being user-friendly, is turning out to be a nightmare presently, he added. AMRG & Associates Senior Partner Rajat Mohan said the common issues frequently faced on the portal since last week includes login taking 10-15 minutes, inability to file responses to the assessment notices, data related to past filings not being visible on the portal and e-proceedings module not being fully functional. “New income tax portal needs to be fixed at the earliest; numerous errors and glitches are causing inconvenience for the taxpayers and tax professionals, Mohan added. Deloitte India Partner Aarti Raote said the new tax portal has raised expectations from all. However, many who accessed the site felt it was slow and several existing features were also not accessible. “Users were faced with access and login challenges. The tax department has also indicated that the Digital Signature would need to be re-registered on account of security reasons. Thus benefits of the new portal would be seen when these initial glitches are addressed," Raote added. Dhruva Advisors LLP Partner Sandeep Bhalla said the classification interface of the new website seems to be user friendly with user manuals for each type of users, but the site itself is pretty slow and takes quite some time for small things like updating of profile. “A basic thing such as changing password could take several minutes. The various forms required to be filed for lower withholding applications… are difficult to find. The data of earlier rectifications etc filed on the earlier e-portal does not reflect and throws up error message," Bhalla added. One sometimes wonders on the timing for the new launch when the advance tax timing was round the corner and deadline for completion of assessments is end of the month, which has been extended multiple times only due to pandemic and now timing of this glitch, he said.

Source: News18

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Second wave not as bad as first, but companies cautious: Morgan Stanley

The brokerage in a note on Monday said that the impact of the second wave of the Covid19 pandemic on business has been less than the first wave that was seen in 2020. Demand has remained relatively intact in some sectors, said the international brokerage firm. Corporate sentiment is cautiously optimistic for the period going ahead with the caveat of a potential third wave of the Covid-19 pandemic, said Morgan Stanley. The brokerage in a note on Monday said that the impact of the second wave of the Covid-19 pandemic on business has been less than the first wave that was seen in 2020. Demand has remained relatively intact in some sectors, said the international brokerage firm. The second wave of Covid-19 in India peaked in May, with cases coming down from 4 lakh new cases per day to consistently under 1 lakh new cases per day now, and dropping further. The brokerage pointed out that end demand deteriorated significantly in May as the Covid-19 wave began to peak although early signs indicate a recovery in June as lockdowns are being lifted. Morgan Stanley said nascent capital spending plans are gaining a foothold. The brokerage also pointed out that pricing power is missing in the downstream sector in relation to escalation in costs by rising commodity prices. On the financial sector, Morgan Stanley pointed out that banks are indicating a drop in collection efficiencies especially in May across retain and rural loans while corporate books are doing much better than they did in the first wave.

Source: Economic Times

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Withdraw customs duty and agri cess on cotton: SIMA appeals Finance Minister

 The Southern India Mills’ Association (SIMA) has appealed to the Union finance minister Nirmala Sitharaman to withdraw both the basic customs duty and the agriculture infrastructure development cess (AIDC) levied on cotton to create a level playing field on the raw material front for the Indian textile and clothing Industry. At present, import of cotton attracts a 5 per cent basic customs duty and another 5 per cent AIDC. In a release issued by SIMA on Monday, Ashwin Chandran, chairman of the………….

Source: Economic Times

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Pakistan govt proposes tax relief in budget to boost industrial growth

 The latest budget presented by the Pakistani government last week aims to reduce the input cost of several industries and bring online transactions under the sales tax net. It offers relief measures in customs duty, sales tax and income tax for the industrial sector amid a proposed plan that explains how the government intends to meet the Rs-1,129 billion hike in the Federal Board of Revenue (FBR) target. The government has either reduced or exempted completely customs duty, additional customs duty and regulatory duty on imports of 584 tariff lines, including fabric in the value chain of the textile sector. The estimated loss of revenue from this major measure is Rs10 billion. The tariff policy board has proposed reduction in customs duty and additional customs duty on 328 tariff lines related to raw materials, chemicals and intermediate goods for chemical, engineering and leather industry, etc. as part of its tariff rationalisation plan, according to Pakistani media reports. Under this, 241 tariff lines are completely exempted from customs duty and additional customs duty, while the same on 87 tariff lines has been reduced to 3 per cent from 16 per cent and 11 per cent respectively. On 2,436 tariff lines, additional customs duty has been reduced from 7 per cent to 6 per cent. These items are placed under the 20 per cent customs duty slab, which includes garments and footwear.

