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U.S. reviewing India’s eligibility; panel hearing on June 19
Chennai-based TCP Ltd, which produces inorganic chemicals, has called for the restoration of Generalised System of Preferences (GSP) benefits, which enables duty-free access to the U.S. market.
Nearly 3,500 Indian products from sectors such as chemicals and engineering get duty-free access to the U.S. market under the GSP, introduced in 1976.
The U.S. is reviewing India’s eligibility under GSP and its sub-committee would hold a hearing on June 19 on the issue.
In its comments submitted to the sub-committee, TCP said that its products had applications in a wide spectrum of industries including textile, pharma, paper and ceramic.
TCP said its flagship product — sodium hydrosulphite, also known as sodium dithionite — is predominantly used in the textile industry as a reducing agent in the processing of fabrics and in paper industry as a bleaching agent. The firm said it is exporting the product to various countries, including the U.S., which continues to be its top three export destinations. In the financial year 2017-18, it shipped 35 TEUS (20 feet containers) worth $6,507,70 on free on board basis, when compared to 31 containers in the previous financial year. Royce Associates is its sole importer.
“Our major competitor in the overseas market is China, where there are too many producers with huge production capacity. Due to economy of scale advantage, cheap labour and government support, their production cost is significantly lower than ours so they are in an advantageous position to export this product at considerably lower price,” TCP said.
Until last year, we were competitive in the U.S. market thanks to the GSP benefit by which export from India enjoyed NIL duty versus 5% (presumed) for export from China, it added.
Competition from China
TCP said post suspension of GSP benefit last year, it lost its cost advantage and consequently is facing more competition from China. “There is a substantial price disparity between the Indian and Chinese product which encourages importers in the U.S. to choose Chinese products over ours. Since last year, especially after the withdrawal of the GSP Scheme, we lost substantial business in the U.S.,” it added.
India and the U.S. have a very strong, longstanding and cordial trade relationship and we expect the U.S. government to support more Indian products in the U.S. market, TCP said.
TCP is among the 60 small and medium businesses that have submitted their comments to the GSP sub-committee seeking continuation of GSP benefits.
The Indian government has also requested the U.S. to maintain the GSP beneficiary status.
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Surat: The first-ever benchmark study to identify the gaps and suggest measures for developing the man-made fibre (MMF) industry will be jointly undertaken by the ministry of textiles and the Synthetic Rayon Textile Export Promotion Council (SRTEPC).
The ministry has approved the study titled ‘Roadmap to identify gaps and suggest measures’. The study is likely to be carried out in a month or two.
The study is significant for the man-made fibre segment in India and the textile ministry and SRTEPC are working on shortlisting the competent agency for issuing request for proposals (RPF) as part of the bidding process.
Talking to TOI, SRTEPC chairman Narain Agarwal said, “The study will come out with interesting facts and figures related to the MMF industry. The technical specifications of the project have been finalized and we are awaiting the commercial quotation by bidders.”
Agarwal added, “Once the price quotation is approved, the study will be completed within four months.”
Agarwal said the study will suggest measures and innovative ideas to cater to the consumer requirements and improve competitiveness of the Indian MMF textile both in domestic and export markets to help India emerge as the leading country in this segment.
At present, Indian MMF industry produces almost everything that is of good international standard and quality and is one of the leading exporter to the European Union (EU) and the United States.
India is the second largest producer of polyester and viscose in the world, but when it comes to export in MMF textile, the country ranks a distant 66. Despite enormous potential, strong fundamentals and raw material base, the MMF textile export has been stagnant at around $6 billion in the last couple of years.
The clothing and footwear industry was largely spared as the Trump administration slapped tariffs on $50 billion in Chinese imports, but a looming trade war could still do damage to an apparel sector that’s more global than ever.
