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Pakistan is likely to be the beneficiary of the prolonged trade war between the US and China, as the country’s textile industry is likely to receive higher orders from US importers.
According to an official of the textile industry, due to ongoing trade tensions between the US and China, Pakistan’s textile industry is getting a huge amount of import queries from the US, reports an English daily.
Earlier this week, the Economic Coordination Committee (ECC) had exempted duties on the import of cotton, a major input for the textile industry to help decrease the cost of industrial outputs.
In September last year, the government had reduced the regulatory duty on the import of cotton yarn from 10% to 5%.
Also, it had reduced the gas and electricity tariffs for the export concentrated industry in an effort to decrease the production cost and improve competitiveness.
The textile sector is being supplied electricity at a tariff of 7.5 cents per Kilowatt-hour (KWh), natural gas at Rs600 per unit and imported regasified liquefied natural gas (RLNG) at $6.5 per unit.
Due to these government incentives have helped bring down the production cost for the textile value chain.
The country has remained a net importer of cotton for around two decades and the local production of the commodity hit its peak in the last decade at 13.96 million bales in 2014-15 and in that year 1 million bales were imported.
During the current financial year 2018-19, the country is anticipated to experience a deficit of 3-4 million bales with production projected at 10.738 million bales against the initial target of 14.37 million bales.
In July 2018, the caretaker administration had slapped high duties and taxes of up to 10% including 3% customs duty, 2% additional duty and 5% sales tax which contributed to a sharp plunge in cotton imports.
According to the official, the current administration was working upon rationalizing subsidies for agricultural crops in hopes of enhancing cotton cultivation.
Moreover, the government is working in conjunction with the cotton ginning industry to decrease contamination, enhance productivity and upgrade the machinery.
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Predictions of a global slowdown do notaugur well for India
The feeble growth in India’s merchandise exports in December (0.34 per cent) should be seen against the backdrop of the world economy slipping into a slowdown. The signs are unmistakable: China’s overall December exports fell 4.4 per cent from the same period in the previous year, the sharpest monthly drop in two years. China’s imports contracted 7.6 per cent in the same month, the biggest fall since July 2016. China’s December trade surplus with the US fell to just below $30 billion, from $35.5 billion in November. China’s falling trade surplus is likely to be part of a larger trend of sluggish trade and economic growth in advanced and emerging economies in 2019. According to the World Bank’s recently released report Global Economic Prospects , growth among advanced economies is expected to “drop to 2 per cent this year”, against an estimated 2.2 per cent in 2018, owing to “slowing external demand, rising borrowing costs and persistent policy uncertainties”, while emerging economies too, are expected to grow at just 4.2 per cent (and India at just over 7 per cent). The latter, the report observes, have been impacted by “substantial financial market pressures” and trade tensions. India’s rise in exports in 2016-17 and 2017-18 coincides with a sharp increase in world growth rates from 2.4 per cent in 2016 to 3.1 per cent in 2017. While total exports have grown by 13.79 per cent in April-December this year (goods exports by 10.18 per cent and services exports by 20.18 per cent), it remains to be seen whether this trend continues.
It is notable that the export increase in 2017-18 (about 13 per cent for goods and services put together) came about in a year when the rupee was largely firm, in the range of 64-65 to the dollar. With import-dependent exports accounting for about 40 per cent of total exports, the role of a weaker rupee in spurring exports should not be over-estimated. It is hard to say whether a weaker rupee in 2018 acted as a major boost to all exports other than services; this is despite the fact that the rupee depreciated more sharply than competing currencies. Certain sectors performed well in April-November 2018, such as chemicals, machinery and transport equipment, while textiles, agriculture, and gems and jewellery did not. GST-related glitches seem to have impacted sectors such as textiles with a large intermediary chain, despite the Centre’s efforts to sort these out.
It would seem that global growth is the biggest driver of exports. Even as India seeks to negotiate trade pacts to its advantage, it should work towards improving its agri-products exports, at a time when farmers are struggling with deflation. The agri-exports policy, unveiled last month, has come at the right time. Its focus on doubling farm exports to $60 billion by 2022 by diversifying the basket of products and destinations could lift both the trade numbers as well as livelihoods of millions.
