citi-news letter · chief ministers of arunachal pradesh, bihar, delhi, tamil nadu and tripura as...
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Cotlook A Index - Cents/lb (Change from previous day)
17-12-2019 76.20 (+0.25)
17-12-2018 87.80
18-12-2017 86.65
New York Cotton Futures (Cents/lb) As on 19.12.2019 (Change from
previous day)
Mar 2020 66.78 (+0.04)
May 2020 67.61 (0.00)
July 2020 68.52 (-0.02)
19th December
2019
Smt. Nirmala Sitharaman holds Pre-Budget consultation with Finance
Ministers of State/UTs
Piyush Goyal to meet 4 state industry ministers
GST Council’s decisions On Rate Changes
Tripura gets its first SEZ
Indonesia: Outlook 2020: Textiles: Working together to revitalize textile
industry
Cotton and Yarn Futures
ZCE - Daily Data (Change from previous day)
MCX (Change from previous day)
Dec 2019 19040 (-130)
Cotton 12850 (+20) Jan 2020 19250 (-120)
Yarn 19490 (-335) Feb 2020 19430 (-80)
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2 CITI-NEWS LETTER
-------------------------------------------------------------------------------------- Smt. Nirmala Sitharaman holds Pre-Budget consultation with
Finance Ministers of State/UTs
Piyush Goyal to meet 4 state industry ministers
GST Council’s decisions On Rate Changes
Panel flags Rs 63,000-crore compensation cess shortfall in 2019-20
Conditions apt to allow a fiscal slippage, says RBI governor
Shaktikanta Das
Some states pitch for relaxation in fiscal deficit target to 4% to
boost consumption
MSP hike hits exports, only 600,000 bales shipped so far
Demand slowdown, costly raw materials to hit local spinners:
Icra survey
BofA: Govt should push for fiscal expansion, growth bottoming up
Government approves Rs 436 crore outlay for skilling 4 lakh persons
Tripura gets its first SEZ
Three vital ingredients for path-breaking innovation
------------------------------------------------------------------------------ Euric calls for ambitious strategy on textiles
Indonesia: Outlook 2020: Textiles: Working together to revitalize textile
industry
Vietnam keen to improve trade, investment cooperation with Pakistan
Vietnam textile sector orders hit by African competition
Kraig Biocraft readies for first recombinant spider silk
Starts cool, stays cool fabric technology at Heimtextil
--------------- --------------------------------------------------
NATIONAL
---------------------
GLOBAL
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3 CITI-NEWS LETTER
NATIONAL:
Smt. Nirmala Sitharaman holds Pre-Budget consultation with Finance
Ministers of State/UTs
(Source: Press Information Bureau, December 18, 2019)
Union Minister for Finance and Corporate Affairs Smt. Nirmala Sitharaman held the Pre-
Budget consultations with Finance Ministers of States and UTs (with legislature) here
today.
The meeting was attended by Chief Ministers of Goa, Haryana and Puducherry, Deputy
Chief Ministers of Arunachal Pradesh, Bihar, Delhi, Tamil Nadu and Tripura as well as 17
Finance Ministers/Ministers representing their states and senior Officers from Union
Government and States. Union Minister of State for Finance & Corporate Affairs Shri
Anurag Singh Thakur also attended the meeting.
Smt. Sitharaman elucidated Union Government's philosophy of "Cooperative
Federalism" and steps taken by the Union Government to bolster growth of the economy.
State Governments welcomed the opportunity to present their views and expressed their
suggestions on growth, investment, resource requirement and Fiscal Policy. They also
suggested measures to strengthen cooperation between States and Centre to attain $5
trillion economy.
The Finance Minister welcomed the suggestions made by the State/UTs in the meeting.
She assured that the memorandums submitted by State/UTs will be examined and
suitably considered.
Home
Piyush Goyal to meet 4 state industry ministers
(Source: Kirtika Suneja & Anandita Singh Mankotia, Economic Times, December 18, 2019)
In the runup to the budget, commerce and industry minister Piyush Goyal will meet trade
ministers of four states on Thursday to prepare a roadmap to make every district in the
country a hub of exports. The meeting follows Goyal’s consultation with industry captains,
including Bharti Airtel chairman Sunil Bharti Mittal on Wednesday and Tata Group
chairman N Chandrasekaran on Tuesday on their respective groups’ investment plans
and the issues they face.
Industry ministers of Haryana, Gujarat, Uttar Pradesh and Telangana will put a
framework in place to promote industry and exports through their districts, sources said.
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4 CITI-NEWS LETTER
While the Tata Group made presentation about its investment plans and the hurdles in
being able to meet those, as per sources, Mittal said he discussed the Bharti Group’s
matters mainly on the infrastructure side as it has large investment plans for telecom
towers, solar and real estate. “We discussed what all areas we are investing in, what are
the bottlenecks and where all we need his help,” Mittal said, adding that the group wants
faster clearances, and has asked support in declaring tower industry as infrastructure.
“We need his help in clearance from aviation authority, real estate side, solar, there are
issues around larger bids for solar parks,” he said. He said his group spends Rs 15,000-
20,000 crore each year on telecom and wants to achieve 20 GW of capacity in solar.
The 2020-21budget is likely to touch upon the
issue of districts being made export hubs on the
lines of Prime Minister Narendra Modi’s
Independence Day speech in which he urged
each district to think of becoming an export hub.
“The states have to put together a framework
that includes a nodal officer, who will be a link
between the district, Centre and respective
state,” said an official. The government wants every district to have an export profile and
an action plan, and it will circulate a guidance note in every district on the concept of
export hub and the outcomes targeted with details on relevant government schemes for
export facilitation, credit provisioning and MSMEs. The consultations come at a time
when the government is trying to boost investment, both domestic and foreign, amid a
slowing economy.
Goyal also met Confederation of Indian Industry (CII) president Vikram Kirloskar, and is
also likely to meet various export promotion councils this week to discuss the upcoming
foreign trade policy as the country’s outward shipments contracted for the third month in
a row in November. November exports were down 0.34% to $25.98 billion from a year
earlier and imports fell 12.7% to $38.11 billion.
Home
GST Council’s decisions On Rate Changes
(Source: Press Information Bureau, December 18, 2019)
The 38th meeting of the GST Council met under the Chairmanship of the Union Minister
for Finance & Corporate Affairs Smt. Nirmala Sitharaman here today. The meeting was
also attended by the Union Minister of State for Finance & Corporate Affairs Shri Anurag
Thakur besides Finance Ministers of States & UTs and senior officers of Ministry of
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5 CITI-NEWS LETTER
Finance. The GSTCouncil recommended the following relating to changes in GST rates,
exemptions.
1. To exempt upfront amount payable for long term lease of industrial/ financial
infrastructure plots by an entity having 20% or more ownership of Central or State
Government. Presently, the exemption is available to an entity having 50% or more
ownership of Central or State Government. This change shall become effective
from 1st January, 2020.
2. To levy a single rate of GST @ 28% on both State run and State authorized lottery.
This change shall become effective from 1st March, 2020.
3. The Council also considered the rate of GST rate on Woven and Non-Woven Bags
and sacks of polyethylene or polypropylene strips or the like , whether or not
laminated, of a kind used for packing of goods ( HS code 3923/6305)in view of the
requests received post the changes recommended on such goods in last meeting
and recommended to raise the GST to a uniform rate of 18%(from 12%) on all such
bags falling under HS 3923/6305 including Flexible Intermediate Bulk Containers
(FIBC). This change shall become effective from 1st January, 2020.
