citi-news letterindustrialist b k birla, grandfather of kumar mangalam birla, passes away ......
TRANSCRIPT
Cotlook A Index - Cents/lb (Change from previous day)
02-07-2019 77.60 (+0.60)
02-07-2018 93.75
03-07-2017 83.55
New York Cotton Futures (Cents/lb) As on 04.07.2019 (Change from
previous day)
July 2019 66.23 (+2.46)
Oct 2019 65.76 (-0.23)
Dec 2019 66.04 (-0.05)
04th July
2019
Cabinet approves hike in MSP for all Kharif Crops of 2019-20 Season
India’s Trade Deficit
Dubai sets sight on Indian startups to become innovation hub
Women unwilling to do night shift can't be denied promotion: Kerala HC
Industrialist B K Birla, grandfather of Kumar Mangalam Birla,
passes away
Cotton and Yarn Futures
ZCE - Daily Data (Change from previous day)
MCX (Change from previous day)
July 2019 21520 (+120)
Cotton 14375 (-135) Aug 2019 21160 (+30)
Yarn 22060 (-110) Oct 2019 20490 (+30)
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2 CITI-NEWS LETTER
-------------------------------------------------------------------------------------- Cabinet approves hike in MSP for all Kharif Crops of 2019-20 Season
'Language, banking system impending trade with central Asia'
Budget 2019: How Modi government can dispel ‘jobless growth’ notion, boost labour-
intensive sectors
In our growth agenda, the world can’t be just US & Europe: Rakesh Mohan
Budget challenges
India’s Trade Deficit
With GST, ability to move goods has become simpler: Rajesh Subramaniam
Pension Coverage to Trading Community
A new urgency
Dubai sets sight on Indian startups to become innovation hub
Simplify tax rate to raise investment: FTCCI
Welspun gets U.S. court nod to settle claims
Worried over GST review, FIASWI writes to Indian minister
Women unwilling to do night shift can't be denied promotion: Kerala HC
Industrialist B K Birla, grandfather of Kumar Mangalam Birla, passes away
Why driving manufacturing and exports is critical
------------------------------------------------------------------------------- US slaps import duties of more than 400% on Vietnam steel
China to introduce new measures to promote innovative models in foreign trade
CNTAC team meets Razak, discusses trade, investment
Garment accessories see bright prospect
Nigeria to sign Africa free trade agreement—Presidency
---------------------------------------------------------------------
NATIONAL
---------------------
GLOBAL
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3 CITI-NEWS LETTER
NATIONAL:
Cabinet approves hike in MSP for all Kharif Crops of 2019-20 Season
(Source: Press Information Bureau, July 03, 2019)
Giving a major boost to the farmers’ income, the Cabinet Committee on Economic
Affairs chaired by Prime Minister Shri Narendra Modi has approved the increase in the
Minimum Support Prices (MSPs) for all kharif crops for 2019-20 Season.
The move will lead to increased investment and production through assured
remunerative prices to the farmers.
Details:
The MSPs for all kharif crops of 2019-20 season have been increased as follows:
For the kharif crops of 2019-20, Government has increased the MSPs of soyabean
by Rs 311 per quintal, sunflower by Rs 262 per quintal and sesamum by Rs 236
per quintal which is a major step towards increasing the income of farmers.
Government has increased the MSPs of tur dal by Rs.125 per quintal and uraddal
by Rs.100 per quintal. This willhelp address the issues related to requirement of
pulses in view of the need to meet the nutritional security and protein
requirements of a large section of population.
The MSP of Jowar has been hiked by Rs 120 per Quintal while in case of Ragi it
has been hiked by Rs 253 per quintal. The Move comes in the backdrop of the
need to promote cultivation and consumption of nutri-cereals. Besides, India
celebrated 2018 as the National Year of Millets and the Food and Agriculture
Organisation (FAO) Council has approved India's proposal to observe an
International Year of Millets in 2023.
For cotton (medium staple) and cotton (long staple), the MSP has been increased
by Rs. 105 per quintal and Rs. 100 per quintal respectively.
The highest percentage return to farmers over their cost of production is for Bajra
(85%) followed by urad (64%) and tur (60%).
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4 CITI-NEWS LETTER
The Minimum Support Prices for all kharif crops of 2019-20 season is as
follows:
Crop
MSP
2018-
19
MSP
2019-
20
Cost* of
production
2019-20
(Rs/quntl.)
Increase
Return
over
cost (in
per
cent)
Absolute
Paddy (Common)
1750
1815
1208
65
50
Paddy (Grade A)^
1770
1835
-
65
-
Jowar (Hybrid)
2430
2550
1698
120
50
Jowar (Maldandi)^
2450
2570
-
120
-
Bajra
1950
2000
1083
50
85
Ragi
2897
3150
2100
253
50
Maize 1700 1760 1171 60 50
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5 CITI-NEWS LETTER
Tur (Arhar)
5675
5800
3636
125
60
Moong
6975
7050
4699
75
50
Urad
5600
5700
3477
100
64
Groundnut
4890
5090
3394
200
50
Sunflower Seed
5388
5650
3767
262
50
Soyabean (yellow)
3399
3710
2473
311
50
Sesamum
6249
6485
4322
236
50
Nigerseed
5877
5940
3960
63
50
Cotton (Medium
Staple)
5150
5255
3501
105
50
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6 CITI-NEWS LETTER
Cotton (Long
Staple)^
5450
5550
-
100
-
*Includes all paid out costs such as those incurred on account of hired human labour,
bullock labour/machine labour, rent paid for leased in land, expenses incurred on use of
material inputs like seeds, fertilizers, manures, irrigation charges, depreciation on
implements and farm buildings, interest on working capital, diesel/'electricity for
operation of pump sets etc. miscellaneous expenses and imputed value of family labour.
^Cost data are not separately compiled for Paddy(Grade A), Jowar (Maldandi), Cotton
(Long staple)
Implementation:
In the case of cereals including nutri-cereals, Food Corporation of India (FCI) and other
designated State Agencies would continue to provide price support to the
farmers. NAFED, SFAC and other designated Central agencies would continue to
undertake procurement of pulses and oilseeds. CCI will be the central nodal agency for
undertaking price support operations for Cotton. NAFED would supplement efforts of
CCI for cotton procurement. The losses, if any, incurred by the nodal agencies in such
operations will be fully reimbursed by the government.
With the intention of giving enough policy thrust to income security of the farmers,
Government's focus has shifted from production-centric approach to income-centric
one. Enhancing the coverage of Pradhan Mantri KisanSamman Nidhi (PM-KISAN) to all
farmers in its first Union Cabinet meeting on 31st May 2019, is another major step in
boosting the income of the farmers. The PM-KISAN yojana was announced in the
interim Budget for the year 2019-2020, where the small and marginal landholder
farmer families with cultivable land holding upto 2 hectare across the country were
assured of Rs 6000 per year.
The new Umbrella Scheme "Pradhan Mantri AnnadataAaySanrakshan Abhiyan' (PM-
AASHA) announced by the government in 2018 will aid in providing remunerative
return to farmers for their produce. The Umbrella Scheme consists of three sub-
schemesi.e. Price Support Scheme (PSS), Price Deficiency Payment Scheme (PDPS) and
Private Procurement & Stockist Scheme (PPSS) on a pilot basis.
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7 CITI-NEWS LETTER
Background:
The increase in MSP for Kharif Crops for 2019-20 season is in line with the principle of
fixing the MSPs at a level of atleast 1.5 times of the all India weighted average Cost of
production (CoP), which was announced in the last budget 2018-19.
This MSP policy whereby the farmers are assured of a minimum of 50 percent as margin
of profit is one of the important and progressive steps towards doubling farmers' income
by 2022 and improving their welfare substantively.
The MSP mechanism provides a price guarantee to the farmers for their produce. This is
implemented across the country as nearly 86% farmers are in small and marginal
category (Agriculture Census 2015-16), the system ensures equity. It also helps in
stabilising prices in the market and thus services the consumers as well.