The actual shirts and shoes imported from China won’t get new tariffs, according to the full list of 1,102 product lines released Friday, and only some of the equipment used to make them, like textile rolling-machine parts and injection molders for shoes, were included in the final list. A host of other Chinese machinery used by American apparel companies that had been on a preliminary tariff list — like textile printing equipment, sewing machines and looms — made it through unscathed.
“We applaud the decision to remove most of the equipment and machinery used in our domestic textile, apparel and footwear manufacturing that were proposed by the administration in April,” said Rick Helfenbein, president of the American Apparel & Footwear Association, an industry trade group. “Levying a tariff on these items would have increased costs for domestic manufacturers across our industry, leading to higher prices and lower sales.”
Read More: Trump’s China Tariffs Met With Retaliation Vow From Beijing
While much of the U.S. apparel manufacturing industry has moved abroad to chase lower labor costs, the country still remains home to a multibillion-dollar textile industry. Many fashion labels and shoemakers, including L.L. Bean Inc., Allen Edmonds and American Giant, still make products domestically. The exclusion of most apparel equipment from tariffs has allayed fears that manufacturers would push higher costs on to consumers.
Retaliation Fears
But while many of the machines used for American-made apparel didn’t make the final list, the industry isn’t out of the woods yet.
“We remain deeply concerned,” Helfenbein said, citing the threat of retaliation. “China previously identified almost $1 billion worth of American cotton exports to China as a target, which will hurt American farmers and U.S. textile manufacturers, and add costs to our supply chains.”
“Ramping up tariffs doesn’t help bilateral trade talks reach a successful conclusion,” he added. “It’s hard to see how anyone benefits from this.”
However, a trade group representing the U.S. textile industry praised the actions, and said the tariffs didn’t go far enough. The National Council of Textile Organizations wants them applied to clothing, high-performance fabrics and home furnishings like carpet to slow the flow of Chinese imports that it claims have hurt the domestic industry.
‘Deterring Effect’
“It would have a greater deterring effect, however, if more textile and apparel end products were included,” NCTO President Auggie Tantillo said in a statement. “NCTO looks forward to working closely with the Trump administration to refine it.”
President Donald Trump’s administration announced the tariffs on Chinese imports early Friday and China has vowed to retaliate. Trump pledged additional tariffs if the country follows through on the threats. The first setof tariffs will total $34 billion and take effect July 6, with another $16 billion still to be reviewed, the U.S. Trade Representative said.
Related: Across the U.S., Wary Businesses Gird for a Trump Trade War
A previous study from the National Retail Federation and the Consumer Technology Association found that imposing tariffs of $50 billion on Chinese imports, coupled with any retaliation, would reduce U.S. gross domestic product by nearly $3 billion and eliminate 134,000 American jobs annually.
“Tariffs are taxes on American consumers, plain and simple,” Matthew Shay, chief executive officer of the NRF, said in a statement Friday. “These tariffs won’t reduce or eliminate China’s abusive trade practices, but they will strain the budgets of working families by raising consumer prices.”
With import tax cuts presented by free trade agreements (FTAs) to which, Vietnam is a member, increasing automation in production and quite favourable factors in the world market, the country’s garment and textile exports are forecast to hit US$200 billion by 2035.
Vu Duc Giang, president of Vietnam Textile and Apparel Association (VITAS), says the US remains Vietnam’s largest garment importer, trailed by the EU and member countries of the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP).
Giang optimistically told the Japanese and Vietnamese media that the garment sector is likely to earn US$34.5 billion from exports this year.
It is expected that after the CPTPP comes into effect in August 2018 and export taxes drop to zero, the country’s garment exports will surge by 3% compared to the estimated figure because Canada, Australia, Mexico, and New Zealand, major importers, currently import about US$40 billion worth of products annually.
The garment sector has great potential for development from now to 2035. However, the sector should make thorough preparations to fulfil the target of US$200 billion in export value by 2035.
The domestic material consumption rate should be raised, aiming at 80% of fibres and 60-65% of other materials by 2030-2035.
