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India’s exports to the US, especially those from sectors like textiles, gems and jewellery, automotive, organic chemicals and pharmaceuticals, could be hurt badly if US President Donald Trump carries out his threat of imposing retaliatory import duties on Indian products. This possibility looks real, given the way Trump has publicly shamed traditional US allies like Japan, Germany and Canada, and levied punitive duties on their steel and aluminium exports.
Any US move to levy retaliatory tariffs will largely hit India’s small and medium enterprises. That could complicate the Narendra Modi government’s political challenges, with general elections just around the corner.
The US accounts for nearly 16% of India’s total exports. In 2017-18, India had a trade surplus of $21 billion with the US.
The US’s industrial tariffs have fallen to close to zero after several rounds of trade liberalisation. But on the other hand, India still continues to impose high import duty, which riles Trump.
For example, India has kept high tariffs on automobiles and motorcycles (60-75%), alcoholic beverages (150%) and textiles (some ad valorem equivalent rates exceed 300%).
What is even more worrying for the US is that as much as 25% of India’s industrial tariffs remain unbound at the WTO.
According to latest WTO data, in 2015 India’s average bound tariff rate was 48.5%, while its simple ‘most favoured nation’ average applied tariff was 13.4%. The US has expressed concern over this, saying its exporters face tremendous uncertainty as India has considerable flexibility to change tariff rates at any time.
Meanwhile, US exporters of stents and knee implants are seething with anger over price caps placed by India on these medical devices.
Value of key Indian exports to the US in 2017-18
Product category Exports ($bn)
Gems and jewellery 10
Pharmaceuticals 4.66
Apparel 3.85
Made-ups 2.39
Road transport vehicles 2.12
Organic chemicals 1.58
Source: Commerce Ministry
The US trade deficit with India has become a sore point for the Trump administration, which wants full reciprocity in trade relations with all countries.
That Trump has publicly flagged that India imposes prohibitive duties of 100% on some products has left little doubt about US intention. Indian trade diplomats’ hope of being exempted from prohibitive US steel and aluminium tariffs has already proved false. They cannot afford to stay complacent about the threat of US slapping punitive tariffs on Indian exports, said trade experts.
“We’re like the piggybank that everybody is robbing,” Trump said while addressing a press conference in Canada’s Quebec City at the conclusion of the G7 summit.
Trump has made it clear that his tariff grievances went beyond developed economies. He especially mentioned India, which he said imposed prohibitively high tariffs on US products like Harley Davidson motorcycles.
Indian exporters worried
Meanwhile, garment exporters are worried at the prospect of the US levying equivalent import tariffs. Currently, US import duty on garment import varies from 8% to 28%. In comparison, India imposes customs duty on garment imports at the flat rate of 32%.
India’s garment exports in 2017-18 were 11% lower than the preceding year. This declining trend continues in the current fiscal year too.
As much as 30% of India’s garment exports go to the US.
One Gurgaon-based garment exporter, who did not want to be identified, told The Wire that the sector could face troubles if the US imposes an equivalent duty on garment imports.
Indian exports of gems and jewellery to the US, estimated at $10 billion in 2017-18, too could face serious hurdles if the latter levies retaliatory tariffs. Export of road transport vehicles and organic chemicals are also at the risk of being hit with high tariffs.
Task cut out for Indian trade diplomats
The Trump administration has ordered a review of India’s compliance with 15 conditions outlined by the Congress for availing concession tariffs in the US market under Generalised System of Preferences (GPS).
Tariff concessions are crucial for Indian SMEs exporting their products to the US market. The Indian government has pleaded its case before the GSP subcommittee, which is conducting a review of India’s eligibility and will decide if the country is providing “equitable and reasonable” market access as a quid pro for GSP benefits.
But there is not much hope of India getting a clean chit in the GSP review in which powerful US trade associations are petitioners. While the National Milk Producers’ Federation and the US Dairy Export Council have complained about restricted market access for farm products, the Advanced Medical Technology Association has brought up price caps on coronary stents and knee implants.
