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The government is working on a strategy to boost share of services in total exports from the country, said Commerce & Industry Minister Suresh Prabhu. The Indian industry needs to identify the markets that they want to export to and the Department of Commerce would work on market access issues there, the Minister said at a meeting on the services sector organised by industry body CII.
Prabhu further added that the World Trade Organisation (WTO) needed to focus on the most relevant issues in the world today and the mini-ministerial that India would organise in a few weeks’ time for top countries will deliberate on such issues. “In my opinion services should be one of the most critical drivers of the growing economy and must be brought to the forefront,” Prabhu said.
The country needs to identify new services which have tremendous export potential such as healthcare and financial services and within that develop new products which could be exported. The Minister suggested that sectors such as IT should look at developing newer markets such as Latin America as markets like the US and Europe were becoming saturated. The services sector contributes 60 per cent of India’s GDP, 30 per cent of India’s exports and just 30 per cent of India’s jobs. According to Uday Kotak, Chairman, CII National Council on Services, measures need to be taken to step up the share of jobs to 40 per cent and that the service sector become the “job creation engine” for the Indian economy.
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The Government of India is preparing a standard operating procedure that will be followed while entering into any new free trade agreement (FTA), Union minister of commerce and industry Suresh Prabhu has said. Besides the European Union, the Indian government is currently in discussion with the Canadian and Australian governments for FTA.
“When we talk of FTA there are always trade-offs…as a country we have to find how a trade-off can benefit us,” Prabhu said at an event organised by the Apparel Export Promotion Council (AEPC).
Informing about the India-EU FTA talks, he said that he had a meeting with the EU minister to discuss various issues. He added that the EU is great market for India for apparel, which is an employment generating sector.
Speaking at the same event, textiles minister Smriti Irani said skilling would be among the focus area for the government and assured her ministry’s all support to garment manufacturers. “We are working on solving all the issues prevailing in the industry,” said Irani, adding that the ministry would work on every plight of the sector.
AEPC chairman Ashok Rajani said that exporters used to earlier receive 11.30 per cent incentives under Remission of State Levies (RoSL), but now it has come down to 6.5 per cent. He added that exporters are facing a crisis while shipping their products abroad, especially the EU, which levies 12 per cent duty on Indian cotton while Bangladeshi and Vietnamese cotton are exempt from any duties.
BEIJING — China’s cotton output ended a four-year declining streak, increasing 2.7 percent in 2017, as yield per hectare saw strong growth, official data showed on Dec 18. Cotton output increased 142,000 tonnes to around 5.49 million tonnes, according to the National Bureau of Statistics (NBS).
The area of cotton fields in China fell 4.3 percent year-on-year to 3.23 million hectares, but yield per hectare rose 7.3 percent, the NBS said. Northwest China’s Xinjiang Uygur autonomous region, the country’s largest cotton growing area, accounted for 74.4 percent of the national total output, 7.1 percentage points higher than last year. China’s cotton output peaked in 2012 at 6.84 million tonnes, more than 2.2 times that of 1978. It started to drop from 2013 due to relatively low profitability.
Though other cotton growing areas continued to see shrinking output this year, Xinjiang posted increases in both area and yield, due to the promotion of scale production, according to Zhao Jianhua, an NBS statistician.
Apparel Export Promotion Council (AEPC) on Monday urged textile minister Smriti Irani and commerce and industry minister Suresh Prabhu to reduce the new rates fixed under the GST regime.
Speaking at an event organised by AEPC here on Monday, AEPC chairman Ashok G Rajani said that exporters are not getting incentives under Remission of State Levies (RoSL). Earlier, the industry used to receive RoSL of 11.30 per cent but now it has come down to 6.5 per cent.
Exporters are also facing a crisis in shipping their products abroad, especially in European Union. The EU levies a 12 per cent duty on Indian cotton while Bangladeshi and Vietnamese cotton are exempt from any duties.Echoing the concern faced by the sector, Amitabh Kant, CEO of Niti Aayog, said, “It’s high time to reduce import duties and custom on raw material.” New rates under GST are 5 per cent, 12 per cent and 18 per cent on textile-related products, which earlier attracted no duties.
Kant also urged the ministers to come up with new GST rates for fibres to support the sector as it is one of the largest providers of employment.The ministers, however, said there are legacy issues with the textile ministry.“We are working on solving all the issues prevailing in the industry,” said Irani, adding that the ministry would work on every plight of the sector.Prabhu said the government was working on finding new markets for the domestically produced cotton.
The recent pink bollworm incidence in certain cotton growing regions suggest that cotton production in India may be lower than the earlier forecast, according to the Mumbai office of the Foreign Agricultural Service (FAS) of the US department of agriculture. For marketing year (MY) 2017-18, FAS Mumbai forecast cotton production at 29.8 million 480 lb bales.
The revised forecast translates to 38.16 million bales of 170 kg on acreage of 12.3 million hectares. The FAS Mumbai forecast is 200,000 480 lb bales lower than USDA official estimate. This is due to the recent untimely rains and pest infestation issues in Telangana and Andhra Pradesh, which suggest lowering production. The all India yield is expected to be around 528 kg per hectare.
