IBTEX No. 112 of 2016 June 03, 2016
USD 67.20 | EUR 74.95| GBP 96.87 | JPY 0.62
Spot Prices of Overseas Ring Spun Yarn in Indicative Prices of Cotton Grey Fabrics in China Chinese Market Date: 7 Apr-2016 FOB Price Date: 7-Apr-2016 Price (Post-Tax) (Pre-Tax) Description Prices Prices (USD/Kg.) (Domestic Production) (Yuan/Meter) Country C32Sx32S 130x70 63” 2/1 fine 20S 30S 7.20 Carded Carded twill India 2.10 2.20 C40Sx40S 133X72 63” 1/1 poplin 6.40 Indonesia 2.78 3.18 C40Sx40S 128X68 67” 2/1 twill 6.20-6.40 Pakistan 2.20 2.60 24Sx24S 72x60 54” 1/1 batik Turkey 2.62 2.75 4.50 Source CCF Group dyeing 20Sx20S 60x60 63” 1/1 plain cloth 6.30
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INTERNATIONAL NEWS No Topics 1 It's Official: US International Trade Commission Predicts Negligible Economic Benefits From TPP 2 World cotton consumption dropped 3% in 2015-16: ICAC 3 Belgium: FTA's Sustainability Conference focuses on cooperation 4 Australia government funding to boost cotton industry 5 Bangladesh: Corporate tax for apparel cut to 20pc 6 H&M Commits to 4,000 New Jobs in Ethiopia 7 Europe and US in race to keep TTIP on track 8 Nike’s New European Distribution Center Will Help Clean Up its Supply Chain 9 Cotton prices fall in Pakistan due to lack of buying interest NATIONAL NEWS 1 'Time to make growth job-oriented, sustainable' 2 India Must Capture World Markets To Sustain High Growth: Arvind Panagariya 3 Scrapping tariff on imports may cost India Rs 75.7k cr a year 4 Have negotiations for RCEP – world’s largest trade bloc of which India will be a part – run into trouble? 5 Zari eyes leap from `cottage' to industry 6 Seed firms for end to NOC from trait cos
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INTERNATIONAL NEWS
It's Official: US International Trade Commission Predicts Negligible Economic Benefits From TPP
Techdirt has written hundreds of stories about TPP over the years. So many of those have revealed troubling aspects of the deal that it's hard to single out the worst. But there can be no doubt that one of the most extraordinary facts is that the US and the other TPP nations were negotiating for eight years the biggest so-called trade deal in history with only the sketchiest idea about its likely benefits. Instead, politicians and supporters simply assured the public that it would all be great, honest. And yet when the rigorous econometric studies began to appear, they consistently showed that TPP would produce almost no benefits whatsoever.
Upon hearing that a planned course of action designed to bring financial gains would do nothing of the kind, most rational people in ordinary life would try something else. But not the politicians and TPP negotiators, who carried on despite these clear signs that TPP was simply not worth the effort. They either ignored these studies completely, or at most said that the only reliable predictions worth considering were the official ones, which would come from the US International Trade Commission (USITC) once TPP's text had been finalised. Last week, the USITC released its massive 792-page report (pdf). Here's a key part of the summary:
The Commission used a dynamic computable general equilibrium model to determine the impact of TPP relative to a baseline projection that does not include TPP. The model estimated that TPP would have positive effects, albeit small as a percentage of the overall size of the U.S. economy. By year 15 (2032), U.S. annual real income would be $57.3 billion (0.23 percent) higher than the baseline projections, real GDP would be $42.7 billion (0.15 percent) higher, and employment would be 0.07 percent higher (128,000 full-time equivalents).
Like all the figures mentioned there, that 0.15% GDP boost would be achieved in 2032, which means that on average TPP is expected to produce an extra annual GDP boost of roughly 0.01%. Public Citizen's Global Trade Watch (pdf) pulled out a few other interesting figures from the report, which:
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Estimates a worsening balance of trade for 16 out of 25 U.S. agriculture (p. 124), manufacturing (p.228), and services (p. 340) sectors that the ITC selected to feature. This includes vehicles, wheat, corn, autoparts, titanium products, chemicals, seafood, textiles and apparel, rice and even financial services. Autoparts would be hard hit with employment projected to decrease by 0.3 percent.
Estimates the TPP will increase the U.S. global trade deficit by $21.7 billion by 2032.
Projects even the U.S. services trade balance will worsen by 2032 as service imports of $7 billion swamp the estimated increase in exports of $4.8 billion (p. 35).
Global Trade Watch also notes that the USITC's track record for predictions is not good:
The actual outcomes of past trade pacts have been significantly more negative than ITC projections generated using the same methodology employed for the TPP study. This makes today’s unusually negative ITC findings on the TPP especially ominous.
The economist Dean Baker from the Center for Economic Policy Research (CEPR) agrees about the USITC's past failures:
The USITC also has not done well in projecting winning and losing sectors from trade agreements. A recent analysis by CEPR found no relationship between the industries that were projected to be export and import gainers and losers from the trade deal with Korea and the actual outcome. He goes on to point out an even more worrying aspect of the latest modelling: this analysis does not seem to incorporate any of the losses associated with the stronger and longer patent and copyright protection required under the TPP. Higher prices for drugs, software and other protected items are likely to impose substantial costs on the United States and other parties to the agreement. For example, the New Zealand government estimated that just one provision -- extension of copyright protection from 50 years to 70 years -- would cost the country 0.024 percent of GDP. This amount is 10 percent of the total gains projected in the USITC report.
