citi-news letter€¦ · 3 citi-news letter national: ‘empowered group’ meeting today to...
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06th April
2020
‘Empowered Group’ meeting today to discuss exit strategy post shutdown
Government considering another package to minimize lockdown impact: Sources
Covid-19 crisis: Govt extends validity of e-way bills; gives relief in ITC
Govt mulls easy bank overdraft norms
Covid-19 aftermath: A third of orders cancelled, grave crisis grips export hubs
Global brands promise to stand by apparel suppliers
Cotton and Yarn Futures
ZCE - Daily Data (Change from previous day)
MCX (Change from previous day)
Apr 2020 16210 (+100)
Cotton 10510 (+170) May 2020 16460 (+120)
Yarn 16625 (+235) June 2020 16680 (+60)
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2 CITI-NEWS LETTER
-------------------------------------------------------------------------------------- ‘Empowered Group’ meeting today to discuss exit strategy post shutdown
Government considering another package to minimize lockdown impact: Sources
Covid-19 crisis: Govt extends validity of e-way bills; gives relief in ITC
Govt mulls easy bank overdraft norms
Covid-19 aftermath: A third of orders cancelled, grave crisis grips export hubs
Statsguru: From auto sector to GST mop-up, economic impact of Covid-19
India, China could explore measures to boost trade hit by Covid-19
Covid fight is a balancing act for world's economies: World Bank India Chief
Ministry's actions allay trade fears
Financial guidelines need to be rewritten due to Covid-19: Andhra minister
Buyers, suppliers need to find midway: Apparel exporters
Small shifts, automated production to restart manufacturing?
CII mobilises industry action towards COVID-19 relief
52% CEOs expect job losses post lockdown: CII Survey
----------------------------------------------------------------------------- Bangladesh: Budget proposals for FY21: CPD favours individual tax reduction, opposes
raise in corporate tax
Global brands promise to stand by apparel suppliers
Bangladesh: RMG workers left in the lurch
Coronavirus: What countries are doing to minimize economic damage
Coronavirus: New Look delays supplier payments 'indefinitely'
Oerlikon Nonwoven large-scale meltblown sold to Asia
Bangladesh: Savar RMG units reopen today
Pakistan: Govt Offers Rs 100 Billion To Uplift Industry: Dawood
------------------ --------------------------------------------------
NATIONAL
---------------------
GLOBAL
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3 CITI-NEWS LETTER
NATIONAL:
‘Empowered Group’ meeting today to discuss exit strategy post shutdown
(Source: Anandita Singh Mankotia, Economic Times, April 06, 2020)
The government has convened a meeting of the ‘Empowered Group on Strategic Issues
Related to Lockdown’, to be chaired by the home secretary, on Monday to discuss an exit
strategy after the lockdown, indicating that Centre may be looking at a calibrated way to
open up the country at the end of the 21-day period of restrictions. “The meeting will be
chaired by home secretary Ajay Bhalla and will have Niti Aayog CEO Amitabh Kant along
with secretaries from 13 departments including economic affairs, health, DPIIT,
pharmaceuticals, I&B, MeitY, labour & employment, and railway board chairman, among
other government representatives,” a senior government official aware of the matter told
ET.
“On the industry side, FICCI and CII have been asked to bring their proposals to the
table,” the official added. Officials familiar with the matter said the government was
looking at a calibrated way to open up the country, and wanted to do so in consultation
with the industry. The meeting between the senior most bureaucrats of the country and
the industry comes within days of Prime Minister Narendra Modi asking states to come
up with strategies to lift the lockdown in phased manner while ensuring that risk to
human lives through spread of Covid-19 is minimised. By Sunday evening, the Covid-19
affected cases in India had jumped to 3,374 with the death toll mounting to 79, according
to the health ministry.
“The lockdown has given the government time to put up the infrastructure required to
deal with the onslaught of the epidemic…now the efforts are also being redirected to
starting the economic engine, obviously it can’t be paused indefinitely and the meeting is
scheduled to discuss what should the strategy be going forward,” another official said.
Officials said that each industry needs to be looked differently and the ones where human
contact can be minimised will get precedence such as air cargo travel versus passenger
flights.
Home
Government considering another package to minimize lockdown impact:
Sources
(Source: Economic Times, April 05, 2020)
The government has started working out the possible post-lockdown scenarios and is
considering another booster shot to minimize the impact of coronavirus and revive the
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4 CITI-NEWS LETTER
economy but nothing has been finalised yet, senior officials said on Sunday. The focus is
on issues that may come up after the lockdown is lifted on April 15, an official said.
There have been discussions about a package but nothing has been finalised yet, the
official said, adding that the idea is to revive consumption, "so some measures might be
needed." If a package is announced, it would be the third major initiative by the
government to tackle the challenges thrown up by the rapid spread of coronavirus. On
March 24, hours before Prime Minister Narendra Modi declared a countrywide lockdown,
Finance Minister Nirmala Sitharaman announced a slew of relief measures for taxpayers
and businesses.
Two days later, Sitharaman announced a Rs 1.7-lakh-crore relief package for those hit
hardest.
On Sunday, the officials said they are also looking at the possibility of redesigning some
welfare and other government schemes to suit the post-lockdown situation. Various
options are on the table — such as scholarships and fellowships given by ministries,
harvesting of rabi crops and the government has started to address them one by one, they
said.
Out of the 10 empowered groups of senior bureaucrats constituted by the prime minister
to prepare India's response to COVID-19, one group is tasked to suggest economic
measures. An informal group of ministers, chaired by Defence Minister Rajnath Singh, is
also looking into various aspects of the lockdown.
Home
Covid-19 crisis: Govt extends validity of e-way bills; gives relief in ITC
(Source: Dilasha Seth, Business Standard, April 05, 2020)
The Centre has also deferred the application of restricted input tax credit (ITC) of 10%
under goods and services tax (GST), providing relief to industry
The government has extended the validity of e-way bills that were set to expire during the
21-day lockdown, put in place to curb the spread of the coronavirus disease (Covid-19),
addressing companies’ fears that their goods transported through trucks could be
confiscated by the authorities.
The Centre has also deferred the application of restricted input tax credit (ITC) of 10 per
cent under goods and services tax (GST), providing relief to industry, which has been
struggling with cash flow. The validity of e-way bills that were set to expire between March
20 and April 15 has been extended till April 30 to help companies facing supply-related
issues with orders stuck in transit in most cases.
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5 CITI-NEWS LETTER
“Where an e-way bill has been generated and its period of validity expires during the
period 20th day of March, 2020 to 15th day of April, 2020, the validity period of such e-
way bill shall be deemed to have been extended till the 30th day of April, 2020,” the
finance ministry said in a notification issued late on Friday.
Under the GST regime, e-way bills have to be generated if goods worth over Rs 50,000
are transported.
Such a bill is valid for up to 24 hours for a distance of 100 km, depending on the size of
the vehicle. However, if the vehicle does not cover 100 km within 24 hours, another bill
has to be generated. For every 100 km travelled, the bill is valid for one additional day.
The Central Board of Indirect Taxes and Customs (CBIC) also deferred till August the
application of 10 per cent restriction for availing ITC for February, and rolled over the
cumulative applicability to September. The seven-month window will ease industry's
working capital and cash flow.
To plug evasion, the GST Council had in December restricted ITC to 10 per cent of the
eligible amount for an entity if its supplier has not uploaded relevant invoices detailing
the payments made.
Abhishek Jain, partner EY, said with most e-way bills for stranded vehicles having
expired, businesses were apprehensive about the possible interception of goods vehicles,
which has now been done away with.
These moves will go a long way in reducing business disruption and ease cash flow issues
for businesses in these challenging times, said Prashanth Agarwal, partner PwC.
Deferment of reduced ITC is expected to provide relief to around 10 million taxpayers by
providing them a little extra working capital, said Rajat Mohan, partner at AMRG
Associates.
GST collections fell below the Rs 1-trillion-mark in March after four months, although
disruption caused because of the lockdown will only be captured in the subsequent
months.
Home
Govt mulls easy bank overdraft norms
(Source: Banikinkar Pattanayak, Financial Express, April 06, 2020)
As part of the package, finance minister Nirmala Sitharaman announced the transfer of Rs
500 a month to 20.4 crore women Jan Dhan account holders for three months.
After announcing money transfer through Jan Dhan accounts of 20.4 crore poor women
to blunt the Covid-19 impact, the government may impress upon state-run banks to help
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6 CITI-NEWS LETTER
improve the cash flow of individuals, many of whom are yet not covered under any relief
measure.