According to Vitas, with further investment in fiber production Vietnam is now less dependent on materials from China. Domestic materials can meet 40-45% of the sector’s demand while the rest is imported from China (37%), Japan, Indonesia, the Republic of Korea and Thailand.
NEW DELHI: Sourcing by top global fashion brands, including Zara, Gap, H&M, Old Navy and Marks & Spencer may get hit as the local dyeing industry is facing shortage of dyes due to China importing raw materials, which are used to make dyes, from India.
Proprietors of dyeing factories in the Delhi-NCR region are considering to scale down operations, especially during a time when orders are pouring in from international markets for the Spring’ 19 season. “The price of dyes has increased by nearly 30 per cent over the last 10-15 days and it is not sustainable to carry on operations at the same rates,” said Vijay Jain, MD of SPS Processors in Faridabad.
India is a major hub for several global brands. For instance, H&M and Ikea have been sourcing from the country for over a few decades. Textiles constitute around 70 per cent of Ikea’s exports from India. Similarly, British retailer Marks & Spencer counts the country among its top five global sourcing hubs.
“The price of yarn has also been increasing over the last few weeks,” said Amit Mudris, head of sourcing & merchandising at an Italian fashion brand. “This is the period, when orders are high due to the approaching season.”
The local dyeing industry, which includes around 150 factories in the Delhi-NCR region, has recently been rocked by the ban on pet coke and furnace oil, important ingredients in the dyeing process. A few plants, unable to sustain operations, have shut shop.
With China’s buffer stock of cotton coming down to barely a year’s inventory, the country has started looking at other markets for import.
With China’s buffer stock of cotton coming down to barely a year’s inventory, the country has started looking at other markets for import.
According to top industry sources, China has signed contracts for 5,00,000 bales of cotton from Indian traders for the new season. With the country also announcing an additional quota for 48 lakh bales, which it may begin procuring from July1, India stands to gain at least 10-15% of the given quantity.
Arun Sekhsaria, managing director, DD Cotton, a major international cotton exporter, pointed out that Chinese contracts have been signed with traders for around 5,00,000 bales and the shipments are expected to leave from India in November-December. China normally has a buffer stock of nearly 120-150 lakh tonne which is expected to drastically go down to barely 25-40 lakh tonne by August this year and therefore the country has begun building up its stocks, he said.
A couple of days ago, the country had announced a quota of nearly 48 lakh bales which it intends to begin importing from July 1, 2018. China’s buffer stocks began depleting from 2015.
Since Indian prices are the cheapest in international market, China will also look towards India for cotton, he said. The recent contracts have been signed for 88-92 cents per pound for the season of 2018-19. According to traders, China is likely to import at least 20 lakh bales from India.
India’s new cotton season commences from October. Since China’s production is expected to go down in the coming season, prices have gone up by nearly 18%. Indian cotton was sold at around 86 to 92 cents per pound on a cost and freight basis (C&F) to China, for shipments in November and December.
Exporters in India usually start selling new season cotton from end-August, after estimating the nation’s crop size. But robust demand from China and higher prices have prompted Indian exporters to sign deals in advance, industry people said.
India could export more than 20 lakh bales to China in November and December as Indian cotton is nearly 10 cents a pound cheaper than supplies from other exporters such as the United States and Brazil.
China is likely to import 14 lakh tonne of cotton in the 2018-19 crop year, its agriculture ministry said, raising its forecast from a previous estimate of 12 lakh tonne due to poor local crop. Amid the robust export demand, cotton sowing in India has been delayed by nearly a fortnight in central and southern parts due to patchy rainfall, but it is expected to pick up in coming weeks.
Meanwhile, the Confederation of Indian Textile Industry (Citi) has said that there is sufficient cotton for the textile sector to smoothly run their units throughout the year The recent increase in cotton prices in the Indian market is due to rise in prices across the globe, led by China and the US weather fears impacting the 2018-19 crop size negatively. Citi estimated the production of Indian cotton crop for the ongoing cotton season 2017-18 at 373 lakh bales (of 170 kg each), up around 8.11% from the previous year. The increase is mainly due to a 13% rise in area under cotton cultivation from 108.45 lakh hectare to 122.59 lakh hectare.