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It is entirely possible that a full assessment of the cost of these provisions would show that the TPP would lead to a net reduction in income for the United States and other countries in the pact.
That's a hugely important point. On the rare occasions when TPP supporters have made specific claims about the economic benefits of TPP, they have consistently failed to take into account any downsides. It's like going into a business deal only looking at the benefits, and ignoring any possible costs. Against this chorus of disapproval, it's interesting to see how TPP supporters try to spin the USITC's miserable figures. Here's what the Business Roundtable, "an association of chief executive officers of leading U.S. companies", has to say:
"The release of the ITC report marks an important step in the process for considering the TPP. We look forward to reviewing the report's findings as we continue to highlight the benefits of the TPP to American businesses, farmers and workers," said Tom Linebarger, Chairman and Chief Executive Officer of Cummins Inc., and Chair of the Business Roundtable International Engagement Committee. "The TPP will remove many foreign barriers to U.S. goods and services and impose strong, enforceable rules for trade -- enabling U.S. manufacturing, services and technology companies to grow their sales to important international markets."
"The TPP sets high standards and reflects American priorities, and if the United States doesn't take the lead in shaping international trade rules, our economic competitors will," continued Linebarger.
That's it: the Business Roundtable could not find a single number to quote that made TPP look like a good deal. What about the ultimate TPP cheerleader, US Trade Representative Michael Froman? What did he have to say about the report? This:
"The ITC report illustrates for the American people and members of Congress the benefits TPP will deliver in their own backyards. If you are a poultry farmer in Delaware this report shows that chicken exports will increase by $174 million annually under TPP. If you are a rancher in Nebraska this report shows that beef exports will increase by $876 million annually under TPP. And if you build cars in the Midwest, this report shows that auto exports will rise $1.95 billion annually.
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With today's study as another important data point, our work with Congressional leaders on TPP implementation and enforcement will continue and accelerate in the days and weeks ahead."
Froman decided to pretend it was all about little numbers, and to gloss over the fact that when you add up all those little numbers to find out TPP's total benefit...you still get a little number. Froman also fell back on that old favorite -- fear-mongering about China:
"What cannot be quantified in this study or any other is the cost to American leadership if we fail to pass TPP and allow China to carve up the Asia-Pacific through their own trade agreement. If we allow China to beat us in defining the rules for trade it will undercut our workers and businesses and prevent us from taking badly needed steps to improve worker rights, bolster intellectual property protections, and protect the environment through TPP."
Source: techdirt.com - June 02, 2016 HOME *****************
World cotton consumption dropped 3% in 2015-16: ICAC
Global consumption of cotton declined by 3 per cent to 23.6 million tons in 2015-16, and it is likely to remain at the same level in 2016-17 due primarily to low polyester prices and weak global economic growth, the International Cotton Advisory Committee (ICAC) has said in its latest report.
In 2015-16, China remained the world's largest consumer and its cotton mill use is estimated at 7.1 million tons. However, its cotton consumption is expected to decrease by 5 per cent to 6.7 million tons in 2016-17 mainly due to high domestic cotton prices, particularly compared with those of polyester, ICAC said.
After falling by 3 per cent in 2015-16 to 5.2 million tons, cotton consumption in India is expected to rise by 4 per cent to 5.4 million tons in 2016-17 due to favourable textile export policies, well integrated downstream industries and competitive prices.
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In Pakistan, mill use fell by 12 per cent to 2.2 million tons in 2015-16 due to the ongoing energy crisis, high costs of production, and weak cotton yarn demand. Mill use is forecast to rise by 1 per cent, to a little over 2.2 million tons in 2016-17.
Bangladesh and Vietnam are projected to see significant growth in 2016- 17, with mill use increasing by 16 per cent to 1.3 million tons in Vietnam and 10 per cent to 1.2 million tons in Bangladesh.
In 2016-17, world cotton imports are forecast to increase by 1 per cent to 7.4 million tons. Imports by China are projected to fall by 12 per cent to 960,000 tons in 2016-17 due to the government's desire to reduce its cotton reserve stock and restrict imports.
However, imports by the rest of the world are expected to increase by 3 per cent to 6.5 million tons, with Vietnam and Bangladesh emerging as the world's largest importers, accounting for 34 per cent of the world's imports.
World cotton production dropped by 17 per cent to 21.8 million tons in 2015-16 as world cotton area shrank and many countries experienced below-average yield. However, production is forecast to increase by 6 per cent to 23 million tons as world cotton area expands and yields improve.
India is likely to maintain its place as the world's largest producer in 2016- 17 and its production is projected to increase by 10 per cent to 6.5 million tons. Production in China is expected to fall by 10 per cent to 4.6 million tons due to reduced subsidies and high production costs.
World ending stocks are expected to decrease by 4 per cent to 19.7 million tons by the end of 2016-17, which would follow an 8 per cent reduction in stocks to 20.4 million tons in 2015-16. However, ending stocks outside of China are projected to rise by 3 per cent to 8.8 million tons in 2016-17.
Source : fibre2fashion.com- June 02, 2016 HOME *****************
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Belgium: FTA's Sustainability Conference focuses on cooperation
The necessity for cooperation and dialogue between all supply chain actors to achieve tangible results and long-lasting improvements for human rights, environment and trade policy challenges, will be highlighted at the inaugural Sustainability Conference of the Foreign Trade Association (FTA) taking place today in Brussels.