One of the proposals being toyed with is to raise the overdraft facility automatically for
customers with good credit history for a temporary period, should they wish to avail of it,
a source told FE. “The proposal also includes raising the limit for Jan Dhan account
holders (not just women) from the current Rs 10,000. A final decision will be taken soon,”
he said.
If approved, the move will benefit not just the poor (Jan Dhan account holders) but also
the lower middle-class customers, who are bereft of the PDS facilities, among others.
Currently, the Jan Dhan scheme has 38.3 crore beneficiaries who hold a total of Rs
1,18,434 crore in their accounts.
Last week, the government pledged succour to the poor and the vulnerable – from BPL
families, Jan Dhan account holders and construction workers to organised-sector
employees – to cope with the lockdown, announcing a relief package of Rs 1.7 lakh crore.
As part of the package, finance minister Nirmala Sitharaman announced the transfer of
Rs 500 a month to 20.4 crore women Jan Dhan account holders for three months. This
will cost the government Rs 30,600 crore. The transfer to only women account holders
was aimed at helping the intended beneficiaries (poor families) with a minimum possible
leakage.
However, fears that the poor households where no woman has a Jan Dhan account will
lose out on this benefit, have prompted the government to consider some relief to them,
said a banking industry source. The government is also gearing up for the next round of
economic measures that will likely focus on needs of specific sectors – including MSMEs,
exports, tourism, civil aviation and animal husbandry – that have been battered by the
Covid-19 outbreak.
Home
Covid-19 aftermath: A third of orders cancelled, grave crisis grips
export hubs
(Source: R Ravichandran, Geeta Nair and BV Mahalakshmi, Financial Express, April 06, 2020)
Even before the pandemic spread its tentacles in India, the country’s goods exports had
contracted by 1.5% y-o-y up to February this fiscal to $293 billion.
With vast swathes of key markets — the US and the EU — badly bruised by the Covid-19
outbreak and migrant workers back home following a nationwide lockdown, export hubs
in India are pummelled by an unprecedented crisis. Exporters from hubs, including
Tirupur, Chennai, Surat, Hyderabad, Pune and Kochi, that FE spoke to were bracing for
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7 CITI-NEWS LETTER
harrowing times. About 25-30% of orders had been cancelled across various product
categories. Overseas buyers are using the crisis to renegotiate contract terms and seek a
cut in product prices. Domestic manufacturing units are shut and logistic chains in tatters,
even though ports are somewhat functioning.
Most of the top 25 destinations for engineering goods exports are facing a lockdown.
These 25 markets together accounted for $53 billion exports in the April-February period,
according to Ravi Sehgal, chairman of EEPC India.
Exporters from Tirupur, the country’s larget garment hub that is expected to have shipped
out aparrel worth Rs 26,000 crore in FY20, apprehend a 50-60% year-on-year slide in
despatches in FY21. The cluster – with 1,000-odd units, mostly MSMEs – employs around
6,00,000 people. About a half of them are migrant labourers, who have gone back home
with no certainty of a return anytime soon.
The leather companies in Chennai say summer sales are gone and, given the crisis in the
US and the EU, the outlook for winter orders remains uncertain. At the all-India level,
orders worth about Rs 8,000 crore have either witnessed cancellation or a deferment of
delivery, said exporters.
Rafeeque Ahmed, chairman of major leather exporter Farida Group, said: “We anticipate
that we will lose at least one quarter’s business. There is hardly any enquiry from the US
and Europe.” Nearly 70% of the leather exporters are SMEs.
Raja M Shanmugham, MD at Warshaw International and president of the Tirupur
Exporters’ Association, said” “We have not even received our payments for exports in
January and February, and much of the stocks despatched in March are stuck mid-way. I
have no clue when the markets will revive and we will get our dues.”
The already-dwindling farm exports are expected to plunge further in FY21. Even large
companies are not unscathed. Having witnessed a dream run in the December quarter
and in February (when its exports outstripped domestic sales), Bajaj Auto’s stellar show
was jolted by the pandemic. Rakesh Sharma, ED at Bajaj Auto, projected an up to 20% y-
o-y decline in exports in FY21 and maintained that the picture still remained hazy. While
the auto maker hasn’t yet seen cancellation of orders, it fears its payment ability will be
eroded if the situation worsens.
Without enough labourers, employment-intensive sectors like garments, leather and even
gems and jewellery are in for an extended period of uncertainties. Cash reserve is
depleting fast and in the absence of adequate and smooth credit flow, and many units,
especially small and mid-sized ones, are on the brink of collapse.
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8 CITI-NEWS LETTER
The EU, the US and China alone account for 40% of India’s overall goods exports. Even
before the pandemic spread its tentacles in India, the country’s goods exports had
contracted by 1.5% y-o-y up to February this fiscal to $293 billion.
In Surat, which houses some 20,000 diamond units, about 30-35% of export orders have
been cancelled, according to Dinesh Navadia, chairman of the Gujarat chapter of the
Gems and Jewellery Export Promotion Council. Production has come to a halt after the
lockdown. Almost 80% of the gems and jewellery from India are exported to the US, Hong
Kong and China, and nine out of every 10 rough diamonds in the world are being cut and
polished in Surat.
In the pharmaceutical sector, since Indian companies rely heavily on China for key raw
materials, until the supply lines are restored fully there, domestic firms will get hit to that
extent. Also, input prices have gone up due to limited supply, while the largest market,
the US, is facing a recession.
Nevertheless, large pharma companies are seen as weathering the crisis better than the
rest. A spokesperson for Dr Reddy’s said, “The market demand continues to be good.
However, our manufacturing facilities are operating at below-normal levels… and there
are challenges related to the supply chain.”
The Rs 12,000-crore carpet industry, with a significant presence in Uttar Pradesh, is
apprehending a loss of about Rs 2,000-2,500 crore in FY21. Sidhnath Singh, chairman of
the Carpet Export Promotion Council, said the order flow has already been hampered
since January, with the crisis breaking out in China. However, it just exacerbated in
March when the epicentre shifted to the US, which accounts for well over a half of our
exports.
Shaji Baby John, CMD at marine exporter Kings Infra Ventures, said: “Vietnam and China
are still buying. But internal logistics is a serious problem.” A broad range of farm
products, including rice, onion, grape, natural rubber, tea and cashew, will likely plummet
in FY21.
More than 4,500 natural rubber dealers and one lakh farmers in Kerala are staring at a
dark future, as tyre companies have shut production. Dealers alone have incurred losses
to the tune of Rs 400 crore in just the first week of lockdown.
According to Jagannath Khapre, president of All India Grape Exporters Association, there
is hardly any fresh order, and in many cases, payments for earlier supplies are stuck. Ajit
Shah, president of the All India Onion Exporters Association, said exports in March were
already down by 25% from the usual level to 75,000 tonne.
Similarly, as Tea Board deputy chairman Arun Kumar Ray pointed out, tea output from
the first flush in Darjeeling could crash by as much as 75%, as hardly any harvest took
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9 CITI-NEWS LETTER
place. West Bengal’s rice exports have been dwindling over the years, and the pandemic
has just worsened the situation.
Pratap Nair of Vijayalaxmi Cashews, one of the largest cashew exporters, said: “If
problems with movement of export cargo to ports in Andhra Pradesh, Tamil Nadu and
Kerala not sorted out fast, many orders will have to be cancelled.”
(With inputs from Sarita Varma in Thiruvananthapuram, Deepa Jainani in Lucknow,
Nanda Kasabe in Pune, Indronil Roychowdhury in Kolkata and Banikinkar Pattanayak
in New Delhi)
Home
Statsguru: From auto sector to GST mop-up, economic impact of Covid-19
(Source: Indivjal Dhasmana, Business Stanadard, April 06, 2020)
The Latest data on most economic indicators is available till February, while the real
economic impact of Covid-19 came in March.
The Latest data on most economic indicators is available till February, while the real
economic impact of Covid-19 came in March.
In fact, some of the indicators peaked for the fiscal year 2019-20 in February. For
instance, the core sector growth has done so (chart 1),
and is likely to witness a major dampening
impact in March. The sector comprises
crucial industries such as coal, refinery,
crude oil, cement, finished steel, fertiliser,
and electricity generation. The only
number available for March in real sense is
PMI for manufacturing, which stood at
51.8 — the same as in the beginning of
FY20 (chart 2).
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10 CITI-NEWS LETTER
Chart 3 again tells a story till February and shows the highest growth rate in services in
any month during FY20.
Given the fact that Covid-19 is affecting the services
sector such as tourism and hospitality the most, the
number is likely to see a major reversal in March.
