citi-news letter · overall, the tried-and-true industrialization strategy seems to be working....
TRANSCRIPT
Cotlook A Index - Cents/lb (Change from previous day)
21-02-2019 80.30 (Unch)
21-02-2018 88.70
21-02-2017 84.10
New York Cotton Futures (Cents/lb) As on 25.02.2019 (Change from
previous day)
Mar 2019 72.00 (-0.19)
May 2019 72.94 (-1.07)
July 2019 73.88 (-1.11)
25th February
2019
Irani assures full support to Kashmir carpet industry for its
growth, promotion
4 lakh Maharashtra farmers in line for PM’s 1st credit
transfers
‘MSMEs contribute State’s 50% GDP, 45% exports’
UAE quickly emerging as a preferred investment
destination
Cotton and Yarn Futures
ZCE - Daily Data (Change from previous day)
MCX (Change from previous day)
Feb 2019 20190 (-40)
Cotton 16270 (+170) Mar 2019 20530 (-10)
Yarn 24855 (0) Apr 2019 20810 (0)
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2 CITI-NEWS LETTER
-------------------------------------------------------------------------------------- Irani assures full support to Kashmir carpet industry for its
growth, promotion
4 lakh Maharashtra farmers in line for PM’s 1st credit transfers
Can Bangladesh beat India in development race? Here's what
economists say
‘MSMEs contribute State’s 50% GDP, 45% exports’
How India and Vietnam can increase bilateral trade
India's economic fundamentals an anchor against volatility:
BSE Chief
Niti Aayog bats for setting up independent debt management
office
The FDI problem
Raymond revamps supply chain, weighs on digital tools for
more efficiency
Gujarati Ajrakh craftsman showcases fine-printed textiles in
Delhi
------------------------------------------------------------------------------------------------
US, China sprint to seal deal ahead of Trump's deadline on
trade wars
UAE quickly emerging as a preferred investment destination
Pakistan: Any option for home textiles exporters?
Afghanistan launches new export route to India through Iran
Relief for cotton farmers as Rivatex inks deal with them
----------------------------------------------------------------------------------
NATIONAL
---------------------
GLOBAL
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3 CITI-NEWS LETTER
NATIONAL:
Irani assures full support to Kashmir carpet industry for its growth,
promotion
(Source: Brighter Kashmir, February 24, 2019)
Asserting that the valley is famous for exquisite high-quality hand-knotted woolen and
silk carpets which are symbolic of quality and finesse, Union Minister for Textiles Smriti
Zubin Irani has assured full support to the Kashmir carpet industry for its growth and
promotion.
Mrs Irani said this while e-inaugurating Srinagar office of Carpet Export Promotion
Council (CEPC) in the premises of IICT Srinagar through video conferencing facility on
Saturday, an official spokesperson said here on Sunday.
The Union Minister expressed hope that CEPC’s Srinagar office will be beneficial for all
the stake holders and will lead to enhance exports and open new avenues for more
employment opportunities in the region.
She said that Indian Handmade carpet is an age-old industry and has made significant
strides in the recent past. She said the industry is highly labour intensive and provides
employment to over two Million workers. “Kashmir is famous for exquisite high-quality
hand-knotted woolen and silk carpets which are symbolic of quality and finesse,” she
added. Mrs Irani informed that 90,000 applications have been received for the
registration under Pehchan initiative and 60,000 Pehchan ID Cards have been
distributed to the artisans so far.
She also assured full support to the Kashmir carpet industry for its growth and
promotion. Meanwhile, it was given out that Textile Committee in partnership with
Development Commissioner Handicrafts (DCH) and CEPC will provide special lab
testing facilities at IICT in Srinagar.
Further, Wool Bank will be opened in collaboration with Wool Development Board to
ensure availability of sufficient raw wool through the follow up of the office of the DCH,
the spokesperson said.
He said that for reduction of GST on Pashmina Shawls a suitable proposal of the
industry will be recommended to the Ministry of Finance from Ministry of Textiles.
“CEPC will work closely with JKTPO to help the marketing and branding requirement of
the manufacturers and traders from J&K at trade shows within India and across the
globe,” he added. Meanwhile, the Chairman CEPC said that Council will also run
awareness campaign to educate members of the J&K region about no applicability of
GST on weavers of Pashmina shawls and Silk carpets, who make less than 40 lakh per
annum.
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4 CITI-NEWS LETTER
4 lakh Maharashtra farmers in line for PM’s 1st credit transfers
(Source: Bhavika Jain, Times of India, February 24, 2019)
MUMBAI: Over 14 lakh farmers from Maharashtra have been selected to receive Rs 2,000
in their bank accounts under the Centre’s Kisan Sanman Nidhi Yojana, inaugurated by
the PM in UP on Sunday. This will be the first of three instalments, totaling Rs 6,000
annually.