For the first time, the FTA is expanding its annual Business Social Compliance Initiative (BSCI) conference to address social compliance in combination with environmental and trade-related matters under a holistic sustainability umbrella, with the theme 'The Power of Collaboration'.
“This conference truly encompasses our vision of international trade and sustainable supply chains. Achieving a strong global economy must go hand-in-hand with sustainable and responsible supply chain practices that are respectful of workers' rights and the environment,” said FTA director general Christian Ewert.
“We are therefore calling for consensus around the need to tackle trade, the environment and human rights in parallel in order to consider a truly sustainable future. This can only be successfully achieved through strengthened collaborations among the different actors in the supply chain,” he said.
Last year, FTA established collaborations and partnerships with different organisations such as the French Initiative Clause Social (ICS), the Zero Discharge of Hazardous Chemicals (ZDHC) programme and Sedex, which will drive significant value to the industry, businesses and their supply chains.
At FTA's debut conference, some 250 members and stakeholders representing business, government, civil society and academia will have the opportunity to hear high-level speakers address such topics as how to create sustainable business models that meet the needs of the future and the intertwined challenge of climate change and human rights.
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Belgium based FTA is the leading business association of European and international commerce that promotes the values of free trade and sustainable supply chains. It represents more than 1,800 retailers, importers and brands to promote and defend free trade and supports their international business by providing information and practical solutions towards sustainability in the international supply chain.
Source: fibre2fashion.com- June 02, 2016 HOME *****************
Australia government funding to boost cotton industry
Cotton Australia has welcomed the announcement of funding for two programmes that will benefit growers. The funding is part of a $150 million funding commitment for feasibility assessments and construction of water infrastructure across the state.
Cotton Australia's reaction came after Deputy Prime Minister Barnaby Joyce today announced $650,000 would be made available to fast-track a feasibility assessment into using recycled water to expand agricultural production in south-east Queensland.
"We are very pleased that funding for such a feasibility project would be made available, given its potential to provide up to 100 gigalitres of water for high-value irrigation land on the Darling Downs," said Cotton Australia General Manager, Michael Murray.
"Making Brisbane's waste water available for irrigation would be a significant boost to farmers on the Darling Downs and the communities they support, and we welcome this news whole-heartedly."
The cotton industry has also welcomed the announcement of an additional $60 million in new funding for the Federal Government's mobile communications black spot programme.
There are more than 6000 mobile black spots across regional communities. More than $160 million had already been committed to fix about half of those, with the additional funding bringing the total commitment to $220 million.
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Murray said that while the use of technology has made Australia's cotton industry the most efficient in the world, yielding more per hectare on average than any other country, the power of that technology has been throttled by poor communications in rural areas, making it difficult to adequately process the extremely valuable useful data this advanced machinery generates.
"We welcome the announcement of additional funding to fix these black spots, which is a significant step towards the creation of adequate telecommunications networks that will benefit agriculture," he said.
Source: fibre2fashion.com- June 02, 2016 HOME *****************
Bangladesh: Corporate tax for apparel cut to 20pc
The corporate tax rate for the garment sector has been slashed 15 percentage points to 20 percent in the forthcoming fiscal year, in what is a middle ground between the demand of apparel manufacturers and the government.
At present, the corporate tax rate for the sector is 35 percent, which the garment exporters demanded be brought down to 10 percent -- a rate they enjoyed until 2014 -- to reduce their costs of production and attract investment.
We are not happy with the reduction proposal,” said Siddiqur Rahman, president of Bangladesh Garment Manufacturers and Exporters Association, in his reaction to Finance Minister AMA Muhith's budget speech.
He said the 20 percent corporate tax rate is still too high for the sector, which is in the midst of massive and expensive reforms as a result of 2013's Rana Plaza collapse, one of the worst industrial disasters in the world.
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“For attracting higher investment and further expansion of factory capacity we need policy support from the government.”
The garment makers also want the government to cut the source tax to 0.3 percent from 0.6 percent, but in the proposed budget for fiscal 2016-17 there is no clear indication on the matter, Rahman said.
But, the minister proposed to increase the source tax to 1.5 percent. Any increase in source tax would only hurt the garment sector as the profitability from the apparel export has been declining, he said.
However, the BGMEA chief welcomed the government's proposal to allow duty-free import of fire equipment and inputs for pre-fabricated buildings in the upcoming fiscal year as well.
“We also welcome the duty reduction on some chemicals used in the textile sector as such a move will help reduce the cost of production for the primary textile sector.”
The government proposed reducing the duty on stripping chemical to 15 percent from existing 25 percent.
However, the spinners and weavers are not happy with the proposed budget.
The Bangladesh Textile Mills Association demanded zero-duty on import of capital machinery, but Muhith did not yield to it.
Instead, Muhith proposed continuation of duty concession on import of capital machinery. Currently, importers have to pay 1 percent regulatory duty for bringing in capital machinery from abroad.
Source : thedailystar.net- June 02, 2016 HOME ***************
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H&M Commits to 4,000 New Jobs in Ethiopia
H&M, DBL Group and Swedfund are contributing to the growth of Ethiopia’s garment industry sector.
The three companies recently collaborated on the opening of a textile factory in Mekelle, Ethiopia, which will create 4,000 jobs in the area.
Development financier Swedfund and exporter company DBL group signed a loan agreement at the Addis Ababa Swedish Embassy last week. Swedfund, DBL and the Development Bank of Ethiopia agreed to invest in the factory with H&M as a main buyer client.
“We have managed to form a unique partnership in Ethiopia with deep professional knowledge in every part of the process in order to fulfill the high sustainability requirements.