[This note presents the decision of the GST Council in simple language for easy
understanding which would be given effect to through Gazette notifications/ circulars
which shall have force of law.]
Home
Panel flags Rs 63,000-crore compensation cess shortfall in 2019-20
(Source: Dilasha Seth, Business Standard, December 18, 2019)
Instead, it has recommended that the present inverted duty structure be corrected, besides
restructuring of GST rate slabs
The Goods and Services Tax (GST) Council was
told on Wednesday that the central government
might have a compensation cess shortage of Rs
63,200 crore in the current financial year.
The calculation is from the Council's revenue
augmentation panel, which also says this shortage
could balloon to Rs 2 trillion by 2021-22. It has
assumed revenue growth of five per cent this year;
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6 CITI-NEWS LETTER
actual growth in April-November, the first eight months of the financial year, was 3.7 per
cent.
In the best-case scenario presented by the panel, with a growth rate of 10 per cent, there
will be a cess gap of Rs 96,360 crore in the coming financial year, 2020-21 and of Rs 1.36
trillion in 2021-22. And, it has ruled out the possibility of 10 per cent, or even eight per
cent, revenue growth for the current year.
Nor, however, does the panel see any scope for raising the compensation cess rates. It says
this will not yield ‘any significant revenue’ to meet that gap.
Instead, it has recommended that the present inverted duty structure be corrected,
besides restructuring of GST rate slabs.
Punjab finance minister Manpreet Badal said the revenue picture so presented was a
setback, being much worse than anticipated. State finance ministers will now have to
comment on the presentation.
The panel has listed 24 items -- including mobile phones, footwear, fabrics, LED lights,
medical equipment, utensils, agricultural machinery, pharmaceuticals and renewable
components — that have an inverted duty structure. Resulting in refunds of close to Rs
20,000 crore annually.
instance, the GST rate on mobile phones is 12 per cent; that on phone parts and batteries
is 18 per cent. Resulting in an inverted structure which creates cases of unutilised input
tax credit (ITC). A registered taxpayer can claim refunds on the ITC on account of a higher
tax on inputs and lower tax on outputs. The cumulative effect of such a structure is
resulting in huge input tax credit outgo. Apart from causing distortion and litigation.
Other recommendations from the panel for augmenting of revenue include a two-slab
GST structure, of 10 and 20 per cent, as against the current four-slab one, though it also
suggests a special higher rate for 'sin' and luxury goods. Also, rationalisation of the
exempted items list and raising the composition rate for manufacturers from the current
one per cent.
On plugging of leakages, it suggests an MRP (Maximum Retail Price)-based levy on items
such as pharmaceuticals or goods sold to final consumers. It has listed suggestions on
revenue augmentation from states and recommended moving items from the 5 per cent
and 12 per cent lists to higher slabs, mobile phones being one example.
Some of the exempted items under GST currently are education, health, public transport,
house rent, cereals, fruit, jaggery, honey, bread, salt, milk, printed books and kajal.
On broadening and rationalisation of GST rates, some of the suggestions it has compiled
include raising the rate on precious metals from three per cent now to five per cent, taxing
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7 CITI-NEWS LETTER
the higher segments of education and health, and revisiting the rates on some items that
have been reduced from the earlier 28 per cent to 18 per cent.
M S Mani, partner at consultancy entity Deloitte India, observed that GST collections are
also dependent on factors such as economic growth. Compensation cess, he adds, appear
to be lower than the requirements of states.
Home
Conditions apt to allow a fiscal slippage, says RBI governor Shaktikanta Das
(Source: Shritama Bose, Business Standard, December 19, 2019)
Reserve Bank of India governor Shaktikanta Das cites escape clause suggested by NK
Singh panel on FRBM.
The prevailing economic conditions were apt for the Centre to invoke the escape clause in
the Fiscal Responsibility and Budget Management (FRBM) Act that tolerates a deviation
from the fiscal target of up to half a percent of GDP a year under exceptional
circumstances, Reserve Bank of India governor Shaktikanta Das told FE in an interview
on Wednesday.
Speaking to reporters later in the day in
Delhi, a senior government functionary
seemed to concur with the governor as he
said it was more critical to focus on growth
at this juncture than to strictly and
unfailingly follow the laid-down fiscal
glide path. “We will see how much space
we will have within the FRBM limit for a
fiscal slippage,” he said, alluding to the
FY21 Budget and on condition of anonymity.
The extent of fiscal expansion such forbearance will allow is not immediately clear, as the
government has not strictly followed the glide path laid down by the NK Singh committee,
which mooted the escape clause, in early 2017.
If one goes by the latest (2018) revision of the FRBM targets, the Centre’s fiscal deficit
must shrink to 3% in FY21 and slippage of 50 bps would mean deficit of 3.5% for the year.
But adherence to the panel’s glide path would have reduced the target to 2.8% in FY21;
the slippage would not have allowed the deficit to widen beyond 3.3% in the year. Of
course, if off-budget financing is included, even the deficits reported by the Centre in
recent years would appear to be underestimations.
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8 CITI-NEWS LETTER
Given the sharp economic slowdown, the demand for counter-cyclical fiscal measures is
gaining traction. While industry bodies on Tuesday asked a resource-hungry government
to resort to a fiscal expansion of 50-75 bps to spend more on asset creation, especially
rural infrastructure, at least two state finance ministers on Wednesday told the Union
finance minister to let the fisc to expand to counter the economic slowdown. “The biggest
take home from Pre-Budget discussion of FMs is suggestion by Bihar
and Kerala to raise the fiscal deficit limit to 4%. It was agreed to (by) a large number of
states,” Kerala finance minister Thomas Isaac tweeted.
Das told FE, “What is important at this point of time is next year’s fiscal deficit number.
There it’s a policy call which the government has to take as to whether they will stick to
the glide path which has been spelt out earlier or whether they would like to invoke the
recommendations of the FRBM committee that in situations of stress, you can deviate up
to 0.5%”. He added,
“That’s a policy call which the government has to take and if you see today’s overall
economic numbers and other aspects, I think the conditions are quite appropriate for
invoking that particular clause in the FRBM Committee’s report. To what extent the
government will invoke it and whether they will invoke it is a call which the government
has to take.”
The circumstances cited by the Singh panel for use of the escape clause inter alia include
over-riding consideration of national security, acts of war, collapse of agriculture severely
affecting farm output and incomes, structural reforms in the economy with unanticipated
fiscal implications and decline in real output growth of a quarter by at least 3 pps below
its average of the previous four quarters. Given that despite the sharp slide in GDP growth,
the latest quarterly GDP expansion rate of 4.5% (Q2) was only 1.6 pps lower than the
average of the previous four quarters, at least that definite condition has not been met
really. The condition of ‘structural reforms’ and farm income leave sufficient room for
discretion, though.
Responding to concerns that cuts in the repo rate have not translated into softer yields on
the benchmark government bond, Das said movements in the benchmark are the result
of a variety of factors. “One is liquidity, one is the market perception of the fiscal outlook
and then the market expectation that there will be a rate cut happening or not happening.
It’s also about the market’s assessment of movement in crude prices,” he observed.