“More than 1 crore farmers (with land holdings of up to two acres) from the state will be
eligible to receive the amount. The first phase includes 14.26 lakh farmers,” said chief
minister Devendra Fadnavis. Based on land holding data, the bank accounts of 52 lakh of
the total eligible farmers have been uploaded to the central database, the highest in the
country, he said, adding that the state will try to bring out a similar scheme for farmers
who are not eligible for the Centre’s scheme due to larger land holdings.
“Several farmers in drought-prone Vidarbha and Marathwada have greater land holdings,
but due to agriculture being mostly rain-fed, they are making losses and need to be
supported,” said an official from the agriculture department.
While the Centre’s move is being seen by policymakers as the first of steps towards income
support in India in the era of liberalization, critics have called the PM and CM’s
announcements poll sops.
Union minister Smriti Irani called the move “a historic step” on Twitter. “It will benefit
large number of jute & cotton farmers who play a crucial role in the textiles sector,” she
wrote. An official said farmers in the country, especially Maharashtra, who are facing
drought and poor prices will be happy.
Not everyone is, though. “What farmers really want is remunerative pricing for their
produce, which the government has not ensured. That is why there is so much rural
distress, requiring the Centre to announce such schemes around the elections,” said Ajit
Navale of the farmers’ organization All India Kisan Sabha.
Ramesh Patil, a farmer from Nashik, said that this year alone he has made a loss of Rs
48,000 due to a crash in the purchase price of onions in the wholesale market. “How will
Rs 6,000 per year help me? There is no infrastructure for us to process our onions and so
we sell them at any cost to avoid them rotting away,” said Patil.
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5 CITI-NEWS LETTER
Can Bangladesh beat India in development race? Here's what economists say
(Source: Noeh Smith, Bloomberg, February 24, 2019)
Although the leaders of Bangladesh and India have similar goals, the difference in the
country's development models is making for an interesting experiment
There’s an old theory that as an organism develops, it progresses through the same
evolutionary stages travelled by its ancestors. Traditionally, economic development has
worked in a similar way. When a country first shifts from agrarian poverty to
industrialization, it tends to start out in light manufacturing, especially textiles. Later it
masters more complex manufactured products, and finally, it progresses to inventing its
own cutting-edge technology. Thus, each country’s development tends to look a bit that
of nations that already went through the process.
That certainly seems to describe the experience of South Korea and Taiwan, which
reached developed-country status relatively recently. It’s also the path being followed by
China. As these countries got richer and their wages rose, low-tech labour-intensive
manufacturing industries tended to migrate to countries with cheaper workers.
Recently, one of the biggest beneficiaries of this process has been Bangladesh. The
garment industry accounts for more than 80 per cent of the South Asian nation’s export
revenue, and about a fifth of its gross domestic product. In 2017, Bangladesh was the
world’s second-largest apparel supplier after China, with 6.5 per cent of the market,
outpacing neighbouring India despite the latter’s much larger economy.
This economic development path has no doubt come at a real human and social cost --
Bangladesh's workers suffer harsh working conditions and many industrial accidents,
including a horrific factory collapse in 2013 that killed more than a thousand people. But
overall, the tried-and-true industrialization strategy seems to be working. Real GDP per
capita has doubled since the turn of the century, and Bangladesh appears to be on a
similar exponential growth path as its neighbour India:
India, meanwhile, has generally underperformed in manufacturing. The country does
have a few bright spots -- for example, it’s now the world’s sixth-biggest auto
manufacturer, with an immense factory cluster in Gujarat, and has been increasing its
production of smartphones. But overall, manufacturing has declined as a share of the
economy:
This isn't to say that India’s leaders have ignored manufacturing -- indeed, they have long
called for a big effort to industrialize. Prime Minister Narendra Modi has courted foreign
manufacturers, but so far the effect has been limited. Most observers agree that a lack of
infrastructure and an excess of regulatory red tape are the reason India remains a difficult
place to make things.
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6 CITI-NEWS LETTER
Despite its struggles in manufacturing, however, India is growing rapidly -- even faster
than Bangladesh, in most years. The reason has been growth in service industries. India’s
famous outsourcing companies are just the tip of the iceberg -- software, finance, online
services, tourism, logistics, media, health care, and other services have been the biggest
driver of India’s impressive growth. Some have suggested that India has discovered a
development model that could leapfrog manufacturing entirely, going straight from
agrarian poverty to a post-industrial economy. Others are more skeptical.
This all leads to a very important question. Will Bangladesh, with its traditional approach
to growth, catch up and overtake India? Or has India stumbled upon a new development
model that cuts out the need for a country to do a stint as the workshop of the world?
This is a crucial question because as technology advances, there’s a concern that the
traditional path out of poverty might be closing. Automation is making textile
manufacturing less labour-intensive. For one thing, that means that poor countries might
no longer be able to create mass urban employment in the garment industry. But even
more troubling, it might cause the industry to migrate back to rich countries like the US,
where labour is expensive but capital is relatively cheap. Some of this reverse migration
might already be happening.