In Telangana, first pickings are over, but farmers are not rushing to the market to deliver seed cotton due to low market prices. Seed cotton prices in the wholesale market yards in Telangana are staying close to minimum support price (MSP) rates. “However, much of the cotton is discounted due to poor quality issues like discolouration and high moisture content,” FAS Mumbai said in its Global Agricultural Information Network (GAIN) report released this month.
Further, there was high incidence of pink bollworm and sucking pests for the first picking in certain districts in Telangana. However, there seem to be limited issues with quality in the standing crop ready for the second picking.
In Andhra Pradesh, the government has issued advisories to install pheromone traps to monitor the incidence of pink bollworm along with the spraying of insecticides. A similar advisory was issued in northern Telangana.
According to the report, the higher incidences of pink bollworm infestations are due to a number of reasons ranging from “resistance of bollworm to Bt toxins, use of spurious and/or unapproved seeds by farmers, limited or poor planting of refugia non-Bt cotton, cultivation of long duration hybrids which provides continuous food for the pest, poor integrated pest management practices, and storage of damaged cotton at gins and market yards.”
As a result, while acreage in Telangana has increased significantly from last year, the yield is estimated lower at 492 kg per hectare.
In Maharashtra, too, “trade sources indicate widespread reports of pink bollworm infestations (even after the third picking), but there are no official reports on the extent of the damage.”
In Gujarat, cotton picking is underway with no pest or infestation issues reported. In Karnataka, the bolls are mature and the first picking of seed cotton in late sown crop, and second picking of early sown crop is in progress. In Tamil Nadu, the crop is at squaring and vegetative stages, and government advisories indicate farmers are to provide adequate drainage in rain-fed and irrigated crops in order to prevent water standing.
All India arrivals as of November 27, 2017, are reported at 6.5 million 480 lb. bales (8.3 million 170 kg bales/ 1.4 mmt) which is roughly 22 per cent of the forecast crop. Arrivals last year were around 13 per cent of the estimated crop on a much smaller overall crop size.
Responding to the Trade Data for the month of November, 2017, showing a sharp increase of 31%, Mr Ganesh Kumar Gupta, President, FIEO said that the global demand has surprised with its strength. The positive growth in exports in November, 2017 have been witnessed by China, South Korea, Taiwan, Singapore, etc. reflecting recovery in global demand, though India has emerged as a top performer. 24 out of 30 major product groups were in positive territory including Engineering goods, Petroleum, Gems and Jewellery, Organic & Inorganic Chemicals, Drugs & Pharmaceuticals, Marine exports, Plantations, Cotton yarns, Fabrics & made-ups and Plastics & Linoleum. However, the major growth contributors were Engineering, Petroleum, Gems & Jewellery, Organic & Inorganic Chemicals, Marine and Pharma.
President, FIEO hoped that the support given to the labour intensive sectors in the Mid-Term Review and the package announced for the Leather Sector will boost job creation in these sectors besides additional exports. He exuded confidence that the problems in GST refund would also be mitigated in the days to come to ease out liquidity for exporters. However, the declining trend in sectors such as Fruits & Vegetables, RMG of all textiles, Jute Manufacturing including floor covering and Carpet needs to be analysed to address them as these sectors are highly employment intrinsic.
FIEO President said that issue of embedded taxes on exports, GST on Sea and Air freight for exports, Seamless timely refund should be the priority of the Government besides managing high volatility in exchange rate. The Government should also gradually extend the MEIS to other sectors of exports since they are also facing numerous challenges in exports. Mr Gupta admitted that there are signs of green shoots for next year but there are still head winds including uncertainties, protectionism and volatility in currencies.
Following pink bollworm pest attack
With the pink bollworm causing serious loss to the cotton farmers during this khariff season and possibility of the pest affecting crop in the next season, the Agriculture Department has asked the farmers to destroy their cotton crop by January and take up alternative crops.
Intermittent rain
Following intermittent rainfall, the farmers had sustained serious loss to the cotton crop with low yield. Simultaneously, the pink bollworm pest had spelt doom for the cotton farmers with steep decline of the yield. Normally, the cotton farmers would have reaped anywhere from 8 to 10 quintals of cotton per acre. But, due to the pink bollworm pest, the yield had come down to 4 to 5 quintals per acre causing huge loss to the farming community. The rains had damaged the grown up cotton produce by decolouring and the pink bollworm had damaged the cotton produce from the flowering stage itself. Talking to The Hindu on Monday, District Agriculture Officer V. Sreedhar said the pink bollworm pest had come from Maharashtra to the district. The pest had attacked the cotton crop at the flowering stage and also after harvesting the crop in the ginning mills. “There is every possibility of spread of the pest and we have been educating the farmers not to continue the cotton crop beyond January in the fields to break its lifecycle”, he said.