On the RBI revising growth projections several times this year, Das acknowledged that
the central bank was constantly working to fine-tune its forecasting mechanisms. “This
year has been a completely unusual one. Nobody had really expected the sudden slide that
has happened,” Das explained, adding, “When we had said 6.1% in October, we had a
range. Internally, there was one body of opinion within RBI that it could be lower. The
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9 CITI-NEWS LETTER
broader consensus was that 6.1% was more likely and so we went with that. We are looking
at improving our growth-forecasting mechanisms.” The RBI has revised its GDP forecasts
for 2019-20 five times since February 2019 to 5% from 7.4%.
The governor observed that the fact that the government has so far not announced any
additional borrowings suggests that collections from small savings would be higher than
originally projected. If there was any shortfall as a result of below-par GST collections and
the corporate tax cut, it would be reflected in the advance tax payments when the numbers
come out for the December payments. “Of course, on disinvestment the government
appears to be going more aggressively to fill up the gap to the extent possible,” he said.
The NK Singh panel had suggested a ceiling for general government debt (both the Centre
and states) of 60% of GDP by 2022-23. And within this overall limit, a ceiling of 40%
should be adopted for the Centre, and 20% for the states. These were the
recommendations that the government has expressly accepted.
Home
Some states pitch for relaxation in fiscal deficit target to 4% to
boost consumption
(Source: Financial Express, December 19, 2019)
Faced with a sharp slowdown in economic growth and tax revenues, many states,
including Kerala and Bihar, on Wednesday asked the Centre to relax the prudential fiscal
deficit limit from 3% to 4% of GDP.
Faced with a sharp slowdown in economic growth and tax revenues, many states,
including Kerala and Bihar, on Wednesday asked the Centre to relax the prudential fiscal
deficit limit from 3% to 4% of GDP.
“The biggest take home from pre-Budget discussion of FMs is suggestion by Bihar and
Kerala to raise the fiscal deficit limit to 4%. It was agreed to by a large number of states.
In the current year, real expenditure of states will decline — a crazy macro outcome in
time of recession,” Kerala finance minister Thomas Isaac tweeted after the meeting with
Union finance minister Nirmala Sitharaman.
In another tweet, Isaac said: “Cutting across political divide State FMs demand raising
fiscal deficit, larger central allocation for programs Ayushman Bharat, social pensions and
MGNREGS, support to farmers, interest subvention to SHGs and streamlining of central
devolution to avoid ways and means crisis.”
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10 CITI-NEWS LETTER
According to the 14th Finance Commission report, states could avail an additional fiscal
deficit of 0.5% if states’ debt-GSDP ratio is less than or equal to 25% in the preceding year
and interest payment/revenue receipts (IP/RR) is less than or equal to 10% in the
preceding year.
If the above norms are to be applied, not many states would be eligible for the relaxation
as many as 20 states have estimated to have debt-GSDP ratio of over 25% in FY20 while
13 states have estimated IP/RR ratio of more than 10%. Both Kerala and Bihar have debt-
GSDP ratio of over 30%. While Bihar’s IP/RR ratio was below 10%, it was 15.6% for
Kerala.
A senior central government official said it was critical to focus on growth first than
maintaining fiscal prudence. “We will see how much space we have within FRBM limits
for fiscal slippage,” the official said.
Constrained by a big dip in tax revenue growth, state governments curbed their capital
expenditure in the first half of the current financial year, a move that could foil the
Centre’s bid to aggressively deploy public capex to partly compensate for the delay in the
revival of the private investment cycle. Tax revenue growth of the 17 states reviewed by
FE was 2.4% in H1FY20, compared with 13.8% a year ago.
Delhi’s deputy chief minister and finance minister Manish Sisodia raised the issue of
stagnation of share in central taxes for union territories with legislature since 2001-02.
“The government of NCT of Delhi is only getting grants in lieu of share in central taxes
and that too has been kept stagnant at Rs. 325 crore since 2001-02 while all other states
get an enhanced share in central taxes every year,” he said in his submission to
Sitharaman.
West Bengal’s finance minister Amit Mitra said budgetary resources amounting to Rs.
7,300 crore for cyclone have not reached the state. He also said social expenditure needs
to increase through budgetary provisions, especially at a time when “stagflation is
knocking at our doors”.
Further, he said that this has never happened in the history of India and we are very
concerned that the next budget may not address it.
Home
MSP hike hits exports, only 600,000 bales shipped so far
(Source: Kavita Desai, Cogenics, December 18, 2019)
India's cotton exports have slowed down in the current marketing year that began on Oct
1 due to higher domestic prices following a hike in the minimum support price and in view
of the depressed global prices, market experts said.
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11 CITI-NEWS LETTER
The ongoing procurement by state-owned Cotton Corp of India lifted the price floor to
around 38,500 rupees a candy (1 candy = 356 kg) or 74 cents a pound, while global prices
are hovering around 72 cents, making exports largely unviable barring some grades of
cotton.
The Number Is Just About 50-60% Of The Normal Export Contracts This Time Than In
The Past Few Years.
So far only 600,000-700,000 bales (1 bale = 170 kg) have been shipped out, and the total
export contracts are yet to hit the 1-mln-bale mark, said Manish Daga of Cotton Guru. The
number is just about 50-60% of the normal export contracts this time than in the past few
years.
These export contracts were struck at 73-74 cents per pound, of which 75% were from
Bangladesh, and the rest from China and Vietnam.
Government procurement may gain pace later this month when good quality cotton crop
enter the markets. This could tighten prices further and halt exports, unless global prices
recover and make exports competitive, trade officials said.
"Cotton exports are not that viable as Indian cotton is being offered at 74 cents a pound,
around 2 cents higher compared with the global market," said Dharmendra Jain, director
of Ahmedabad-based DP Cotton.
The Cotton Association of India has pegged annual exports at 4.2 mln bales, while the
Cotton Advisory Board and trade officials have estimated the exports at around 5.0 mln
bales. The association has estimated exports until November at 500,000 bales.
Cotton exports are also lower due to poor quality in the wake of excessive and prolonged
rains, and trade ban between India and Pakistan, said a prominent Mumbai-based
exporter.
Abnormally high rainfall in October in cotton growing states led to germination and
waterlogging, which affected the yields and quality of the standing crop.
The Cotton Association of India has projected the country's production at 35.45 mln bales
in the current season, up 13.6% from the previous year.
Home
Demand slowdown, costly raw materials to hit local spinners: Icra survey
(Source: Financial Express, December 18, 2019)
Some of the key reasons include weak export demand amid increasing competition from
other producing countries and sluggishness in domestic consumption levels.
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12 CITI-NEWS LETTER
Domestic spinners’ performance in the first half of current fiscal (H1 FY2020) is expected
to weigh on full year’s performance. Despite industry’s gradual recovery, most spinners
expect revenues to fall by more than 5% and operating profitability to contract by around
3% for FY2020, said an Icra survey on Tuesday.
Though the industry is gradually recovering from the slowdown, the domestic spinners
expect the overall FY2020 performance will be weighed down by the tepid volumes and
weak earnings seen in the first half of the fiscal.