In other words, the developing world is at risk of premature deindustrialization. If
Bangladesh fails due to competition from rich-world robots, it will bode ill for countries
such as Ethiopia that are looking to hop on the escalator to prosperity. That would leave
India’s service-centric development model as the only feasible path.
Some economists argue that automation hasn’t closed off the traditional path, and that
there is still plenty of work for industrious people in poor countries. Bangladesh,
meanwhile, is scrambling to diversify into more valuable manufacturing industries such
as autos and electronics.
So although the leaders of Bangladesh and India have similar goals, the difference in the
country’s development models is making for an interesting experiment.
Countries in Africa hoping to follow these two South Asian giants’ growth trajectories
should be watching keenly. If Bangladesh grows faster, it will suggest that manufacturing,
starting with textiles, is still the ticket to industrialization; but if Bangladesh falters and
India sustains its growth, it will imply that poor countries should look to services first.
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7 CITI-NEWS LETTER
‘MSMEs contribute State’s 50% GDP, 45% exports’
(Source: Daily pioneer, February 25, 2019)
As many as 3.67 lakh recorded MSMEs contribute towards 50 per cent of the GDP and 45
per cent exports of Odisha, informed MSME Additional Chief Secretary LN Gupta at a CII
meeting at Jajpur on Sunday.
Gupta further informed that the State has 17 lakh farm and nonfarm enterprises,
including trading business. He said the focus sectors in the State for MSMEs are food
processing, chemicals and petrochemicals, textile, electronics, ancillary and downstream.
He also proposed if there could a MSME park at Kalinganagar and every large industry
support at least 10 MSMEs.
The conference, called ‘Connect2Indutries’ held by the CII North Odisha Zonal Councilat
Jajpur focused on connecting MSMEs and startups to mega industries. The conference
provided a platform for the MSMEs to interact and understand the requirements of the
large industries.
Council Chairman SS Upadhyay mentioned that MSMEs are the backbone of a developing
economy and they are the India’s the biggest employer.
NINL VC and MD SS Mohanty stated that the Kalinganagar Industrial Complex, home to
six large industries, is one of the largest Industrial complexes in the country. He opined
that Kalinganar should be able to produce 30 per cent of steel produced in India.
VISA Steel director Manoj Kumar proposed a vote of thanks.
Procurement heads from the Tata Steel, VISA Steel, Balasore Alloys Ltd, Jindal Stainless
Ltd and Neelachal Ispat Nigam Ltd gave their respective presentations and invited
MSMES and start ups to explore opportunities with them.
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How India and Vietnam can increase bilateral trade
(Source: ANI Asia, February 25, 2019)
Vietnam is India's fourth largest trading partner in Association of South East Asian
Nations (ASEAN)- the first three being Singapore, Indonesia and Malaysia. The India-
Vietnam trade has been consistently growing- clocking double-digit rates. It has grown
almost 80 per cent over the last five years.
India is among Vietnam's top ten trading partners.
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8 CITI-NEWS LETTER
Data from the Indian Department of Commerce shows that trade
between India and Vietnam grew 11.5 per cent to USD 14.2 billion in 2018 compared with
a year ago. The two countries targeted bilateral trade to hit USD 20 billion by 2020 in
2015. This now seems a little bit of a stretch considering the compounded annual rate of
growth since 2013 was 12 per cent and for this to happen, it will have to grow at around
19 per cent per year in the next two years.
It should not be a surprise that Vietnam and India currently enjoy strong diplomatic and
trade relations. The strong ties date as far back as to the cold war days of the 1950s. India
not only supported Vietnam's independence from France, it also objected to the US
involvement in Vietnam in the 1960s and was one of the first countries to recognise a
united Vietnam in 1975 after the war with the US.
Today, India sees Vietnam as a pivotal state in its "Act East" policy, the same way
that China sees Pakistan as a strategic counter-balance to India. Vietnam and India share
the same apprehension of China's growing power and influence in the region. To this
effect, India is leveraging Vietnam and other ASEAN states to protect its interest in the
resource-rich South China Sea which China has been aggressively growing its
assertiveness. This is reflected in its build-up of weapons systems on the artificial islands
it has constructed in the area.
It is with this background of common security interests that bilateral trade between the
two states have strengthened in recent years.
The partners established extensive economic ties since 1992, starting with cooperation in
oil exploration, agriculture and manufacturing. Trade took a giant leap forward after both
nations liberalised their economies and Vietnam following up by backing India for a more
prominent role in ASEAN.
Today, Vietnam's main exports to India include electronics and electrical products,
textiles, handicrafts, cashew nuts, coffee, tea, mate, spices, canned food, building
material, pharmaceutical products, precious metals, copper and rubber.