“The estimated balance-sheet for 2017-18 shows production at 373 lakh bales, imports at 15 lakh bales and exports at 70 lakh bales. Further consumption is estimated to be 316 lakh bales (including non-mill consumption of 19 lakh bales) against 306 lakh bales in 2016-17,” said Citi chairman Sanjay K Jain. Considering the opening stock for 2017-18 at 47.81 lakh bales as decided by the Cotton Advisory Board, Citi said the closing stock will be around 49.81 lakh bales which is quite sufficient for the textile sector to smoothly run their units throughout the year.
China will import 1.4 million tonnes of cotton in the 2018/19 crop year, its agriculture ministry said on Tuesday, raising its forecast from a previous estimate of 1.2 million tonnes due to a poor local crop.
India’s cotton exporters have signed contracts to ship 500,000 bales (85,000 tonnes) of their new season harvest to China as the world’s biggest consumer of the fibre looks to raise its imports in the next crop year, industry officials told Reuters.
Exporters in India, the world’s biggest producer of cotton, usually start selling new season cotton from end-August, after estimating the nation’s crop size. But robust demand from China and higher prices have prompted Indian exporters to sign deals in advance, the officials said.
“Chinese demand is very robust. They are ready to book Indian cotton,” said Atul Ganatra, president of the Cotton Association of India (CAI).
“But Indian traders don’t have a clear idea about the upcoming crop size and prices, so they are hesitant to commit to large amounts,” he said
Most Indian farmers sow cotton with the arrival of monsoon rains in June, and the crop is typically ready for harvesting from the end of September.
Indian cotton was sold at around 86 to 92 cents per pound on a cost and freight basis (C&F) to China, for shipments in November and December, said Chirag Patel, chief executive at Jaydeep Cotton Fibres Pvt Ltd, a leading exporter.
The country could export more than 2 million bales (340,000 tonnes) to China in November and December as Indian cotton is nearly 10 cents a pound cheaper than supplies from other exporters such as the United States and Brazil, Patel said.
China will import 1.4 million tonnes of cotton in the 2018/19 crop year, its agriculture ministry said on Tuesday, raising its forecast from a previous estimate of 1.2 million tonnes due to a poor local crop.
Some traders said China’s forecast was too low, with one estimating Chinese imports in the range of 1.5 million to 2.5 million tonnes.
“Everyone thinks prices will go up further, so many deals have been signed,” said an Indian trader, who declined to be named.
New York cotton futures were trading near their highest in more than six years due to worries over dry weather in West Texas, a major producing region in top exporter the United States.
India’s cotton exports are likely to jump nearly 30 percent from the previous year to a four-year high of 7.5 million bales (1.3 million tonnes) in the 2017/18 crop year, which ends on September 30.
Amid the robust export demand, cotton sowing in India has been delayed by nearly a fortnight in central and southern India due to patchy rainfall, but it is expected to pick up in coming weeks, said Ganatra of CAI.
ICE cotton futures settled little changed on Wednesday, ahead of a weekly exports sales report by the U.S. Department of Agriculture (USDA).
The most active cotton contract on ICE Futures U.S., the
third-month December contract , settled up 0.03
cent, or 0.03 percent, at 92.93 cents per lb. It traded within a range of 91.92 and 93.69 cents a lb.
The USDA’s weekly export sales report is due on Thursday.
“The market is waiting for sales (report) to come tomorrow,” said Rogers Varner, president of Varner Brokerage in Cleveland, Mississippi.
Market participants are keeping a close watch on rain in Texas, the major cotton-growing region in the United States.