It is a great example of how to work to achieve efficient job creation, and in this project it is particularly focused on women,” Anna Ryott, Swedfund managing director, said. “Job creation is crucial to help people find their way out of poverty and the cooperation with such a great partners like H&M and DBL will make this a role model for other similar projects.”
Major goals of the textile factory project include improving working conditions, creating jobs for women and promoting environmentally- friendly practices among supply chains. DBL group, H&M and Swedfund will also work with other local and international officials to fortify these efforts.
All three companies also bring their own sustainable industry strengths to the table. DBL will own the Mekelle factory, since it is one of the world’s largest and most sustainable exporters of ready-made garments. Swedfund will invest $15 million in order to promote financial sustainability. H&M lends its expertise in sustainable large scale textile production to the project.
Helena Helmersson, global head of production at H&M, talked about how the company is working with DBL and Swedfund to improve economical, social and sustainable conditions within Ethiopia’s garment factories.
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“H&M is pleased that Swedfund is co-financing a project with DBL Group,” Helmersson said. “H&M wants to contribute to a long-term sustainable textile industry in Ethiopia taking social as well as environmental dimensions into consideration.
It is important to us that both DBL and Swedfund are putting these questions on top of their agenda when doing investments.”
Source: sourcingjournalonline.com- June 01, 2016 HOME *****************
Europe and US in race to keep TTIP on track
Washington and Brussels are scrambling to rebuild momentum for a landmark trade accord, amid signs that it is faltering under an increasingly bitter onslaught from politicians on both sides of the Atlantic.
Jean-Claude Juncker, president of the European Commission, travelled to Paris on Tuesday to sell potentially the world’s biggest trade deal to one of the toughest political constituencies in Europe — a convention of France’s mayors.
He reassured them that the Transatlantic Trade and Investment Partnership would not undermine their interests.
“I believe that TTIP negotiations can yield a deal that will profit the European economy — our [small and medium enterprises] and our farmers — without harming standards,” he said.
Frustrated by hardening opposition from Germany’s influential socialists and the French government, Mr Juncker has called for the 28 member states to reconfirm their commitment to the deal at a summit in June. The commission argued that the countries must show they are “all rowing in the same direction”. Britain and Italy are strong supporters.
Speaking in Stockholm on a European tour to push TTIP, Michael Froman, US President Barack Obama’s trade tsar, warned that there was no “Plan B” if talks were not concluded this year. “We either work together to help set the rules of the world or we leave that role to others.”
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TTIP’s supporters have also been blindsided by increasing opposition to trade deals in the US, where Republican presidential hopeful Donald Trump has built his campaign around an antitrade message and Democrat Hillary Clinton, facing a challenge from the left, has abandoned her support for a similar Pacific trade pact.
With the clock running out on Mr Obama’s presidency, officials on both sides now believe that the window is closing for a deal to be reached and approved in legislatures in Europe and the US before the end of the year. EU officials stress that they want to agree a working text by July.
A failure to complete the agreement before a change in US administration could condemn the pact to years of drift.
France is the most vocal TTIP sceptic, largely because of fears that the deal could harm its hallowed farming sector and lessen the value of geographical indications that protect iconic French wines, cheeses and meats.
While Mr Juncker was addressing the mayors, François Hollande, French president, was offering his own, more defiant, assurances at the inauguration of a wine centre in Bordeaux.
“There can be no question of sacrificing our interests to get a deal,” he said. “Geographical indications contribute to preserving agricultural quality in our country. They help keep our farming activity on our land.”
In May, Mr Hollande was even more categorical, saying that France would say “no” to any deal “at this stage”.
In Germany, Sigmar Gabriel, vice-chancellor and economy minister, criticised Chancellor Angela Merkel in a newspaper interview last week over her enthusiasm to conclude TTIP this year.
US trade officials say that, ironically, TTIP negotiations have been making good progress in recent months. They also express annoyance that Mr Hollande is more interested in domestic politics before French elections in April rather than in striking a deal to defend US and EU commercial standards in the face of a rising China.
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“To put it mildly, there are a lot of mixed signals out of Europe in recent weeks and we are trying to sort through them,” a senior US official told the Financial Times.
“We are hoping that the message out of Brussels at the end of June will provide clear evidence of a broad European commitment to TTIP.”
Source: next.ft.com- June 01, 2016 HOME *****************
Nike’s New European Distribution Center Will Help Clean Up its Supply Chain
Forget about the “store of the future.” Nike’s latest investment is a state- of-the-art supply chain of the future.
The athletic apparel and footwear giant has expanded its logistics facility in Belgium in a bid to make its European operations more efficient, more responsive and more sustainable. According to the company, the upgraded distribution center—which employs more than 3,000 people—will serve consumers across Nike.com as well as its retail and wholesale partners in 38 countries, all from a single inventory location.
“Globally, we ship more than one billion units of footwear, apparel and equipment every year, which demands an agile, innovative and sustainable supply chain,” Eric Sprunk, chief operating officer, said in a statement Thursday. “The expansion of our European Logistics Campus demonstrates our commitment to bring the full range of Nike products to consumers more quickly, where and when they want it—whether it’s one pair of Flyknit shoes or a 10,000-item order for a retailer.”
“Our facilities in Belgium are a pinnacle example of how sustainable innovation is embedded into Nike’s growth strategy, which enables us to maximize our performance while minimizing our footprint,” Bert Stevens, vice president of supply chain operations at Nike Europe, noted. “The success of this expansion is a result of excellent teamwork, with great cooperation from local and national governments, and support from many partners and the local community.”