The surge in export demand for cotton yarn during the initial few months of the current financial year has helped the domestic spinners record a healthy recovery from the multi-year low profitability reported during FY2018 amid multiple headwinds, according to an Icra report released on Monday.
Even though exports have started to normalise and cotton prices have softened with fresh arrivals in the recent months (though still higher vis-a-vis last year), cotton yarn realisations have exhibited stickiness which, together with movement in cotton yarn stock levels, point towards a pick-up in domestic demand. Moreover, notwithstanding the moderation in Y-o-Y growth in cotton yarn exports in the recent months, trend in absolute exports remains healthy.
Commenting on the emerging trends, Mr. Jayanta Roy, Senior Vice-President and Group Head, Corporate Sector Ratings, ICRA, says, “Healthy demand and higher cotton fibre prices (vis-a-vis last year) have shifted cotton yarn realisations into a higher trajectory this year, with realisations averaging ~13% higher vis-a-vis an 11% increase in cotton fibre prices from last year. Additional benefits of lower cost cotton stocked during the last harvest season has helped in placing the recent performance
of the cotton spinners amongst the strongest seen in more than five years in terms of gross contribution margins.”
Notwithstanding the volatility in Indian rupee against the US dollar during the current year, the sharp rupee depreciation between July and October 2018 also supported spinners’ INR realisations and hence contribution margins.
The aggregate operating margins of ICRA’s sample of 13 large spinning companies improved to two-year high of 13.7% in Q2 FY2019 vis-a-vis 12.2% in Q1 FY2019, after remaining subdued at 9-11% during the preceding five quarters. On an absolute basis, the aggregate operating profit of ICRA’s sample in Q2 FY2019 stood at five-year high level, with 59% Y-o-Y growth and 9% Q-o-Q growth.
After growing at a strong pace of 50% Y-o-Y during 5M FY2019, India’s cotton yarn exports normalised in the subsequent months of September and October 2018, reporting a moderation in growth to 34% Y-o-Y in 7M FY2019. The growth initially had been driven by a more than two-fold increase in exports to China – one of India’s key markets for cotton yarn. Besides a low base effect, the staggering growth in exports was supported by the relative competitiveness of Indian cotton and yarn prices, providing an arbitrage opportunity to Chinese buyers.
“Despite exports retreating to normal levels in the recent months in absolute terms, ICRA expects the annual growth in India’s cotton yarn exports to remain healthy at ~18-20% during FY2019 supported by a strong YoY growth of ~34% in 7M FY2019.” Mr. Roy added.
A more than 90% growth in India’s cotton yarn exports to China during 7M FY2019 also helped Indian spinners claw back a part of the export market lost to competing nations such as Vietnam over the past few years. However, sustainability of India’s cotton yarn exports remains to be seen, given the correction in spread between domestic and international cotton prices to ~8% in the quarter ended Dec 2018 from ~16% in the quarter ended Jun 2018 and continued competitive pressures from Vietnam.
Given India’s continued high dependence on China, its ability to strengthen its presence in other export markets remains crucial. Besides, incremental developments on the US-China trade row can play a key role in influencing India’s export prospects, as China has a significant reliance on the US for import of cotton fibre.
Transco undertaking major support initiatives in the State
The AP-Transco’s renewable energy evacuation scheme under the Power-for-All (PFA) programme, which is capable of transmitting 1,000 MW of wind energy from the generating stations to the grid, is going to give a fillip to the fledgeling wind power sector.
Besides, according to official sources, the AP-Transco has laid a 400-KV line from Jammalamadugu in Kadapa district to Uravakonda in Anantapur and is in the process of laying another line of the same capacity from Uravakonda to Hindupur, both under its Green Energy Corridor programme planned to evacuate 3,150 MW in Anantapur, Kadapa and Kurnool districts at an estimated cost of Rs. 3,375 crore.
