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President Nana Addo Dankwa Akufo-Addo on Thursday announced a stimulus package to revamp Ghana’s struggling textile industry.
“Our local textile industry has been struggling for years, and many textile companies have, indeed, gone under. We have decided to give it a major stimulus to help put it on a strong footing,” President Akufo-Addo stated in his 2019 State of the Nation Address (SONA) to Parliament.
“The local textile industry has, therefore, been granted a zero-rated VAT (Value Added Tax) on the supply of locally-made textiles for a period of three years,” he said.
“We have put in place a tax stamp regime for both locally manufactured and imported textiles to address the challenge of pirated designs and logos in the textile trade.”
President Akufo-Addo said the Tema Port had been designated as a Single-Entry Corridor for the importation of textile prints, with a textile taskforce in place to ensure effective compliance, and reduce, if not eliminate, smuggling of imported textiles.
He said a new textile import management system had been instituted, to also control imports of textiles.
He said the “One-District-One-Factory” policy had taken off, and 79 factories under the scheme were at various stages of operation or construction; adding that, another 35 were going through credit appraisal.
“All told, there is a lot of activity going on under the scheme, and it has awoken the interest of young people to go into manufacturing business,” he said.
President Akufo-Addo said under the Rural Enterprises Programme, funded by the African Development Bank and the International Fund for Agricultural Development, 50 small-scale processing factories would be established by the end of the year in 50 districts across the country, particularly in areas where there was evidence of significant post-harvest losses.
He said these would be owned and managed by organised youth groups, with technical support from the Ministry of Trade and Industry.
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Textile Exchange has released the first annual report on the 2025 Sustainable Cotton Challenge. The challenge serves as a cornerstone for change in the apparel and textiles industry by encouraging brands and retailers to commit to source 100% of their cotton from the most sustainable sources by the year 2025. The Challenge was formed in 2017 when His Royal Highness The Prince of Wales convened a group of CEOs through the work of his International Sustainability Unit that existed to address critical challenges facing the world.
Those original 13 CEOs committed to work together to accelerate the use of sustainable cotton, which paved the way for other industry leaders to follow – resulting in 39 companies now committed to sourcing 100% sustainable cotton by 2025.
At the time of its inception, the 2025 Sustainable Cotton Challenge was known as the Sustainable Cotton Communiqué and its purpose was, and still is, to increase the uptake of organic and preferred cotton, therefore increasing the income of smallholder farmers, eliminating highly hazardous pesticides, eliminating or reducing the amount of pesticides and synthetic fertilizer used, reducing water use and improving water quality and soil health, which includes positive carbon impacts as a result of more sustainable practices.
“There is growing recognition of the enormous social and environmental impact of the global fashion industry. The 2025 Sustainable Cotton Challenge shows how by working collaboratively the sector can scale rapidly solutions that are good for farmers, the environment and consumers alike,” said Mike Barry, Director of Sustainable Business at M&S.
Today, 19% of the world’s cotton is more sustainable. By 2025, it is the vision of this Challenge that more than 50% of the world’s cotton is converted to more sustainable growing methods.
Key findings
Of the 39,2025 Sustainable Cotton Challenge signatories, 30 participated in the 2018 Preferred Fibre and Materials Benchmark program to report on their progress towards their goal of 100% cotton being sourced from the approved initiatives by 2025:
10% of 2025 Sustainable Cotton Challenge signatories have achieved their 2025 target of 100% preferred cotton usage, all of which are organic
37% have achieved a preferred cotton share of between 75-99%
23% have achieved a preferred cotton share of between 50-74%
7% have achieved a preferred cotton share of between 25-49%
17% have achieved a preferred cotton share of less than 24%
6% of cotton is not tracked yet
From the niche to a market share of 19%, preferred cotton is gaining ground
“The tide is turning on traditional supply chains, with demands for greater transparency generating a change from transactional relationships to transformational partnerships,” said Alison Ward, CEO for CottonConnect.
In order for sustainable cotton to become standard business practice, the amount of sustainable cotton grown and bought must increase significantly. The 2025 Sustainable Cotton Challenge pledge sends a signal to millions of producers that there is a real demand for a more sustainable approach to cotton production that reduces the environmental and social costs.
“Greater transparency across the supply chain and stronger, more strategic relationships between supply chain partners will be critical to the muchneeded widespread adoption of sustainable farming practices around the world,” said Liza Schillo, Manager of Global Product Sustainability at Levi Strauss & Co.