Home
'Language, banking system impending trade with central Asia'
(Source: Business Standard, July 03, 2019)
Language barriers, weak banking system and poor connectivity are some of the key
factors impeding higher level of trade with Central Asian countries, Commerce Minister
Piyush Goyal said in Lok Sabha on Wednesday.
Goyal said efforts are being made to boost trade by resolving various trade related
matters through existing institutional mechanisms between India and Central Asian
countries.
"Some factors impeding higher level of trade with Central Asian countries include
language barriers, stringent process of registration of products, problems in dispute
settlement, weak banking and financial system, low accessibility, poor connectivity and
visa issues with these countries," he said during Question Hour.
Central Asian countries Kazakhstan and Kyrgyzstan are members of the Eurasian
Economic Union (EaEU).
The minister said a joint feasibility study has been conducted to explore possibility of
free trade agreement with EaEU in which Russia, Armenia, Belarus are the other three
countries.
The Joint Feasibility Study (JFS) has found there is a significant realizable potential to
enhance bilateral trade with Kazakhstan and Kyrgyzstan through a trade agreement, he
said.
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8 CITI-NEWS LETTER
Further, Goyal said, a joint statement has been shared with Uzbekistan to commence a
joint feasibility study to explore preferential trade agreement between India and
Uzbekistan.
The likely potential of the bilateral trade would be determined once the joint feasibility
study gets completed, he said.
Home
Budget 2019: How Modi government can dispel ‘jobless growth’ notion,
boost labour-intensive sectors
(Source: Banikinkar Pattanayak, Financial Express, July 03, 2019)
Budget 2019-20: Keen to soften the blow for the MSME sector that was hit by the double
whammy of demonetisation and the goods and services tax (GST), finance minister
Nirmala Sitharaman could also heed industry demand for a 2% interest subsidy on bank
loans to SMEs for a year.
Budget 2019 India: Seeking to dispel the notion of “jobless growth”, the Narendra
Modigovernment will likely roll out incentives in the coming Budget for some labour-
intensive sectors such as textiles & garments, gems & jewellery and leather, particularly
targeting exporters and micro, small and medium enterprises (MSME) in these sectors.
With an aim to boost exports of garments, the biggest employer after agriculture, the
scope of the textile ministry’s “remission of state levies” (ROSL) scheme will be widened
to also compensate apparel and made-up exporters for their payment of Central levies
on inputs consumed in exports, official and industry sources told FE. So, the allocation
under this scheme could be more than tripled for FY20 from February’s Interim Budget
level of just Rs 1,000 crore.
Keen to soften the blow for the MSME sector that was hit by the double whammy of
demonetisation and the goods and services tax (GST), finance minister Nirmala
Sitharaman could also heed industry demand for a 2% interest subsidy on bank loans to
SMEs for a year. Such a relief is already available but only on fresh loans and for GST-
registered SMEs. Facilitating smoother flow of credit to them will be another focus area
of the Budget.
Indranil Sen Gupta, chief India economist at Bank of America Merrill Lynch, said: “If
the ministry of finance offers 2% subvention for a year in the July 5 Budget, it will have
to pay out just Rs 100 billion each in December-March of FY20 and June-September
quarters of FY21.” Such a step will “defuse the liquidity crunch at a minor fiscal cost of
0.05% of GDP each in FY20-21”, Sen Gupta said in a report.
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9 CITI-NEWS LETTER
The Budget may also seek to trim customs duty on capital goods that are not produced
in India and look at creating an export development fund for MSMEs, with a corpus of
0.5% of export value so that they can aggressively take part in global trade shows,
according to industry sources.
To draw people to park their idle gold holdings with banks to reduce reliance on imports
and cut their damaging impact on trade balance, the Budget will likely offer a fresh push
to the gold schemes, laying out plans to tweak existing ones and announce new
products. It may introduce a gold savings account under the monetisation scheme that
will enable banks to take deposits from customers in rupees but credit grams of gold
into their accounts. The monetisation scheme, introduced in late 2015, hasn’t yet
succeeded, having mopped up only about 2% of the country’s annual consumption so
far.
The government may consider hedging against any price risks that are associated with
sovereign gold bonds. The tenor of such securities from the current eight years may be
reduced, and investors may get more flexibility to exit early. However, a key demand of
the gems and jewellery sector to cut the import duty on gold from 10% may not be met.
Sharad Kumar Saraf, president of the Federation of Indian Export Organisations, has
sought income tax relief to units which provide additional employment in the export
sector. “Incentives may be provided based on twin criteria of incremental growth in
exports and incremental growth in workers so that while on the one hand exports are
increased, on the other, the employment intensive units also get a boost,” he added. If
GDP has to grow at 8% or more, exports have to accelerate at over 15% a year, he added.
Having grown at 9% in FY19, merchandise export growth collapsed to just 0.6% in April
and 3.9% in May. Citing persistent risks from a global trade war, the IMF has trimmed
its 2019 trade growth forecast by a sharp 60 basis points to 3.4%, against the actual rise
of 3.8% in 2018. This will weigh on the prospects of Indian exports.
As for employment, the NSSO’s first annual survey on employment suggested that
joblessness rose to a 45-year high in 2017-18, with the unemployment rate at 6.1%
(although the government asserted the findings couldn’t be compared with earlier data)
Home
In our growth agenda, the world can’t be just US & Europe: Rakesh Mohan
(Source: Economic Times, July 01, 2019)
Days before first Union Budget of Modi 2.0, former Finance Secretary and former RBI
Deputy Governor Dr Rakesh Mohan, who was also an Executive Director with the IMF
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10 CITI-NEWS LETTER
until recently, presented a report on ‘Moving India to a New Growth Trajectory’ for
Brookings India. He spoke on a range of issues in an interview with Bijoy Sankar Saikia .
When the entire nation is clamouring for jobs, jobs and jobs, you seem to be
suggesting "focus on growth, jobs will follow"?
I say, growth, growth, employment and universal basic services. In a very basic sense, I
don't know any other way of generating employment unless there is growth. Unless you
focus on growth, whether it is in agriculture, industry or services, you can't have
employment. You will have to concentrate on stepping up the growth rate in a manner
in which there can be greater employment generation; which means employment-
oriented growth. We really need to shift our attention on how to generate much higher
growth rate in industries that are more labour-intensive.
But one of the best growth phases of our economy also saw an estimated 18
million job loss. How does one explain that conundrum?
I am not sure where you got this 18 million number. I don't accept that number. But
what would have been the job growth, had there been zero growth? Secondly, our focus
has not been on growth in manufacturing, which is labour-intensive. In this country of
1.3 billion people, only 14 million are employed in the organised sector. In China, that
number is 100 million plus. That's the thrust of the entire debate. You cannot get
employment growth in this country unless you really focus on the organised sector
labour intensive industries.
Your labour-intensive manufacturing growth model obviously is export-
focussed, which is also the China model. In a world that is increasingly
protectionist, would it work?
If the world to you is Europe and the US, then it won’t. But the world in next 5, 10, 15,
20, 50, 100 years is not going to be the US. The world is going to be China, ASEAN,
Latin America, Africa and South Asia. The volumes there will be much larger than the
west. The import-GDP ratio of China is much higher than the US; the import-GDP ratio
of ASEAN is much higher than the US or Europe. So, the expectation of growth in GDP,
in terms of incremental GDP in the world, will be higher in the next 15 years than the
past 15 years. The growth in demand for goods imports will be much higher.
In simpler terms, China is 1.4 billion people, we are at 1.3 billion; that's 2.7 billion.
ASEAN combined is about a billion now. Along with rest of South Asia, we are 4 billion
plus. Projections by ADB and others suggest 5 per cent GDP growth. So if each of these 4
billion plus people buys one shirt extra a year, one pair of extra shoes a year, one extra
chair a year; imagine the numbers. There is no shortage of demand. You better be
conscious of this.