The auto sector was struggling before the Covid-19
outbreak as well, ranging from issues such as BS-VI
to electric vehicles (chart 4).
Chart 5 shows that the goods and services tax collection fell below the Rs 1-trillion mark
in March for the first time after four months. Though these are for activities in February,
companies may have witnessed difficulty in paying taxes in March. April may see a major
correction if arrears are excluded.
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11 CITI-NEWS LETTER
Given the state of the economy, none
believes that 4.7 per cent gross domestic
product growth rate, pegged by the official
advance estimates (chart 6), would come
true. Therefore, FY20 would see less than
5 per cent economic expansion. The
outlook for FY21 is more pessimistic (chart
7).
Home
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12 CITI-NEWS LETTER
India, China could explore measures to boost trade hit by Covid-19
(Source: Dipanjan Roy Chaudhury, Economic Times, April 04, 2020)
India and China are expected to discuss steps and explore measuresof boosting bilateral
trade which has been significantly impacted by the coronavirus outbreak. China is a major
market for Indian products including seafood, petrochemicals, gems and jewellery, but
India’s export of these products to its neighbor has been impacted by the virus outbreak.
According to Chinese official data, trade between the two countries in January and
February of 2020 was down 12.4% year-on-year. This was also the time when the
coronavirus epidemic in China was peaking. China's exports to India during this period
stood at 67.1 billion yuan, down 12.6% y-o-y, while imports from India dropped 11.6% to
18 billion yuan. The slowdown in manufacturing activity in China, other Asian markets,
Europe and the US due to the viral epidemic is hitting Indian exports.
India exports 36% of its diamonds to China. The cancellation of four major trade events
between February and April this year is likely to cause a loss of $1.05-1.3 million in
business opportunities in the jewellery sector for the city of Jaipur alone, ET has learnt.
The domestic fisheries sector is anticipated to incur a loss of more than $171,000 due to
the fall in exports to China, according to some estimates. The knock-on effect of the
pandemic is expected to disrupt trade in agricultural markets too across the Indo-Pacific
region, including China. Global prices of goods like cotton will be affected in the second
half of 2020 if virus continues to spread, according to experts.
Some people familiar with India-China trade said that sectors including pharmaceuticals,
healthcare and non-traditional securities are likely to emerge as the new sectors for trade
between the two countries. According to official Indian data released in February, India’s
trade with China decreased from $89.71 billion in 2017-18 to $87.07 billion in 2018-19.
During this period, India’s imports from China declined to $70.32 billion in 2018-19 from
$76.38 billion in 2017-18, and exports to the country grew to $16.75 billion in 2018-19
from $13.33 billion in 2017-18. As a result, India’s trade deficit with China reduced to
$53.57 billion from $63.05 billion. Commerce and industry minister Piyush Goyal had
said in Rajya Sabha in February that the government, in all its official engagements with
the Chinese government, has been making efforts to achieve a more balanced trade with
China, requesting them to lower trade barriers. “Various protocols have been signed to
facilitate export of Indian rice, rapeseed meal, tobacco and fishmeal / fish oil, and chilli
meal from India to China,” he said in a written reply to the Upper House.
Home
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13 CITI-NEWS LETTER
Covid fight is a balancing act for world's economies: World Bank India Chief
(Source: Economic Times, April 03, 2020)
The Coronavirus pandemic is having a strong impact on the global economy. Questions
are rife about the possible economic and financial fallout of asking a third of the world's
population to stay home and shutting down factories. Is a systemic financial crisis likely,
maybe along the lines of the 2008 crisis 12 years ago? The World Bank's India Chief says
the two crises cannot be compared. In an interview to Times Now, Junaid Kamal Ahmad
talked about how the coronavirus impact is different from the financial meltdown of '08,
saying, "what is really different is the financial shock was an attack on the demand side of
the economy. Here it is a supply shock. It is a health shock."
While in 2008, economies simply needed to be stimulated for demand to rise, and for the
crisis to end, this time around it isn't as simple. Countries around the world now face a
fine balancing act of slowing an economy down to deal with a health crisis, while not
holding it too far back that a rebound would become difficult. "In order to address the
health shock you actually have to hold back the economy. If you do not hold back the
economy, you cannot practice social distancing," Ahmad said. It is this sequencing that is
extremely important, and countries around the world are doing it differently, Ahmad said,
giving the examples of US, Sweden and India. In the United States, the federal
government has used a bottom-up approach, where different states are slowly being
locked down separately. This then adds up to the whole country under some version of
restricted movement. Sweden on the other hand, has asked citizens to actually honor the
system themselves and observe social distancing and go into lockdown mode. India, by
far, has taken the most drastic step, shutting 1.3 billion people in their homes which is
"unprecedented, unheard of" according to Ahmad. Every country's main goal now is to
flatten the curve in terms of health but the real challenge lies in getting the economy back
on track as quickly as possible. To help with this, the World Bank approved a fast-track
$1 billion India COVID-19 Emergency Response and Health Systems Preparedness
Project to help India prevent, detect, and respond to the COVID-19 pandemic and
strengthen its public health preparedness.
"What we have done is followed India’s lead and put out a billion dollars into that health
expenditure supporting the public health system to actually deal with this health crisis
immediately so that the economy can come back as soon as possible," Ahmad said. This
is the largest ever health sector support from the Bank to India. This new support will
cover all states and Union Territories across India and address the needs of infected
people, at-risk populations, medical and emergency personnel and service providers,
medical and testing facilities, and national and animal health agencies.
Home
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14 CITI-NEWS LETTER
Ministry's actions allay trade fears
(Source: TNC Rajagopalan, Business Standard, April 06, 2020)
The Director General of Foreign Trade has also extended the validity of Handbook of
Procedures 2015-20 till the end of March 2021
Considering the massive disruption of economic activities due to the spread of Covid-19,
the commerce ministry has extended the life of the Foreign Trade Policy (FTP) 2015-20
till the end of the fiscal year 2020-21.
The Director General of Foreign Trade (DGFT) has also extended the validity of
Handbook of Procedures (HBP) 2015-20 till the end of March 2021. Many provisions
relating to the export promotion schemes have been amended to extend the validity of the
import authorisations, the export obligation periods and the last dates for making
applications, submitting installation….
Home
Financial guidelines need to be rewritten due to Covid-19: Andhra minister
(Source: Yunus Y. Lasania, Live Mint, April 05, 2020)
Conceding that the road ahead is difficult, AP's information technology and industries
minister Mekapati Goutham Reddy described in an interview the steps being taken by the
state to tackle the situation.
The coronavirus outbreak has shut down Andhra Pradesh that was looking to divide its
capital among Visakhapatnam, Amaravati and Kurnool, and the economic implications
will most certainly be felt once the situation stabilises. Conceding that the road ahead is
difficult, AP's information technology and industries minister Mekapati Goutham Reddy
described in an interview the steps being taken by the state to tackle the situation. Edited
excerpts:
Q. How much damage has the virus outbreak caused to AP’s economy?
A. We are still assessing the damage. One of our biggest export items was shrimp and
marine products, which has been affected. The MSME (micro, small and medium
enterprises) sector has been badly affected, agriculture-based and export- based sectors
are facing big challenges. Right now it is still too early for a full assessment in terms of the
economic damage, but we have a plan to deal with the situation.
Q. Given that there will be a worldwide economic impact, what do you think
needs to be done?
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15 CITI-NEWS LETTER
A. Financial guidelines need to be rewritten given the present scenario. Like the FRBM
(fiscal responsibility and budget management) Act, or limitations on borrowing by states.
The government should not be worried about inflation and new rules need to be looked
at. One thing the Centre can do is to offer a moratorium on outstanding loans for the
MSME and critical sectors. It should make sure that there is capital available.
Q. How do you see AP’s economy faring after the pandemic subsides?
A. A lot of business in China will be moving out, at least the non-Chinese ones. This is
something we should be looking forward to. Electronics and textiles (manufacturing) are
examples.
Q. How do you plan to address job losses?
A. Our government has been looking at skilling. We will re-train most workers and
prepare them for newer opportunities. The most important thing is for consumption to
pick up, and for that to happen, the Centre has to put money in peoples’ hands.
Q. AP’s covid-19 cases have increased manifold in a week’s time. Do you think
the state government has done well in containing the virus?
A. We did not have a large number of screenings in AP initially, but through the village
volunteer system we were monitoring people. The spurt that has happened (cases linked
to the Tablighi Jamaat congregation in New Delhi last month) is something that we
predicted, given that ours is a very social country. How we contain this will be important.