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It’s all part of Nike’s vision for a low-carbon, closed-loop future, as outlined earlier this month in its annual sustainable business report.
Renewable energy is a key feature of the new facility: six wind turbines on- site produce enough electricity to power 5,000 households, while solar panels cover the size of three soccer fields.
The center also gets energy locally from geothermal, hydroelectric and biomass sources.
In addition, the facility is fed by an infrastructure of canals, railways and highways. Notably, 99 percent of inbound containers reach the local container park by water, not road, which Nike said will save 14,000 truck journeys a year.
The company is also moving away from a traditional structure that requires more steel and concrete. The new warehouse is a rack-supported building, reducing waste and material used, thereby minimizing its footprint.
Other features include: more than 95 percent of waste generated on-site is recycled (for instance, pathways used by employees are made from recycled footwear material); lots of windows and automated LED lighting help cut costs and environmental impact; sheep will naturally maintain the landscape; on-site beehives will contribute to biodiversity by pollinating flower around the facility and in the local area.
And there’s more like this to come: earlier this month, Nike said it would focus on creating fewer and better factories.
Source: sourcingjournalonline.com- June 01, 2016 HOME *****************
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Cotton prices fall in Pakistan due to lack of buying interest
On Tuesday, cotton prices in Pakistan slid amid lackluster trade due to lack of buying interest from spinners and higher imports of cotton, whereas, cotton prices in the world markets moved higher.
The spot rate settled at PakRs5,500/maund (37.324 kilogram each), down PakRs50/maund from the previous level. Around 1400 bales of cotton were changed hand in the ready markets of Sindh and Punjab.
Floor brokers stated that the market was expected to witness enthusiasm after a government’s decision to declare textile exports free from duty and taxes. However, there was hardly any change in the trading pattern.
The Trading Corporation of Pakistan also sold 2,000 bales to spinning mills as ginners continued to ask high prices for the premium quality fiber amid fast depleting lint stocks with them, said brokers.
A major factor for low buying interest was higher imports of cotton, but some brokers said that many spinners believed the arrival of new crop phutti (seed cotton) would be in time.
Source: yarnsandfibers.com- June 01, 2016 HOME *****************
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NATIONAL NEWS
'Time to make growth job-oriented, sustainable'
Assocham President Sunil Kanoria has hailed India's emergence as the fastest growing major economy in the world with the GDP expanding by 7.6 per cent, and said it was time to build on the gains and boost private investment which will be a big catalyst for job creation and achieving the ultimate objective of sustainable growth.
“At 7.6 per cent, India's GDP growth rate for FY16 is at a 5-year high. This is good news and firmly puts India as the world's fastest growing major economy. However, the sustainability of this growth momentum will certainly depend on how well and how fast government can help revive the investment, especially in the private sector” Kanoria said.
According to an Assocham press release, Kanoria, who is also the Vice Chairman of Srei Infrastructure Finance Ltd, said the government focus on investing in the physical and social infrastructure did have a decisive impact on the GDP growth.
However, it is the large scale private investment which would bring in vibrancy in the economy which has the potential to grow well over eight per cent within the current financial year itself.
“But for that to happen, an all – out efforts must be made by the Finance Ministry, Reserve Bank of India to work closely with the banks to resolve the problem of the large scale non-performing assets, taking a pragmatic view of the difficult situations that the corporates across different sectors like steel, power and construction, have run into”.
He said, once the private investment picks up, that would be reflected in the better ratio of the Gross Fixed Capital Formation (GFCF) to GDP. This ratio has been shrinking for the fourth successive year, while the country's GDP continues to grow.
“The success of the 'Make in India' initiative hinges on some key reforms. In this context, introducing the Bankruptcy Code and getting it passed by both the Houses of the Parliament is a big step forward.
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Now we need its quick implementation as that would help resuscitate a lot of stuck projects and unlock capital. The government also needs to expedite the rolling out of the Goods and Services Tax by building political consensus. This is something which will greatly help in improving the investment climate.
It would also send out a very strong signal to the foreign investors establishing this government's pro-reform credentials”. Kanoria said.
He hoped that a good monsoon combined with the steps announced in the Union Budget for rural development will provide a further spurt to the rural economy.
He also urged the Centre to collaborate with state governments to improve the 'ease of doing business' so that more entrepreneurs can be groomed.
“For a country like ours where almost a million gets added to the workforce every month, creation of job creators is imperative” Kanoria said.
Source : fibre2fashion.com- June 03, 2016 HOME *****************
India Must Capture World Markets To Sustain High Growth: Arvind Panagariya
India needs to capture some of the world markets if it has to sustain an 8- 10 per cent growth rate over the next 20-25 years, a top planner has said but acknowledged that the country has been "slower" than others in entering into free trade agreements.
NITI Aayog Vice Chairman Arvind Panagariya said that "on the Free Trade areas, India has been certainly slower than other countries."
He made the remarks in New York on Wednesday at a discussion organised by the Asia Society Policy Institute on the two years of the Indian government responding to whether trade-led growth is a priority for the government.
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Mr Panagariya said the broader question is whether "outward orientation" is part of the government's strategy of development, adding that his push is in that direction. "I just don't see that if India is to try to sustain a growth rate of 8-10 per cent over a period of 20-25 years, it can't be done without actually capturing some of the world markets," he said.
He added that apart from liberalisation, India would also need to focus on "internal reforms" like trade facilitation, speed at which goods can move in and out of the country and the various clearances required.