These major infrastructure works are required to facilitate the growth of the wind energy sector from its cumulative installed capacity of nearly 4,059 MW as at the end of October 2018. Andhra Pradesh has got the highest capacity addition in five years of nearly 2,190 MW in 2016-17. With a substantial production of wind energy, the State is able to meet around 22% (Renewable Power Purchase Obligation) of its total energy requirement through renewable sources as against just 1.85% during 2013-14.
Big players
Coming to the specifics of the wind energy sector, leading manufacturers such as Suzlon, Gamesa and ReGen have set up their units in the Rayalaseema region and more players are being roped in.
A senior official of the New and Renewable Energy Development Corporation of A.P. toldThe Hindu that the wind power potential of the State was estimated by the National Institute of Wind Energy to be about 44,230 MW at 100-metre level.
To achieve synergies, the State is promoting wind-solar hybrid projects on a large scale to utilise the common infrastructure and achieve better grid stability. For this, Wind – Solar Hybrid Power Policy-2018 has just been released.
Allows $750 m/fiscal under the automatic route; expands list of eligible borrowers
To further improve the ease of doing business in India, the Reserve Bank of India has drawn up a new external commercial borrowing (ECB) framework allowing all eligible borrowers to raise up to $750 million per financial year under the automatic route, replacing the existing sector-wise limits. The central bank has also expanded the list of eligible borrowers and recognised lenders.
To curb volatility in the forex market arising out of dollar demand for crude oil purchases, the framework provides a special dispensation to public sector oil marketing companies.
It allows them to raise ECB, with an overall ceiling of $10 billion, for working capital purposes with a minimum average maturity period (MAMP) of three years under the automatic route without mandatory hedging and individual limit requirements. The list of borrowers has been expanded to include all entities eligible to receive FDI.
Additionally, port trusts, units in SEZs, SIDBI, Exim Bank and registered entities engaged in microfinance activities can also borrow under this framework.
Maturity period
While the minimum maturity period for the ECB will be three years, the framework allows manufacturing companies to raise up to $50 million per financial year with a maturity period of one year. Further, if the ECB is raised from a foreign equity holder and utilised for working capital, general corporate purposes or repayment of rupee loans, the maturity period will be five years. This probably has been done to encourage foreign shareholders, especially in Indian airlines, to support their Indian partners. This could help Jet Airways deal with its current financial crisis.
As per the policy, call and put option, if any, cannot be exercised prior to the completion of the minimum average maturity.
After hitting a multi-year low last fiscal, cotton yarn spinning companies’ profit margins have improved in the December quarter due to revival in export and rupee depreciation. However, sustainability of profit is already threatened by rising cotton prices and competitive pressure from Vietnam and Bangladesh.
Over 90 per cent of increase in exports to China in first seven months this fiscal helped Indian spinners regain a part of the export market lost to competing nations such as Vietnam over the past few years, said the rating agency ICRA.
However, the difference between domestic and international cotton prices have fallen to eight per cent in the quarter ended December quarter from 16 per cent logged in June quarter, adding to competitive pressures from Vietnam.
Besides, incremental developments on the US-China trade row can play a key role in influencing India’s export prospects, ICRA added. After growing at a strong pace of 50 per cent in five months of FY’19, India’s cotton yarn exports have normalised to 34 per cent in October.
ICRA expects the annual cotton yarn exports to grow at 18-20 per cent this fiscal supported by a strong beginning.
Jayanta Roy, Senior Vice-President, ICRA, said healthy demand and higher cotton prices have shifted cotton yarn realisation into a higher trajectory this year, with realisations averaging 13 per cent higher against an 11 per cent increase in cotton prices from last year.
The Maharashtra State Electricity Distribution Company Ltd (MSEDCL) will create 3,200 MW of distributed solar capacity in the next two years, a senior State government official has said.
Maharashtra has 130 MW of functional scale solar projects and 320 MW of projects in the pipeline.
The decision to scale up solar power capacity was taken by Power Minister Chandrakant Bawankule at a review meeting on Wednesday. The MSEDCL has 16 zones and each zone has been tasked with installing 200 MW of solar power projects, the official said. The power will be generated in a distributed manner by installing solar panels on grampanchayat and State government buildings.