Home
Buyers, suppliers need to find midway: Apparel exporters
(Source: Fibre2Fashion, April 05, 2020)
Apparel manufacturers and exporters in India feel that they should keep talking with
buyers and vendors and find midway solutions during the ongoing Covid-19 pandemic.
Few apparel exporters Fibre2Fashion spoke to said they will be working with the buyers
to cover the losses due to cancellation of orders, non-placement of news orders, and other
challenges.
Currently, everything is on a standstill globally due to coronavirus. Since all stores are
closed, retailers are unable to sell their merchandise. This leaves them with no alternative
but to come back to the sourcing people to cancel the orders, feels HKL Magu, CEO of
New Delhi-based Jyoti Apparels.
Besides cancelling orders, some buyers have put their orders on hold, "which is a nice way
of saying no," according to Magu.
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16 CITI-NEWS LETTER
Even if the orders are not cancelled, the next quarter will be bad because "the customers
will lose business which will affect our business. So, current financial year 2020-21 is
going to be a bad year; there will be a contraction. Only way to survive is to keep our heads
above water. Not only there will be orders cancelled, there will be serious payment issues
and other challenges," Anil Buchasia, director of Kolkata-based Amrit Exports Pvt Ltd
told Fibre2Fashion.
There is no textbook solution for retailers and manufacturers for the current
unprecedented situation, says V Elangovan, director of Tiruppur-based SNQS
International. "Under the current scenario, there have been grim reactions from western
retailers, because shops are closed in all the countries in which they operate. They all are
sitting with a lot of stock in the warehouses with nothing to sell. They have their own
difficulties and as suppliers we have our own difficulties. We have to pay salaries to the
workers."
However, KM Subramanian of KM Knitwear is optimistic that the retailers will place their
orders back once the stores reopen.
When asked about what buyers should do in the current situation, Buchasia said, "We are
into workwear. We do business with the industry in the US and Europe, and the importers
there. My suggestion for them will be – support the suppliers in this difficult time, keep
giving them orders and not to stop them altogether. Of course, they can reduce orders
gradually. They have to keep supporting the suppliers because this is a labour-intensive
job, and if we don’t get orders, then the workers are going to suffer, we won’t be able to
give salaries to them. This will lead to a huge socio-economic problem in countries like
India and the developing countries."
Elangovan suggested that there should be no naming and shaming of buyers. "We have to
work along with the retailers, because tomorrow a vaccine may be announced, and the
situation can turn around. As a buying agent, we have to build better bridges and not burn
them. We have to keep talking to both the vendors as well as the buyers, put everybody at
a comfort level. This is the most we can do now."
"We are talking to the top management of our buyers' organisation, discussing better
terms, taking out the stock. They say that instead of paying out in 30 days, they want
better terms like paying in 100 days to 180 days. Of course, we need to help them at this
stage. Some of our buyers are working with us for last 30 years, so we need to reciprocate
them. My supplier base is also very cooperative. So, we are working out a solution," he
added.
In the same spirit, Subramanian said, "We will work mutually with the retailers and cover
the losses."
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17 CITI-NEWS LETTER
Ramu Raju, director of RR Sons Fashion Knits, Tiruppur, also feels that a mid-way should
be found. "If buyers can defer the orders, instead of cancelling them, the new terms should
be decided between the buyer and the seller."
Explaining that the time ahead is not going to be easy, Magu said: "Now is the peak time
of exports of RMG, but we are held up. It is not going to be before December that we reach
the peak season once again, because the cycle is so big that even if we have everything in
place and work very hard, the cycle of manufacturing and then booking the orders, then
placing the orders and all that, at least we will be losing 8 months."
According to him, it is now the opportune time for the government to come forward and
help apparel exporters. "The Government of Bangladesh has given a Tk 5,000 crore
package to the textile industry. In the UK, 80 per cent of the salary of the workers will be
paid by the government. The Indian government has waived off ESIC/PF for companies
having strength of less than 100. But even a small garment company doing an export of
₹5-10 crore will have a greater number of workers, making it inapplicable to the industry.
Our government should reduce the GST by maybe 50 per cent. It can make reductions in
the electricity bill, house tax etc."
While the government has announced that the wages for the lockdown period are to be
paid to the workers, it is not clear where the money will come from. "For our shipment
which has gone out two months back and buyers have already received, now they have
excused themselves regarding payments saying everything is closed. And if the buyers are
not making payment and we have borrowed from the banks, all our limits will be
exhausted. Not only worker’s salaries, we have to pay for the electricity bills, PF/ESIC,
insurance etc. Hence, the government has to come forward with some stimulus package
so that the industry also feels confident," Magu told Fibre2Fashion.
Pointing out another problem, he said that around 70-80 per cent of Indian apparel
industry consists of MSMEs, and many of them have invested their own money instead of
borrowing from the bank. "How will banks give them money unless they have collaterals
with them? So how are these MSMEs going to pay their workers when money is not
coming from the buyers?"
Buchasia is also of the opinion that the government should come out with some kind of
package for the labour-intensive garment industry, which brings foreign exchange for the
country. "In addition to deferment of interest, there should be a waiver of interest, waiver
of statutory dues, which normally the government and the banks take from us. We are
partners with the banks and government. Ultimately, they take 35 per cent of what we
earn. So, in difficult times, they should support us."
The government can help the industry by waving off PF to be paid by the employer. It can
also give ESIC waiver and reduce the power tariffs for the next couple of months,
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18 CITI-NEWS LETTER
according to Elangovan. "Already some states have announced reduction in power
tariffs," he mentions.
"If we pay 2-month salary to workers, our capital will get exhausted. So, we are waiting
for the government to take some steps, including lowering of interest rates. The
Bangladesh government has taken good steps in this direction. It is paying 3-month salary
with only minimal deduction in some fees, which can be paid back in 2 years," adds Raju.
Subramanian suggests that the textiles ministry should speak with the brands "to
continue working with India and maintain trading relations".
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Small shifts, automated production to restart manufacturing?
(Source: Rajeev Deshpande & Sidhartha, Times of India, April 06, 2020)
A discussion has started within a section of the government over multiple ways to resume
economic activity, particularly in manufacturing, in a limited way after the lockdown ends
to enable businesses to pay salaries and meet operating costs and to ensure the economy
does not fold up and go into a deep freeze. While discussions are preliminary, and the
outcome will depend on the coronavirus threat levels, there is loud thinking on allowing
curtailed shifts with social distancing, allowing automated production like automobiles
and putting in place a regimen of work passes and companies providing dedicated
transport to their workers.
In case of automated production lines, it might be easier to commence operations given
there are fewer number of hands on the floor and it is easier to observe social distancing.
At the same time, it is essential to devise ways to get textiles and some of the other large
employment generating sectors running to reduce likely economic hardship. Measures
are being considered even as thinking of the next economic package may await a fuller
assessment of the domestic and international Covid-19 fallout. The immediate priority, of
relief to the poor and tax compliance relief for individuals and businesses, has been
addressed for now, it is felt.
Officials suggested that such factories will have to ensure that workplaces are not
crammed, as it cannot be business as usual till the pandemic is brought under control.
But arrangements can be worked out in such a way that 30-40% of the workers are
allowed so that at least a part of the production cycle can commence. This will help keep
supply chains, crucially in common consumer goods, moving. This will also mean the
movement of goods in some of the sectors although the demand for products such as
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19 CITI-NEWS LETTER
automobiles may be limited. While there are suggestions that some of it can be stocked,
for companies, carrying large inventories will impose additional financial burden.
There is a proposal to allow exporters, who have already received orders, to complete
production and dispatch them to ensure that they fulfil their contractual obligation and
are not barred from future contracts. In fact, some businesses that have by and large
agreed to pay salaries for March, will find it tough to keep meeting the wage cost going
forward as their revenues have stopped. In fact, sectors such as tourism and hospitality
are starting the month with zero business and sustaining operations without any sales is
going to be tough. Even some of the largest companies in the consumer goods space are
only running 15-20% of the production chain, which are part of the ‘essential goods’ set-
up, industry sources said.
Besides, disruption in the supply chain for even food processing and beverage companies
is holding up operations. While big companies may be able to sustain their operations for
a longer period, the smaller ones do not have deep pockets to sustain their operations
without any revenue for long. The decision to bear the EPFO bill for those earning less
than Rs 15,000 in units employing up to 100 workers is expected to cost Rs 20,000 crore
annually, leaving the government with no headroom to bear the cost for the entire
workforce.
Apart from workers, banks and other lenders also need to be paid to ensure that there is
no pile-up of bad debt that impacts the stability of the financial sector in the medium to
short term.