Given all of this, it would not be surprising if the US president goes ahead with his threat of increasing tariffs on exports from India in the event talks do not yield results.
Starting from June 10, India’s commerce minister Suresh Prabhu was on a two-day visit to the US, where he held talks with US secretary of commerce Wilbur Ross and US Trade Representative Robert E. Lighthizer to cool the rising trade tensions between the two countries. However, chances that Prabhu persuaded the US administration to drop its demand of full reciprocity in bilateral trade relations look dim.
India’s exports to the US grew by 13.42% during the year, much faster than the 9.98% growth rate of its overall merchandise exports, underlining the significance of the American market for Indian industry.
However, the easy access that Indian exports have traditionally enjoyed in the US market could be a thing of the past soon, if the Modi government does not properly handle Trump’s demand on reciprocity in bilateral trade relations.
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The solar thermal industry in India is miffed as it believes that the ministry of new and renewable energy is ignoring its contribution in the renewable energy space.
The solar thermal industry in India is miffed as it believes that the ministry of new and renewable energy is ignoring its contribution in the renewable energy space, though the country ranks among the top five markets globally for solar thermal.
There is scope to save Rs 5,000 crore annually by supplementing solar thermal with fuel oil, said the Solar Thermal Federation of India (STFI).
According to the STFI, the solar thermal industry in India has been growing without any financial assistance from the Centre. Yet, it fails to find a mention of its contribution. Solar heating and cooling solutions are a substitute for fuel oil/diesel. Solar heat is used in large public and private building as well as factories for cleaning, steam production, heating and surface treatment in manufacturing, and comes at 40% lower costs.
As per the Renewable Global Markets Status 2018, India continues to maintain its position among the top five markets globally for solar thermal. “Solar heat for industrial processes (SHIP) is a an upcoming market in India and we are placed fourth in the world. With oil prices looking high, SHIP will have a vital role to play in reducing dependence on oil,” Jaideep N Malaviya, secretary general at STFI, said.
The Indian solar thermal capacity saw a 26% y-o-y growth in 2017, the highest growth across the globe. With capacity of 2.8 MW thermal India was among the top 10 markets for concentrated heat technologies in 2017 along with Oman, China, Italy and Mexico. When it comes to solar water heating collectors capacity in operation, India was at number six behind China, the US, Turkey, Germany and Brazil.
India has used solar thermal across various industries and has the largest number of units using the technology, unlike in other countries where it is used in limited areas, Malaviya said. The Swiss use it in the dairy industry, Chile uses it in mining and in the Gulf, it is used for refining. In India, it is used in pharma, textile, food processing, textile, fertiliser and many more industries, an achievement which is appreciated globally but ignored at home, said Malaviya.
The Ministry of New and Renewable Energy has not considered this contribution either in the grid-interactive power capacity or the off-grid/captive power segment, said Malaviya. There needs to be a special category for solar thermal if it does not fit into either of these categories, he suggested.
The energy demand of the industrial sector in India accounts for 189.43 million tonne of imported crude oil, as per a study by GEF-UNIDO. Of this, around 30 million tonne is provided by the therrmal energy at temperature below 250 degree Celsius and solar technologies can produce a range of temperature between 50 degree C and 400 degree C, which can be used in a variety of industrial heating applications and can supplement up to 5% of fuel oil which translates into `5,000 crore in annual savings, Malaviya said.
While there is 30% subsidy for solar thermal, the STFI said it needs something similar like the power sector has with its RPO or renewable purchase obligation.
The STFI has 28 members, who account for close to 80% of the solar thermal manufacturing in India.
Garment shipments to India, a country with a $50 billion apparel market, more than doubled in the first 11 months of the fiscal year — in a promising development for Bangladesh’s manufacturers.
Between July last year and May this year, apparel items worth $253.07 million were shipped to the neighbouring country, in contrast to $117.21 million a year earlier, according to data from the Export Promotion Bureau.
The reason for the exponential rise is bulk purchase by Western brands with operations in India and Indian clothing chains, which are finding Bangladesh’s garment items to be more competitively priced for India’s bulging middle-class demographic.