In return, India top exports to Vietnam are agriculture and farm products, meats and
seafood, cotton and pharmaceutical products.
In terms of investments in each other countries, India is the 26th ranked investor in
Vietnam with almost 210 projects worth around USD 880 million. These projects are in
telecommunications, information technology, energy, mining, pharmaceuticals and
electrical appliances. Vietnam's direct investments in India is negligible.
That there is interest in improving trade between the countries at a faster clip is not in
doubt.
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9 CITI-NEWS LETTER
Vietnam had a strong presence in last week's ASEAN-India expo in New Delhi. The event
is co-organised by the Indian Ministry of Commerce and Industry, the Federation of
Indian Chambers of Commerce and Industry, and the ASEAN-India Business Council.
More than 20 Vietnamese firms representing industries as diverse as farm produce,
transportation services, tourism to handicrafts were present.
How can India and Vietnam work towards meeting the 2020 target?
Tourism could very well be the "low hanging fruit". There is a mutual visa-on-arrival
programmes already in place for each other's citizens. Increasing the number of flights as
well as joint promotion of each other's destinations would go a long way towards enticing
the growing middle class in both countries to visit.
Secondly, both countries have significant pharmaceutical industries and cooperation in
this field would improve efficiencies and enhance the industry's growth in both countries.
In the longer term, Vietnam can increase its investments in India by taking advantage of
the Indian government's loosening up of foreign direct investment (FDI) quota for foods
and beverage sector as well as the 100 per cent allowance of FDI in the in e-commerce and
foods manufacturing industries.
Increasing trade between India and Vietnam is not without challenges. There is a
significant cultural, custom and language gap between people from both countries.
Furthermore, the two countries are geographically far apart with flight time between most
major cities around seven hours. This not only affects tourism but also impacts the import
and export of goods and business exchanges.
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India's economic fundamentals an anchor against volatility: BSE Chief
(Source: SME Times, February 25, 2019)
India's positive macro-economic fundamentals remain a key anchor against any
volatility that might flare-up in the country's equity indices due to the upcoming general
elections and current geo-political dynamics, says the top executive of the Bombay Stock
Exchange (BSE).
"India's growth story is undeniable, but the noise around it may vary from time to time.
However, the growth story is here to stay for the next 40 years," Ashishkumar Chauhan,
Chief Executive Officer and Managing Director of BSE, told IANS in an exclusive
interview.
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10 CITI-NEWS LETTER
"For long-term investors in a growing India, short-term volatility is not a major factor,"
he said.
According to Chauhan, the current period might seem to be particularly volatile due to
upcoming elections, but factors like demographic advantage guarantees sustained
economic growth which will also enhance equities' returns.
"This is a particularly volatile time for India due to the upcoming elections, geo-political
issues with neighbours, the fact that both US and China are slowing down and have
severe trade disputes and Brexit."
"There are uncertainties, but they were there earlier and it is a fact that India has done
better in uncertain times. It is characteristic of India, that it does well when people don't
expect it to, it bounces back."
Besides, Chauhan feels that capital markets regulator SEBI's proposal to fix circuit
filters or price bands on futures & options (F&O) scrips will aid to curb excessive
volatility.
"India has demographic advantage... and is well equipped to fully utilise the information
revolution with tech savvy young population."
Accordingly, Chauhan asserted that as India grows economically, so will the partnership
formed through equities and that the asset class remains as the best performing long-
term asset class.
On the growth prospects of BSE, Chauhan pointed out that BSE was now focused on
growth of new products such as MF distribution and agri-based contracts.
"Revenue-wise, if you see Star MF has really done well and all the MFs have started
paying (fees) back to the BSE. It will be the revenue lead going forward," Chauhan said.
Presently, BSE operates India's largest MF distributor platform with over 20,000
distributors. In the current fiscal, till January 31, 2019, the platform processed nearly
2.87 crore transactions amounting to Rs 126 lakh crore.
It added 1.56 lakh new SIPs amounting to Rs 45.98 crore last month.
"India INX is already touching $1 bn turnover daily and we don't charge there but with
the new regulator coming in and if competition allows, the platform might be another
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11 CITI-NEWS LETTER
revenue earner for us," Chauhan said.
Additionally, BSE has expanded in agri-commodities portfolio by launching cotton,
Guar seed futures contract on the exchange.
"On a daily basis, we have captured 35-40 per cent business in Gaur seeds and around
35 per cent in cotton seeds. Soon, from March 2019, many online platforms will offer
these BSE contracts to brokers and investors who will join our ecosystem."
The stock exchange major has emerged as the largest market for bond distribution,
IPOs, Offer to Buy, Offer to Sale and other instruments related to equities.
Home
Niti Aayog bats for setting up independent debt management office
(Source: Money Control, February 22, 2019)
The time for an independent debt management office may have come, Vice Chairman
Rajiv Kumar said at an event organised by Niti Aayog.