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CII mobilises industry action towards COVID-19 relief
(Source: Financial Express, April 05, 2020)
The relief and rehabilitation interventions include distribution of personal protective
equipment, hygiene kits, ration kits and other daily essentials.
The Confederation of Indian Industry (CII) is extending all the possible support to
mitigate the global crisis. Synergising the efforts of the corporate India and engaging with
Government, CII is reaching out to various sections of the society, providing immediate
relief and strategic long-term rehabilitation support.
Through CII Foundation (CIIF), Young Indians (Yi), Indian Women Network (IWN) and
Regional & State Offices, CII has been mapping the requirements and mobilising relief
and rehabilitation support. The relief and rehabilitation interventions include
distribution of personal protective equipment, hygiene kits, ration kits and other daily
essentials among the communities. Awareness regarding the recommended hygiene and
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20 CITI-NEWS LETTER
safety practices is also being taken up among industrial workers and poorer
neighbourhoods.
Towards this, CII is working in 18 states across the country. Through regular engagement
and continuous efforts, so far 1,83,000 beneficiaries have been directly impacted. More
than 1.5 lakh health and hygiene kits, 5,050 ration kits and more than 12,000 kg food
grains have been distributed. Community kitchens have been supported at various
locations across regions, collectively providing 28,100 meals to approximately 16,250
beneficiaries.
Awareness drives and distribution of sanitisers and food is being undertaken in 110
villages of Punjab. The awareness drives are being run with awareness vans running in
the villages making announcements regarding the best practices, importance of
handwashing, social distancing, etc. Through the CII Foundation Woman Exemplar
Network, initiatives are also being rolled out to reach out to the vulnerable communities
of West Bengal, Madhya Pradesh, Maharashtra, Uttar Pradesh, and Rajasthan, through
awareness and provision of Ration and Hygiene kits.
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52% CEOs expect job losses post lockdown: CII Survey
(Source: IANS, April 06, 2020)
Around 52 per cent of top corporate bosses in India anticipate that job losses will occur
after the nation-wide lockdown is lifted, according to a CII CEO Snap Poll.
The survey found that 46 per cent of the CEOs do not expect job cuts while the rest 2 per
cent are not sure.
“About 52 per cent of the CEOs anticipate job losses in their respective sectors post
lockdown. 47 per cent of the firms expect upto 15 per cent job losses and another 32 per
cent expected 15 to 30 per cent job losses,” said the CII survey.
The survey, conducted electronically, saw a cross-country participation of close to 200
CEOs across sectors.
Further, the survey found that much of the inventory of companies is lying idle.
“About 64 per cent (inventory) is expected to be cleared in less than 30 days. However,
demand will not hold good for the next 30 days and beyond,” it said.
Also, most of the firms expect revenues to fall more than 10 per cent and profits to decline
more than 5 per cent in the fourth quarter of FY2019-20 and the first quarter of FY2020-
21.
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21 CITI-NEWS LETTER
The CII Poll also shows that access to manpower and movement of products are the major
constraints in essentials manufacture, transport and distribution.
Commenting on the survey, CII Director General Chandrajit Banerjee said: “The
government could announce a fiscal stimulus package for the industry and implement it
on fast track mode, given that the sudden imposition of the lockdown has significantly
impacted industry operations and the uncertainty of a recovery threatens substantial loss
of livelihoods going forward.”
Industry players and chambers have raised concerns of the economic impact of the
current crisis and also sought a stimulus package from the government.
Finance Minister Nirmala Sitharaman has assured that the government is working on a
package for the industry and would announce its soon. She is also heading the Covid-19
economic response task force.
On March 26, Sitharaman announced an economic relief package of Rs 1.7 lakh crore for
the poor and migrant workers under the Prime Minister Gareeb Kalyan Scheme.
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GLOBAL
Bangladesh: Budget proposals for FY21: CPD favours individual tax
reduction, opposes raise in corporate tax
(Source: Nazmul Ahsan, Dhaka Tribune, April 05, 2020)
The think-tank submitted their budget proposals for 2020-2021 fiscal year to the National
Board of Revenue (NBR)
The Centre for Policy Dialogue (CPD) on Sunday urged the government to keep corporate
taxes unchanged and slash individual taxes in the upcoming budget to help businesses
and general taxpayers overcome the crisis emerging from COVID-19.
The think-tank submitted their budget proposals for 2020-2021 fiscal year to the National
Board of Revenue (NBR).
“It will be difficult for the NBR to raise tax rates or expanding the tax net to include new
sectors. The primary focus should be to strengthen monitoring and enforcement
mechanisms to effectively curb tax evasion anf illicit financial flows,” said the CPD in its
budget proposals.
To deal with the coronavirus pandemic, the CPD proposed reduction in the import-level
duties on essential food items.
“Keeping food prices low should be seen as a strategic objective of the NBR in FY2021.
Food security of low-income people during the period of uncertainties of the corona
outbreak must be seen with utmost importance,” recommended the CPD.
Besides, it urged the revenue board to reduce import related tariffs (such as AIT and VAT)
on essential food items such as onion, lentil, garlic, ginger and soybean oil etc.
The think-tank in its budget proposals demanded to raise the tax-free income threshold
for individuals from current the Tk250,000 to Tk350,000 for the next fiscal year.
Besides, it suggested to consider restructuring the first three slabs of income tax from 10
per cent, 15 per cent, and 20 per cent to 5 per cent, 10 per cent, and 15 per cent respectively
at least for next two years.
“Moreover, NBR may consider allowing payment of individual income taxes for FY2020
in installments by March 2021,” said the budget proposals.
Focusing on the emerging scenario in the backdrop of COVID-19, the CPD said the
shutdown of enterprises, job losses and income reduction would lead to lower income tax
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23 CITI-NEWS LETTER
collection. Affected private and multinational companies suffering revenue losses would
likely to pay lower corporate tax, it predicted.
Highlighting the economic outlook for the rest of the current fiscal year, it said the budget
deficit might increase to 5.5% of gross domestic output which was estimated at 5% in the
budget.
Besides, CPD projected a shortfall of Tk100,000 crore in revenue income for the current
fiscal year.
The think-tank strongly recommended the revenue board for focusing in curbing tax
evasion and illicit financial flow in the next budget.
It recommended considering several fiscal measures for the affected agro-based
industries which could include waiver of VAT at the domestic stage for the period of
March-June, this year, deferred payment of quarterly advance income taxes till June,
2020 and payment of corporate taxes by installments till March, 2021.
The CPD urged the government to include deemed exports (exporting below 80% of their
production) like textiles, accessories, processed and frozen food, footwear,
pharmaceuticals, plastic and ceramic under the Tk5,000 crore stimulus package.
Other recommendations of the CPD include raising tax exempted yearly turnover limit
for SMEs from Tk50 lakh to Tk 1.0 crore for the next fiscal year, reduced corporate tax for
sectors like pharma, hospitals, and other health facilities for the final quarter of the
current fiscal year, special financial package for doctors, nurses, and other support staff
working in hospitals with corona patients.
It recommended initiating wealth and property tax and scrapping the existing money
whitening facility and introducing a Benami Property Bill in the upcoming budget.
In the proposals, the CPD said the during the first eight months of the current 2020-2021
fiscal year , major economic indicators of the economy exhibited some worrying signals.
Barring a healthy remittance flow, performance of the external sector had been negative,
it said.
Along with the subdued economic parameters, state of macroeconomic management also
demonstrated disquieting signals as could be gleaned from available data till date, it said.
Progress in terms of both public expenditure and domestic resource mobilization marked
below the targets set for the current 2020-2021 fiscal year, the CPD said further.
Home
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Global brands promise to stand by apparel suppliers
(Source: Refayet Ullah Mirdha, The Daily Star, April 05, 2020)
At least 15 international apparel retailers and brands have so far assured Bangladesh's
garment manufacturers that they will accept shipments of products that were previously
ordered, in an effort to help the country's exporters deal with the coronavirus fallout.
The retailers and brands are: H&M, Inditex, PVH, Target, Kiabi, M&S, C&A, Tom Taylor,
KappAhl, Benetton, Decathelon, Primark, Puma, Tesco and Kontoor.
They are currently finalising the terms and conditions of previously submitted work
orders.
However, the total size or value of their orders could not be ascertained.
DBL Group, a leading garment exporter whose biggest buyers include H&M and Puma,
has been assured by the two international retailers that they will not cancel work orders
placed earlier, said DBL's Managing Director MA Jabbar.
"I hope the rest of my buyers will contact me next week. We are positive that the buyers
will stand by us in this critical time," Jabbar told The Daily Star over phone.