The project willl be implemented under the State Energy Conservation Policy for which initial capital of Rs. 500 crore will be raised and presented before the State Cabinet for approval, the official said.
Large solar park-based project will be implemented by Maharashtra State Power Generation Company (Mahagenco) while distributed projects will be under MSEDCL.
The Maharashtra government has been very active on the solar power front and in last June, tenders of 750 MW of grid-connected solar photovoltaic (PV) projects to cater to the agricultural feeder loads of various substations across the State were floated. A 1,000 MW floating solar power plant on Ujani Dam in Solapur is also under consideration by MSEDCL, the official added.
Trendsetter Marketing Pvt. Ltd., a publishing house pioneering the production of coffee-table books, has unveiled its new publication, India Series: The Textile Story. This new coffee-table book provides an elaborate glimpse into India’s vibrant textile industry, with particular emphasis on its present-day relevance in securing livelihoods and generating revenue for the national exchequer. India’s textiles, handicrafts and handlooms form an important industry vertical that is not only the backbone of India’s indigenous livelihoods but also garners deep appreciation from global markets. Traditional Indian designs, prints, materials, crafts, among others, have built a unique niche. Over time, this indigenous and deeply fragmented industry, spread across the country’s length and breadth, has been consolidated under the Ministry of Textiles and its several ancillary organisations. The journey of textiles from being a traditional practice to becoming a synchronised industry has been facilitated by the Ministry, its various organisations and their timely implementation of policies. This book has been published in coordination with some leading industrial chambers functioning in the ambit of Indian textiles – they include, Confederation of Indian Textile Industry (CITI), Export Promotion Council for Handicrafts (EPCH), Apparel Export Promotion Council (AEPC), The Clothing Manufacturers Association of India (CMAI) and Welspun.
The book, India Series: The Textile Story, was unveiled by Union Minister for Textiles, Smriti Zubin Irani, at Udyog Bhawan, New Delhi. The unveiling was attended by eminent dignitaries of various textile industry chambers, including – O P Prahladka, Chairman, EPCH and Rakesh Kumar, Executive Director, EPCH; Padma Shri Dr A Sakhtivel, Vice Chairman, AEPC and Gautam Nair, Member, Executive Committee, AEPC; D L Sharma, Vice Chairman, CITI and Dr S Sunanda, Secretary General, CITI; and Rahul Mehta, President, CMAI. Following the unveiling, a round-table conference was organised at Press Club of India, New Delhi, where dignitaries spoke of India’s burgeoning textile industry and its implications on the future of the national economy. Padma Shri Dr A Sakhtivel, emphatically mentioned that “there is no better time to be in India than now” as “the Indian textiles industry has evolved!” O P Prahladka of EPCH expressed deep gratitude while appreciating the Ministry of Textiles for implementing timely policy changes and providing adequate support to overcome challenges and steer towards greater success. Appreciating the publication, Rakesh Kumar, EPCH, remarked that “the production is timely as India is waiting to take rapid strides in global textile markets and we now have a book that has documented our trajectory for reference to the outside world”. A humble representation of a vast industry that sustains close to 100 million Indian lives, this book encapsulates textiles as the pinnacle of India’s indigenity and prized diversity.
NEW DELHI: Reserve Bank of India (RBI) Governor Shaktikanta Das will meet industry chambers on Thursday to understand their issues and concerns.
After his taking over as 25th Governor of the RBI last month, he has been holding consultations with various stakeholders including banks, non-banking financial companies and micro, small and medium enterprises.
“Will meet the apex chambers/associations of industry and commerce tomorrow (17th January),” Das said in a tweet. The meeting comes ahead of the sixth bi-monthly monetary policy statement for 2018-19 scheduled to be announced on February 7. Industry has been pitching for the rate cut amid falling inflation and factory output.
Continued decline in food prices pulled down retail inflation to an 18-month low of 2.19 per cent in December 2018. Another set of official data showed that the wholesale inflation also eased to an eight-month low of 3.80 per cent in December on softening fuel and food prices.