He noted that India's internal goods market is less than USD 1 trillion while in the world market, merchandise exports stand at USD 18 trillion.
He said that in China, wages have been rising over 10 per cent a year for more than a decade and currently, they are 2-3 times the wages in India on an average.
"Wages are likely to rise much faster than they will rise in India. Lot of labour intensive firms are moving out of China and India ought to be the natural destination for them," he added.
When asked if India could look at joining the Trans-Pacific Partnership, Mr Panagariya said the TPP is not on India's horizon "at this stage". "A lot of the things that India would need to do to be a member of the TPP remain to be done," like on intellectual property, government procurement and labour standards.
"These are all very integral parts of the TPP and India is below the standards that are required in the TPP in these areas," he said.
Referring to the H1-B visas, Mr Panagariya said: "When you raise fees like this on a commitment in a way that effectively threatens to take away a concession that was actually given, then politically it does not generate a very good reaction on the other side".
His remarks came in the backdrop of the US raising the visa fees for the popular H-1B petitions forcing Indian IT companies to shell out at least an additional USD 4,000 per application under the new regulations that came into effect last December.
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On job creation, he said unemployment is not a big issue in India but the "big problem" in the country is "underemployment" and cited the example of the agriculture sector, saying about 49 per cent of the workforce produces about 15 per cent of the GDP.
"Clearly there is gross underemployment," he said adding that productivity issues need to be addressed. Mr Panagariya said trade agreements like with APEC will be a "stepping stone" and APEC by itself "is not going to get you very far".
On GST, he said the reform is very much on the agenda.
While the Congress party wants 18 per cent cap on the GST put into the Constitution, the government is very reluctant to do that.
"That is the issue on which the resolution has to happen. I personally think it will certainly happen. This is a high priority for the government," he said adding that for the Congress party also under the UPA regime the GST was a high priority item but it did not get done.
"I remain optimistic. GST is a process even after the legislative documents are in place, there will still be a transition to GST. It is a process that takes some time. I'm not worried about GST," he added.
Source : ndtv.com - June 03, 2016 HOME ***************
Scrapping tariff on imports may cost India Rs 75.7k cr a year
India could lose tax revenue of Rs 75,733 crore a year if it now scraps tariff on merchandise imports entirely, to either counter or emulate the US-led Trans-Pacific Partnership (TPP) model of zero duty over a period of time, sources told FE.
The prospect of massive revenue losses has put negotiators for various trade talks in a fix and have made their jobs tougher than ever, amid fears that the TPP model may become the benchmark for future trade deals even among nations outside the mega bloc.
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The government may now decide the red line for each trade negotiation, keeping in mind realities of the country that needs huge funds for development work and rues a relatively low tax-GDP ratio.
The estimate was made by the revenue department of the finance ministry at the request of the commerce ministry to help government officials negotiate better, as they seek to balance out interests, often conflicting, of various stakeholders. Such an estimate will also help them gauge how good the other party’s offer is against an Indian commitment.
India will participate in the next round of talks for the RCEP from June 12 to 18 in Auckland, New Zealand.
According to the estimate, the potential losses comprise basic customs duties of Rs 64,729 crore, countervailing duties (CVD) of Rs 8,091 crore and special additional duties (SAD) of Rs 2,913 crore, sources told FE.
The potential losses will be even higher in the coming years once import picks up. Currently, the country’s average import tariff rate is around 13.5% and in case of non-agricultural items, it’s even lower, at 10%.
Although the CVD and the SAD are imposed even when the basic customs duty is zero, the estimated losses of these taxes are due to the fact that these are levied (in percentage terms) after the basic customs duty is added to the assessable value of an imported product. So, if the basic customs duty is abolished, the CVD and the SAD also drop to a certain extent.
The CVD and the SAD are imposed on imported items under the so-called “national treatment principle” to offset any undue disadvantage to a domestic manufacturer (of the same or similar goods) who has to pay local levies such as excise duties and sales tax. They are levied even in cases where the BCD is zero to avoid undue advantage to imported goods over domestic ones.
The government has budgeted total customs collection of Rs 2,30,000 crore for 2016-17, including basic customs duty of Rs 64,729 crore, CVD of Rs 116,700 crore and SAD of Rs 34,000 crore. The country’s total customs duty collection stood at Rs 2,09,500 crore in 2015-16, representing 1.54% of its nominal GDP.
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A former Indian negotiator at the WTO said for a country like India, abolishing the basic customs duty entirely is worth experimentation when commensurate returns are assured. “Ultimately, it’s a political call,” he said.
A former commerce secretary recently said India’s free trade agreement with Asean (in goods) in 2009 was guided more by politics than economics, as it was part of the government’s ‘Look East’ policy.
Domestic industry has been critical of the country’s FTA with Asean members, saying its offer on goods was hardly matched by gains in subsequent deals in services and investments and resulted in massive trade deficit. India has been pushing hard to get a fair deal in services and investments in all the current negotiations, including RCEP, if it is making attractive offers in goods (its average tariff of 13.5% is the highest among potential RCEP members, so its sacrifice level will also be greater than others).
But sources had earlier told FE that most others are interested only in seeking a better deal from India in goods, but are not willing to offer much in return in services or investments. This could delay the negotiations until a balanced approach is adhered to by all.
Another source said: “It’s a myth spread by vested interests that India’s tariffs are a barrier to trade. This is evident from the fact that Chinese goods have flooded the Indian market despite these tariffs,” he added.