Texas is turning cautiously optimistic even if time is running out as separate tropical systems in both the Pacific and in the Caribbean give West Texas and South Texas respectively, chances for meaningful precipitation early next week, Ron Lee, general manager at McCleskey Cotton in Bronwood, Georgia, said in a note on Wednesday.
Meanwhile, India’s cotton exporters have signed contracts to ship 500,000 bales (85,000 tonnes) of their new season harvest to China as the world’s biggest consumer of the fibre looks to raise its imports in the next crop year, industry officials told Reuters.
The (U.S.) market hopes for significant new demand from China, but must wait until Friday when the Trump administration will announce its next moves against the Chinese,” Jack Scoville, vice president with Price Futures Group in Chicago, said in a note.
“Cotton would be a loser in a trade war with China as China once again looks ready to become a major world buyer.”
Total futures market volume rose by 12,412 to 65,774 lots. Data showed total open interest fell 1,947 to 309,608 contracts in the previous session.
Certificated cotton stocks
(Reporting by Vijaykumar Vedala in Bengaluru; Editing by David Gregorio)
Farmers in Maharashtra are on tenterhooks. They have prepared their fields for the sowing of kharif (monsoon) crops, but a cloud of uncertainty hangs over their heads. On the one hand, on June 11, the India Meteorological Department (IMD) announced advancement of the southwest monsoon “into some more parts of Marathwada and Vidarbha” regions in the state; and on the other hand, in the same press release, the Met department said: “thereafter [after 48 hours] no further advance [of the monsoon] is likely for the next one week due to probable weakening of monsoon flow”. In short, the IMD has forecast a dry spell for least a week, beginning June 14.
Meanwhile, its multi-model ensemble (MME) extended range forecast for the next four weeks is hinting at the possibility of the dry spell extending up to June 28.
Dr M Rajeevan, secretary, Union Ministry of Earth Sciences, cautioned that monsoon would remain subdued for at least another 10 days, except over the north-east and west coast of the country. This is expected to delay monsoon over Gujarat, Madhya Pradesh and eastern parts of Uttar Pradesh. Since there won’t be a lot of rainfall over Maharashtra in the next 10 days, farmers should be advised about the dry spell, he said, adding that monsoon is expected to revive after June 25.
This impending dry spell has thrown the state’s farmers into a tizzy, who, after ‘good’ pre-monsoon showers (large excess rainfall of 60 percent or more in Marathwada and Vidarbha, and excess rainfall between 20 percent and 59 percent in Madhya Maharashtra for week ending June 6), were waiting to sow (locally known as perni) the kharif crops. But, the memory of last year’s failure of kharif sowing, due to a prolonged dry spell in the region, is still fresh in their minds. Predictably, the farmers are having sleepless nights, fearing another year of kharif losses.
According to Dr RR Kelkar, former director general of the IMD, the southwest monsoon takes at least 45 days to establish itself across the country, and dry spells are a part of monsoon. A dry spell becomes a matter of concern when it is prolonged and can lead to sowing/crop failure, which happened last year in Vidarbha and Marathwada, where a majority of the farmers practice rain-fed farming (due to lack of irrigation facilities).
Post-sowing, there is a need for regular rainfall so that the seeds/seedlings don’t dry or crop growth is not stunted. Sowing failure means farmers have to reinvest in buying seeds, fertilisers, and chemicals, which puts an additional financial burden on them. It must be noted that Vidarbha and Marathwada regions of Maharashtra are often referred to as the farmers’ suicide belt of India. As per news reports, over 2,414 farmers took their lives in the state, between January and October last year. The situation is no better this year.
Manik Kadam, president of Marathwada division of Swabhimani Shetkari Sanghatana, a state-level farmers’ organisation, claimed that in the last six months, about 1,880 farmers had committed suicide in Marathwada alone.
