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Postponing the levy of retaliatory duties and giving some room for resolution of the matter is tactically the right thing to do.
Last month, when India confirmed to the World Trade Organisation (WTO) its plan to slap retaliatory duties on 20 items from the US by June 21, it could have qualified as a proud moment for policy-watchers in India. The country was finally mustering up courage to take some concrete action against the Trump regime’s bullying, and intended to punish it for wrongfully penalising its aluminium and steel producers. Finally, however, things turned out a little different. The Finance Ministry did come out with a notification listing retaliatory import duties on various items imported from the US, but actual implementation was put off by a month-and-a-half to August 4, 2018.
Although the postponement of duties was anti-climactic, diplomatically it was an astute move. A team from the US Trade Representative’s office was to visit New Delhi in less than a week’s time to discuss ways to bring down trade tension between the two countries. Imposing retaliatory duties at that point might not have set the right tone for the meeting.
Astute thinking
It is easy to see that it was totally unfair on Washington’s part to impose higher duties on Indian steel and aluminium without any provocation from the country and treating it at par with large exporters of the metals to the US such as China, Russia, the EU and South Korea.
Adding insult to injury was the fact that the duties were imposed under the garb of national security concerns when India has only tried its best to intensify bilateral security ties. Therefore, taking action against the unilateral unfair trade measure and hitting back at American products with retaliatory duties was totally called for.
However, it is hard to ignore that the US happens to be one of the largest export destinations for India. Despite exports from the US to India rising faster in 2017-18, India still has a robust bilateral trade surplus. If there is even a slight possibility of resolving the tariff issue amicably with the US, economic sagacity dictates that India should indeed give it a try.
Seen in this light, postponing the imposition of retaliatory duties and giving some room for resolution of the matter to the visiting team was tactically the right thing to do.
The same logic could be used to justify India’s last-minute decision not to impose retaliatory duties on American iconic bike Harley Davidson. Since imposing duties would not have amounted to much revenue because of relatively low imports of the bike, the Centre thought it better not to unnecessarily provoke the US President who has been protecting the interests of the bike maker with zeal.
What is important here is that despite the placatory gestures India went right ahead to show the US that it means business by putting the effective date of implementation of the retaliatory tariffs on the notification itself. Unless India is convinced about rolling back the decision, the higher duties on imported items from the US will be triggered on August 4.
Be firm
What India needs to do now is to singularly focus on convincing the US to roll back the additional duties imposed on Indian aluminium and steel. It should make it clear to USTR officials that enough time has been provided to them to iron out the matter and if the issue is not sorted out by August 4, the retaliatory tariffs would roll in.
While Trump is a powerful man, Indian Prime Minister Narendra Modi should take inspiration from other WTO members, including China, the EU and even Turkey, who are all on the path of retaliation.
India needs to remember that the US cannot operate in isolation. While bending a bit for the Trump regime given the US’s superpower status may be diplomatically appropriate, India should not crawl.
Archives
Heavy rains lashed at various places of the district on Friday and Saturday giving a fresh lease of life to withering red gram, green gram, black gram and cotton crops. The district recorded moderate rainfall during the past 48 hours. The rains served as the boon to the farmers who have given up their hope on the recovery of cotton crop.
Rain Gods have shown mercy on the farmers perhaps understanding their plight. On Friday night, the Peddemul mandal recorded a rainfall of 27.2mm on Saturday. The farmers who have taken up deweeding of their crops on Saturday morning on account of the rain soon have to give it up as more rain lashed the mandal on Saturday morning. Elsewhere in Vikarabad district recorded the following amount of rainfall during the past 48 hours: Parigi-40.2mm, Doma-21.2mm, Puduru-38.4 mm and Kulkacharla-16.6mm.
In Puduru, the farmers resumed agricultural operations following the rains and started sowing seeds of maize and cotton. In Kodangal Assembly constituency, continuous downpour was experienced since Friday afternoon. Doultabad mandal recorded a rainfall of 27.2mm. On account of the rain, dried tanks, ponds and other minor irrigation sources are full of water. The rains brought respite to red gram, maize and cotton crops.
Meanwhile, residents of Madaveedhipalle on the outskirts of Annaram took out a procession to Lord Anjaneya temple performing bhajans. They performed special pujas for rains. Dharur mandal experienced a continuous rain of three hours from 12 noon on Saturday brining joy to soybean, turmeric, cotton, maize and red gram farmers. On the whole Ranga Reddy district experienced 5.4mm rainfall, Vikarabad recorded 35mm and Medchal received 2.3mm during the past 24 hours.
While Kesampet in RR district recorded the highest rainfall of 30 mm, Shamirpet in Medchal district recorded the highest rainfall of 14 mm on Saturday. The following are the chief amounts of rainfall recorded at various places in Vikarabad district during the past 24 hours (mm): Vikarabad-35, Marpalli-8.2, Mominpet-12, Nawabpet-3.6, Dharur-45.4, Peddemul-27.2, Bantwaram-21.6, Kotpalli-23, Kulakacharla-16.6, Puduru-38.4, Doma-21.2, Parigi-40.2 mm, Tandur-4.8mm, Basheerabad-10 mm, Yalal-9.0, Kodangal-16.8, Doultabad-27.2 and Bomraspet-13.6.
Business-to-business meetingsto be organised with delegates
The second edition of Global Textile Technology and Engineering Show will be held in Mumbai from January 18 to 20 next year.