Some of the key reasons include weak export demand amid increasing competition from
other producing countries and sluggishness in domestic consumption levels. Higher
domestic raw material costs, with Indian cotton prices trading at a premium to
international cotton also contributed to the loss of export competitiveness. Buoyed by the
improvement in exports witnessed since October 2019, the survey indicates that the
industry pins its hopes on a continued gradual recovery in cotton yarn exports over the
coming quarters, aided by the softening of domestic cotton prices, Icra said.
The other survey findings include: the likelihood of cotton prices to remain below the
minimum support price level till March 2020 on expectations of a bumper crop
production in CY20; yarn prices and contribution levels to continue to tread lower than
the FY2019 levels even though yarn prices have started moving up; increase in working
capital debt levels by 15% y-o-y, reflecting the inventory build-up amid shortfall in
earnings; and limited capacity additions are envisaged over the next 12 months.
While most industry participants expect operating profitability to contract by around 300
bps in the current fiscal, some respondents anticipate higher correction reflective of the
difficult times being faced by the sector. The fall so far has been steeper for companies
which had stocked and carried over higher-cost cotton (at around Rs. 130/kg) into the
current fiscal.
While the domestic cotton prices have reduced from July 2019, the decline in yarn prices
has been sharper, resulting in contribution levels adjusted for cotton stock held falling to
around Rs. 75/kg in Q2 FY2020. Even though yarn realisations have improved in recent
weeks, the respondents do not expect any major uptick in yarn prices, given the low cotton
prices witnessed as the industry expects the crop output in the current season to be
healthy at more than 375 lakh bales.
According to the survey, cotton and yarn prices are likely to remain range-bound at
around Rs. 110-115/kg and Rs. 195-205/kg, respectively in H2 FY2020. As a result, the
spinners expect average contribution levels for the fiscal to be at Rs. 80/kg (with
contribution likely to improve to around Rs. 82-85/kg in H2 FY2020 as against FY2019
levels of Rs. 95/kg).
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13 CITI-NEWS LETTER
The survey findings also highlight that the working-capital debt levels of spinners have
increased, because of a pile-up in yarn stocks and some elongation in the receivables cycle
owing to the tepid demand conditions. Respondents expect average utilisation of fund-
based limits to be at around 90% in FY2020, higher from the 75% levels seen in the last
fiscal. On the back of these adverse developments, coupled with average capacity
utilisation levels in the industry falling by around 500 bps to 82% in H1 FY2020, a vast
majority of the respondents have indicated that no capacity expansion is being planned
over the next 12 months.
Jayanta Roy, senior vice-president and group head, corporate sector ratings, Icra, said:
“The Indian cotton spinning industry’s performance has been severely constrained in the
current fiscal, being adversely impacted by the demand slowdown, unfavourable raw
material prices and rising funding requirements. While export volumes have seen some
uptick in recent months, as against the sharp degrowth witnessed between May-
September 2019, they remain lower than the levels seen in the preceding fiscal.”
Home
BofA: Govt should push for fiscal expansion, growth bottoming up
(Source: Anup Roy, Business Standard, December 18, 2019)
The reason for the current slowdown is high real rates in the past, and delay in
recapitalisation of banks, among others
The ailing economy needs a joint effort by the government and the Reserve Bank of
India (RBI) to engage in countercyclical fiscal and monetary measures, even at the risk of
pushing fiscal deficit to 3.8 per cent of gross domestic product (GDP), according to
Indranil Sengupta, chief economist, BofA Securities. The government has set a fiscal
deficit target of 3.3 per cent for FY20.
The deficit can come down to 3.5 per cent of GDP in 2020-21, but the growth slowdown,
which seemed to have bottomed out in November and December, needs some strong
measures. Such countercyclical measures would hardly be inflationary in the absence of
a robust private sector investment drive. “When there is no private sector, why would
higher expenditure by the government lead to inflation?” said Sengupta in a media
interaction while discussing outlook for 2020.
Even if there is some inflation, it is imperative that the government addresses the growth
question first rather than thinking about future inflation, he said.
The reason for the current slowdown is high real rates in the past, and delay in
recapitalisation of banks, among others. Relative to the core wholesale price index (WPI)
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14 CITI-NEWS LETTER
based inflation, which measures the pricing power of companies, interest rates in the
economy have remained too high, Sengupta said. The concept of consumer price index
(CPI) based inflation doesn’t capture this trend as much as WPI, as the CPI is used for
cost of living, whereas WPI reflects the fall in commodity prices and ultimately the pricing
power of the companies. And so, even as the real interest rate seems negative in CPI terms,
in WPI terms, it continues to remain high.
Home
Government approves Rs 436 crore outlay for skilling 4 lakh persons
(Source: Economic Times, December 18, 2019)
The government on Wednesday announced Rs 436 crore outlay for skilling 4 lakh
professionals in futuristic areas such as artificial intelligence, blockchain, and
cybersecurity over the next three years. The ''Future Skills PRIME'' programme will be
jointly rolled out by the information technology ministry and industry body Nasscom, and
will seek to position the initiative as India stack for digital talent.
India is upping the ante in digital skilling at a time when it is poised to see over 90 million
people joining the overall workforce by 2030. Indian IT giants have been investing over
Rs 1,000 crore per year to address the reskilling and upskilling requirements of their
employees, given the magnitude of the challenge. "The programme will increase
employability. It will add digital value to our talent pool," Information Technology
Minister Ravi Shankar Prasad told reporters. He said the government has approved Rs
436 crore outlay for Future Skills PRIME. In the last phase, two lakh IT employees were
trained under skilling program, and the new initiative will expand the scope beyond IT
professionals to others keen to upskill themselves in areas like AI, Cyber security,
blockchain.
Home
Tripura gets its first SEZ
(Source: Press Information Bureau, December 18, 2019)
The Ministry of Commerce and Industry has notified the setting up of the first ever Special
Economic Zone (SEZ) in Tripura on December 16, 2019.
The SEZ is being set-up at Paschim Jalefa, Sabroom, South Tripura District, which is 130
km away from Agartala. It will be a Sector Specific Economic Zone for Agro-Based Food
Processing.
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15 CITI-NEWS LETTER
The estimated investment in the project will be around 1550 Crore. The developer of the
SEZ will be Tripura Industrial Development Corporation (TIDC) Ltd. The SEZ is
estimated to generate 12,000 skilled jobs. Rubber based industries, textile and Apparel
Industries, bamboo and Agri-food Processing Industries will be set-up in the SEZ.
Setting up of the SEZ in Sabroom will open up new avenues to attract private investment
considering the proximity of the Chittagong Port and construction of the bridge across
Feni River in South Tripura which is underway.
After it is set up, 100 percent Income Tax exemption will be provided on export income
for SEZ units under Section 10AA of the Income Tax Act for the first 5 years. Also 50
percent exemption will be provided for the next 5 years and 50 percent of the ploughed
back export profit for another 5 years.
Home
Three vital ingredients for path-breaking innovation
(Source: Nisha Holla & Taslimarif Saiyed, Financial Express, December 19, 2019)
Partnerships with leading global institutions in fundamental and application-based
research will ensure our ideas and implementation strategies are globally-relevant.
Deep science innovation is the art of drawing fundamental scientific breakthroughs up
the value chain into useful products and processes. The most successful innovations are
the ones that quietly integrate into the very fabric of our daily lives. Prime examples are
cell phones, cars, antibiotics, pacemakers and electricity; all of which have irreversibly
transformed lives. So much so that one day, a generation wakes up and cannot imagine
life was any other way.