Ever since the coronavirus outbreak began, many western apparel retailers—who had
been sourcing products from Bangladesh for decades—sent letters to the local
manufacturers, seeking cancellation of current and upcoming work orders.
This is because, amid nationwide lockdowns to curb the spread of the deadly virus, their
stores are closed and demand has collapsed.
At the same time, many retailers and brands stood by garment manufacturers who have
been adversely impacted by order cancellations and delayed shipments.
"We welcome their decision to support us and hope that payment terms will remain
unaffected in order to ensure liquidity flow for the factories," said Rubana Huq, president
of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), in a
WhatsApp message last week.
Huq issued the response after Swedish retail giant H&M last week assured apparel
suppliers that it would accept orders which were already manufactured.
"At least six of my long-term buyers contacted me to receive the orders," said Mahmud
Hasan Khan Babu, managing director of Rising Group, a leading garment exporter.
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25 CITI-NEWS LETTER
"I am trying to continue production in the factories, but the situation is not good.
Moreover, most Western buyers have already shut down their stores," he said, adding that
the buyers' response at this critical moment is definitely a positive sign.
For instance, French buyer Kiabi told Rising Group during a video conference last week
that it would take previously placed orders worth nearly $14 million.
Rising Group has been supplying knitwear items like T-shirts to Kiabi for more than nine
years. The French company purchases nearly $120 million worth of garment items from
the Bangladeshi manufacturer every year.
Kiabi has been annually sourcing various Bangladeshi garment items worth $700 million
for the past 20 years, Babu said.
As of yesterday, export orders amounting to $3.02 billion have been cancelled by
international retailers, according to data compiled by the BGMEA.
About 1,104 garment factories have reported a combined loss of 946.90 million units of
work orders. This will affect 2.19 million workers in the country.
Very few factories were in operation yesterday even in production dense areas like
Ashulia, Savar, Gazipur, Chattogram, Tongi, Maona, Narayanganj and Narsingdi.
Garment export fell by 26.70 per cent year-on-year to $1,972.24 million in March this
year, according to BGMEA data.
The countries worst hit by coronavirus, such as Italy, the UK, the US, France, Spain and
Germany are prime destinations for Bangladeshi garment exports.
The US alone is the single largest export destination for Bangladeshi garments, importing
about $6 billion worth of apparel items each year.
Germany is close behind with slightly less imports.
Bangladesh exports nearly $3 billion worth of garment items to Italy and more than $2.5
billion to Spain and France each year and over $3 billion to the UK.
Home
Bangladesh: RMG workers left in the lurch
(Source: New Age Bangladesh, April 06, 2020)
Owners’ indecision blamed
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26 CITI-NEWS LETTER
Indecision of factory owners and lack of coordination among the government agencies
multiplied the sufferings of readymade garment workers, labour leaders and experts said
on Sunday.
They said that thousands of workers on Friday and Saturday were forced to return to their
work locations in Dhaka and its adjacent areas amid the countrywide shutdown.
Export-oriented garment factory owners were allowed by the government to reopen
factories on April 5 while the number of novel virus infections and death was on the rise.
Blaming indecision of RMG factory owners, trade union leaders demanded closure of all
factories to protect workers from infections, besides demanding payment of wages and
coronavirus protective equipment for the workers.
Transparency International Bangladesh on Sunday in a statement also condemned the
factory owners for exposing workers to health risks violating their health rights.
TIB said that the insensitive act of factory owners which was detrimental to public interest
had put tens of thousands of workers as well as people at large at higher risk of getting
infected.
TIB considered it a violation of safety and health rights of RMG workers who were under
pressure from the factory owners to rush to their workplaces in extremely adverse
conditions fearing loss of jobs as the country was still under lockdown.
Thousands of garment workers used local transports, ferries and even walked to reach
back to their places of employment in Dhaka, Gazipur and Narayanganj, among others,
as their owners were set to resume production at factories from Sunday amid the
nationwide shutdown announced to fight the spread of coronavirus.
However, on Sunday morning most workers could not enter their factories as the
authorities of a good number of factories chose not resume work without any prior notice
after the BGMEA and the BKMEA urged their members at midnight to keep factories shut
till April 11, labour leaders said.
Due to the closure of factories, workers decided to go back to their village homes on
Sunday on local transports and on foot.
‘There are two reasons behind the sufferings of the readymade garment sector workers.
There is this lack of coordination among the ministries as government agencies failed to
determine the health risk of the RMG workers and the delayed decision issued by the
apparel trade bodies to keep their units closed,’ Centre for Policy Dialogue research
director Khondoker Golam Moazzem told New Age on Sunday.
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27 CITI-NEWS LETTER
He said that the government agencies were not giving the same priority in assessing the
health risks involving the RMG workers.
Moazzem also said that the leaders of the apparel trade bodies should have tried to keep
their units shut through negotiation with brands and buyers amid the outbreak of the
pandemic.
He said factory owners should pay wages to the workers within a very short time as they
had been made to rush to the city.
‘We are not machines, we are human beings. We deserve dignity and respect and decent
livelihood,’ Combined Garment Workers Federation president Nazma Akter said.
Nazma urged the government, factory owners and buyers to pay workers and stop their
sufferings in the apparel sector that engages over 40 lakh workers.
About the payment of wages, BGMEA president Rubana Huq said they urged all of their
members to clear wages for March as early as possible.
‘A cell has been set up to assist BGMEA members in this regard,’ she added.
According to the industrial police data, there were a total of 3,371 RMG and textile units
under the jurisdiction of the agency across the country and of them 578 factories were
open on Sunday.
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Coronavirus: What countries are doing to minimize economic damage
(Source: Kate Martyr, Ankita Mukhopadhyay, DW, April 05, 2020)
Coronavirus has wrecked global markets in a way comparable to the global financial
crisis. Nations are unrolling emergency plans to save their economies.
Germany
The German government is providing €1 billion ($1.1 billion) in credit for businesses and
companies of all sizes. The credit will be delivered through the state-owned KfW business
development bank. Last week, Berlin said the KfW has around €500 billion to help
support its economy.
The government also announced a number of tax measures to ensure liquidity for
companies. Late payment fines for loans may be waved for companies hit hard by the
slowdown caused by the outbreak. Financial support will also be given to the Robert Koch
Institute, the country's public health institute.
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28 CITI-NEWS LETTER
Germany's Ministry for Education and Research is expected to receive €145 million for
the development of a vaccine. The country has also set aside €50 million to repatriate
German tourists stranded around the world.
The southern state of Bavaria announced a fund worth up to €10 billion to help the region
withstand the coronavirus. The fund allows the local government to buy stakes in faltering
companies to prevent insolvencies.
Companies with up to 250 employees can apply for loans between €5,000 and €30,000.
The fund will also be used to guarantee 80% of loans taken by companies threatened by
default. Bavaria is home to nine blue-chip DAX-30 companies including car manufacturer
BMW, engineering giant Siemens and sports retailer Adidas.
German Finance Minister Olaf Scholz told the newspaper Die Zeit that European
countries must show "solidarity" with hard-hit countries like Italy. "A country like Italy
must now spend billions to support its economy. This must not be allowed to fail due to a
narrow interpretation of regulations."
Spain
Prime Minister Pedro Sanchez announced measures worth €200 billion ($219 billion) to
help companies and protect workers and other vulnerable groups affected by the
escalating coronavirus.
The Spanish government plans to mobilize €117 billion for the package, with private
companies providing the rest. Some €600 million will be pumped into basic social
services.
Half of the assistance measures, which are worth 20% of Spain's economic output, are
state-backed credit guarantees for companies, and the rest includes loans and aid for
vulnerable people.
Portugal
Portugal, which declared a 15-day state of emergency starting on March 18, has unveiled
a €9.2 billion ($10 billion) aid stimulus package, worth more than 4% of the country's
GDP.
The package includes state-backed credit worth €3 billion to help companies in sectors
like tourism, hospitality, textiles, wood, micro and small enterprises. Some €5 billion of
the fiscal stimulus is set aside to enable flexible tax and social security payment.
Portugal's finance minister said that the country may implement a moratorium on loan
repayment. Talks are currently underway with several banks.
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France
France has pledged a €45 billion ($50 billion) aid package for small businesses in addition
to tens of billions already promised for French workers forced to stop working because of
shop and restaurant closures and strict new quarantine measures.
UK
Newly appointed Chancellor of Exchequer, Rishi Sunak, announced a $14.5 billion
emergency fiscal stimulus package to tackle the coronavirus pandemic.
The stimulus will support the UK's National Health Service (NHS) and refund the cost of
businesses for 2 weeks. The UK is also offering state-backed loans worth $400 billion
(15% of the UK's GDP) for businesses in the retail and hospitality industries struggling in
the sudden economic paralysis caused by mass self-quarantine.