Initiatives
Brands and retailers joining the challenge and committing to source more sustainable cotton, can choose from sources that are included on Textile Exchange’s list of recognised organic and sustainable cotton initiatives.
These initiatives include: ABRAPA; BASF e3; Better Cotton Initiative (BCI); Cleaner Cotton; Cotton made in Africa (CmiA); Fairtrade; Fairtrade Organic; Field to Market; ISCC; myBMP; Organic; Recycled cotton (that is certified to an independently verifiable standard such as the Global Recycled Standard (GRS) or the Recycled Claim Standard (RCS)); REEL Cotton; Regenerative Cotton; and Transitional Cotton.
Mexico’s government on Friday signaled it could adopt measures to protect its steel and textile industries as President Andres Manuel Lopez Obrador said producers had been left “defenseless” by previous administrations.
At the end of January, the government opted not to renew a 15 percent tariff on steel imports from 2015 that protected Mexico’s steel industry from rising Asian imports, especially from China. The government also allowed tariffs to come down for imports of textile and footwear products from countries with which Mexico has no trade agreements.
However, Lopez Obrador hinted at a U-turn on those moves.
“It’s being reviewed,” Lopez Obrador told a regular news conference when asked if he would take any protective measures or support fiscal incentives for the industries following the expiration of the previous safeguards.
“We don’t agree with what was done in the neo-liberal period, which saw an indiscriminate opening without limits and left domestic producers defenseless,” he said. “We’ll review this case, always thinking about protecting national industry.” Lopez Obrador characterizes the administrations that ruled Mexico from the early 1980s onwards as “neo-liberal.”
Mexico’s steel industry has been pushing for government support since the administration of U.S. President Donald Trump slapped tariffs on imports at the end of May. Representatives from industry drew encouragement from the president’s words on Friday.
“We greatly welcome what Mr. Lopez Obrador says because it gives us hope that tariffs could return to previous levels,” Alejandro Gomez, executive chairman of the national footwear industry association, told reporters in the state of Guanajuato. Separately, the Mexican economy ministry said in a statement on Twitter the government was reviewing “alternative measures” to support the industries following meetings with representatives from the steel, textile and footwear sectors. (Reporting by Sharay Angulo; Editing by Leslie Adler)
The Union minister of commerce & industry and civil aviation Suresh Prabhu recently interacted with the tradeassociations and export promotion organsations across India regarding the launch of Outreach Programme. As many as 92 trade bodies from across the country participated in the video conference, discussing the innovative and pro-industry initiative.
The Synthetic & Rayon Textiles Export Promotion Council (SRTEPC) has welcomed the Outreach Programme launched by the minister recently.
“This innovative initiative of the government will be helpful for the stakeholders from all corners of India to participate and directly convey their concerns to the ministry. It will also be helpful to establish a dialogue between the government and the industry,” SRTEPC chairman Narain Aggarwal stated.
During the interaction, the minister mentioned that the GST issues are taken up with the ministry of finance which is likely to come up with positive announcements for the exporters. “The government is giving special focus on the MSEMs by ways of introducing various encouraging schemes including the recent 100 Days Outreach Programme and introduction of up to Rs 1 crore loan within 59 minutes. The government is positive to consider export credit in the category of priority sector lending. Another initiative taken by the government is to improve the logistics of the country for facilitating greater trade.
The initiatives taken by the government such as Make in India, Ease of Investment, Government -e – Marketing (GeM), establishment of two mega convention centres, setting up of standards, start dialogue with EU for concluding India – EU FTA, working with WTO, research inputs from IIFT & IIM, etc. were also highlighted by the Minister. He informed about the improvement made by India to 77th position in the Ease of Doing Business ranking.
The Minister informed that exports have been growing for the last three years. He said start-up India is the largest programme in the world for new business ventures and the Government is making all efforts to remove unnecessary hurdles.
“The initiatives taken by the government will help in improving India’s exports, specially from the small and medium units,” concluded Aggarwal.
Ballari Textile Cluster is among nine clusters identified and proposed to be set up
Four entrepreneurs have signed Memorandum of Understanding (MoU) with the State government to set up textile units in Ballari at the recently launched China Model Industrial Development Clusters, an ambitious initiative of the State government.
Ballari Textile Cluster is among the nine clusters identified and proposed to be set up in the State. The idea is to generate employment for 1 lakh persons where these clusters are located. Ballari is known for its readymade leg wear, particularly jeans, across the country and also in the international market.