Countries around the world have built extensive institutional machinery to harness the
power of innovation in building and retaining socio-economic and political power. A
leading example is the US, which soared after its scientists discovered how to weaponise
nuclear energy and pioneer mass manufacturing. It remains a top economy today, fuelled
by the world-class innovation of its universities and research laboratories. On the other
hand, economies impoverished at the end of the Second World War, such as Japan and
Germany, also bounced back quickly by focusing on innovation-driven growth in high-
velocity domains like automobile manufacturing and energy. China’s growth accelerated
when it converged on capturing the semiconductor fabrication market in the 1980s, and
it now dominates quantum computing, among other deep innovation verticals.
India’s strengths in science and technology are renowned, as is our tenacity in scientific
development, exemplified by the bold progress of our space and nuclear energy
programmes. However, as a nation, we are progressing beyond distinction in individual
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16 CITI-NEWS LETTER
programmes and towards collective excellence in innovation that reflects our bold
economic vision. We need a nationwide mandate and structure to fuel sustained
innovation efforts.
Several departments under the ministry of science and technology – biotechnology, for
instance – have forged strong foundations to foster early-stage innovation. The NITI
Aayog is laying out comprehensive policy initiatives in exponential technologies like
artificial intelligence. There is the concept of a National Research Foundation to
consolidate research efforts. A picture is starting to emerge from the jigsaw puzzle.
The next step is to establish a seamless value chain for idea-to-market technology
development, much like the US and China have. Three ingredients are paramount – a
framework that facilitates generation and curation of ideas, deep-tech investment
strategies, and a bold vision with a clear view of how to realise growth in every focus
sector.
Continuous generation and curation of ideas
A free and continuous flow of ideas is the cornerstone of any innovative society. A holistic
sector-agnostic framework to support idea-generation entails the following:
Building the infrastructure in the form of world-class research labs with state-of-
the-art equipment in universities and fundamental research institutions. An
immediate requirement is to enhance the capabilities and capacity of existing labs
and innovation hubs with proven track records.
Curation of ideas must be multifocal by continually taking it up the idea-to-market
value chain. Many entrepreneurs are developing solutions to India’s considerable
societal challenges. Regular interactions with the necessary stakeholders will
facilitate swifter implementation of these ideas and solutions.
Policymakers must systematically study India’s needs and incentivise innovators
to solve these.
Partnerships with leading global institutions in fundamental and application-
based research will ensure that our ideas and implementation strategies are
globally-relevant.
Incentivise young talent to continue with research and specialisation by ensuring
they are economically taken care of through fellowships and grants. This will help
retain talent by disincentivising them from joining a job just for a salary, or moving
abroad in search of better opportunities.
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17 CITI-NEWS LETTER
Intervention during the educational years to nurture talent in schools and colleges
is essential. Widespread access to tinkering labs, world-class labs at universities,
and other amenities are required.
Deep-tech investment strategies
Deep science innovation often constitutes a substantial amount of initial research,
protracted testing and validation cycles, and an extensive generation of intellectual
property (IP) that contributes to the embedded value of the technology. They have long-
drawn runways, often requiring 10-15 years to actualise real returns. For this, we need
patient capital from both private and government stakeholders.
Essential points here are:
Government focus on innovation is mostly at the early-stage now, like grants for
initial research and product testing. Deep science innovation needs robust follow-
on funding to go beyond early development and thrive in the market.
Infrastructure requirements in deep science innovation are higher than in tech and
other internet-based solutions. They need support with scale-up test beds like
pilots and production facilities, testing and quality labs, pollution clearances,
industrial design and productisation, and decoding regulatory pathways.
Create focused funding avenues for different deep science innovation entities like
scientist-entrepreneurs, university research labs, innovation hubs, and India’s top
research institutions like ISRO, TIFR and CSIR. Dedicated investment
opportunities to support India’s top science talent will turbocharge the ecosystem.
Tax benefits and incentives for private Indian investors to invest for the long term
are necessary to secure large pools of capital. Innovation-driven nations like Israel,
the US and others have built lasting ecosystems with such investor-friendly
strategies.
Long-term vision
India has already set an ambitious goal of $5-trillion GDP by 2025, and $10 trillion by
2030. Every growing nation needs an ambitious goal, so the interests of all the
stakeholders are aligned. We then break this goal down backwards to understand what it
means for timelines, implementation and achievability.
Specifically, we need to:
Address domestic challenges, identify critical verticals that can accelerate India’s
socio-economic growth, and create long-term investment strategies for each. These
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18 CITI-NEWS LETTER
include defence, healthcare, water-treatment technologies, energy, artificial
intelligence and others.
Within the broader policy goals, technology development needs special attention.
For example, India has already set an exceptional zero-emission target for 2030.
Now we back-calculate what that means for investment in renewables, electric
vehicles and maglev technology. We identify which of these we already have a firm
footing in, and which we need to accelerate. This focus will catapult India into a
leadership role, especially around global issues faced by emerging economies.
To ensure ongoing progress, corporate frameworks to track key performance
indicators (KPIs) down to the last detail are useful. We can track every goal, target
and organisation in this manner.
The idea of a bold vision is that Indian society and quality of life will have advanced
dramatically in 20-30 years. Globally-accepted markers like the Innovation Index
are useful to track these disruptive changes.
Since economic liberalisation, India has slowly but steadily metamorphosed into an
ambitious tribe on track to becoming a superpower. There is an infectious spirit of
innovation in the air. To harness every bit of this spirit, we must recognise that it takes a
long time to see the results of the investment of time and money in innovation; we cannot
afford to waste any of it. By establishing frameworks around these three vital ingredients
and implementing them systematically, we have a shot at assembling an innovation
powerhouse that can drive India’s growth for decades. We must get this right.
Holla is technology fellow, and Saiyed is CEO & director, C-CAMP (Centre for Cellular and
Molecular Platforms)
Home
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19 CITI-NEWS LETTER
GLOBAL
Euric calls for ambitious strategy on textiles
(Source: Recycling Magazine, December 18, 2019)
Euric strongly welcomes the European Commission’s decision to make textiles, apparel
and fabrics a priority product category within the Circular Economy 2.0.
The European textiles re-use and recycling industry is key to accelerate the transition to
a circular economy in textiles. It gives them a second life either through second-hand
markets or, to a smaller extent, through material recovery. Textiles re-use and recycling
saves resources, emissions and energy. In addition, it is a labour-intensive and local
industry, be it at collection or processing stages, relying on a wide variety of skilled
professionals ranging from social workers, to experts in materials’ processing and
marketing of second-hand textiles.
Euric’s newly constituted textiles’ re-use and recycling Branch calls for ambitious
measures to render textiles circular throughout the value chain (from design to end-of-
life preparation for re-use or recycling). The obligation to separately collect textiles by
2025 will mechanically increase the supply of used textiles, shoes and accessories without
addressing current issues linked to poor circular textiles’ design and low-quality materials
directly impacting preparing for re-use and recycling of used textiles. Hence, the need to
complement the separate collection obligation by equally ambitious measures aiming at
pulling the demand for re-use and for material recovery of post-consumer textiles, in line
with the waste hierarchy. In doing so, Euric textiles looks forward to work with all
stakeholders, in particular the textiles’ industry to achieve such a goal.