United States
The US Senate cleared a federal aid package worth $104 billion, which will give free
coronavirus testing to people without health insurance, school meals for children, 10 days
of sick leave and 12 weeks of paid family leave for certain workers.
US President Donald Trump's administration is currently in talks with lawmakers about
another stimulus package worth as much as 1 trillion dollars (€900 billion). The proposed
package includes an immediate cash payment to lower-income Americans.
The measures would include a tax cut for wage-earners, $50 billion for the airline industry
and $250 billion for small businesses. Senator Mitt Romney also proposed $1,000 in
payouts for ordinary US citizens. The enactment of the financial package must wait for
Congress to agree on it.
The US Federal Reserve announced three new finance mechanisms to combat economic
damage. The first is to help households and businesses stay afloat and the second funds
major financial institutions for up to 90 days.
The new mechanism will allow companies including JP Morgan, Goldman Sachs, HSBC,
Morgan Stanley, Deutsche Bank Securities, BNP Paribas Securities and Nomura
Securities to use debt holdings as collateral for credit from the Federal Reserve. The
program will be in place for at least six months.
The third mechanism, the $10 billion Money Market Mutual Fund Liquidity Facility, will
create an emergency lending facility for banks that purchase assets from mutual funds
and other short-term credit sources. This measure is expected to keep credit flowing in
the US economy.
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Canada
Canada's Prime Minister, Justin Trudeau unveiled an aid stimulus package worth $82
billion Canadian (US $56.4 billion; €51.4 billion). The package will be used to support
businesses and provide temporary tax relief. The package is worth 3% of Canada's GDP.
The stimulus package will also support child benefit payments and provide emergency
care to workers who don't have access to paid sick leave.
Trudeau also announced that Canada would restrict all non-essential travel from the US.
He assured that supply chains would not be affected by the move.
Australia
Australia has announced a fiscal stimulus package worth $11 billion to tackle the
coronavirus pandemic. The package includes a one-off payment of AUD $750 ($451) for
nearly 6.5 million lower-income Australians.
In addition, the package will be used to save 120,000 apprentice jobs and support small
and medium-sized firms. The fiscal stimulus package is nearly one % of Australia's GDP.
Australia's central bank has slashed its interest rate to a record low of 0.25%, to boost
fiscal stimulus in an embattled Australian economy. The Australian government also said
that it would enable cheaper borrowing for businesses by intervening in the bond market.
Turkey
Turkey said that it would roll out a stimulus package worth $15.4 billion to tackle the
coronavirus pandemic. The 21-point package, known as the Economic Stability Shield,
will support delay in loan and tax payments.
The package will also increase pension pay, support businesses, reduce Value Added Tax
(VAT) on domestic air travel and defer social security payments by 6 months for the retail,
steel, automotive and hospitality industries, among others.
Turkish President Recep Tayyip Erdogan also announced that Turkey is putting in place
a "periodic program" to give healthcare at home for people above the age of 80 who live
alone.
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Coronavirus: New Look delays supplier payments 'indefinitely'
(Source: BBC News, April 03, 2020)
New Look says it is suspending payments to suppliers for existing stock "indefinitely",
telling them in a letter that the stock can be collected by its owners.
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The retailer is also cancelling orders for its Spring and Summer clothing lines and won't
pay costs towards them.
New Look told the BBC it did not take the decision lightly. "This is a matter of survival,"
it told suppliers.
One small firm said New Look’s behaviour was “totally out of order”.
'Challenges'
The supplier, which provides clothing for several High Street chains and did not want its
name published, told the BBC it was not currently owed money by New Look and had no
outstanding orders with the retailer.
However, it added that New Look’s approach would “devastate smaller companies down
the supply chain at a time when they need help the most”.
New Look’s instructions to suppliers came in the form of a letter, signed by chief executive
Nigel Oddy and dated 2 April, which has been seen by the BBC.
All New Look stores have been closed since 21 March. The firm said it was still trading
online, but its distribution centre was full and it could receive no more goods.
“We are acutely aware that our suppliers are facing their own challenges at this time, and
that both their businesses and employees are being affected,” Mr Oddy wrote in his letter.
“Government support schemes continue to be announced throughout the world, and we
encourage you to pursue any options that are available to you.”
The supplier who contacted the BBC said small firms could not afford to trade in those
circumstances and accused New Look of “passing all the risk on to the supply chain”.
The firm said it, and others like it, had its designs manufactured in China and could not
afford to take on all the liability by itself.
It added: “The new reality in China is that factories now insist on deposits for all orders
placed on behalf of grocers and large retailers, as they cannot afford orders to be cancelled
with no compensation to cover raw materials and production.”
The firm called on those big retailers to “play their part in helping the whole supply chain
by paying these deposits up front at the point of order”.
“Since the middle of March, our revenue has collapsed from £160,000 per day to virtually
nothing, as almost all of our retail customers in the UK have chosen or had to close for
the foreseeable future,” the supplier said, adding that it had already furloughed 90% of its
staff.
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32 CITI-NEWS LETTER
New Look was already facing difficulties before the coronavirus pandemic struck.
It closed dozens of stores in 2018 and 2019 because of “challenging” retail conditions on
the High Street.
A New Look spokesperson said: "Whilst our online sales channels remain open, albeit on
a significantly reduced basis, we have regrettably had to inform suppliers that we cannot
place new orders until further notice and will be temporarily postponing outstanding
supplier payments until the situation improves."
"We have not taken this decision lightly and have only done so out of absolute necessity,
given the exceptional circumstances we are in. We greatly value our relationships with
suppliers and are actively identifying opportunities where they can hold product for use
for autumn-winter this year or spring-summer next year."
Home
Oerlikon Nonwoven large-scale meltblown sold to Asia
(Source: Oerlikon, April 02, 2020)
A leading Asian large-scale manufacturer of manmade fibers and polymers has invested
in a new Oerlikon Nonwoven meltblown system. The recently-signed contract comprises
a 2-beam system for manufacturing filtration nonwovens – predominantly for medical
products such as face masks – with a nominal capacity of up to 1,200 tons of nonwovens
a year. The commercial production launch has been scheduled for the fourth quarter of
2020.
Oerlikon Nonwoven shortens delivery times due to rising demand for
meltblown systems
Caption: Oerlikon Nonwoven meltblown nonwovens systems fulfill the very highest
quality requirements when manufacturing high-end materials for filtration applications
and medical products.
The 2-beam system has an operating width of 1.6 meters and is equipped with the new
patented Oerlikon Nonwoven electro-charging unit. The Oerlikon Nonwoven meltblown
technology is recognized by the market as being the technically most efficient method for
producing highly-separating filter media made from manmade fibers, particularly in
conjunction with electrostatic charging and with extremely low pressure loss. Electro-
charging the filter nonwovens allows the manufacture of sophisticated EPA- and HEPA-
class filter media as well as media that comply with the requirements of N95-, FFP2- and
FFP3-class respiratory masks.
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33 CITI-NEWS LETTER
The demand for filtration nonwovens for medical applications has risen tremendously
across the globe since the outbreak of the Sars-CoV-2 (coronavirus) epidemic, presenting
all manufacturers with huge challenges. “We are currently receiving inquiries from all
over the world for our system concepts”, explains Dr Ingo Mählmann, Vice President
Sales & Marketing Oerlikon Nonwoven, talking about the current situation. “To improve
the supply situation, we have changed our prioritization in favor of considerably shorter
delivery times for meltblown systems, so that customers can now be supplied even faster
and also with very short lead times.” A meltblown system will be commissioning at the
site of a leading Western European nonwovens producers as early as the second quarter
of 2020. This system will be deployed exclusively in the manufacture of nonwovens for
respiratory masks.
Due to the current state of emergency with regards to the local supply of face masks,
Oerlikon Nonwoven is currently using its own laboratory system to produce
electrostatically-charged filter media which are being sent to local small businesses and
companies for the manufacture of face masks. “We are thrilled to be making a
contribution towards fighting the pandemic, particularly in the local vicinity of our
production site in Neumünster”, adds Rainer Straub, Head of Oerlikon Nonwoven.
Home
Bangladesh: Savar RMG units reopen today
(Source: Monira Munni, Financial Express, April 05, 2020)
Garment factories will remain open from today (Sunday) only at Savar off the city despite
the ongoing shutdown amid the coronavirus pandemic, sources said.
Considering the overall situation, Bangladesh Garment Manufacturers and Exporters
Association (BGMEA) president Rubana Huq urged all members to keep their units shut
until April 11.