Whereas last year, both the IMD and the state government had failed to timely warn the farmers about a prolonged dry spell in the region. This year, an advisory on the dry spell was issued in advance. On June 7, the state government issued an advisory, informing farmers not to hurry with kharif sowing because of the impending dry spell. This has delayed large-scale sowing in the state. But, the worries of farmers are far from over who have to choose between the devil and the deep blue sea.
Gajanan Divekar of Waghmare village in Yavatmal said that farmers were at their wits’ end. If they wait till the end of the month, they may miss the kharif crop cycle; but, if they sow now, the dry spell may lead to a sowing failure.
Knowingly, some farmers have taken the risk and gone for sowing of Bt cotton in talukas such as Arni (in Yavatmal), which have received good pre-monsoon showers. Kadam claimed that several small and marginal farmers, owning up to five-acre land, had already sowed Bt cotton crop in Marathwada. However, soybean farmers were still holding on, but for how long? Mohan Gojamgunde, agriculture officer of Latur, informed that in talukas receiving more than 100-125mm rainfall in pre-monsoon, farmers may go in for sowing, irrespective of the dry spell advisory. He also added that no formal communication regarding the dry spell had come from the Commissionerate of Agriculture in Pune. Agriculture officers and farmers had come to know about the dry spell from news reports or WhatsApp forwards.
Clearly, rain-fed agriculture is a gamble and desperate farmers of Marathwada and Vidarbha are its pawns. Officially, the southwest monsoon has already covered major parts of Marathwada and Vidarbha, barring some parts of madhya Maharashtra, as confirmed by Dr M Mohapatra, additional director general of IMD. But the arrival of monsoon has brought little cheer to the farmers who are hanging by a thread. The last one year has been a year of insurmountable losses to the state’s farmers, who lost their last kharif crop due to a prolonged dry spell. The Bt cotton crop, too, was lost to the pink bollworm attack. And, rabi (winter) crops were destroyed due to hailstorms early this year. In the last kharif season, the state government declared 14,679 villages as drought-hit, of which 9,799 villages were from Vidarbha. During the last rabi season, eight more talukas in three districts of Yavatmal, Washim and Jalgaon were added to the list of drought-hit areas. Can the farmers of Maharashtra cope with another dry spell?
The rollout of GST appears to have made the cost of agricultural operations higher, thanks to a 12 per cent rise in fertiliser prices. According to latest prices, the price of urea bag has been increased by Rs 36 compared to the pre-GST regime and a bag of complex fertiliser is priced Rs 80 more. Seed companies too have increased their product prices. However, the government had banned the sale of seeds for the interim period.
But with all mandals receiving rain, farmers are in no mood to wait and are buying chilli and cotton seeds from Guntur, whose quality remains unverified.
Though the amount received under Rythu Bandu proved to be a relief to small and marginal farmers, they say the investment support is not sufficient to cover the rising farming costs.
State Agriculture Action plan to be unveiled soon
The state government has set a target of 1.37 crore tonnes for foodgrain production this year (2018-19) — an inc-rease of 47 lakh tonnes over last year’s target. The Agriculture Action Plan is likely to be unveiled this week.
Though the last year’s target was 90.88 lakh tonnes, only 85.45 lakh tonnes of foodgrains were produced. The target was missed due to lower production cause by deficit rainfall during kharif season last year.
Among all the foodgrains, paddy plays the major role with higher production in the state.
The agriculture department has put the estimated normal crop sown area for 2018-19 at 1.53 crore acres. Of this, the normally sown area in kharif has been pegged at 1.14 crore acres and rabi 38.75 lakh acres.
Agriculture minister Pocharam Srinivas Reddy said, “Kaleshwa-ram lift irrigation project is expected to provide water to an additional five lakh acres by rabi this year. Another nine lakh acres will get irrigation facility with the compl-etion of various pending projects. The crop sown area will increase by 14 lakh acres over last year, which will in turn result in higher foodgrain production.”
The government has so far distributed Rs 4,500 crore to 44.75 lakh farmers under the rythu bandhu scheme, which is expected to increase the crop sown area.