1. Specificities of textiles at production and end-of-life stages As outlined by the
report recently released by the European Environment Agency1, the vast majority
of textiles including clothing, footwear and household textiles (carpets, curtains,
bedlinen, towels, etc.) marketed in Europe are imported from non-EU countries
while domestic production only accounts for 7.4 kg/person.
The raw materials used to manufacture textiles are mostly synthetic (60%), with polyester
being the most widely used synthetic fibre. Cotton is the most widely used organic fibre
but accounts only for 37% of the fibres used. Textiles are the fourth largest contributor to
resource’s use and greenhouse gas emissions accounting respectively for the share of
textiles consumed in the EU-28 to 1321kg/person and 654kg CO2-eq/person in 2017.
The textiles re-use and recycling industry collects, sorts either for re-use purposes or for
material recovery discarded clothing, apparels, shoes and accessories. Given its activities,
it works closely with both municipalities and charity organisations locally and with end-
markets which are both local and global. The main specificity of that industry, when
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20 CITI-NEWS LETTER
compared with other waste streams, is that the vast majority of the value is generated via
preparation for re-use to meet the high demand for second-hand textiles, which is the
highest treatment option in the waste hierarchy, after waste prevention. Approximately
70% of the world population purchases second-hand clothing.
Taking the example of Germany, which represents the largest European market with on
average 1 million tons of used textiles collected per year, 60% are directed to the re-use
market (second-hand market), 20% are used as wipers and only 15% are recycled, with
5% going for disposal . Similar orders of magnitudes are observed in the
BENELUX countries, France, Switzerland or some Eastern countries, with preparing for
re-use remaining in all instances the largest treatment option.
To maximise the value of used textiles, preparation for re-use at industrial scale requires
proper handling at collection and processing stages with dedicated textiles collection and
skilled workers trained for a professional fine- grained manual grading process ensuring
the highest achievable level of reuse. It is at the processing stage that the suitability of
used textiles for re-use (second hand textiles market), material recovery or disposal is
decided for every single item, through manual sorting on garment level assisted by
machinery to speed up the logistical part of the process.
In terms of end-markets, depending on Europe’s geographic area, overall 70 to 75% of
used textiles prepared for re- use are exported outside the EU while a remaining 20% to
25% is marketed domestically. As a result, in the absence of stronger end-markets in
Europe, international trade is vital to Europe’s textiles re-use and recycling industry.
2. Issues affecting the post-consumer textiles reuse and recycling industry
The shift towards synthetic fibres is linked to the development of the fast fashion industry.
It directly impacts the quality and the end-of-life recyclability, hence the value of textiles
reaching end-of-life, especially if blended with other synthetic or organic fibres.
Fast-fashion has also brought as a megatrend quicker turnaround of new styles, increased
number of collections offered per year, and – often – lower prices . In other words, it is
getting more and more complicated and troublesome for the textiles re-use and recycling
industry to actually re-use or recycle those clothes since product quality is declining as
well as consumers’ demand responsive to fast changing fashion trends.
In terms of end-markets, a number of barriers, beside the ones mostly rooted in the design
of textiles, affect current day-to-day textiles re-use and recycling activities and long-terms
investments:
Cheap low-quality textiles competing with second-hand textiles markets in Europe
and in developing countries;
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21 CITI-NEWS LETTER
Lack of textiles’ producer responsibility to contribute to the costs of collection and
treatment of clothing placed on the market;
Unilateral trade restrictions impacting second-hand textiles in Asian or African
countries;
Lack of business case for further investments in material recovery of textiles unfit
for re-use;
Failure of the market to internalise the social, environmental and economic
benefits of textiles’ re-use and recycling which curbs long-term and large-scale
investments needed;
National policies which further affect the ability of the textiles re-use and recycling
industry to compete on a level playing field.
To turn these challenges into opportunities, Euric strongly recommends the following
measures as part of an EU Textiles Strategy:
1. Market-based and fiscal incentives for textiles’ re-use and recycling activities;
2. Extended producer responsibility (EPR) for new textiles with eco-modulation of
fees rewarding textiles’ re-usability, recyclability and recycled content.
Additionally, fair and transparent financial contributions should be paid by the
producer to cover the cost of the treatment for used textiles, in accordance with the
minimum requirements set by the Waste Framework Directive. EPR fees should
be directed to the textiles re-use and recycling industry;
3. End-of-waste criteria for prepared for re-use textiles to create a stronger internal
market for second-hand textiles;
4. Eco-design criteria for textiles incentivising the use of mono-material fibres in
textiles, apparel and fabrics;
5. Recycled content targets for textiles to pull the demand for quality recycled fibres,
boost end-markets for separately collected used textiles and invest to scale up
textiles’ material recovery;
6. Proper labelling of sustainable textiles and apparels to empower consumers’
choices;
7. Alleviate trade and fiscal barriers, be it within Europe or imposed by third
countries, affecting second-hand textiles markets;
8. Public awareness campaigns to highlight the importance of textiles’ re-use and
recycling;
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22 CITI-NEWS LETTER
9. Fair competition between all actors be them private companies, charities or
publicly owned companies;
10. Funding opportunities in research and development for the various stages of
textiles’ re-use and recycling and in projects fostering partnerships across the value
chain to foster textiles’ circularity.
Home
Indonesia: Outlook 2020: Textiles: Working together to revitalize textile
industry
(Source: Basrie Kamba, Director of Asia Pacific Rayon, Jakarta Post, December 19, 2019)
With Idul Fitri in May 2020 on the horizon, businesses in the Indonesian textile and
textile products (TPT) industry should be anticipating a busy start to the year to meet the
expected growth in demand ahead of the biggest annual Muslim festive period.
But the prolonged and complex pressures faced by the labor and capital intensive TPT
industry may result in a different story this year. The industry — centered mostly in the
densely populated provinces of West and East Java — has seen an increasing number of
business closures.
Expected growth in unemployment is one serious short-term impact. But what will
happen to this distressed industry, which contributes 1.3 percent of the country’s gross
domestic product, in the longer term? Why is Indonesia — listed as one of the world’s top
10 textile and apparel producers — facing such challenges in its TPT sector, despite recent
positive indicators? Exports in 2019 are estimated to be worth about US$15 billion, up
from $13.2 billion the previous year.
How is Vietnam, a relative newcomer to the sector, forging ahead with its exports
expected to be worth $40 billion in the same period? Why is the Indonesian textile market
flooded with cheap garments, curtains, scarves or even bed sheets from other countries?
What makes our production costs so high? How come only one-third of the 3.1-million-
ton national capacity is utilized?
Concerned with this situation, President Joko “Jokowi” Widodo has over the last two
months held two meetings, in September and November, with the two main TPT industry
associations — the Indonesian Textile Association (API) and the Association of
Indonesian Filament Yarn and Fiber Manufacturers (APSyFI). His questions were
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23 CITI-NEWS LETTER
straightforward: What are the critical challenges faced by the industry? What are the
recommendations? What and how can the government help?
Some actions have been quickly executed by his ministers as a follow-up. After a recent
inspection at a bonded logistics center (PLB), Finance Minister Sri Mulyani Indrawati
found irregular practices at the site and revoked dozens of licenses of TPT importers.
These irregular practices at PLBs are considered to be among the main contributing
factors causing a flood of imported cheap materials into the domestic market.