However, hundreds of garment workers are coming back to Dhaka from different parts of
the country despite ban on public transport.
Besides, factory owners in the Ashulia industrial belt at an emergency meeting held on
Saturday decided that RMG units in Ashulia industrial zone will reopen from Sunday.
Some 50 factory owners, headed by Abdus Salam Murshedy, managing director of Envoy
Group, took the decision.
When asked, MrMurshedy said some 50 factory owners from Ashuliazone sat on Saturday
and decided that factories will remain open since Sunday.
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34 CITI-NEWS LETTER
They took the decision in line with the instruction of Department of Inspection for
Factories and Establishments (DIFE).
DIFE on April 01 in a notice said the export-oriented factories which have work orders,
are willing to run factories and engaged in manufacturing personal protective equipment,
mask, hand wash/sanitizer and medicine to prevent coronavirus, can run their units
provided they ensure adequate health safety of workers.
The meeting also called on apparel makers to pay wages for the month of March to
workers from April 12 to 15, MrMurshedy added.
BGMEA president Dr Rubana Huq in an audio message said the factories having work
orders and are engaged in manufacturing safety equipment can reopen in line with DIFE's
instruction provided they can ensure sufficient health safety.
She urged all members to pay March wages timely and not terminate any workers if any
of them is absent.
BKMEA on Thursday in a statement said it would not take any decision about factory
closure from April 05 and its previous instruction regarding closure until April 04 would
not be effective from Sunday.
It asked its member factories to take their own decision at their own risk and
responsibility regarding keeping their factory open.
Mohammad Hatem, senior vice president of BKMEA, in a video message urged member
units, if possible, to keep their respective factories closed until April 10.
According to the Industrial Police (IP) data, there are 425 garment factories registered
with BGMEA in Ashulia zone. And only 27 BGMEA member units remained shut while
422 remained open until Saturday.
Only 12 out of 81 BKMEA member units, four out of 21 registered Bangladesh Textile Mills
Association (BTMA) factories and 02 out of 98 factories under Bangladesh Export
Processing Zones Authority remained closed until Saturday.
And 32 out of 731 factories from other sectors were closed.
The majority of the apparel manufacturing units in other industrial belts like Gazipur,
Chattogram, Narayanganj, Mymensingh and Khulna, however, remained closed,
according to IP sources.
Some 7,602 factories including textile and clothing are under the jurisdiction of IP and
5,821 were closed while 1,781 were open.
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35 CITI-NEWS LETTER
Meanwhile, close to a billion pieces of clothing items have been stockpiled or under
production in factories as work orders cancellation continues in the aftermath of
coronavirus, owners said.
Until Saturday, over 1,100 factories reported that export orders for 946.90 million pieces
of readymade garment items worth US$3.02 billion were cancelled or held up, affecting
2.19 million workers, according to the lobby group Bangladesh Garment Manufactures
and Exporters Association, or BGMEA.
Similarly, 281 member units of the Bangladesh Knitwear Manufacturers and Exporters
Association, or BKMEA, reported that orders for more than $3.0 billion were cancelled
or held or suspended until Friday.
Citing primary data of the National Board of Revenue, the BGMEA said single month
apparel exports in March 2020 dipped by 26.70 per cent to $1.97 billion versus $2.69
billion in March 2019.
In contrast, dozens of global buyers have come forward to rescue the local textiles makers
giving assurance of taking in the goods already produced even as the European Union,
the US and Canada, the country's key export destinations, enforced lockdown to slow the
spread of the deadly virus.
Buyers such as H&M, PVH, Inditex, M&S, Kiabi, Target, Benetton, Decathlon, and
KappAhl and PVH have assured local RMG makers of taking in their already-produced
goods after the BGMEA urged the retailers not to cancel or hold up the existing orders.
H&M, one of the country's largest global apparel buyers that sources apparels worth more
than $3.0 billion a year from Bangladesh, in a statement last week, announced that it
would get the delivery of the already produced garments and goods in production and pay
for the orders.
It, however, said it would not ask for any discounts and temporarily suspend placing new
orders to its listed supplier factories in Bangladesh amid the coronavirus outbreak.
Talking to the FE, Mahmud Hasan Khan, managing director of Rising Group, said
factories have a good number of products either on stockpile or in the process of
production due to the current cancellation or suspension.
The owners, however, said only H&M and Inditex have committed to unchanged payment
terms.
Some of the buyers want to take 90 to 120 days to make the payment, they said, unsure
about the delivery dates.
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36 CITI-NEWS LETTER
A few apparel makers alleged that the conditions of Bestseller, C&A and Primark are not
business-friendly.
When asked, BGMEA president Dr Rubana Huq said some brands have come forward
and informed the trade group of their decision to take the delivery of ready goods and the
goods in production.
She welcomed the decision to support the local suppliers and expressed the hope that the
payment terms would remain unaffected, thereby ensuring liquidity flow to the factories.
Home
Pakistan: Govt Offers Rs 100 Billion To Uplift Industry: Dawood
(Source: Muhammad Irfan, Urdu Point, April 05, 2020)
Adviser to Prime Minister for Commerce and Textile, Abdul Razak Dawood has said that
the government had offered up to Rs100 billion packages to the industrial sector as a
support following current challenging situation, created due to COVID- 19 pandemic.
"We are continuously in contact with all major industrial sectors, including textiles and
construction. With consultation of all stakeholders, the government would give incentive
to the priority areas of industrial sector for revival in current critical situation," Razaq
Dawood told APP here.
The government wanted to resolve the liquidity issue of industrial sector, he said adding
that Drawback of Local Taxes and Levies (DLTL) payments would be made, which were
pending since 2009.
The adviser said the government would pay Technology upgradation fund worth Rs
30 billion to the industrial sector to help it come out from the current challenge of COVID-
19 Coronavirus pandemic.
He informed that total Rs 47 billion would be paid to the textiles sector in coming 100
days to support the major export sector of the country.
Replying to a question, he said the government would pay all the refunds including in Rs
200 billion packages to compensate the industrial sector in coming Budget 2020-21.
He said that this package would be paid at faster pace to the industries, adding that all the
stakeholders were on board with the government to evolve joint strategy to resolve all the
issues of industrial sector in current situation.
He said that promoting industries and giving incentives to the business community was
an important step to leading the country forward.The government would support the
industrial sector and provide Incentives.
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37 CITI-NEWS LETTER
The commerce ministry has also prepared a list of industries which could be reopened in
the current situation, he said.
The adviser said the refund of Rs100 billion for the business community is a part of that
process and the government was committed to ensure timely refunds to
the business community in this challenging situation.
Razak Dawood said that his ministry was in constant contact with
the business community to figure out how the challenge posed by the epidemic can be
resolved in country's industrial sector.
He hoped the government and business community including all industrial was one page,
with joint plan of action with consensus of all stake holders "we would overcome on
economic challenges after the COVID-19 pandemic Coronavirus.
President of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI)
Mian Anjum Nisar while talking to APP hailed the Rs 100 billion package offered by
the government.
He said the government would take preventive measures and develop strategy to protect
the pace of economic and trade progress and effects of world economic slowdown as
apprehended by leading research organization after evolving the situation in COVID-19
pandemic.
Mian Anjum Nisar while talking to APP said that the whole world including the
potential market of Europe Union (EU) was effected by the coronavirus, which was the
second biggest trade destination for Pakistan after the Generalized Schemes of
Preferences (GSP-Plus) offered by EU in 2013.
In this regard, the government must to go for conducting studies for mitigating the
economic changes after Coronavirus.
Renowned industrialist from Baluchistan, Ex-President FPCCI , Eng. Daroo Khan
welcomed the package announced by the government and said that proper mechanism
was required to disburse this package according the needs for different industries.
He suggested that the government engage all stakeholder to resolve the current evolving
challenge.
On the occasion, President Islamabad Chamber of Commerce and Industries (ICCI)
Muhammad Ahmed Waheed said that his chamber was fully engage in consultation
with government in current challenging situation.
Business community of the twin's city welcomed the Rs100 billion package offered by
the government for industrial sector.
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38 CITI-NEWS LETTER
President, Karachi Chamber of Commerce and Industries, Agha Shahab Ahmed Khan
appreciated the government efforts for mitigating the current challenge.
He said that his chamber and business community from all over the country was
committed to support the government in current evolving situation.
President, Peshawar Chamber of Commerce and Industry Engr. Maqsood Anwar Pervaiz
said that business community of Khyber Puktunkwa (KPK in cooperation
with government and stand with the government and lauded Rs 100 billion package
announced by the government.
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