Niti Aayog Vice Chairman Rajiv Kumar on February 22 made a strong case for setting
up an independent debt management office, and also pitched for segregating different
aspects of Reserve Bank's responsibilities.
Kumar further said that India's gross domestic product (GDP) will be growing at over 7
percent in the coming years.
The time for an independent debt management office may have come, he said at an
event organised by Niti Aayog.
Kumar said, very often, there have been conversations on whether the central bank
should not only have a role as monetary policymaker or supervisor, but also as a
government debt manager.
"In 2014, the finance minister... had announced (setting up of independent debt
management office), but it has not happened," he said.
In his February 2015 budget speech, finance minister Arun Jaitley had proposed to set
up a Public Debt Management Agency (PDMA) within the finance ministry.
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12 CITI-NEWS LETTER
The idea behind setting up of PDMA was to resolve issues relating to conflict of interest
as the RBI decides on the key interest rates as well as undertakes buying and selling of
government bonds.
Kumar also noted that there was a need to deliberate on how to segregate different
aspects of the Reserve Bank of India's responsibilities.
In this context, he said the government has been very courageous in giving the Reserve
Bank the statutory authority of inflation targeting.
"Therefore, who then looks after growth, employment, debt and other legal things etc in
the country? I think those are the things that need to be discussed," Kumar said.
The Niti Aayog vice chairman also noted that the RBI and the finance ministry have
been working together in tough times without any single causality.
At present, the government debt, including market borrowing, is managed by the
Reserve Bank of India.
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The FDI problem
(Source: Business Standard, February 25, 2019)
Indian economy appears to be less attractive to foreign investors
The Indian economy appears to be losing attractiveness to foreign investors. This is the
most reasonable conclusion from figures released recently by the Department for
Promotion of Industry and Internal Trade (DPITT).
The figures show that, between April and December of 2018, foreign direct investment
(FDI) in India fell to $33.5 billion, as compared to nearly $36 billion over the equivalent
quarters of 2017. These figures have been released with a long and mysterious delay, in
spite of the fact that the Reserve Bank of India (RBI) has regularly been passing along the
required data to the ...
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13 CITI-NEWS LETTER
Raymond revamps supply chain, weighs on digital tools for more efficiency
(Source: Sangeeta Tanwar, Business Standard, February 25, 2019)
The biggest gains have been reducing time lags along the chain and freeing up working
capital
For most branded textile players, sourcing and supply chain management are key cogs in
the wheel. As locations and capacities for manufacturing multiply, more companies are
moving away from focusing their efforts on plant-level production planning and are
adopting a demand-driven approach — to try and manage demand more efficiently.
Aligning production, delivery and the entire sales channel with that mindset has become
make or break. And time is of the essence in all this. . Textile major and fashion retailer,
Raymond Group is reorganising its supply chain to meet these new ...
Home
Gujarati Ajrakh craftsman showcases fine-printed textiles in Delhi
(Source: Business Standard, February 24, 2019)
Delhi's textile lovers can now head to an exhibition-sale of the unique textile craft of
Ajrakh, showcased as saris and stoles by UNESCO-recognised master
craftsperson Abdul Jabbar Khatri.
Ajrakh, a resist dyeing block printing technique, has been part of the Indian culture since
centuries, says Khatri, a ninth generation member of Gujarat's traditional textile-making
family, and a key player in transforming Ajrakh as a fashion fabric for global urban
markets.
Saris, stoles and yardage, crafted by him in cotton and silk in natural dyes, are on display
at the Dastkari Haat Studio here. The exhibition has been organised by non-profit
Dastkari Haat Samiti and can be viewed till March 9.
The exhibition features Khatri's contemporary yet traditional textiles in earthy hues and
intricate patterns, ranging from rich floral to complex geometric combinations, reflecting
what the painstakingly-done Ajrakh printing is famous for.
Dastkari Haat's 76-year-old president Jaya Jaitly recalled seeing Jabbar at work as a
teenager. "That time, his father used to say he is not working properly. Now he has grown
into a true master craftsman. His other brothers specialise in fine Ajrakh printing, block
and natural dye-making. Jabbar is now designing much finer and smaller blocks. He
wants to design on his own too," Jaitly, a former Samata party leader, told IANS.
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Terming Jabbar a committed guardian of India's craft heritage, Jaitly said the exhibit-
sale invites craft connoisseurs to see and own Khatri's masterpieces.
A platform to bring the consumer closer to Indian craft, it is also an opportunity for the
2003 National Craft Award recipient to display his work and "show what all can be done
with the Indian textiles and traditional techniques", the master craftsman said.
Khatri has been awarded the prestigious UNESCO Seal of Excellence both in 2006 and
2007, and he now helms a large block printing enterprise, which generates income for
several hundred women in Dhamadka, his village in Gujarat.