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11 CITI-NEWS LETTER
In your growth model, you visualise a large share for private sector
investment in infrastructure, at 50-55 per cent. In the past few years, in
almost every infrastructure sector that private sector has invested, they
have got into a mess. Everything is not in a mess. If you look at where we
were 50 years ago, and where we stand today, it's utterly wrong to say
everything is in a mess.
First, you have to recognise, huge improvement has taken place in roads -- whether it's
national highways or rural roads. Secondly, look at telecom. Again a huge improvement
in terms of everyone now having a cell phone. It's all private sector. There has been a
huge improvement in airports; again private sector. Much of the expansion of ports has
happened from private sector, because there is a steady stream of revenues. A steady
stream of revenues is what the private sector has to have to be able to invest. You have to
be clear on what the private sector can do and should do, what they cannot and should
not. There may be some policy issues. Power sector has issues; in generation there is a
lot of private sector, but there are public policy problems, because we still have a lot of
subsidised power consumers. So, it's very clear: unless there is a steady stream of
revenues, then private sector can't invest. There is a public policy issue, where tariffs
have to be changed, connections have to change, policies have to be changed. In other
areas like urban infrastructure, water supply, sanitation, roads; these are public
services. Largely, the public sector has to invest there.
You also say replacing Planning Commission with Niti Aayog was an
unfortunate move. You actually, make a case for bringing back a plan panel
kind of structure.
If you have to focus on a roadmap, there are a lot of public investment functions in
terms of coordination and investments; even by the private sector. There are huge
interconnections that take place. For instance, roads have to be connected with ports
and airports and logistics parks. Similarly, investment in power has to be coordinated
with availability of energy sources, be it coal, petroleum pipeline, ports. These things
cannot be done without synchronisation. Therefore, you need to have a coordinating
body, which has fund allocation powers. When different ministries are drawing up
plans, someone has to coordinate them. That function has been taken away from Niti
Aayog. To my understanding, no country has grown fast without synchronising these
efforts. The coordinating body has to be technically competent. What happened with
Planning. This is the opportunity to set up such a competent body which can carry out
these functions. It has to be staffed with technically-competent people in every sphere so
that it enjoys the respect of all departments.
You say RBI is funding govt borrowing, plus it has also been borrowing to
manage liquidity in the system. You are also a member of Jalan Panel.
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12 CITI-NEWS LETTER
Reading between the lines, are you sort of telling the government to look
beyond RBI’s so-called ‘excess’ reserve to recapitalise banks?
In the last seven-eight years, financial savings in the country has come down. In order
to understand the problems we are facing in terms of lack of investment and lack of
capital in the country, we need to look at why the financial savings have come down. As
a consequence of financial savings coming down, RBI had to do a lot of open market
operations for the government borrowing programme in 2018-19,, which came to
around 70 per cent. That's a reflection of the lack of financial savings in the country.
Given the lack of fund supply, it has also become difficult to ensure official transmission
of monetary policy. You also say India’s tax-to-GDP ratio is too low to support the kind
of growth we desire. But right now everyone seems to be wanting the FM to cut tax rates
to boost demand in the economy and enthuse private sector capex? I have a clear view.
Our tax rates, especially personal income-taxes, are lower than the world average. There
is absolutely no need for any cut in personal income-tax rates. The threshold has already
been raised effectively to Rs 6.5 lakh ($9,300), which is excessively high at about 4.5
times India's annual per capita income. In the US, where the per capita income is
around $50,000, around 30 times that of India, the current income-tax threshold is
$13,500. We have to make every citizen understand that we have to contribute to
revenue so that the government can provide services. You can't have services coming out
of nothing. So, there is absolutely no reason to cut income-tax rate.
Corporate tax is more complicated. But if you take the actual incidence, which is around
24%, it is pretty low. We have zero tax on dividends in the hands of investors. In the US,
dividends are taxed in the hands of investors. There are some reports, including one
from OECD, which suggest that tax is very high. What they have done is add the
dividend distribution tax, as if all the profits are distributed. I don't understand how a
skilled technical body like OECD can make such an error to come out with some 44 per
cent number. This is factually wrong. Obviously, the tax regime has to be fair,
transparent and easy to administer, but you have to look at the revenue kit of the
country before looking at tax rates
Home
Budget challenges
(Source: Chandrajit Banerjee, The Hindu BusinessLine, July 03, 2019)
Boosting consumption, investment is vital
Over the last five years, a series of landmark economic reforms such as Goods and
Services Tax, Insolvency and Bankruptcy Code, Ease of Doing Business, and many more
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13 CITI-NEWS LETTER
have changed the policy environment for industry. However, a fresh set of challenges
confronts us now which requires new policy responses.
The Budget needs to address the issues of boosting demand, energising investments,
and accelerating India’s path to becoming a $5-trillion economy. The foremost
consideration for the Budget should be to retain the fiscal deficit discipline. The current
level of 3.4 per cent appears prudent at this juncture. Simultaneously, the government’s
spending programme will be crucial to overall health of the economy, and the aim
should be to maintain expenditure on key infrastructure sectors with high multiplier
effect.
A key area of concern today is the cost of consumption and investments. According to a
CII estimate, India would need an investment of ₹451 lakh crore over the next five
years, to take GDP growth rate to the desired 10 per cent by 2023-24. To raise resources,
the Budget may consider keeping a strong disinvestment programme going through the
year. Recycling of brownfield government assets with sale of financially viable facilities
such as airports, power plants, roads, and so on could also add greatly to its funds for
new capital investments.
High tax rates on capital need to be brought down by lowering corporate tax rates. CII
has suggested 25 per cent corporate tax rates for all enterprises with few exemptions
and a movement towards a revenue-neutral rate of 18 per cent without exemptions as a
desirable future target. The dividend distribution tax may be halved from 20 per cent to
10 per cent. While this is under consideration, an immediate step to attract investments
could be to extend investment allowance to all sectors.
Similarly, the personal income tax burden also needs to be brought down. It is
important to simplify tax administration over the next three years to infuse greater
consistency, certainty and continuity into the process.
The financial sector has been subdued over the last year. Bank recapitalisation will be a
priority area for the upcoming Budget to enable banks to lend more. The CII has
suggested that government stake in public sector banks should be brought down to 51
per cent and thereafter to 33 per cent in stages to promote capital inflows and efficiency.
With non-banking financial companies (NBFCs) a major source of consumer finance, it
is important that their current problems should be addressed. Currently, NBFCs have no
recourse to the Debt Recovery Tribunal and should be allowed to exercise the right of
recovery of dues under this and under the provisions of the SARFAESI Act for ₹1 lakh
and above. Further, a unified regulator for the financial sector could be considered.
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14 CITI-NEWS LETTER
With employment generation as a high priority, specific labour-intensive sectors may be
taken up for promotion by the Budget such as textiles, housing and construction,
agriculture, food processing, tourism and so on.
Boosting corporate sector participation in agri marketing is critical. A level playing field
between private direct purchase centres and mandis would help in this effort. A critical
area that the Budget must take up is export promotion. While global supply chains are
restructuring and trade is slowing down, India needs to redouble its efforts to access
overseas markets. India must phase out direct incentives for exports and replace them
with those that conform to WTO norms.
The writer is Director General, CII
Home
India’s Trade Deficit
(Source: PIB, July 03, 2019)
India’s overall trade deficit (merchandise and services) for the last three years is as
follows:
(in US $ Billions)
Years Trade Deficit
2016-17 -40.20
2017-18 -84.45
2018-19* -103.63
Source: DGCI&S, Kolkata and RBI (* Provisional)
The data given in the above table shows that the trade deficit increased in 2017-18 and
2018-19 as compared to the previous years. Trade deficit depends upon relative
fluctuations in the imports and exports of different commodities due to the global and
domestic factors such as demand and supply in domestic and international markets,
currency fluctuations, cost of credit and logistics costs.