However, a sizeable number of garment units are in the unorganised sector with a sizeable workforce depending on it.
Royal Intex Apparels, Binary Apparel Park, and Gokaldal Exports, all from the State, and Shahi Exports from Faridabad in Haryana are the four firms to sign the MoU to invest around Rs. 25 crore, Rs. 100 crore, Rs. 80 crore, and Rs. 100 crore respectively.
The firms have promised to set up their units between 2019 and 2020.
Sources in the District Industries Department told The Hindu that these entrepreneurs have also submitted a wishlist to the government to allot suitable land required for setting up their units, allotment of land at low cost, exemption of stamp duty and conversion charges, and also wages subsidy to the tune of Rs. 3,000 per labourer per month, among other things.
“The wishlist is under the consideration of the government,” sources added.
However, some of the smaller units welcome the government’s initiative but also hoped that the scheme would promote Micro and Small and Medium Enterprises (MSME) in this sector.
‘Several States wanted to voice their opinions in person’
The Goods and Services Tax Council on Wednesday decided to hold off on adjusting tax rates on the real estate sector as several States said that they would like to voice their opinions in person rather than through video conference.
The Council will take up the real estate issue again on Sunday. It, however, decided to extend the deadline for filing the GSTR-3B to the midnight of February 22 for most of the country, and February 28 for J&K. “There was a discussion on the Group of Ministers’ report on real estate,” Union Finance Minister Arun Jaitley said at a press conference following the video-conference meeting with most of the State finance ministers. “Most of the members felt that a decision on this should be taken today.”
“Some members felt that it should be discussed in a physical meeting and a decision should be taken on it after that,” Mr. Jaitley added. “Keeping the idea of consensus in mind, I adjourned the meeting to Sunday so that a physical meeting can be held and the issue can be discussed.”
Consensus building
“It is better to build consensus on key issues on the real estate sector as all previous meetings have achieved the same,” M.S. Mani, senior director at Deloitte India said.
“The real estate sector is critical for all States, hence unanimity in the decision-making process will assist in uniform implementation of the decisions of the GST Council.”
The original deadline for filing the summary GSTR-3B for the month of January was February 20. Given the volume of submissions received, the Council decided to extend this deadline by two days, Mr. Jaitley said.
From August 2015 to December 2018, the EPFO invested Rs 63,224 crore in ETFs
The Employee Provident Fund Organization (EPFO), is likely to ramp up the corpus that it invests in the central government’s two exchange traded funds — the Central Public Sector Enterprises ETF (CPSE ETF) and Bharat 22 ETF, 2019-20 onwards. Business Standard has learnt that EPFO could invest more than Rs 4,000 crore in the two ETFs next year.
“We have had multiple discussions with EPFO. They have understood the concept. Their investment in the two ETFs next year should be around Rs 4,000 crore. In a year, EPFO invests around Rs 25,000 crore in ETFs,” said a finance ministry official.
From August 2015 to December 2018, the EPFO invested Rs 63,224 crore in ETFs. Of this, only Rs 5,507 crore, or 8.7 per cent, has been invested in CPSE ETF and Bharat 22 ETF. The rest have been invested in ETFs of SBI Mutual Fund and UTI Mutual Fund.
The return on investment for these period, for EPFO, has been 12 per cent from SBI Mutual Fund, 10.31 per cent from UTI Mutual Fund, 1.9 per cent from CPSE ETF, and 0.5 per cent from Bharat 22 ETF.
Government officials, however, defended these numbers and said the ETFs have been tracking the performance of PSU indices. This isn’t the first time the Centre has reached out to EPFO to invest in its ETFs.
Following a proposal from the Department of Investment and Public Asset Management (Dipam), the EPFO invested Rs 2,025 crore in the New Fund Offer of Bharat 22 ETF in November 2017. EPFO further invested Rs 250 crore in Bharat 22 ETF in June 2018, after receiving another request from Dipam to invest during the Further Fund Offer of Bharat 22 ETF.
The EPFO has also invested in the fund offers of CPSE ETF in two tranches — Rs 1,504 crore and Rs 303 crore in January 2017 and March 2017, respectively. However, before investing in CPSE ETFs, the central board of trustees of the EPFO had decided to negotiate with Dipam to “get incentives” on a part with retail investors. It had decided that 5-20 per cent of the total ETF investments made during a year would go towards CPSE ETFs.