The finance minister also issued temporary safeguard measures on several TPT
commodities. Related ministries and agencies, including the Investment Coordinating
Board (BKPM), are expected to follow suit with longer-term strategic plans to rescue the
industry.
Ups and downs
As a key textile market and exporter, the Indonesian TPT industry has had its share of
turbulence over the years. During the honeymoon period in the 1980s, the industry
enjoyed strong support from the government, to a point where then-president Soeharto
was able to inaugurate 192 TPT factories at a single ceremony in 1982.
But the onset of the 1997 financial crisis, followed by the 1998 Reformasi, saw the industry
enter one of its darkest periods. Debt, decentralization, stringent regulations, numerous
licenses and labor costs hindered the development of the sector, limited investment and,
consequently, lowered productivity.
Business owners gradually shifted their investments to garments, or other appealing
sectors like property. While other TPT producers, like China, Vietnam, Bangladesh and
India, aggressively reformed, Indonesia’s TPT sector stagnated and lost its competitive
edge. A few years later, the sector was further hit with an influx of goods from overseas
following the implementation of the ASEAN-China Free Trade Agreement in early 2010.
Now, with the current global economy slowing down, the United States-China trade war,
aging and inefficient textile machines, a growing number of regulations, minimal
investment, high electricity prices and labor issues have all become even bigger
contributing factors behind the sluggish development of the textile sector.
Opportunities and priorities
The growing world population, together with rapid urbanization, rising income levels and
increasing numbers of retail outlets and online markets in developing countries, is
expected to drive the global textile market up to $1.23 trillion in 2025 from about $860
billion in 2019. Meanwhile, the Indonesian government has set a target to increase
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24 CITI-NEWS LETTER
Indonesia’s share of the global TPT market from its current level below 2 percent to 5
percent, with a total value of $75 billion, in 2030.
The good news is domestic demand is still promising. According to API, Indonesia’s
revenue from the apparel market is to grow annually by a compound annual growth rate
of 5.4 percent in 2019 to 2023. In 2019, it is expected to reach $18.1 billion. Learning from
the success of other textile producing countries, Indonesia under the current
administration has a great chance to survive and win. But timing is paramount, as some
experts have described the current status as a do-or-die situation.
Among the top priorities of the President and his Cabinet, in terms of revitalizing the TPT
sector, are the establishment of textile parks, simplification of regulations and licenses,
curtailing the growing number of illegal imported TPT products, microcredit schemes for
small and medium-sized textile businesses, addressing the alleged misuse of PLBs, the
issuance of inland free trade agreements and controlling imports of raw materials.
Actions for Businesses
Businesses, together with industry experts, have responded with a range of
recommendations, including control over imports of raw materials, subsidized electricity
prices, the presence of the government’s TPT-focused agency and the establishment of
more textile research and education facilities, as part of a massive overhaul program to
transform the industry.
In terms of solutions, there are some broad areas that businesses and the government can
focus on. First, working together with the government is critical in order to tackle the
issues head on. The industry also needs to form strategic collaborations with brands,
retailers, fashion designers, fashion editors and design school students.
Second, the domestic market should be protected to allow the industry to revamp and
expand. Opportunities to streamline regulations to support growing local market demand
and rising exports should be considered. Once Indonesia signs the Comprehensive
Economic Partnership Agreement with the European Union, which is anticipated in early
2020, exports are expected to rise significantly.
Third, the government needs to consider how to best optimize upstream capability.
Textiles, together with four other industries (food and beverages, electronics,
petrochemicals and automotive), has been listed by President Jokowi as one of the
government’s top industry priorities in the Making Indonesia 4.0 road map.
But a high dependency on imported raw materials could continue to weaken Indonesia’s
position in the global TPT industry.
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25 CITI-NEWS LETTER
The risks of this kind of dependency were evident this year in India, another major global
TPT producer. Over 2019, India recorded a massive 200 percent increase in its viscose
staple fiber (VSF) yarn imports, forcing domestic yarn manufacturers in India to lower
prices. This in turn led to financial difficulties for local producers. The national textile
association sought to address the issue by requesting an increase of import duty on VSF
yarn from 5 percent to at least 10 percent.
Fourth, businesses and the government should consider global eco-conscious fashion
trends. The United Nations Alliance for Sustainable Fashion, established in March 2019,
is targeting the private sector, UN member states, NGOs and other relevant stakeholders
to create a unified movement for a more sustainable fashion industry in line with
sustainable practices and ensuring traceability, sustainable sourcing, responsible
manufacturing and labor rights.
Part of the solution almost certainly lies in viscose rayon. Less well known than other
alternative fibers like cotton, the global production of viscose rayon rose from 2 million
tons in 1990 to 5.6 million tons in 2018, with an expected increase to 8.6 million tons in
2020. The forecast growth is estimated at 4.27 percent per annum from 2019 to 2024.
Indonesia is currently one of the world's largest producers of rayon with a total capacity
of 800,000 tons per year. With domestic consumption ranging between 350,000 and
400,000 tons per year, the production of viscose rayon has abundant potential to boost
local demand and reduce imports.
In conclusion, 2020 may be another challenging period for Indonesia’s TPT industry.
Immediate and far-reaching solutions and partnerships are critical to support the
government in addressing these issues, but viscose rayon certainly represents a
significant opportunity for progress. One thing is for sure: The status quo is not an option.
Home
Vietnam keen to improve trade, investment cooperation with Pakistan
(Source: Dunya News, December 18, 2019)
Deputy Director General of Vietnam’s Ministry of Industry & Trade Do Quoc Hung, who
led a high level Vietnamese delegation to Karachi Chamber, said that Vietnam’s global
trade turnover was more than US$500 billion this year, of which Pakistan-Vietnam trade
volume was around US$600 million only which was way too low against the expectations
and potentials.
“This meager trade volume can certainly be improved as both countries have many
advantages and potentials while Vietnamese government is keen to improve trade and
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26 CITI-NEWS LETTER
investment cooperation with Pakistan”, he added while speaking at a Business-to-
Business meeting between Vietnamese delegates and KCCI members.
Commercial Counselor of Vietnam Nguyen Hong Tien, Acting President KCCI Arshad
Islam, Vice President KCCI Shahid Ismail, Chairman of KCCI’s Diplomatic Missions &
Embassies Liaison Subcommittee Shamoon Zaki, Chairman Fairs, Exhibitions & Trade
Delegations Subcommittee Haroon Qaiser, Managing Committee members and others
were also present at the meeting.
Highlighting some of the advantages and potential for developing trade and investment
cooperation, Deputy DG of Vietnam’s Ministry of Industry & Trade said, “Vietnam and
Pakistan have been enjoying very good political and friendly relations while the two
countries are huge markets as Vietnam’s population is roughly 100 million and Pakistan’s
population is double of Vietnam’s population hence there is a great demand for numerous
commodities on both sides.”
“Moreover, Pakistan’s business community can consider Vietnam as gateway to ASEAN
(Association of South East Asian Nations) region and can also benefit from the Free Trade
Agreements (FTAs) which have been signed by Vietnam with many countries around the
world”, he added.
He said, “As Vietnamese government is keen to develop trade and investment cooperation
with Pakistan, this trade delegation has been sent which comprises of manufacturers and
suppliers of spices, health supplement, herbal drinks, rice, wheat, coffee, animal feed,
frozen seafood, confectionery & beverage, biological products, agricultural products and
frozen seafood etc.”