The inflation based on the Consumer Price Index was 2.33 per cent in November and 5.21 per cent in December 2017. The RBI, which mainly factors in retail inflation, has been tasked by the government to maintain the inflation near 4 per cent. The factory output based on movement in the Index of Industrial Production (IIP) slumped to a 17-month low of 0.5 per cent in November on account of contraction in the manufacturing sector, particularly consumer and capital goods.
The Government of Gujarat will be focussing on Exports, Trade and Investment Potential at Vibrant Gujarat 2019. The VGGTS will house some of the major pavilions such as Automobiles, Agro and Food Processing, Oil and Gas,
E Mobility, Chemicals and Petrochemicals, Banking and Finance, and Pharmaceuticals.
India’s biggest trade fest Vibrant Gujarat Global Trade Show with 2 lakh square meter of Exhibition Area and Stalls for Vibrant Gujarat 2019 is all set to begin.
In what has become the highlight of the Vibrant Gujarat Global Summits held biennially, Vibrant Gujarat Global Trade Show 2019 (VGGTS) will begin from 17 January and will last till 22 January 2019 in Gandhinagar.
The exhibition will be inaugurated by the Prime Minister on the first day of the show’s commencement. It must be noted that till the 20th of January, the exhibition is reserved mostly for delegates taking part in Buyer-Seller Meets and Reverse Buyer-Seller Meets along with media and academia. Those interested can visit the exhibition from the second half the 20th of January.
The main goal of the exhibition aims to get multi-sector B2B engagements, wherein there will be, inter alia, Buyer – Seller Meets, Reverse Buyer – Seller Meets, Vendor Developments Programmes, Business Networking, Technology Assessment and Strategic Partnerships under one roof. The estimates say that over 1500 overseas and domestic buyers will be visiting the VGGTS 2019. Moreover, the Vendor Development Programme is also being organized to nurture “stronger synergies” between MSME and Large Scale Enterprises including PSUs.
The business through Buyer Seller Meet and Reverse Buyer Seller Meet is expected to reach nearly Rs. 2000 crore. Nearly 1.5 million visitors and about 3000 International Delegates from over 100 countries are expected to visit the Exhibition. Attractions like a replica of Statue of Unity, Bullet Train simulator, Farm-to-Fabric Pavilion and Fashion Show with a focus on ‘Make in India’ and Khadi await the visitors at the Trade Show.
Gujarat Chambers of Commerce & Industry (GCCI) is also supporting the fashion show which will be held at picturesque Sabarmati Riverfront on the evening of 19th January.
Other high points for the visitors include a tableau of Innovation and Technology, in particular Robotics and Laser Cutting. Most countries will participate in this and also Service Sectors including Medicare and Health, Audio Visual Services, ITES and Communication, are expected to participate.
So far, VGGTS 2019 will have 15 partner countries and countries such as France, South Korea, Canada, Poland, Japan, Thailand, The Netherlands, Sweden, South Africa, UAE, Uzbekistan, Norway, Czech Republic, Morocco and Australia will have their own pavilions. Moreover, an elaborate Africa Pavilion will have more than 25 African countries which will be representing the continent of Africa including two of the partner countries – South Africa and Morocco.
Visitors can also see pavilions exhibiting flagship initiatives of Government of India that include Ayushman Bharat, Digital India, Start-up India, Make In India, Sagarmala, and Indradhanush at the Trade Show.
The Government of Gujarat will be focussing on Exports, Trade and Investment Potential at Vibrant Gujarat 2019. The VGGTS will house some of the major pavilions such as Automobiles, Agro and Food Processing, Oil and Gas, E Mobility, Chemicals and Petrochemicals, Banking and Finance, and Pharmaceuticals.
Sectors such as Bio Technology, Ceramics, Ports, Transport and Travel, Tourism and Hospitality, Logistics, Power and Renewable, Start-ups and Innovation, Textiles, Urban Infrastructure, Water Treatment and Environment, Education, Skill Development and Engineering are also included.
The State Government has also established an Exhibition Committee to look after the preparations for the VGGTS 2019, which is being coordinated by S.J Haider, Principal Secretary, Tourism.