Home
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GLOBAL:
US, China sprint to seal deal ahead of Trump's deadline on trade wars
(Source: Reuters, February 24, 2019)
The Chinese delegation is scheduled to leave for Beijing on Monday, according to a person
familiar with their itinerary
U.S. and Chinese negotiators met for over seven hours on Saturday to resolve their trade
dispute and avoid an escalation of the tit-for-tat tariffs that have already disrupted global
commerce, slowed the world economy and roiled financial markets.
The two sides will meet again on Sunday morning as they race to seal an agreement before
a March 1 deadline imposed by US President Donald Trump, who has threatened to
dramatically hike tariffs on Chinese goods unless there is a deal.
Saturday marked the fifth straight day of the negotiations between the world's two biggest
economies. Talks were extended through the weekend after both sides reported progress
in narrowing their differences.
The Chinese delegation is scheduled to leave for Beijing on Monday, according to a person
familiar with their itinerary.
This is the fourth round of negotiations since Washington and Beijing agreed to a
ceasefire in their trade war.
Trump, who has embraced an "America First" policy aimed at rebalancing global trade in
favour of the United States, said on Friday there was "a very good chance" a deal would
be struck, and that he was inclined to extend his March 1 tariff deadline and meet soon
with Chinese President Xi Jinping.
Extending the deadline would mean putting on hold a scheduled increase in tariffs to 25
percent from 10 percent on $200 billion of Chinese imports into the United States.
Trump and U.S. Treasury Secretary Steven Mnuchin said U.S. and Chinese officials had
reached an agreement on currency issues, but did not give details. U.S. officials have long
argued that China's yuan is undervalued, giving it a trade advantage and partly offsetting
U.S. tariffs.
China has also committed to buy an additional 10 million metric tons of U.S. soybeans.
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16 CITI-NEWS LETTER
ENFORCEMENT MECHANISM
Reuters reported exclusively on Wednesday that both sides were drafting memorandums
of understanding (MOUs) on cyber theft, intellectual property rights, services, agriculture
and non-tariff barriers to trade, including subsidies.
On Friday, Trump said he did not like MOUs because they are short-term in nature, and
he wanted a long-term deal.
An industry source briefed on the talks said both sides have narrowed their differences on
intellectual property rights, market access and narrowing a nearly $400 billion U.S. trade
deficit with China. But bigger differences remain on changes to China's treatment of state-
owned enterprises, subsidies, forced technology transfers and cyber theft.
There is no agreement on the enforcement mechanism, either. The United States wants a
strong mechanism to ensure the Chinese reform commitments are followed through,
while Beijing insists upon what it calls a "fair and objective" process.
"Enforcement is a difficult puzzle," said the source, who requested anonymity to speak
candidly about the talks. "You need objective arbitrators to make a decision."
It was not clear whether Saturday's talks managed to iron out those differences. Neither
side shared the details of the day's discussions.
Trump said the biggest decisions could be reached when he meets with Xi, probably in
Florida next month, and that they may extend beyond trade to encompass
Chinese telecommunications companies Huawei Technologies and ZTE Corp.
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UAE quickly emerging as a preferred investment destination
(Source: Khaleej Times, February 25, 2019)
Pro-business environment, excellent infrastructure, diversified economy
and political stability among nation's key factors
Given how uncertain and volatile the global economic and political landscape currently
is, with market uncertainty pervasive and investor confidence deteriorating, global
private equity firms are on the lookout for stable, new markets where they can be certain
not just of promising returns on investment but also an investor-friendly regime.
As a result, the UAE, with its pro-business environment, excellent infrastructure,
relatively diversified economy and political stability, is quickly emerging as a preferred
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17 CITI-NEWS LETTER
investment destination, renowned international investors Laurence Fink and Henry
Kravis said at a panel discussion hosted at the Majlis Mohamed bin Zayed.
The discussion, entitled Adnoc as a catalyst for foreign direct investment: a global
investment perspective, was held at Abu Dhabi's Al Bateen Palace on Sunday and was
attended by Sheikh Hamed bin Zayed Al Nahyan, Chief of the Abu Dhabi Crown Prince
Court, as well as other dignitaries.
Fink and Kravis' remarks were extremely topical considering that just hours earlier, their
respective firms, BlackRock and Kohlberg Kravis Roberts & Company (KKR), had signed
a landmark pipeline infrastructure investment agreement with Abu Dhabi National Oil
Company (Adnoc).
The agreement is set to unlock $4 billion in value from Abu Dhabi's crude oil pipelines
and marks the first infrastructure partnership between leading global institutional
investors and a national oil company in the Middle East. It is certain to pave the way for
further significant foreign direct investment (FDI) into Abu Dhabi and the UAE.
Kravis, co-founder, co-chairman and co-CEO of KKR, kicked off the panel discussion by
saying he was delighted to take part in this discussion of Adnoc's "capital modernisation"
agenda and the "vision for economic transformation" of His Highness Sheikh Mohamed
bin Zayed, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the UAE
Armed Forces.