The latest proposal from Dipam came in October 2018, when it asked the EPFO to invest in another fund offer of the CPSE ETF. This time, the EPFO invested Rs 1,425 crore towards it in November 2018. EPFO is permitted to invest 15 per cent of fresh accrual of its subscribers in ETFs.
The Bharat 22 ETF draws companies from six sectors. The constituents of the basket are Nalco, ONGC, Indian Oil, Bharat Petroleum, Coal India, State Bank of India, Axis Bank, Bank of Baroda, Rural Electrification Corp, Power Finance Corp, Indian Bank, ITC Ltd, Larsen & Toubro, Bharat Electricals, Engineers India, NBCC, Power Grid Corp, NTPC, Gail India, NHPC, NLC India, and SJVN. Though ITC, Axis Bank and Larsen & Toubro are not state-owned enterprises, the government owns shares in them through the Specified Undertaking of Unit Trust of India.
The CPSE ETF, after being reconstituted in 2018, constitutes NTPC, SJVN, NLC, NBCC, ONGC, Coal India, Indian Oil, Oil India, PFC, REC and Bharat Electronics.
The Employees’ Provident Fund Organisation (EPFO) has an exposure of Rs 570 crore towards crises-hit Infrastructure Leasing & Financial Services (IL&FS) and is receiving regular returns to date, a member of EPFO’s finance and audit committee said on Wednesday.
The finance, investment and audit committee (FIAC) of the EPFO, which met on February 12, discussed the EPFO’s exposure with the IL&FS, which might also come up for discussion in a meeting of its Central Board of Trustees (CBT) headed by Labour and Employment Minister Santosh Kumar Gangwar on Thursday.
“In the FIAC meeting, it was found that the EPFO’s investment in the IL&FS was to the tune of Rs 570 crore and it was getting regular returns to date. We, however, didn’t discuss the exposure of exempted firms running their own trusts in the IL&FS,” EPFO’s FIAC Member Prabhakar J Banasure told Business Standard.
The EPFO’s CBT will decide the interest rate for subscribers for 2018-19 in its Thursday meeting. It is expected to give approval to a revised policy for unitisation of exchanged-traded fund investments by the EPFO subscribers.
The CBT meeting will take up draft amendments to create provisions in the Employees’ Provident Fund scheme, 1952, “to enable the process of unitisation of the investments being made by the EPFO in equity.”
According to the proposal, the EPFO will credit to the account of EPF members “the amount diverted from his contributions” as ‘EPF units’, so that they are able to track their investments made in exchange traded funds (ETFs).
It said the EPFO units will be unitised “at the applicable per unit net asset value (NAV)” as determined by the CBT. The EPF units will be credited to the accounts of subscribers at regular intervals, the proposal added.
However, the EPFO members may only be able to withdraw their ETF investments at the time of retirement. And in that case, “EPF units standing to the credit of member shall be redeemed at the last declared per unit NAV preceding the date of receipt of the claim from the claimant.”
Trade Ministers meeting in Cambodia next week to take forward decisions taken in Bali
Facing pressure to finalise its market opening commitments under the Regional Comprehensive Economic Partnership (RCEP) pact being negotiated between 16 countries, India will hold intense bilateral discussions with China on the sidelines of the ongoing round in Bali to narrow differences on import duty cuts and the implementation period that both seek under the trade pact.
“There is a lot of pressure on India to come to an agreement with China on its offer in goods as the round will immediately be followed by a trade ministers meet in Cambodia where RCEP members are keen to come to a resolution on market access. The Indonesian Minister, who is chairing the round, has already said that negotiations will be stretched through the night in Bali if needed,” a goverment official told BusinessLine
RCEP, being negotiated between India, China, the 10-member ASEAN, Japan, South Korea, Australia and New Zealand, can potentially result in the largest free trade bloc in the world covering about 3.5 billion people and 30 per cent of the world’s Gross Domestic Product. Apart from goods, the areas being negotiated include services, investments, intellectual property and government procurement.
India has been holding discussions with China since January to come to an understanding on the level of import duty cuts it can promise but differences remain. New Delhi has tried to argue that it will not be possible for it to offer tariff elimination on more that 72 per cent of the traded items as apart from agriculture there were a lot of sensitive industrial goods that needed some protection.