India’s imports from China stood at a whopping $60.41 billion in 2014-15, accounting for 13.5% of the country’s total imports, according to the official data. The share of China in India’s total merchandise imports grew further in the last fiscal (up to February) to 16.2%, a sharp rise from 11.3% in 2013-14.
What has been vexing Indian negotiators is the tag of being “obstructionists”. “India was blamed for obstructing the WTO’s trade facilitation agreement (TFA) in goods in 2014. Well, it endorsed the TFA in April, but even until now only 81 of the 162 members have ratified it (at least two-thirds of the members must ratify the pact for it to take effect). Why not blame others?” asked the former negotiator at the WTO.
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Sources said for a country like India, moderate tariff rates are desirable, as they ensure certain amount of revenue generation along with trade creation. “Studies have pointed out that beyond a point, tariff reduction doesn’t help create additional trade opportunities; it just helps a few at the cost of the rest of a country upon whom higher burden of taxes falls so that revenue losses due to the abolition of the customs tariff is offset,” source said.
Source : financialexpress.com- June 03, 2016 HOME ***************
Have negotiations for RCEP – world’s largest trade bloc of which India will be a part – run into trouble?
The Regional Comprehensive Economic Partnership (RCEP) is an initiative to link the ten ASEAN member states and the group’s free trade agreement (FTA) partners—Australia, China, India, Japan, South Korea and New Zealand. In total, the grouping of 16 nations includes more than 3 billion people, has a combined GDP of $17 trillion, and accounts for about 40% of world trade. RCEP is the largest FTA negotiation in Asia, and also the one with the biggest membership, largest scale and widest influences that India has ever participated in.
If negotiated successfully, RCEP would create the world’s largest trading bloc and have major implications for Asian countries and the global economy. Negotiations among the 16 parties began in early 2013 and are scheduled to conclude by the end of 2016. So far, 12 rounds of negotiations have been completed, with the 13th round scheduled to take place during June 12-18 in Auckland.
RCEP seeks to achieve a modern and comprehensive trade agreement among members. The core of the negotiating agenda would cover trade in goods and services, investment, economic and technical cooperation, and dispute settlement. RCEP would be a powerful vehicle to support the spread of global production networks and reduce the inefficiencies of multiple Asian trade agreements that exist.
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India is a major player in RCEP negotiations and is under pressure to bring about steep reductions in its tariffs. In fact, a steep tariff reduction for goods from China has been the biggest threat for negotiators and the industry, fearing a rush of cheap goods from across the border.
In addition, countries such as Singapore, which has near-zero tariffs on most goods, and Malaysia, where 90% of trade carries a negligible customs duty, are exerting pressure on India to lower barriers. According to an internal commerce ministry estimate, the signing of the 16-country RCEP agreement will result in a revenue loss of as much as 1.6% of GDP and this has forced the negotiators to tread cautiously.
According to the latest report, the serious adverse effects of joining the agreement have made India more aggressive in the ongoing negotiations. It is said that India is seeking greater market access in services to be able to justify the closing of the deal at home, where an apprehensive local industry views it as equivalent to signing an FTA with China. This has been the norm and a problem that India has faced since it started negotiating regional trade agreements (RTAs) and RCEP is no exception.
Like in all FTAs and RTAs, one of the objectives of RCEP is eliminating nearly 95% of tariffs. This is an easy proposition for most ASEAN member states whose tariffs are less than 5%. But for a country like India, with average tariffs at around 15%, drastically reducing them to zero or 2-3% is difficult and would entail giving up much greater market access than what it would get in return.
However, given the importance of the deal—especially since the Trans- Pacific Partnership (TPP) has already been signed which is likely to hurt Indian exports—India has offered several concessions to member countries in RCEP. For instance, with those with which India has already signed FTAs, such as ASEAN, India has proposed to eliminate tariffs on 80% of items.
Similarly, for Japan and South Korea, it has offered to open up 65% of its product space. For Australia, New Zealand and China, Delhi has proposed to eliminate duties on only 42.5% of products. As India does not have any kind of FTA with these three countries, its offer is less.
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But the expectations from India are high and members are demanding much more. Hence, going ahead with RCEP and other pending FTAs is a politically difficult prospect for India.
India’s interests lie mostly in services, the removal of technical barriers to trade such as those taken under sanitary and phytosanitary measures, and trade in goods such as pharmaceuticals and textiles. India has been negotiating hard for liberalisation on mode 4 (movement of professionals from one country to another) of services agreement to offset the revenue loss from goods liberalisation.
The country thinks its best bet is in services export, through which it can supply its burgeoning skilled professionals to other countries, thus partially meeting the demand for jobs from a million people joining the labour market every month. At the same time, there are serious limitations to this as well, as many opine that India’s services trade with ASEAN is not significant and the country faces stiff competition on this segment from countries like the Philippines.
It is high time India decides whether it wants to go ahead with RCEP and conclude it. Procrastinating and delaying the process for which India has earned the ire of many member countries is not good.
India needs to have a clear vision and strategy with respect to its FTAs and move forward quickly. This would benefit the country’s external sector as its exports have shown a negative growth for more than a year now.
The government needs to act tough and realise that RCEP’s potential future as a major trade bloc will remain uncertain until there is enough political will to go through the arduous negotiation rounds and conclude them.
Most importantly, India would need to refrain from holding extreme and established positions, and make a little leeway and reverse the perception of it being a tough negotiator and obstructing talks.
The country has to show that it is serious about moving forward with the talks in a positive way.