Like in previous years, woven garment shipments outnumbered knitwear as the demand for formal shirts is high in the country packed with office-going executives.
Between July and May, $187.37 million worth of woven garment items were shipped to India and $65.70 million worth of knitwear products, EPB data showed.
“Garment export from our factory to India is increasing every year. But the receipts are still very low,” said Mohammad Hasan, executive director of Babylon Group, a leading garment exporter.
Apart from Indian retailers like Tata, Reliance and Arvind, Western brands like H&M, Zara and Mango are sourcing garment items from Bangladesh in bulk quantity.
“We see India as an emerging market for us,” Hasan said.
In the next few years, garment exports to India might cross the $1 billion-mark, said Siddiqur Rahman, president of the Bangladesh Garment Manufacturers and Exporters Association.
Were garment afforded the privilege of duty-free access to India, the receipts would have hit $1 billion by now.
Bangladeshi garment exporters face 12.5 percent countervailing duty for shipment to India, although India announced duty-free facility on all Bangladeshi products except some alcoholic and beverage items in 2012.
Overall, exports to India increased 24.67 percent year-on-year to $792.88 million in the July-May period.
Turkey wants to impose new requirements on textile firms importing material from China, alarming leaders of one of the country’s biggest export industries, three clothing company executives told Reuters.
They said the plans were discussed at a meeting in Ankara on Monday between economy ministry officials and representatives of textile companies, who had requested the meeting to ask that the planned measures be delayed or revised.
An economy ministry official confirmed the meeting at the ministry, without giving details. “We expressed support for production imports from China, but on the condition of bringing value added to Turkey,” the official said.
Turkey’s textile sector is a pillar of its economy. Ready-to-wear clothing accounted for about 18 percent of Turkey’s $157 billion exports last year.
Cuneyt Yavuz, Chief Executive Officer of jeans retailer Mavi, said he believed the government plan was aimed partly at tackling Turkey’s widening current account deficit, which reached $47.1 billion last year.
Turkey imported a quarter of its $10.1 billion textile imports from China in 2017, more than half of which are cotton fabrics and intermediary goods.
“The ministry had a plan to increase the documentation of textile imports from China,” Yavuz told Reuters. “This plan was only regarding the textile sector… and it would go into effect in mid-July”.
He said business leaders at the meeting told the ministry that material imported from China was sold on to other countries such as Russia and the United States, benefiting Turkey.
“I was told that there would be either a postponing or at least a revision in the ministry’s plans” which were originally intended to go into effect in mid-July, Yavuz said.
FRUITFUL MEETING
Another senior textile sector executive who attended Monday’s meeting said the new measures included obtaining documents about the Chinese companies they are buying from, which will add costs and cause delays in trade.
“The ministry undersecretary told us that there is a huge trade deficit with China, where our imports are about 10 times the size of exports,” the executive told Reuters.
“They want some balance. But they understood our concerns and promised to take another look at the proposed measures.”
The chief executive of another major Turkish textile company, confirmed that the ministry had been asking for additional documents for textile imports from July, but said the ministry had been asked to postpone the move until January.
“We had been informed that we would need a lot of extra documents for imports from China, so we demanded this meeting,” said the CEO, whose company has almost 150 stores in Turkey, and exports to seven other countries.
“The ministry didn’t ask us to stop producing in China. It was a fruitful meeting. We asked them to postpone the plan until at least January 2019, which the ministry will evaluate.”
Gujarat is now leading the country in the number of e-way bills generated, ever since the auxiliary compliance to Goods and Services Tax was rolled out on 1 April 2018. Since Gujarat is a major manufacturing hub for petrochemicals, pharmaceuticals and textile among others, it comes as no surprise that the state is well ahead of Maharashtra, Karnataka, Haryana and UP in terms of e-way bill generation.
Meanwhile, diamond traders are completely now exempted from e-way bills under Rule 138 to 138 B as per the notification issued on 23 January this year by the Central Ministry of Finance, Department of Revenue. The notification states that if the commodity (diamond) is being moved around in non-motorised vehicles, there is no need to generate an e-way bill.