Kravis, who co-founded KKR in 1976 and is known as one of the pioneers of the private
equity industry, said Sunday's landmark deal "sets an important precedent in the market
that can demonstrate the potential for value-add foreign investment across UAE".
With approximately $200 billion in assets under its management, KKR invests capital
across the world with the aim of being a partner in supporting economic development,
growing companies and meeting the needs of its clients.
Fink, the founder, chairman and CEO of BlackRock, said it was "a privilege to be asked to
be part of the Majlis", adding that "information exchanges such as this bring investors
and countries together and create a closer community."
Fink is one of the most respected investors and business leaders in the world. He founded
BlackRock in 1988 with seven partners, and under his leadership, the firm has grown into
a global powerhouse in investment management. Today, BlackRock manages more
money than any other investment firm in the world, with around $6 trillion in assets
under management.
Kravis and Fink, whose firms are at the forefront of global infrastructure investing, went
on to discuss global investment trends and opportunities for partnership in Abu Dhabi
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18 CITI-NEWS LETTER
and the UAE and the importance of FDI in the country. FDI in the UAE has increased by
21 per cent between 2015 and 2017 to reach $10.4 billion. The United Kingdom, India and
Saudi Arabia are the main investors in the country, with the bulk of the funds
concentrated in the trade, real estate, energy, finance and insurance, manufacturing and
construction sectors, the Majlis heard.
During the course of the discussion, Kravis and Fink covered key trends that affect the
global and Middle East investment landscape. Drawing on their experience in investing
across American, European, and Asian markets, the international investors discussed the
potential for FDI and how their firms approach emerging foreign investment destinations
like the UAE. The Majlis also heard why BlackRock and KKR decided to invest in UAE
infrastructure assets, and why they feel it is becoming an increasingly attractive global
investment destination.
Earlier in the day, Kravis and Fink joined Dr Sultan bin Ahmad Sultan Al Jaber, UAE
Minister of State and Adnoc Group CEO, to sign a pioneering, multi-billion dollar
investment partnership agreement between Adnoc, KKR and BlackRock. Under the terms
of the innovative agreement, the investors will pay around $4 billion for a 23-year lease
in the 18 pipelines that carry crude and condensate. Sovereignty of the infrastructure and
the management of the pipeline operations will remain with Adnoc.
The partnership "paves the way for further significant foreign direct investment in the
UAE", Dr Al Jaber said. "Adnoc has been undergoing a significant business
transformation, underpinned by innovative partnerships and investments that are key to
unlocking and maximising value across our full portfolio."
Following the wise guidance of the UAE leadership, Adnoc has been transforming into a
more commercially-focused and performance-driven organisation and has hit significant
milestones regularly over the last three years. Today's deal with BlackRock and KKR
represents the next major step in the delivery of this smart growth strategy,
demonstrating its expanded partnership model and more proactive management of its
assets and capital. The Abu Dhabi government-owned oil giant received an AA long-term
credit rating, the region's highest, from Fitch Ratings last week.
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Pakistan: Any option for home textiles exporters?
(Source: Financial Express, February 24, 2019)
Export of home textiles from the country is facing difficulties and with the passage of time
things are becoming increasingly difficult for the local manufacturers and exporters to
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ride out the crisis. The very fact that export of home textiles comprising mainly terry
towels and bed sheets is in a bad shape is evidenced from the abundance of these products
in street shops sold at throwaway prices. Bundles of terry towels have lodged on the
shoulders of hawkers at busy road intersections of the capital and elsewhere instead of
being packaged to be cotainerised for export to North America and the EU countries.
Home textiles include mainly terry towels, bed sheets, linen, curtains and pillow covers.
Terry towel, the most important segment, is experiencing the shock most of all. Terry
towel export declined 4.40 per cent year-on-year to $42.35 million in the last fiscal year,
according to the Export Promotion Bureau data. The sector's growth started to witness a
decline from January 2014, when the European Union (EU) allowed zero-duty benefit to
Pakistan under its GSP-Plus scheme on export of home textiles and some other products.
As a result, the impact is too severe for the local manufacturers and exporters. Around a
dozen small and medium factories have reportedly been shut down. Currently, ninety
factories are in operation and most are staying in business in the hope that they might
find alternative markets elsewhere.