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RCEP will no doubt face stiff opposition from various interest groups within the participating countries. But now that India has decided to join, it will need to balance economic and strategic calculations and prepare to lead in the Indo-Pacific century.
Source : in.finance.yahoo.com- June 03, 2016 HOME ***************
Zari eyes leap from `cottage' to industry
For nearly four centuries, bridal make-up has been incomplete without Surat's famed zari that is intricately woven into saris.
These golden and silver threads have added to the charm of Kanjivaram and the world-famous Banarasi saris too.
However, these largely decentralized units, many of which even operate from households, can hope for a better future. The zari manufacturers under the aegis of Surat Zari Goods Producers Cooperative Society Limited and three other associations of zari are eyeing to develop `Zari Park' on the 1.80 lakh sq m land at the upcoming Diamond Research and Mercantile (DREAM) city project at Khajod.
The manufacturers are expecting a final approval from the state government for the allotment of land in the next couple of months. The Zari Park, as envisaged by the leaders of the zari sector, will be housing around 1,200 units, a research and development (R&D) centre and other facilities including a meeting hall to cater to the buyers coming from different places around the country .
The units will be constructed keeping in mind the housing needs of the workers. For the first time, zari sector is going to be centralized. Buyers coming from southern and northern states to buy zari kasabs will be more than happy .
After GI (Geographical Indication) tag, Zari Park will be the second feather in our cap," said president of Surat Zari Goods Producers Cooperative Society Limited, Shantibhai Jariwala.
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The zari makers will be eligible for subsidy to buy land under the various state and central government schemes to construct their units in the park.
Devesh Jariwala, a unit owner in Mahidharpura said, "I have 50 workers but was unable to expand due to space crunch. I will be shifting majority of my gold kasabs there."
Another imitation zari manufacturer, Rakesh Rana from Golwad said, "We are 10 people in the family and all are into the zari making in our house. My younger brother will shift to the park to look after the production there. We will be able to approach buyers directly now instead of going through wholesale traders."
The craft got a big boost in 2010 when it was awarded the GI tag, which has provided a commercial leverage to zari makers to increase their income by marketing zari goods under the Surat Zari Craft brand name in domestic and international market.
At present, the zari manufacturing is a cottage industry that operates from old houses in Gopipura, Golwad, Mahidhapura, Soni Falia and Saiyedpura. There are over 200 composite units and around 1,700 homogeneous small units engaged in making zari kasabs -original threads using gold and silver and imitation ones using copper, cotton yarn, silk and silver for coating.
The glorious history of this world-renowned art of zari thread making and weaving of zari cloth dates back to more than 400 years but it is believed that the industry's fame peaked during the Mughal period.
A bulk of zari produced in Surat goes to Varanasi and other pockets of Uttar Pradesh, Tamil Nadu, Karnataka and Andhra Pradesh. In the global market, Indonesia, Malaysia, Pakistan, United Arab Emirates (UAE), Afghanistan, France and Japan are the leading consumers of zari, while the enchanting and artistic zari textiles and embroidered zari goods like purses and bags are sold mostly in the sophisticated markets of Britain and the US.
Source : timesofindia.com - June 03, 2016 HOME ***************
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Seed firms for end to NOC from trait cos
Hybrid seed companies body National Seed Association of India (NSAI) has urged the Union agriculture ministry to advise the Genetic Engineering Approval Committee (GEAC) not to insist on a no-objection certificate (NOC) from technology providers like Monsanto for commercial release of Bt cotton seeds every season.
The seed companies have suggested that the GEAC could give approval for commercial release of Bt cotton seeds if it is satisfied with the results of testing done by public-sector labs to ascertain the elements present in such seeds.
In 2006, the GEAC had made an NOC from trait providers mandatory for marketing of Bt cotton seeds.
The seed companies’ move comes even as the agriculture ministry, faced with sharp criticism from biotech companies like Monsanto, withdrew a controversial order capping the trait value or royalty charged by them on new genetically modified (GM) traits, besides declaring null and void all existing licence agreements between the trait providers and seed producers.
“The stipulation of NOC from the technology provider from the applicant seed company for approval and commercialisation of Bt cotton hybrids under the event base approval mechanism by the subcommittee of GEAC is leading to monopoly of cotton seed market by technology provider Mahyco Monsanto Biotech (MMBL) who are able to use the stipulation and insist seed companies to sign licence agreements with one-sided clause,” KB Goswami, executive director, NSAI stated in a recent communication to JS Sandhu, DDG (crop sciences), Indian Council for Agricultural Research.
However, industry sources said that in the absence of an NOC and letter of consent from technology provider like MMBL, a joint venture between Monsanto and Maharashtra-based Mahyco, the seed companies can make wrong claims about presence of technology or trait in Bt cotton seeds and mislead farmers. This could eventually dent the credibility of GM technology.
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The NSAI communication also stated that if an NOC from MMBL is a must, it would lead to collection of excessive royalty (trait value) by the firm.
Last year, the retail price of widely-used Bollgard II variety cotton seeds was `930 per 450 gm packet with the trait value component of `163.
The agriculture ministry in its December 7, 2015, price control order reduced the seed price to `800 and the trait value to `42 (exclusive of taxes).
The new price is said to be non-remunerative to trait providers like MMBL.
About 90% of the country’s cotton area of 11.8 million hectares (in the 2015-16 season) is under Bt cover. Domestic cotton production has risen manifold since the introduction of Bt seeds — from 13.6 million bales in 2002-03 to a projected 30.5 million bales in 2015-16.
Source : financialexpress.com- June 03, 2016 HOME ***************
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