Gujarat Miles Ahead of the Rest
The GST regime requires businesses and transporters to generate an e-way bill for moving goods that are worth more than Rs 50,000. E-way bills are also to be generated for intra-state movement of 19 commodities as well. In April, May, and June first week, Gujarat recorded 4.9 million, 5.2 million and 5,73,453 e-way bills respectively.
After Gujarat comes Maharashtra where the state has collected 2.99 million, 4.18 million, and 964,778 bills in the months of April and May, and the first of week of June; meanwhile Karnataka collected 3.73 million, 3.89 million, and 444,047 bills, respectively, for the same period.
Uttar Pradesh at 2.73 million, 4.41 million and 500,095; and Haryana at 2.62 million, 4.51 million and 506,837; completes the list of top five of Indian states generating e-way bills for the same period.
The joint secretary of check posts in the commercial tax department of the Gujarat Government, RR Patel, attributed strict checks and controls measures as the leading cause behind Gujarat’s rise in e-way Bill generation.
According to the Cotton Association of India (CAI), better prices for cash crops like soybean and paddy may distract the farmers from cotton sowing and in result, cotton sowing area is expected to decline by 10-12 percent to 10.7 million hectare this year in comparison of 12.2 million hectare last year as distressed farmers in Punjab, Maharashtra, Telangana and Andhra Pradesh have evinced weak interest in this cash crop. Farmers are facing a spate of issues such as water shortage, unfavourable weather and the persistent menace of pink bollworm, CAI said. Farmers may shift from Cotton to Groundnut in Gujarat, paddy in Haryana and Soybean in Maharashtra and the Telangana belt as Cotton is still not remunerative compared to other options. Similarly, Soybean, pulses and Sugarcane area could surpass Cotton in acreage as prices were firm and pest infestation in those crops are less, the association noted. The decline in acreage may lower Cotton output proportionately. Indias Cotton output was estimated at 37.7 million bales in the first advanced estimate by the Cotton Advisory Board (CAB) under the Ministry of Textiles
The 2017/18 season was the third consecutive for growth in world cotton demand, with production at an estimated 26.6 tons and world mill use projected at 25.5 million tons
For the current season, decreasing stocks in China are being offset elsewhere. China’s cotton stocks are projected down to 9 million tons, while cotton production outside of China is projected at up to 10.3 million tons – marking the fourth consecutive season-to-season increase. But there is a caveat.
“Along with weather issues in the Xinjiang region, which represents 75% of China’s cotton area, and potential drought conditions in West Texas affecting 25% of the US crop, there may be concern of quality supply gaps which may affect next season’s supply,” the ICAC cautioned. World cotton consumption is projected to increase to 26.7 million tons in 2018/19, while world cotton production is estimated at 25.7 million tons, the organization noted in its June report. Key takeaways:
Production in China is projected to decrease to 5.6 million tons in 2018/19 based on reduced planting area, while consumption is forecasted to increase to 8.4 million tons.
Reduced yields in 2017/18 in India are contributing to lowered planted area for 2018/19, with exports projected at 840,000 tons representing a 24% decrease from the previous season.
Production in Brazil for the 2017/18 season is estimated to be 1.9 million tons, a 26% increase from 2016/17, with 900,000 tons projected for export.
• Production for the West Africa region in 2017/18 is projected at 1.2 million tons, representing a 13% growth from the previous season, with exports for the region expected at 1.04 million tons.
Khadi Gramam project at the heritage village of Aranmula inaugurated
Khadi is very much part of Indian culture and its popularity across the globe has increased manifold ever since the government led by Narendra Modi came to power at the Centre four years ago, Union Minister for Textiles Smriti Irani has said.
Ms. Irani was speaking after inaugurating the Khadi Gramam project of the Union government at Aranmula on Monday.
She said the Khadi Gramam was part of the government project aimed at making the heritage village of Aranmula self-reliant through the production and sale of Khadi products.
Ms. Irani said the annual sale of Khadi products in the country had gone up from ?3,900 crore to ?7,000 crore now.