The increasing trade deficit, in spite of positive growth of exports, is mainly due to
higher imports particularly of the petroleum crude and products electronic goods, iron
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15 CITI-NEWS LETTER
and steel, chemicals and related products, coal, coke & briquettes, fertilizers, machinery
and non- ferrous metals, which contribute to more than 70% share in total imports in
2018-19.
As per Foreign Trade Policy 2015-20, the Government aims to increase India’s export of
merchandise and services from USD 465.9 billion to approximately US$ 900 billion by
2019-20 and to raise India’s share in world exports (Goods and Services) from 2% to
3.5%. India’s share in world exports (Goods and Services) has increased to 2.1 % in 2017
as per WTO estimates.
The value of India’s overall exports (merchandise and services) and imports
(merchandise and services) made in terms of US$ billion during last 3 years are as
follows:
(Value in USD Billion)
Years Export % Change Import % Change
2016-17 440.05 5.63 480.26 3.14
2017-18 498.63 13.31 583.08 21.41
2018-19* 535.86 7.47 639.49 9.68
Source: DGCI&S & RBI (*Provisional)
Representations/suggestions to give impetus to exports are received from trade
organizations/export promotion councils from time to time, which are taken into
consideration as part of the regular ongoing process of review and reform of trade
policies. Higher trade deficit is primarily because of essential imports to meet energy
needs of the country and to meet consumer demands for those products which are not
manufactured in India. Government has taken the following steps to boost India’s
exports and minimize the impact of trade deficit:
i. A new Foreign Trade Policy (FTP) 2015-20 was launched on 1st April 2015. The
FTP 2015-20 provides a framework for increasing exports of goods and services
as well as generation of employment and increasing value addition in the country,
in line with the Make in India, Digital India, Skills India, Startup India and Ease
of doing business initiatives. The policy, inter alia, rationalised the earlier export
promotion schemes and introduced two new schemes, namely Merchandise
Exports from India Scheme (MEIS) for improving export of goods and ‘Services
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16 CITI-NEWS LETTER
Exports from India Scheme (SEIS)’ for increasing exports of services. Duty credit
scrips issued under these schemes were made fully transferable.
ii. A new Logistics Division was created in the Department of Commerce to
coordinate integrated development of the logistics sector. India’s rank in World
Bank’s Logistics Performance Index moved up from 54 in 2014 to 44 in 2018.
iii. Various measures for improving ease of doing business were taken. India’s rank
in World Bank ‘Ease of doing business’ ranking improved from 142 in 2014 to 77
in 2018 with the rank in ‘trading across borders’ moving up from 122 to 80.
iv. A comprehensive “Agriculture Export Policy” was launched on 6th December,
2018 with an aim to double farmers’ income by 2022 and provide an impetus to
agricultural exports.
v. A new scheme called “Trade Infrastructure for Export Scheme (TIES)” was
launched with effect from 1stApril 2017 to address the export infrastructure gaps
in the country.
vi. A new scheme called “Transport and Marketing Assistance” (TMA) scheme has
been launched for mitigating disadvantage of higher cost of transportation for
export of specified agriculture products.
vii. The policy includes measures to nudge procurement of capital goods from
indigenous manufacturers under the EPCG scheme by reducing specific export
obligation from 90 percent to 75 percent of the normal export obligation.
viii. The policy provides issue of Advance Authorisation to allow duty free import of
inputs, which is physically incorporated in export product within a specified
timeline.
ix. The Mid-term Review of the FTP 2015-20 was undertaken on 5th December,
2017. Incentive rates for labour intensive / MSME sectors were increased by 2%
with a financial implication of Rs 8,450 crore per year.
x. Niryat Bandhu Scheme has been launched for outreach/ trade awareness
amongst new/potential exporters.
xi. Interest Equalization Scheme on pre and post shipment rupee export credit was
introduced with effect from 1.4.2015 providing interest equalisation at 3% for
labour intensive / MSME sectors. The rate was increased to 5% for MSME sectors
with effect from 2.11.2018 and merchant exporters were covered under the
scheme with effect from 2.1.2019.
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17 CITI-NEWS LETTER
xii. A new scheme called Scheme for Rebate of State and Central Taxes and Levies
(RoSCTL) covering export of garments and made-ups was notified on 7.3.2019
providing refund of duties/taxes at higher rates.
The major 25 countries with which India’s trade deficit has widened during last three
years are given below:
25 major countries where trade deficit has widened during last three years
(Value in USD Million)
25 major countries where trade deficit has widened during last three
years
Sr. No: Countries 2016-17 2017-18 2018-19*
1 SAUDI ARAB -14862.11 -16659.26 -22917.49
2 IRAQ -10596.50 -16153.58 -20583.81
3 KOREA RP -8343.93 -11900.80 -12053.69
4 IRAN -8126.89 -8459.16 -10014.63
5 QATAR -6861.66 -6937.14 -9110.54
6 JAPAN -5908.90 -6239.13 -7910.91
7 NIGERIA -5895.37 -7246.41 -7879.50
8 VENEZUELA -5449.83 -5787.16 -7094.18
9 GERMANY -4402.06 -4607.91 -6258.65
10 KUWAIT -2964.29 -5800.03 -6096.90
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18 CITI-NEWS LETTER
11 HONG KONG 5843.06 4014.29 -4985.02
12 GHANA -1257.52 -2074.27 -3046.08
13 TAIWAN -959.25 -1769.58 -1970.04
14 MEXICO 516.47 -147.47 -1735.46
15 PERU -380.27 -1616.18 -1684.37
16 ALGERIA 236.77 -437.75 -756.69
17 BOLIVIA -94.02 -562.06 -747.50
18 BURKINA FASO -141.48 -484.22 -699.83
19 VIETNAM SOC REP 3466.00 2794.53 -684.86
20 JORDAN -305.84 -444.16 -537.43
21 GABON -26.12 -350.31 -400.84
22 CONGO P REP -20.69 -82.12 -272.77
23 BELARUS -130.41 -160.23 -171.48
24 LUXEMBOURG -34.60 -41.84 -101.83
25 SOUTH SUDAN 3.07 -67.02 -79.43
*Provisional, Source: DGCI&S, Kolkata
Home
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19 CITI-NEWS LETTER
With GST, ability to move goods has become simpler: Rajesh Subramaniam
(Source: Business Standard, July 03, 2019)
He also said Indians have proved themselves assets across the world
Rajesh Subramaniam took the corner office of logistics major FedEx in February. He is
one of the many Indians who have successfully climbed the corporate ladder in US.
Subramanian discusses global trade, effects of protectionism and what India needs to do
to make itself more business friendly with Arindam Majumder.
Edited excerpts: The air freight industry is going through a slowdown. Does that
concern you? Over the past 50 years, trade has grown faster than GDP. So, air cargo has
grown faster than air freight and air express has grown faster than air cargo. This is
happening ...
Home
Pension Coverage to Trading Community
(Source: PIB, July 03, 2019)
Retail is one of the primary forces driving India’s economy. As per Indian Brand Equity
Foundation (IBEF) analysis, 2019, retail industry contributes 10 per cent to the
country’s Gross Domestic Product (GDP) and around 8 per cent to employment. It is
also extensively linked with other labour-intensive sectors, such as agriculture, food and
beverage, textiles, construction, real estate, and logistics. Further, it indirectly generates
job opportunities in allied (retail-related) sectors, including warehousing, logistics and
packaging. The Government has approved a pension scheme for shopkeeper’s/ retail
traders and self-employed persons for providing monthly minimum assured pension of
₹3000/- for the entry age group of 18-40 years. It is a voluntary and contribution based
central sector scheme. The salient features of the scheme are:
(i) All shopkeepers/retail-traders/ self-employed persons in the age group of 18-40
years are eligible to be the member, on self-declaration.
(ii) A shop keeper/ retail-trader /self-employed person if registered with GSTN, his/
her firm’s annual turnover should not exceed ₹1.5 crore.