A relatively new item in the country's export basket, terry towel demonstrated great
promise due mainly to the easier production process and market access made easy by the
EU's EBA (Everything but Arms) scheme allowing duty free facility to all LDC exports,
except arms. Coupled with it, there is the preferential duty facility under the EU GSP
scheme meant only for LDCs like Bangladesh. The scheme has been revised a few years
ago and dubbed GSP-plus with a major shift in its eligibility criterion. The GSP-plus
scheme is an extension of the GSP system, in that it includes developing countries also as
eligible to avail the benefits of preferential duty -- provided they have proved their
commitment to sustainable development and good governance. Most duty rates are 'zero'
under this scheme. So, it is clearly the erosion of competitive advantage that Bangladesh
has been enjoying as an LDC for so long. Extension of the facility to exporters of
developing countries like Pakistan and Sri Lanka, among others, has
exposed Bangladeshi exporters to fierce competition from these countries, especially
Pakistan which as a traditional home textile producing country is now in a more
advantageous position to increase its products-particularly terry towels.
There is apparently no option but to be increasingly competitive for the Bangladeshi terry
towel producers to stay in business. Sector insiders are of the opinion that facilitation in
respect of cotton procurement might lower the present production cost. Also, exploring
the market segments in overseas markets could result in finding better avenues for export.
The government in consultation with the sector people may consider taking some
facilitating steps as well.
Home
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Afghanistan launches new export route to India through Iran
(Source: Reuters, February 24, 2019)
Officials said 23 trucks carrying 57 tonnes of dried fruits, textiles, carpets and mineral
products were dispatched from western Afghan city of Zaranj to Iran's Chabahar port.
Afghanistan began exports to India through an Iranian port on Sunday, official said, as
the landlocked, war-torn nation turns to overseas markets to improve its economy.
Officials said 23 trucks carrying 57 tonnes of dried fruits, textiles, carpets and mineral
products were dispatched from western Afghan city of Zaranj to Iran’s Chabahar port.
The consignment will be shipped to the Indian city of Mumbai.
At the inauguration of the new export route, President Ashraf Ghani said Afghanistan was
slowly improving its exports in a bid to reduce its trade deficit. “Chabahar port is the result
of healthy cooperation between India, Iran and Afghanistan this will ensure economic
growth,” he said. The Iranian port provides easy access to the sea to Afghanistan and India
has helped developed this route to allow both countries to engage in trade bypassing
Pakistan.
Last year the U.S. government granted an exception to certain U.S. sanctions that allowed
development of Chabahar port as part of a new transportation corridor designed to boost
Afghanistan’s economy and meet their needs of non-sanctionable goods such as food and
medicines. India has sent 1.1 million tonnes of wheat and 2,000 tonnes of lentils to
Afghanistan through Chabahar. Both countries established an air corridor in 2017.
Afghan exports to India stood at $740 million in 2018, making it the largest export
destination, officials said.
Home
Relief for cotton farmers as Rivatex inks deal with them
(Source: Fred Kibor, Standard Digital, February 24, 2019)
Cotton farmers in Kerio Valley have struck a deal with Rift Valley Textiles (Rivatex) that
will see them sell their produce to the manufacturer.
The farmers have suffered unending marketing woes hat have forced many to abandon
the crop, citing exploitation from middlemen who buy their produce at measly prices.
According to the memorandum of understanding, Rivatex will provide certified cotton
seeds and pesticides to the farmers and purchase the produce upon harvest.
Peter Barngetuny, the Kerio Valley Cotton Producers’ chairman, said although the crop
thrived in the region, many farmers had abandoned it due to lack of market and persistent
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pests and diseases. “We have suffered in the hands of middlemen, who buy our produce
at throw-away prices. This deal will encourage more farmers to try cotton,” he said.
Speaking during the deal signing ceremony on Friday, Elgeyo Marakwet Deputy Governor
Wisley Rotich said the partnership was a big win for cotton farming in the county.
"We are planning to engage more than 1,000 farmers along the Kerio Valley belt, which
is one of the best cotton producing zones in the region," he said. The deputy governor said
farmers would reap more because Rivatex would supply them with disease resistant
higher yielding seeds.
Some 300 farmers living in Kerio Valley grow cotton currently. The county projects that
more than 2,000 acres will be put under cotton this year in Soy North, Soy South,
Tambach, Emsoo, Arror, Endo and Sambirir wards.
Rivatex Managing Director Thomas Kipkurgat said the company would partner with
Elgeyo Marakwet County to increase supply of raw materials.
“We are currently producing an average of 10,000 bales against a capacity of 70,000
annually. We are tapping Elgeyo Marakwet, which has the potential to produce more
cotton,” said Prof Kipkurgat.
The Ministry of Industry says cotton production has remained below the national demand
due to unstable international prices and high cost of production. Industrialisation
PS Betty Maina commended the deal, saying efforts would be made to ensure farmers got
value for money. “The over-reliance on maize has made our farmers poor. With more
incentives like this to our farmers, the economic benefits to the local community will
increase," said the PS.
She said the ministry was targeting to put more than 50,000 acres in Elgeyo Marakwet
under cotton. "We import cotton from neighbouring countries. With the current
arrangement we can beat the deficit," she said. Her Transport counterpart Esther Koimett
asked farmers to diversify farming and utilise the opportunities offered by Rivatex.
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