New Delhi’s stance
“China is proving to be a very tough country to negotiate with as it is unwilling to settle for a figure which is substantially lower than what India is ready to offer to the ASEAN countries. This is not possible as India already has a free trade pact with the ASEAN under which it would anyway be eliminating duties on more than 80 per cent items. More over, the Indian industry faces stiffer competition from the Chinese,” the official explained.
One option that is being discussed is that of a much longer implementation period for elimination of tariffs for China, but that may not be enough to give confidence to the Indian industry. “Longer implementation periods are fine but time flies, as we are already experiencing in terms of our free trade pacts with South Korea, Japan and the ASEAN. In just about a couple of years, we will have to eliminate duties of all items that we promised,” the official added.
India will also have bilaterals with other members of the grouping such as Australia and Japan.
Going forward, decline in cotton price may be limited due to government support price
Cotton futures slipped below Rs 20,000 per bale (one bale = 170 kg) for the first time this season on concern over demand for domestic cotton from the industrial buyers and textile mills. Prices are declining this season despite forecast of lower cotton production and higher exports figures for the first three months of cotton season started in October.
Earlier in the season, cotton hit an all-time high of Rs 24,280 on Multi Commodities Exchange (MCX) in August on expectations of improved export demand from China due to the ongoing trade war with the United States. Moreover, slow start to cotton sowing in Maharashtra and Gujarat and hike in Minimum Support Prices (MSP) too supported domestic cotton prices.
After four months into the new season, cotton futures are now hovering around Rs 20,100, down more than 14 percent compared to prices at the beginning of the harvest season in October. In October, cotton prices were around Rs 23,300.
Cotton prices on Intercontinental Exchange (ICE) plunged to 15-month low this month due to bearish February USDA report, higher US sowing projections and trade war between largest exporter, the US and largest consumer, China.
In the latest USDA monthly report, world cotton consumption is revised lower by 2 million bales to 123.6 million. The forecast for ending stocks has been increased by 2.3 million bales to 75.5 million with a 2 million bale increase for China. Moreover, world’s stocks-to-use ratio for cotton is up at of 29.4 percent, highest since 2015. For India, USDA estimated cotton-ending stocks to increase by 450,000 bales and mill use to reduce by 500,000 bales in 2018-19.
In 2018-19, cotton output in the country is expected to be lowest in eight years due to late and deficient monsoon rains in the main cotton growing states of Gujarat and Maharashtra. Lower acreage in Telangana, Andhra Pradesh and Karnataka reduce cotton production in south India by close to 14 percent or 13 lakh bales. Moreover, Cotton Association of India (CAI) in its latest press release forecast cotton output at 330 lakh bales, down by 10 percent compared to last year’s production of 365 lakh bales. It has also predicted imports to be higher by about 80 percent on year to 27 lakh bales.
From the demand side, CAI has revised down the consumption requirement by mills to 316 lakh bales from 324 lakh last season, mainly on lower export demand for yarn from the country. In the recent study by Confederation of Indian Textile Industry (CITI), export of cotton yarn to the European Union (EU) and China constantly declined in last five years due to duty disadvantage with Bangladesh, Vietnam and Pakistan. Yarn export from the country has slowed down since September last year. According to Commerce Ministry data, India exported 3.81 lakh tonnes of yarn during Sep-Dec period, which is down by almost 10 percent on year. However, for the Apr-Dec period, the exports are up 18 percent on year to 9.22 lakh tonnes.
However, the cotton export from the country is expected to slow down in coming months due to comparatively higher domestic prices than the world coupled with stronger rupees. CAI in its latest release said that export volume is expected to be 50 lakh bales in 2018-19, down about 27.5 percent from last year exports.
Outlook
Cotton futures is heading for fourth straight month loss in February and also fallen to lowest in 10 months on higher domestic supplies than the prevailing demand from the bulk buyers. The spot prices have also slipped below minimum support price but active procurement by Cotton Corporation of India (CCI) is supporting prices above Rs 20,000.
Going forward, a decline in cotton price may be limited due to government support price. Therefore, we need certain fundamental triggers like increase in exports from the country in case of improving international cotton price following resolution of a trade dispute between China and US, lower crop outlook, forecast of deficient monsoon rains and weaker rupees. Boost to yarn exports may also help improving cotton prices in the country.
However, as per the current scenario, we expect cotton to trade under pressure towards Rs 19,500 as farmers continue to hold on to their stocks in anticipation of better prices, which is leading to higher imports while demand is still wanting from the textile mills.