(iii) He/she should not be an income tax payee.
(iv) He/she should not be a member of EPFO/ESIC/NPS/PM-SYM.
(v) The Central Government’s share will be matching to the subscriber’s contribution
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20 CITI-NEWS LETTER
A new urgency
(Source: Business Standard, July 04, 2019)
New Delhi must move forward on FTA with EU
The conventional wisdom that globalisation has gone into reverse and that the world is
turning against trade agreements and openness was delivered a major shock last week.
The world’s largest trading entity, the European Union, came to an agreement with four
of South America’s biggest economies — Brazil, Uruguay, Paraguay, and Argentina —
the four surviving full members of the trading bloc Mercosur, which was till recently the
world’s fourth-largest of such blocs. (Venezuela, which was also a member, has been
suspended for over two years.) Once free trade begins ...
Home
Dubai sets sight on Indian startups to become innovation hub
(Source: Business Standard, July 03, 2019)
Looking to transform itself into an innovation hub, Dubai is wooing entrepreneurs from
India, the third biggest startup base in the world, to set up shops in the emirate.
The focus is on technology-driven startups, wherein the authorities are offering easier
business licences, office spaces and access to funding.
Dubai grew to prominence first as a trading hub, and then as a construction, tourism
and manufacturing centre. However, it grew at 1.9 per cent in 2018, the slowest growth
since the post-crisis time in 2010.
"When we decided to launch the programme of attracting overseas startups here,
naturally the first choice was India, as 30 per cent co-founders of our Dubai Startup Hub
have Indian origin," Natalia Sycheva, manager, entrepreneurship department of Dubai
Chamber of Commerce told PTI here.
"We have a strong focus on India and we realise how our incubators will benefit from
Indian talent," she said, adding that the chamber has launched Dubai Startup Hub to
attract startups here.
"We would like to have around a couple of hundreds of startups, to bring their
businesses to Dubai," she added.
They are looking at companies in emerging technologies like blockchain, artificial
intelligence and digital transformations, with a focus on how their solutions can be
applied to help the local economy, she said.
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21 CITI-NEWS LETTER
These startups should bring changes in e-commerce, construction, logistics and retail
sectors, she said.
The hub organised roadshows at the Indian startup capital of Bengaluru and Delhi last
month to identify and attract high-potential startups from India.
Selected startups will get business licences and office set up in Dubai and assistance in
getting access to various government or private sector funding, she said, adding that
efforts are also on to get startups from different African countries.
The chamber feels that there is a lot of potential for the growth of trade between India
and the UAE.
"India is Dubai's second-largest trading partner with USD 31.4 billion worth of bilateral
non-oil trade in 2018, a 17 per cent increase compared to the previous year. But we see a
lot of opportunity in the increase of this figure in coming future," she said.
The local government is expecting approximately 1.5 per cent of the UAE's annual
forecast of GDP during the six months of the Dubai Expo 2020 to be held next year, Jon
Bramley, vice president, communication of the Dubai Expo 2020 said.
He said India is participating in a big way at the Expo, which will feature 192 individual
country pavilions in 4.38 square km area.
The World Expo is one of the world's oldest and largest international events, taking
place every five years and lasting for six months, which serve as a bridge between
governments, companies, international organisations and citizens.
Home
Simplify tax rate to raise investment: FTCCI
(Source: Telangana Today, July 04, 2019)
Arun Luharuka, president, FTCCI, said, the federation is expecting the Government to
announce concrete measures to boost the growth across all the sectors and to achieve
eight to 10 percent growth rate
Federation of Telangana Chambers of Commerce and Industry (FTCCI) is seeking the
government to augment public expenditure in agricultural infrastructure such as
irrigation and cold storage to help improve the rural demand and consumption. To
encourage higher investment into the equity market by private sector, the tax incidence
on equity investors need to be reduced. Companies pay high corporate tax at over 34 per
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22 CITI-NEWS LETTER
cent now. A simplified and reasonable tax rate regime is required to raise the
investment.
Arun Luharuka, president, FTCCI, said, the federation is expecting the Government to
announce concrete measures to boost the growth across all the sectors and to achieve
eight to 10 percent growth rate.
To create more jobs, investment has to be focused in the job creating sectors. The
organised sector does not create much employment due to rising automation. Large
number of jobs are created in education, health, small irrigation, rural infrastructure
like telecom and roads. So, the need is to invest in these areas.
The major obstacle in increasing labour intensity in manufacturing has been the
stringent labour laws. Even if the government cannot immediately change the labour
laws, it should workout relaxation in selected labour intensive sectors. Encouragement
to agro-processing, textiles (readymade garments) and leather industries are few areas,
besides, tourism and hospitality.
“From this budget, we are anticipating a strong push to cyber security. The vision of
Digital India calls for cyber security and we strongly recommend that the first budget of
the new Government should mandate setting aside a certain proportion of fund from the
technology budget,” he added.
The budget is expected to address the stressed assets problem within banks and NBFCs,
as this is acting as a big constraint to revive the investment.
To revive the MSME growth and reduce the financial stress, MSMEs may be offered two
per cent interest subvention on loans up to Rs 5 crore and direct tax concession.
Government should include e-vehicles in priority lending sector for sustainable and
environment-friendly transport system.
The entire eco-system of trade is needed to be restructured and increase the export
incentives in line with WTO guidelines. The budget should focus on providing measures
and gain from the US-China trade war, as this has opened avenues for India to become a
prominent exporter to both nations.
He pointed out, “The State of Telangana is receiving a raw deal in the previous budget,
we hope that more funds will be allocated for State for various projects and also setting
up of institutions/university (ies) that were promised in the State Reorganization Act
are obliged.”
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23 CITI-NEWS LETTER
Welspun gets U.S. court nod to settle claims
(Source: The Hindu, July 03, 2019)
Aggregate settlement cap at $36 mn
Welspun India Ltd. has received preliminary U.S. court approval for a settlement
agreement to resolve all pending legal claims made against the company in the United
States.
These claims concern the past marketing and labelling of its premium cotton home
textile products, the company said in a statement.
In 2016, U.S. retail major Target Corporation terminated the product sourcing contract
with the company following allegations of supply of products made of inferior cotton as
against Egyptian cotton which was promised in the contract. After that, several class
action suits were filed in U.S. courts, claiming damages.
“The plaintiffs in other pending litigations involving these issues have also agreed to
withdraw their objection to the global settlement and suspended litigation pending the
settlement agreement’s final approval,” it said. The firm has also, inter alia, agreed to
increase payouts to individual settlement class members without increasing the
aggregate settlement cap of $36 million. “Based on expert advice, the provision already
made by the company during the quarter ended March 31 remains unchanged and
adequate. As per statutory procedure, the settlement agreement is subject to final
approval and review by the appropriate courts in USA,” the company said in the
statement.
It said over the last three years, the company had addressed the issue by aggressively
undertaking various steps to enhance traceability, including the introduction of Wel-
Trak, a patented and industry-defining solution, ‘which had helped it us earn stronger
trust among customers.’ It also and reiterated the firm’s its commitment towards
prioritising customer interest above all.
“We have also increased additional third party assurances, such as vendor audits, and
deployed a dedicated resource in Egypt to source Egyptian cotton,” it said.
“With this, Welspun is well equipped to further consolidate its leadership position in the
industry and leverage global opportunities in flooring and advanced textiles, as well as
the growth of its domestic home textiles business,” it added.
Home
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24 CITI-NEWS LETTER
Worried over GST review, FIASWI writes to Indian minister
(Source: Fibre2Fashion, July 03, 2019)
Power loom weavers in the country’s largest man-made fabric (MMF) sector in Surat are
worried over a likely move by the Indian Government to review the present rates of
goods and services tax (GST) in the textile sector. The weavers fear any review of the
rate may adversely affect manufacturers while possibly benefiting the yarn spinning
sector.