She said the Mudra loan project launched by the Modi government was a big hit and a large number of unemployed youth had benefited from it. As many as 70% of the Mudra loan beneficiaries were women, she said.
Anto Antony, MP, presided over the function. V. Muraleedharan, Rajya Sabha member; G. Chandramouli, Khadi Commission member; Ashokan Kulanada, Kulanada grama panchayat president; and Prasad Verumkal, Aranmula panchayat vice president; spoke.
With a view to ensuring compliance with Tamil Nadu Pollution Control Board norms, over 35 textile processing units and industries at SIPCOT, Perundurai, by adopting zero liquid discharge technology, among other steps.
This was decided at a meeting convened here by theSouthern India Mills’ Association (SIMA) and Perundurai SIPCOT Textile Processors Association, which deliberated on pro-active measures to be taken up to protect the environment.
The June 7 meeting unanimously decided to enforce self-discipline to ensure sustainability with regard to the environment, a SIMA press release said here today.
Each textile processing unit would ensure compliance with TNPCB norms by adopting zero liquid discharge technology,apart from conserving water and recording effluent treatment performance data with water quality watch centre of the Board, the release said.
It was also decided to engage a competent and credible external body, Nataraj said, adding this would create further confidence in the minds of all stakeholders.
He said each textile processing unit has invested between Rs 10 crore and Rs 30 crore for ZLD effluent treatment plants and spent huge recurring expenditure to comply with environmental norms.
Nataraj said textile processing is the weakest link in the entire textile value chain, particularly in Tamil Nadu and availability of quality water and treatment of textiles in a cost-effective manner have become the major challenge for the processing sector to sustain its viability and survival.
He pointed out that Tamil Nadu is one of the fastest growing states complying with various laws in the country and had also pioneered in the adoption of ZLD technology to treat textile effluents to protect the environment.
The State Industries Promotion Corporation of Tamil Nadu Ltd (SIPCOT) has encouraged industrialists to follow the regulations and comply with various statutes and has promoted a large number of industries, Nataraj said.
Surat: In 1981, Surat witnessed the worst accident in its famed textile industry when 98 people died and 105 injured as the four-storey Shantinath Silk Mills crumbled after a boiler explosion. Around 200 firemen had toiled for five days to remove the bodies from the debris. The accident had forced the state government to amend the law and make checking the structural stability of industrial units mandatory and the license be renewed every five years by a competent authority.
But the law seems to be remaining only on paper. The collapse of Shalu Dyeing and Printing Mills building on June 9 has raised several questions whether the owners are adhering to safety norms and getting the mandatory structural stability checks done. In Pandesara GIDC, which has got a swanky redeveloped infrastructure at the cost of Rs 62 crore, all the industrial units are more than 30 years old and in a dilapidated condition.
In 2017, Pandesara GIDC became a model industrial estate in south Gujarat with facilities like underground electricity network, better water and drainage network, cement concrete roads in 2.12 lakh square metre area. However, majority of the textile mill owners are still complacent when it comes to the periodic checks of the structural stability of their mill structures.
President of South Gujarat Textile Processors’ Association (SGTPA) Jitu Vakharia said, “I am not sure whether old units have been doing the internal maintenance of the structure and the machinery. Time and again, we have been holding meetings and asking our members to comply with all the norms of industrial safety. Having fire fighting equipment is must for all. However, in some cases people tend to ignore it and take things lightly.”
Vakharia added, “When factory inspectors pay the visit, generally they look for the machinery and pressure vessel stability reports. But, they do not check the structural stability of the building, which can be in bad shape.”
It is a fact that out of 100 textile dyeing and printing mills in this estate, few are constructed in the last 15 years, but most of them are those built in the 80’s.
Factory inspector at Pandesara R Tarpara told TOI, “A officer has to go for two mandatory inspections every month as per the draw system . We cover our area and units for inspection are decided by the government procedure which is through lots. We check every aspect of structural stability and industrial safety and health issue. In some cases, we ask for immediate action on behalf of owners.”
A textile mill owner said on the condition of anonymity said, “The shortage of manpower in the government is serious issue. The department is not able to physically check everything.”