Vietnamese Deputy DG was of the opinion that Karachi Chamber with a strong
membership base of 23,000 direct and more than 55,000 indirect members was the right
platform which can bridge and connect the business communities of the two countries.
He hoped that today’s Business-to-Business event organized by Karachi Chamber would
pave way and present good opportunity to Vietnamese companies to get connected with
Pakistan companies. He also requested Karachi Chamber to arrange a similar delegation
to Vietnam next year which will be fully assisted and facilitated by the Vietnamese
government.
Earlier, Acting President KCCI Arshad Islam, while commenting on bilateral trade
between Pakistan and Vietnam, pointed out that during 2018, Pakistan exported goods to
Vietnam worth $282.25 million while the imports from Vietnam stood at $412.37 million
which was way too low as compared to the potential. Hence, the business communities
will have to enhance linkages to improve the meager trade volume between the two
countries.
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27 CITI-NEWS LETTER
He was of the opinion that Pakistan needs to seek Vietnam s help in accessing economic
community of ASEAN for greater market share while Vietnamese investors can invest in
energy, electricity, textile material, vehicle component and agricultural goods processing
units.
Arshad Islam also stressed the need to exchange trade delegations to boost bilateral
engagement and market research among the business communities. Vietnam and
Pakistan should take part in each other s trade fairs and exhibitions.
He said that Vietnam has good expertise in producing hydropower and it could cooperate
with Pakistan in this field. Vietnamese investors should visit Pakistan to explore Joint
ventures (JVs) particularly in seafood sector by jointly setting up shrimp farming and
processing units, besides looking into the possibility of investing in China Pakistan
Economic Corridor (CPEC).
He further mentioned that the cost of Vietnamese visa on arrival was $190 for Pakistanis
where as it was just $10 for Indians. This is a glaring disparity which is limiting trade and
people interaction between the two countries. There is an utmost need to remove such
anomalies so that business relations between the two countries can realize their full
potential, he added.
Home
Vietnam textile sector orders hit by African competition
(Source: Fibre2Fashion, December 19, 2019)
Vietnamese textile firms are witnessing declining orders as buyers are moving to cheaper
developing countries, especially in Africa. Many businesses this year do not have enough
orders for 2020, with a few have reported a 20 per cent drop in orders from last year.
Many have not signed long-term contracts for products, but only monthly or quarterly
ones.
Normally, by the end of a year they would have enough orders for the whole of the
following year, according to Nguyen Van Thoi, chairman of TNG Investment and Trading
JSC, which makes garments.
An anonymous Vietnam Textile and Apparel Association (VITAS) official told a
Vietnamese newspaper that many orders have shifted to emerging countries in Africa,
while competition with textiles superpowers like China, India and Bangladesh is
becoming increasingly fierce.
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28 CITI-NEWS LETTER
Even China’s orders are being transferred to countries with preferential tariff rates such
as Bangladesh and Cambodia.
Even the fibre industry is facing increasing competition from foreign businesses and rivals
in countries such as India, Thailand and Indonesia, he added.
Experts had forecast at the beginning of the year that the US-China trade war and new
free trade agreements (FTAs) signed by Vietnam would help it increase textile exports,
but had done a U-turn by mid-year to say there would be a lack of orders, VITAS said.
This is due to a slowdown in the global economy, affecting consumer demand, and failure
by Vietnamese enterprises to adopt radical solutions to comply with FTAs’ rules of origin,
VITAS explained.
Some 70 per cent of the fabric used to produce garments in Vietnam is imported from
mainland China or Taiwan, VITAS chairman Vu Duc Giang said.
Other difficulties being faced by Vietnam’s textile industry include rising costs of raw
materials from China and lower prices demanded by foreign buyers.
Vietnam is losing its low labor cost edge over other countries even as its use of technology
in production remains limited, leading to reduced competitiveness, VITAS said.
Garment exports in the first 11 months of this year were up nearly 8 per cent year-on-year
to $30 billion, according to figures from the ministry of industry and trade.
Home
Kraig Biocraft readies for first recombinant spider silk
(Source: Fibre2Fashion, December 18, 2019)
Kraig Biocraft Laboratories is nearing completion of 2nd production cycle of recombinant
spider silk at its Vietnamese production factory. The company expects to begin shipping
the specialised silk cocoons by next week, which will be turned into first recombinant
spider silk yarn and once complete, will be sent to US for testing and delivery to
customers.
The company transferred production operations in October of this year to the Prodigy
Textiles factory, the company’s Vietnamese subsidiary. Over the last two months, the
company has been scaling this facility’s throughput, nearly tripling its skilled workforce
to support its rapidly growing operations.
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29 CITI-NEWS LETTER
The company’s COO, Jon Rice, is currently in Vietnam overseeing operations, assisting in
preparations for this first shipment, and guiding the implementation of additional
operational process controls. During this trip, Rice and Prodigy Textiles’ management are
also working with local government officials to assess and plan the allocation of additional
land and facilities to grow Prodigy’s operations.
“Our production team continues to deliver on the lofty expectations we have outlined for
them,” said Rice. “With production scale up now well underway and the first shipment
scheduled for delivery soon, Prodigy management and I are pressing forward with an even
greater vision of where we can take the company.”
Kraig Biocraft Laboratories is a leading developer of spider silk-based fibres.
Home
Starts cool, stays cool fabric technology at Heimtextil
(Source: Innovation in Textiles, December 18, 2019)
Swiss textile innovator HeiQ has added bio-based thermo-functional polymer products to
its HeiQ Smart Temp family for a full range of intelligent thermoregulation triggered by
body heat. The newly introduced products add dual-action cooling at contact to the
already successful dynamic evaporative cooling technology, the company reports.
“Launched in 2011, HeiQ Smart Temp was a pioneer in intelligent thermoregulation
technology for textiles. Continuous refinements of this product range have allowed HeiQ
to be the go-to solution provider as its technologies offer not only industry-leading
dynamic evaporative cooling performance, but also ease of application and a friendly
price point for brand partners,” HeiQ said in a statement today.
“The latest breakthrough with cool touch technology allows consumers to touch, feel and
understand the technology at point-of-sale, and ensures thermal comfort at all times by
providing the benefits of cool at contact and continuous evaporative cooling. It is
currently optimized for use on home textile products such as mattress ticking and bed
linens. All HeiQ Smart Temp products are Oeko-Tex Class 1-
4 conform, bluesign and USDA BioPreferred pending.
As the demand for thermo-functional polymer applications continues to grow, HeiQ
created HeiQ Iberia to focus on this product development. There are three new products
(two more in the pipeline) in the range that all provide instant cooling from a bio-based
thermo-functional polymer, and each product is optimized to perform on specific items
such as mattress ticking or bedding accessories.
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30 CITI-NEWS LETTER
By adding a new category of products to the range, HeiQ now has a broad range of
intelligent thermoregulation solutions for home textile market. HeiQ is launching these
products for home textiles with their partner Standard Fiber at Heimtextil Frankfurt (7-
10 January 2020).
“We have more and more business developing around temperature-regulating
technologies”, says Sandy Gray, CEO at Standard Fiber LLC. “To support our mission of
continuously introducing new technologies and innovations to our customers, we are
excited to work with HeiQ and present HeiQ Cool Touch technologies to our customers to
elevate and differentiate their products in the market”
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