The Federation of Indian Art Silk Weaving Industry (FIASWI), on behalf of other
important associations representing the power loom industry, has written to finance
minister Nirmala Sitharaman over the issue, according to a report in a top English-
language daily.
The government incurred a loss of over ₹3,500 crore after it reviewed GST rate on
yarns from 18 per cent to 12 per cent, while MMF fabrics continued to be taxed at a rate
of 5 per cent, with no refund of input tax credit.
Home
Women unwilling to do night shift can't be denied promotion: Kerala HC
(Source: Times of India, July 03, 2019)
A notice (produced before court as exhibit P2) was issued by the management of Kerala
Lekshmi Mills stating that women employees who are not willing to do night shifts won’t
be given permanent appointment, promotion, seniority, etc. Only those women
employees who work in three-shift rotation will be entitled for benefits and preferences,
the notice issued by the management had stated. At the court, the petitioners sought a
directive to the company not to compel them to work after 7pm, as stipulated in section
66 of Factories Act, and to direct that their emoluments should not be affected for not
working after 7pm. Kerala Lekshmi Mills filed a statement to the court stating that it has
been decided, after receiving the court’s notice, to make women employees work only
until 10pm and it has been implemented from May 27th this year. The management also
said in the statement that all that was intended by the clause in the notice is that women
who work during night shifts would get a preference over others in respect of grant of
seniority, promotion, etc. Petitioners’ counsel argued that seniority and promotion are
governed by service regulations of NTC and do not refer to the option to work in night
shifts as one of the requirements for either better seniority or fair chances of promotion.
The court said in the judgment, “The learned counsel for respondents (Kerala Lekshmi
Mills and its management) has read the condition in Ext.P2 and also the statement
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25 CITI-NEWS LETTER
made by respondents 2 and 3 along with the Court, but unable to satisfy the Court that
the condition now imposed can have legal semblance, much less authority in the scheme
under which the management of NTC is seen. Therefore, it is clear that the condition in
Ext.P2 cannot be treated as a guideline, either for seniority or promotion, while
determining the service conditions of employees. In other words, the women employees
who do not opt to work in night shifts are not denied either seniority or promotion
because they opted to work in the morning shift.” Further, the court said the
management can utilize the services of women employees who are willing to do night
shifts by providing proper safety measure.
Home
Industrialist B K Birla, grandfather of Kumar Mangalam Birla, passes away
(Source: Financial Express, July 03, 2019)
B K Birla was the chairman of Century Textiles and Industries, and had been active in
business since the age of 15.
Industrialist B K Birla, the grandfather of Kumar Mangalam Birla, died in financial
capital Mumbai on Wednesday, sources said. He was 98. B K Birla was the chairman of
Century Textiles and Industries, and had been active in business since the age of 15. He
was instrumental in a slew of business initiatives, starting with his stint as the chairman
of Kesoram Industries, sources said.
Specifically, he tapped into opportunities in sectors like cotton, viscose, polyester and
nylon yarns, refractory, paper, shipping, tyrecord, transparent paper, spun pipe,
cement, tea, coffee, cardamom, chemicals, plywood, MDF Board, according to a profile
available online. Kumar Mangalam Birla’s father Aditya Vikram Birla, who died in 1995,
was his only son.
Home
Why driving manufacturing and exports is critical
(Source: M G Arun, India Today, July 03, 2019)
They are the twin engines for growth and job creation. The finance minister will do
well to address these sectors comprehensively in the Budget, and provide a roadmap
for their recovery.
A big revival in manufacturing is critical for the government to achieve both better
economic growth as well as create more jobs. The Union Budget presented by finance
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26 CITI-NEWS LETTER
minister Nirmala Sitharaman will need to have proposals that significantly improves the
status of manufacturing in the country. According to Crisil, manufacturing's share in
India's GDP crawled up to 18.2 per cent in the year 2018-19, from 17.2 at the end of the
UPA government's second term. The meagre one per cent increase in five years shows
how much faster the manufacturing sector needs to grow, if its share of GDP has to
reach 25 per cent by 2022, a threshold that must be achieved if India has to compete
with nations like China, the US, Japan and South Korea in the international arena, as
well as generate enough jobs for India's aspiring youth.
With the heightened tensions between the US and China on the trade front, there are
many who feel India has an opportunity to offer a base to MNCs who may leave China.
Moreover, there is also an opportunity to supply value added manufacturing goods to
developed markets, a segment China had been catering to so far. However, this is not
going to be easy, as India is also under the US radar for allegedly levying high tariffs on
imports from the country. Here are some things the government can do to step up
manufacturing, some of which are expected to find resonance in the upcoming Budget:
Boost investments: One of the biggest dampeners for manufacturing has been the
tepid investment climate. "Stepping up investments, both public and private, is critical
for boosting our growth potential. The New Industrial Policy has to be made more
potent, providing key directions in terms of continuity, consistency and certainty for all
policies governing industry", says Vikram Kirloskar, president of the Confederation of
Indian Industry (CII). The formation of the Cabinet Committee on Investments, chaired
by the prime minister, is expected to look into the matter with urgency. India's best bet
to raise growth is by raising the investment cycle. "India's best bet to raise private
investment (which makes up 75 per cent of all investment) is by creating a conducive
environment, by stepping up public investment in a fiscally responsible way. And that
can only happen by adopting 'asset recycling'," says Pranjul Bhandari, Chief India
Economist at HSBC.
Ease of doing business: The government needs to expedite ease of doing business on
the ground, especially in areas related to land acquisition, faster and simpler clearances
and also ensure a lead role for the states in reforms. For instance, only eight states have
implemented the Land Acquisition, Rehabilitation and Resettlement (LARR) Act 2013.
This is despite the Union government allowing states to amend LARR as per their
specific requirements. The government should also identify key areas of growth in the
global markets, and help set up units that can compete in the global markets on product
quality and cost-effectiveness.
Reviving the auto sector: India's car sales dipped 16 per cent in April, the worst fall
in eight years, and the tenth consecutive month since July 2018 when sales have
declined. To revive the sector, the Society of Automobile Industry (SIAM) wants the
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27 CITI-NEWS LETTER
government to reduce the current tax incidence of 28 per cent for all categories of
vehicles and bring it down to 18 per cent to spur demand. Also, in September 2017, the
cess was increased to 17 per cent, 20 per cent and 22 per cent from the earlier rate of 15
per cent for mid-sized and large (luxury, SUVs and MUVs) passenger cars. This cess rate
can be revised downward to provide the required push to the auto industry. Also, to get
polluting old vehicles off the road, SIAM has proposed an incentive-based scrapping
scheme. In order to promote 'Make in India' initiatives and support local
manufacturing, SIAM asked the ministry for an increase in applied customs duty on
fully imported commercial vehicles (CV) to 40 per cent from 25 per cent and reduce the
customs duty on semi-knocked down CVs to 20 per cent from 25 per cent.
More allocation for textiles: The government proposed Rs
5,832 crore in budgetary allocations for the textile ministry in
the 2019-20 interim budget, which is over 16 per cent lower
than the last fiscal. The industry, however, expects a higher
allocation of over Rs 7,000 crore to meet its obligations under
the Amended Technology Upgradation Fund Scheme (ATUFs)
and Remission of State Levies (ROSL) scheme. Also, the
industry wants the government to include cotton yarn and
fabrics as well under the ROSL scheme.
Supporting MSMEs: To revive the MSME sector, focus on improving supply chains to
save on logistics costs in procuring raw material. World over, MSMEs are the backbone
of large manufacturing industries, providing a seamless supply of raw materials, or
acting as outsourcing firms to the large manufacturers.
Industrial clusters: Promote the establishing of industrial clusters that can lower
overall cost of production and provide better logistics - the proposed National
Investment & Manufacturing Zones or integrated industrial townships can be a game-
changer. Kirloskar says a new model of special economic zones (SEZs) must be
developed based on the original concept of having six to seven very large SEZs.