Source: Fibre2Fashion

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Cambodia-US trade climbs over 24.5% from January to April

Although the economic crisis unleashed by Covid-19 has driven large international trade declines, Cambodia-US trade seems to have largely eluded the clutches of the pandemic wobbles, worth US$2.6549 billion in January-April, an increase of 24.48 per cent over the US$2.1327billion booked in the same period of 2020. Of that, the Kingdom exported $2.5192 billion, up by 24.43 per cent year-on-year from $2.0246 billion, and imported $135.7 million, up by 25.53 per cent on a yearly basis from $108.1 million, according to the US Census Bureau. Cambodia Chamber of Commerce vice-president Lim Heng told The Post that although Covid-19 influences production chains at all levels, the US market still boats large potential for the Kingdom’s finished textile products. He said he remains optimistic that the upward trend of bilateral trade growth will continue as the US economy, which has been hard-hit by the Covid-19 crisis, shows more positive signs. The Kingdom is also gaining traction in US market share due to the ongoing Sino-US trade row and investment diverted from Myanmar, he said. “The trade volume between the two countries will increase further if Cambodia continues to qualify for the Generalised System of Preferences [GSP] from the US,” Heng said. He asserted that plans in many countries around the world to reopen tourism would provide significant momentum for orders of garments and finished textile products from Cambodia. Bilateral trade between the Kingdom and the US amounted to $6.9213 billion in 2020, up 17.89 per cent from 2019, data from the US Census Bureau show. The export value of Cambodian goods was $6.5777 billion, up 22.79 per cent from the $5.3568 billion posted in 2019, while goods imported from the US were worth $343.6 million, down 33.15 per cent from $514 million.

Source: The Star

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Rising yarn prices threaten garment export recovery

 Local garment exporters are feeling the pinch of a sudden unusual rise in yarn prices in the local and international markets, a development that is threatening to derail the recovery of the apparel shipment from the pandemic-induced slowdown. Yarn prices rose 40 per cent between December and June because of the cotton price hike in the international futures markets, exporters say. Yarn accounts for 50 per cent of the cost to produce a t-shirt or a garment item, while button, zippers and other accessories comprise the rest. The yarn prices increased in the local markets because of the cotton price spike, the abnormal rise in freight charge, and the hike in utilisation capacity at the mill level due to the resumption of production after a pause caused by lockdowns. In the international futures markets, cotton was traded between $88.21 per pound and $87.72 per pound on June 11, up from $72.65 to $72.90 on December 14. Cotton prices soared 21 per cent year-on-year to $1.99 per kilogram in the January-March quarter of 2021, World Bank Commodities Price Data showed. As a result, the widely consumed 30-count yarn sold for $4.25 to $4.30 per kg in the local markets on Sunday. It ranged from $3.9 to $4 in December. The rise in the freight charge has affected the yarn price badly in the local market. The freight rate was $1,000 per 40-foot container in December. It rose to $3,000 in June, said Monsoor Ahmed, additional secretary of the Bangladesh Textile Mills Association (BTMA), a platform of primary textile millers. The demand for cotton rose 163 per cent between April and June compared to the corresponding period last year as almost all the local mills either enhanced their capacity or have gone for the highest use of the installed capacity because of the rise of demand for yarn, he said. According to the US Department of Agriculture, global cotton production and consumption are expected to rise marginally from last month. The record global trade will be boosted, led by robust demand in China, Bangladesh, and Turkey, it said. Since Bangladesh is not a major cotton-producing nation, 99 per cent of the requirement for the raw material is met through imports. Traders, importers and millers import 8 million bales of cotton, spending $3 billion a year. Last year, cotton imports fell to 7.2 million bales as production halted in many mills after the government had imposed nationwide restrictions to tame the coronavirus pandemic. Bangladesh produces 1.5 lakh bales of cotton annually. Despite the increase in the price of raw materials, international clothing retailers and brands are reluctant to offer a better price to local garment suppliers. The increase in yarn price has pushed up the production cost of a finished exportable garment item by 25 per cent. But buyers are offering a 5 per cent to 10 per cent increase. "One of my buyers had proposed a 3 per cent price hike. I rejected the offer," said a garment supplier. "The buyer shifted the work orders to Sri Lanka, but the Sri Lankan supplier also did not accept the price. Finally, a Bangladeshi buying house received the order at a lower rate." Md Fazlul Hoque, managing director of Narayanganj-based Plummy Fashions Ltd, said his buyers were offering a 5 per cent to 10 per cent hike. "I am taking the orders to keep my factory up and running. Keeping the factory operational even at an abnormally lower price is also a business," he added. Some local suppliers are not getting any additional prices from the buyers as retailers and brands booked the orders at least six months ago, according to a European buyer in Dhaka. "Six months ago, the prices of cotton and yarn were lower. The suppliers should have bought the raw materials at that time. Then, they would not have faced the current situation," he said. Last year, cotton production was lower in the US and India, the two major suppliers of the raw material for Bangladesh, said Mohammad Ali Khokon, president of the BTMA. "So, the yarn prices have gone up in local markets," Khokon said. Because of the depressed demand in the western markets and lower prices, Bangladesh is set to miss its apparel export target for the outgoing fiscal year. At the beginning of the fiscal year, the government aimed to earn $33.79 billion from apparel exports. In the first 11 months of FY2020-21, the country earned $28.57 billion from garment exports, registering 11.1 per cent year-on-year growth, according to data from the Export Promotion Bureau. Knitwear shipments fetched $15.36 billion, and woven garments brought home $13.19 billion, registering 20.55 per cent and 1.80 per cent year-on-year growth respectively. Faruque Hassan, president of the Bangladesh Garment Manufacturers and Exporters Association, said the retailers and brands raised the prices up to 15 per cent for new orders, although the cost had gone up by up to 25 per cent. "We need to negotiate strongly with buyers," he added.