Educating ryots
The officials from the department have been visiting the villages and educating the farmers to destroy the cotton crop after completing the plucking of cotton and later plough the crop to take up alternative crops such as maize, gingelly etc. He said that the farmers, who had completed three pluckings of the crop, had already started setting fire to the crop and beginning fresh ploughing of the fields to take up alternative crops. He hoped that the campaign would yield results.
Demand for better grades of lint from buyer likely to keep sellers on driving seats as import price has been escalated due to increase in dollar value. Buyers made deals for better and second grade of cotton on higher prices on account of depleting better grades of lint. Better and second grade of lint fetched price of Rs 6,925 per maund and Rs 6,875 per maund respectively.
The leading ginning units slowed down supply of better grades in order to get premium prices for in next coming trading sessions sensing on increasing demand from buyers.
Majority of mills and spinners bought better grades of cotton and also made forward deals for a month delivery period at around Rs 6,750 per maund and Rs 6,825 per maund respectively.
Physical prices would remain firm on demand for all grades of cotton that would keep market’s sentiments in positive while bottom line prices likely to stand in firm frame. Private sector commercial exporters made deals at Rs 6,400 per maund to Rs 6,425 per maund. Raw grades of lint changed hands at Rs 5,975 per maund depending on trash level during trading session.
More than 1,200 cotton bales changed hands while ex-gin price per maund remained firm at Rs 6,850 per maund. In Kerb market trading took place in a range of Rs 6,575 per maund to Rs 6,650 per maund.
Active trading was recorded at the Karachi Cotton Exchange on Friday, while spot rates increased Rs100/maund. The spot rates increased to Rs6,950/maund (37.324kg) and Rs7,448/40kg. Ex-Karachi rates also rose to Rs7,095/maund and Rs7,603/40kg after an addition of Rs145 and Rs155 as upcountry expenses, respectively.
A total of 27 transactions were recorded of around 32,000 bales at a price of Rs6,400 to Rs7,500/maund. Notable deals were recorded from Daharki, Saleh Pat, Rohri, Khanpur Maher, Khairpur, Kot Sabzal, Khanpur, Liaquatpur, Rahimyar Khan, Shujabad, Bahawalpur, Ahmedpur East, Yazman Mandi, Chistian and Mianwali.
Vietnam textile and garment sector has faced multiple challenges early this year, but the situation has changed for the better since the second quarter of this year. Of the total export revenue of this year estimated at US$31 billion, textiles and garments contribute an estimated US$25.91 billion, fabrics US$1.07 billion and cotton US$3.51 billion.
At a press conference in HCMC on December 11, Giang said that the sector has gained strong export growth this year, at 10.23% versus 2016, and the momentum is to continue into next year with export earnings expected at US$33.5-34 billion. Giang added that the local enterprises have tapped new markets including China, Russia and Cambodia while maintaining traditional markets such as the U.S., the EU, Japan and South Korea. It is noteworthy that local firms have managed to switch production, from processing exports for foreign firms to FOB (free on board) and ODM (original design manufacturing).
Commenting on next year’s business, Giang said that many textile and garment firms have signed big export contracts enough for production in the first haft of next year and buyers of these products have shown their confidence in product quality and delivery time of Vietnamese firms.
To achieve the target for next year, VISTA advised textile and garment enterprises to change their production methods meeting requirements of import markets, enhance competitiveness, invest in new techniques and technologies, diversify products and build links among enterprises.
However, the price competition will be tough as many other countries have also sought to undercut Vietnam, especially apparel manufacturers from China, Bangladesh, Sri Lanka, Myanmar and Cambodia. Therefore, local enterprises have to ensure the supply and have high-skilled workers, invest in modern equipment and step up automation. According to VISTA, domestic firms have to import 86% of fabrics for garment production as locally-produced fabrics have not met standards of major import markets, while locally-produced fabrics are subject to taxes while imported fabrics used for export processing are tax-free.
The textile and garment sector is also experiencing difficulties due to rising production and labor costs. For example, expenditures on social and health insurance in Vietnam are 2.5 times higher than in other regional countries.
To help textile and garment enterprises overcome difficulties, the Government has been proposed to adjust policies on salary, insurance, administrative procedures and inspections.
Depressed due to crop loss and increasing burden of debts, a cotton farmer committed suicide in Siddipet district on Saturday. Mulugu Karunakar, 34, consumed pesticide at his field and succumbed while undergoing treatment. Karunaker is survived by his wife and three children.
Mulugu Karunakar, a resident of Singatam village in Gajwel mandal, owns two acres of agricultural land. Due to scant rainfall, there was no growth in his cotton crops. Meanwhile, he had borrowed around Rs 4 lakh from different persons in the village for a very high interest rate.
As the crop failed, he was not able to repay his debts and they kept mounted. Depressed, he consumed pesticide at his field on Saturday morning. Farmers from neighbouring fields noticed him and rushed him to Gajwel government hospital, where he died during treatment. Based on a complaint from his wife Anitha, a case is registered at the Gajwel police station.