Public-private partnerships: Thrust on private - public partnership aimed at skill
development in the manufacturing sector, since lack of a skilled workforce is one of the
biggest drawbacks of the sector. In modern manufacturing, knowledge of new
technology developments is imperative. The government needs to also take a hard look
at public sector enterprises in manufacturing. While they need more functional
autonomy, these enterprises also have to be made accountable to stakeholders. Many
public sector firms are struggling with losses, bloated workforces and a casual attitude
to productivity.
Boosting exports
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28 CITI-NEWS LETTER
Just when it was picking up, the US challenged India's export promotion schemes and
ended preferential trade treatment for $5.6 billion worth of exports that were being
given duty-free status. The continued global growth slowdown and increasing share of
services in GDP means that growth in merchandise exports from India has been steadily
slowing. However, it has fallen to an anaemic 1.7 per cent per year in the past five years,
impacting the performance of export-oriented firms and even job creation. A major
problem export units face is finance, especially the small and medium industry ones.
Simplify GST: The government should ease pressure on liquidity from GST payments.
For this, the GST Council has to implement the e-wallet (electronic wallet) scheme,
which would be credited with notional or virtual currency by the Directorate General of
Foreign Trade (DGFT). Exporters can use this virtual currency to pay off GST on the
goods they import or procure so that their funds are not blocked.
Identify key markets: Identify key areas of growth in the global markets, and help set
up units that can compete in the global markets on product quality and cost-
effectiveness. Competing on a global scale will require a thorough evaluation of the
opportunities and manufacturing products tailor-made for specific markets. The
industry wants a big overhaul of the entire system of Export Incentives and Exports
Credit to make all incentives WTO (World Trade Organisation) compatible.
A relook at export schemes: A number of India's export promotion schemes have
been challenged by the US government, putting pressure on our exports. India needs to
work on alternative schemes to counter the US challenge on the country's existing ones.
As an impetus to the 'Make in India' initiative, a majority of the respondents to a pre-
budget survey conducted by KPMG India wanted the tax holiday for exports available to
SEZ units extended beyond March 31, 2020.
Better market access: Several small and medium companies have the best of
products, but are unable to market them as they lack the necessary resources. India
should increase the fund for market access initiatives from Rs 300 crore at present to,
ideally, Rs 4,000 crore. These funds should be utilised only for small and medium scale
companies, as they need such resources the most.
Boosting R&D: India is one of the lowest spenders on R&D for exporters in the world,
making us lag behind in innovative products in export markets. Exporting firms should
be encouraged to invest more in R&D activities through tax concessions. As of now,
other than pharma companies, those investing in R&D are very few. This would help
companies to come up with innovative products that will do better in the export
markets.
Improve liquidity: There is a serious liquidity crisis among exporters, especially those
in the small scale segment. Since banks are reluctant to lend to small exporters, they end
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29 CITI-NEWS LETTER
up borrowing from money lending institutions, raising their cost of borrowing. Banks
should be encouraged to lend to the small and medium scale industry, especially the
gems and jewellery segment where liquidity has almost dried up. One of the ways is to
bring the exports segment under the priority lending segment.
Implement the e-wallet scheme: There's a liquidity crunch in the export segment as
Goods and Services Tax (GST) entails payment of taxes upfront with returns coming
only later. Many small manufacturers have their payments blocked for three to four
months in this manner. To solve the pressure on liquidity from GST payments, the GST
Council has to implement an e-wallet (electronic wallet) scheme, in which e-wallets
would be credited with notional or virtual currency by the Directorate General of
Foreign Trade (DGFT). This virtual currency would be used by the exporters to make the
payment of GST on the goods imported or procured by them so their funds are not
blocked.
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GLOBAL:
US slaps import duties of more than 400% on Vietnam steel
(Source: Economic Times, July 03, 2019)
The US Commerce Department imposed duties of more than 400% on steel imports
from Vietnam, accusing some businesses in the Southeast Asian nation of evading the
levies in a further escalation of tension between the two trading partners.
In three preliminary circumvention rulings on Vietnamese steel, the Commerce
Department said certain products produced in South Korea and Taiwan were shipped to
Vietnam for minor processing before being exported to US as corrosion-resistant steel
products and cold-rolled steel. Customs officials have been ordered to collect cash
deposits at rates as high as 456.23% on imports of the steel products produced in
Vietnam using material from South Korea and Taiwan. Vietnam's Ministry of Foreign
Affairs didn't immediately respond to a request for comment.
The US is hardening its rhetoric against Vietnam, one of its major trading partners and
an economy that's benefiting from President Donald Trump's trade war with China.
Trump described Vietnam last week as “almost the single-worst abuser of everybody”
when asked if he wanted to impose tariffs on the nation. Vietnam says it's working to
reduce its trade surplus with the US, and is already cracking down on Chinese
manufacturers who are rerouting their goods via the Southeast Asian nation for export
to the U.S. in order to bypass higher tariffs.
The US Embassy in Hanoi said this week it's in talks with authorities and hopes
“Vietnam takes steps in the near term to address our concerns in a constructive
manner.” Vietnam's annual trade surplus with the U.S. has exceeded $20 billion since
2014 and reached $39.5 billion last year, the highest in records going back to 1990,
according to US.
Home
China to introduce new measures to promote innovative models in foreign
trade
(Source: Xinhua, July 04, 2019)
China will support the pilot free trade zones in undertaking more experiments with
reform and opening up, and refine policy incentives for cross-border e-commerce to
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31 CITI-NEWS LETTER
facilitate more innovative models in foreign trade, a State Council executive meeting
chaired by Premier Li Keqiang decided Wednesday.
"These pilot free trade zones have accumulated much good experience in the past six
years since their launch. In particular, they have set an example in deepening the reform
of government functions and expanding opening up," Li said. "There must be a stronger
unity of purpose, supported by intensified efforts in this respect."
At the Wednesday meeting, attendees called for speedy launch of new measures to
support the pilot zones in achieving wider opening up and innovation-driven
development in line with high-standard international economic and trade rules.
Relevant provincial and municipal governments will be urged to delegate more
provincial administrative authority to the pilot free trade zones, especially in investment
approval and market access. The reform of decoupling business licenses and operation
permits will be fully implemented in all pilot zones.
The meeting called for efforts to support local governments and competent departments
in proposing deeper reforms under their portfolio of responsibilities, trying the reforms
out in the pilot zones, and working to see that all reforms and innovations be part of a
systematic whole.
The 2019 edition of negative list for foreign investment applicable to the pilot free trade
zones must be fully implemented, and related laws and regulations should be speedily
adjusted accordingly.
Concrete measures were proposed at the meeting for innovation in trade facilitation.
Pilot programs in competition policy will be launched in the zones as part of efforts to
level the playing field. The government will step up exploration of measures in widening
market access, especially in opening the services sector, in the zones, with a view to
gaining experience for businesses to participate in-depth in global competition and for
realizing opening up at a higher level.
At the same time, reform and innovation in pilot zones will be better leveraged to
facilitate the development of their host cities and the surrounding regions.
"Nowadays, globalization, free trade and multilateralism have experienced some
disruptions. Yet China's commitment to opening up as the general direction remains
unchanged, and steps for wider opening will be better delivered," Li said. "We have
made arduous efforts to this end in the past 40 years, and going forward, we will be as
steadfast in pursuing opening up. What has happened shows that China's opening up
has benefited the world, and boosted its own development."
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32 CITI-NEWS LETTER
The Wednesday meeting also studied supportive measures for cross-border e-
commerce.
The past few years have seen robust growth of cross-border e-commerce, which has
become a prominent highlight in foreign trade.
"Cross-border e-commerce is an innovation responding to the new industrial revolution.
As our economy transforms and upgrades, innovations in business model become an
imperative. Cross-border e-commerce may take up a very small share in our overall
foreign trade now, yet with its fast growth, it has catalyzed domestic industrial
upgrading, spurred consumer spending, boosted domestic logistics such as express
delivery, encouraged innovation and business start-ups, and created massive jobs."