Source: The Daily Star

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Fashion for Good launches Renewable Carbon Textiles project

Netherlands-based Fashion for Good has launched Renewable Carbon Textiles project to bring together a pioneering consortium for accelerating the development of Polyhydroxyalkanoates or PHA polymer fibres. These fibres are a promising biosynthetic alternative to fossil-based fibres with the potential to reduce carbon emissions in the fashion supply chain. The project brings together key industry players to investigate, test and validate the solutions provided by innovators in the PHA polymer space. The fashion industry accounts for around 4 per cent of global greenhouse gas emissions (GHG-e), with 38 per cent of these emissions coming from raw material production, preparation and processing and 3 per cent from end-of-use. Polyester fibre is one of the most widely used in the fashion industry, making up 52 per cent of global fibre production, Fashion for Good said in a press release. The production of virgin fossil-based polyester fibres is responsible for increased greenhouse gas emissions and their use results in the release of microplastics into the natural environment. PHA polymers provide a bio-based, marine and soil compostable solution to fossil-fuel derived polyester fibres, and could be a possible holy grail to decarbonising the fashion industry. “There is an urgent need to find replacements for the predominantly fossil based fibres in the fashion industry through solutions such as biosynthetics from renewable sources. PHA polymers represent an exciting, yet challenging solution for reducing carbon emissions in the fashion industry, and this project aims to drive further innovation in this space to bring them to scale,” said Katrin Ley, managing director, Fashion for Good. With catalytic funding provided by Laudes Foundation, collaborating partners include Bestseller, Norrøna, PVH Corp and the Fabrics Division of W L Gore & Associates providing industry expertise and financial support. Bio Craft Innovation, Full Cycle Bioplastics and Newlight, leading innovators in the field of biopolymers, have joined the project to applying their expertise to produce the fibres and further develop fibre melt-spinning, a traditionally challenging, yet critical step in PHA production. As such, there are still some manufacturing challenges and additional technical assessments needed to compare and evaluate the different polymers. The project focuses on validating the technical feasibility of the output, working with the Nonwovens Innovation & Research Institute (NIRI) to run the melt-spinning trials. This allows for a comparative evaluation which can provide key learnings on how to best support and bring these technologies to scale. Alongside the technical feasibility study, the project includes a range of degradation testing that will be conducted by Organic Waste Systems (OWS), the release said. PHAs are produced through a fermentation process using various renewable carbonbased feedstocks. In the coming months, the innovators will begin developing their individual PHA formulations, which will be shipped to NIRI for melt spinning trials.

Source: Fibre2fashion

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