It was decided Wednesday that on top of the 35 existing zones, such zones will be
launched in more cities in light of local needs. Retail goods that exported from these
pilot zones will see their value-added tax exempted in the absence of a valid purchase
certificate. Simpler methods for verifying and collecting corporate income tax will be
introduced.
The meeting urged on building more service platforms for developing cross-border e-
commerce. The development of overseas warehouses in more places will be encouraged.
Relevant e-commerce platforms will be guided in stepping up services for intellectual
property protection.
Educational institutions will be supported in launching majors of cross-border e-
commerce to promote both industrial and academic development, and produce more
professionals for cross-border e-commerce.
The meeting also urged efforts to improve the prudent yet accommodative regulatory
approach and boost international cooperation, including active participation in the
making of international rules on cross-border e-commerce.
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CNTAC team meets Razak, discusses trade, investment
(Source: Business Recorder, July 03, 2019)
A Chinese delegation of National Textile and Apparel Council (CNTAC) called on
Advisor to PM on Commerce, Textiles, Industries & Production and Investment Abdul
Razak Dawood to deliberate upon bilateral trade and investment opportunities.
The CNTAC is the national federation of all textile-related industries, as it includes the
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33 CITI-NEWS LETTER
textile industrial associations and other economic entities as registered members. The
advisor underlined the significance of investment opportunities in textile sector for
industrial development through mutual cooperation. He appreciated the role of Chinese
companies in textile sector of Pakistan and urged the Chinese delegation to have more
extended cooperation in the textile sector.
Head of CNTAC delegation appreciated the Pakistan's business friendly environment for
better cooperation in industrial development, especially textile industry. He apprised
the participant that China has already cooperated in manufacturing of polyester yarn in
Pakistan and eyeing for extended mutual cooperation in finished/value added products
of textile sector.
The visit of CNTAC aims to observe the existing business environment for future
investment in industrial sector in Pakistan. The advisor emphasised to enhance know-
how regarding Chinese technological advancement in textile sector and urged the
delegation to cooperate in the development of textile sector to avail investment
opportunities for developing better partnership. Members of the delegation showed
interest in technology up-gradation in Pakistan by investing in textile research centres
and stitching labs.
The advisor informed the delegation that-China Pakistan Economic Corridor (CPEC)
has opened enormous investment and business opportunities in Pakistan. In the first
phase of the project, investment was only attracted to power sector and infrastructure
development. "Now we are entering the second phase of CPEC ie. industrial
cooperation, which provides enormous opportunities for investment in textile and
agriculture," he said.
Moreover, in the wake of China-Pakistan FTA Phase-II, bilateral cooperation between
the two countries is widening by providing extended market access to Pakistani
products in Chinese market which has increased industrial base of Pakistan, the advisor
highlighted. The Chinese companies should invest in whole value chain of textile, from
cotton to garment, for the development of sector and both countries should work for
win-win position, he said.
Home
Garment accessories see bright prospect
(Source: The Independent, July 04, 2019)
Tk 1,200cr was invested last year: BGAPMEA president
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34 CITI-NEWS LETTER
Makers of garment accessories and packaging have made an enormous investment of
about Tk. 1,200 crore to push up export earnings and meet the demand of the apparel
sector.
Accessibility of the workforce at reasonable wages, duty-free market access in major
export destinations, and preferential location at the heart of the Asia-Pacific region have
lured foreign investment to the textile and apparel industry, said Abdul Kader Khan,
president of the Bangladesh Garments Accessories and Packaging Manufacturers’ and
Exporters’ Association (BGAPMEA).
Around 100 newly built factories are coming up each year to manufacture accessory
products.
Last year, investments worth Tk. 1,000–1,200 crore were made in this sector. Even
more projects are now waiting in the pipeline, Abdul Kader Khan said.
Talking about the reason behind the huge investment, Khan said since Bangladesh is the
world’s second largest exporter of apparel products after China, there is a huge
investment opportunity in the textile and garments industry.
So far, Tk. 40,000 crore has been invested since the inception of this sector, he added.
“We have urged the government to reduce corporate tax to 10–12 per cent from 35 per
cent to ensure more growth in the garment accessories sector. We have seen how the
government's decision to reduce corporate tax rate from 15 per cent to 12 per cent in the
readymade garments (RMG) sector eventually inspired local investors to make
investment decisions,” said Khan.
Since the demand for accessory products is growing at a faster rate at both home and
abroad, around 100 new factories have started their operations this year. Presently,
around 1,200 factories are producing accessory items in the country. Most of them are
compliant factories.
Talking about fully compliant accessories factories, the BGAPMEA president said:
"Dekko Accessories Ltd, Babylon Group, Montrims Ltd, KDS Accessories, Mastex
Accessories are some of the fully compliant factories in the accessories industry."
“We have to put more emphasis on producing high-quality accessory items. We must
establish this sector separately and not as the backward integration of the readymade
garments (RMG) industry,” he also said.
“However, the new investment will focus on direct export of accessory items because we
can meet approximately 95 per cent of the local demand,” he added.
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35 CITI-NEWS LETTER
He said Bangladesh produces and exports accessories like woven labels, leather badges,
stone and metal motifs, rubber patches, gum tapes, satin and cotton ribbon hangers,
price tags, buttons and zippers.
Indirect contributions have always made up 15–20 per cent of the net export earnings of
the RMG sector. Export earnings from the RMG sector in FY2017–18 totalled USD
30.61 billion. This includes approximately USD 7.10 billion from accessory items used in
the RMG, leather, pharmaceutical and other export-oriented sectors.
Currently, the export contribution of accessory items is USD 7.10 billion, among which
USD 1.42 billion comes from direct exports to the Middle-East, South Africa, Sri Lanka,
Malaysia, Europe, Vietnam, Cambodia, and Laos.
Some factories are already exporting accessory items directly, Khan said.
“Bangladesh yearly exports basic polo shirts, which are worth USD 6 billion, among
which our contribution stands at USD 1.2 billion,” he added.
Export Promotion Bureau stats show that exports of yarn and fabrics rose by 20.16 per
cent to USD 141.12 million between July and May of FY2018-19 compared to the same
period in FY2017-18. This scenario clearly depicts that Bangladesh could be a major
source of garments raw materials, said Khan.
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Nigeria to sign Africa free trade agreement—Presidency
(Source: North Africa Post, July 03, 2019)
Nigeria’s presidency on Tuesday said the West African nation will sign the Africa free
trade agreement at the coming African union summit.
According to a statement posted on the presidency’s Twitter feed, Nigeria would sign
onto the deal at the upcoming African Union extraordinary summit in Niamey, Niger.
The Summit is taking place to celebrate the Entry into Force of the AfCFTA Agreement
and to launch the Operational Phase of AfCFTA Market, which also includes launching
the AfCFTA Consultative Dialogue Framework.
“Our position is very simple, we support free trade as long as it is fair and conducted on
an equitable basis,” the Twitter feed quoted President Muhammadu Buhari as saying.
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36 CITI-NEWS LETTER
The architects of the AfCFTA hope that the deal will encourage inter-African trade,
currently at 17 percent of all African exports, by eliminating complex and disjointed
trade agreements across the region.
In addition to creating a massive market of 1.2 billion people with a combined GDP of
more than $2.2 trillion, the AfCFTA also eliminates 90 percent of tariffs which
proponents say will encourage foreign direct investment by creating and easing entry
into a larger, single, seamless market for goods and services.
Nigeria, the largest economy on the continent, was one of the last countries that had not
committed to signing the deal.
President Muhammadu Buhari had expressed concern it could allow neighboring
countries to inundate Nigeria with low-priced goods that could affect local businesses.
In a more integrated African market, textiles and apparel, leather, wood and paper,
vehicles, and transportation equipment are some of the industrial goods expected to
benefit the most, as are vegetables, fruits, nuts, beverages, and meat products.
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