According to a press release, the event by India ITME Society is supported by all the major textile export promotion councils. Business-to-business meetings will be organised with delegates from Ethiopia, Ghana, Botswana, South Africa, Tanzania, Benin, Togo, and South Sudan on January 18.
Weaving units
Hari Shankar, chairman of India ITME Society, urged the technical textiles, apparel, and weaving units in this region, including Coimbatore, Erode, and Tirupur to take part in the show.
A conference on technology innovation in textile colouration and an international conference on non-woven technical textiles will be held on January 19 and 20 respectively as part of the event.
Textile machinery and accessories manufacturers can interact with delegates from African, south Asian, and Asian countries apart from the visitors from textile clusters across the country.
Machinery, accessories, and solutions will be displayed in 13 major categories, spread across the textile value chain, including engineering technology, the release added.
For details, log on towww.gttes.india-itme.com
A slowdown in demand from developed countries; Indian exporters urge the government to sign FTA
India’s apparel exports are estimated to have declined by 17 per cent in the first quarter of FY19 due to a slowdown in demand from developed countries following weak economic activity there.
Data compiled by the apex industry body, the Clothing Manufacturers’ Association of India (CMAI), showed India’s apparel exports at $1.35 billion and $1.34 billion in April and May 2018, a decline of 23 per cent and 17 per cent respectively. During FY18, apparel exports from India fell by 4 per cent to $16.72 billion.
Starting in June 2017, after the goods and services tax (GST) was implemented, and resulted in the blockage of working capital due to delay in refund of state levies and other mandatory refundable taxes, the slowdown in overseas pick continued till the first quarter of the current fiscal.
“India’s overall apparel exports are estimated to have declined by 17 per cent in the quarter between April – June 2018 due to depressed economic conditions-led lower demand and growth. Consequently, Indian domestic market performed better during the first quarter of the current fiscal than the largest consumption regions like United States (23 per cent share in India’s overall apparel exports), European Union (38.4 per cent share) and Japan (1.1 per cent share),” said Rahul Mehta, President, CMAI, while announcing the 67th National Garment Fair, India’s largest apparel trade show, scheduled to be held between July 16-19.
India’s domestic apparel market was estimated at $67 billion in 2017 and it has grown at a compounded annual growth rate (CAGR) of 10 per cent since 2005. Owing to strong fundamentals, the domestic apparel market is expected to grow at 11-12 per cent CAGR and reach about $160 billion by 2025.
“The introduction of GST has resulted in non-refund of several embedded taxes. Consequently, apparel exports for the financial year 2017-18 posted a decline. The downturn continues in FY 2018-19 with a month on month decline of 10 per cent. The government is seized of the matter and has assured that embedded taxes will be refunded through the drawback route,” said Premal Udani, Managing Director, Kaytee Corporation, one of India’s largest kids’ wear exporters.
Meanwhile, the apparel industry has raised concerns over the rising import of apparel from Bangladesh, which experts claimed had hit the domestic industry hard.
“The imports of textiles and apparel have reported a jump of 16 per cent to touch the highest ever of $7bn for the financial year 2017-18 compared to $6bn. All the categories across the value chain have seen a drastic rise in imports over the last few years,” said Sanjay Jain, Managing Director, TT Ltd and Chairman of the Confederation of Indian Textile Industry (CITI).
Union Minister for Commerce and Civil Aviation Suresh Prabhu on Saturday sought to dispel the notion of other countries that India subsidised its exports.
He said that the government was merely trying to mitigate the adversities of the exporters, which did not tantamount to subsidising of exports from India, specifically farm products.
“It is a misconception that we subsidise our exports. We are fully WTO compliant and not at all violating those”, Prabhu said at a chat session organised jointly by Shefexil and a leading business daily here.
He said that OECD countries were giving more subsidies to their farmers, particularly in the export of agriculture products.
Talking about agriculture exports, he said “should it not be so that when India exports its agricultural products to other countries, those importing nations deter themselves from subsidising those items”.
Stressing on agriculture, Prabhu said it was important to provide market access to the farmers for which the highest standard of safety was needed to overcome the non-tariff barriers (NTBs).
The government was already working on a craft agriculture policy to double farmers’ income, he said.
“The commerce department is already working on the development of standards. The standard in the Western countries is very high “, he said. Unless the highest standard was not adhered to, it would be difficult to do exports, he added. He also said there would be no market access and realisation of better prices.
Prabhu also said that the ministry was also working on preparing an integrated logistics plan to reduce costs and increase speed and efficiency. Earlier speaking at a CII event, he said that the ministry was preparing separate plans for the manufacture of drones and planes in the country.
China’s major cross-border e-commerce players put much focus on the Middle East and India markets, a report has shown.
Five of the top 10 best performing cross-border e-commerce apps in the first five months focus on the two regions, such as Club Factory, SHEIN, ROMWE, and JollyChic, according to a report from app data provider App Annie.
Smartphones are popular in Arab countries and local consumers have strong purchasing power. But the oil-rich countries lack textiles and other light sectors, offering cross-border e-commerce opportunities for products like apparel.
The Indian market enjoys a huge population and high potential for economic growth, thus attracting many e-commerce players to expand their presence.
Alibaba’s AliExpress tops the list, which mainly reviews the performances of third-party business-to-consumer e-commerce platforms targeting overseas consumers.
The report also showed that South American markets pose rising growth potential while developed markets in Europe and the United States remain attractive to Chinese e-commerce players.
While hailing the increase in the MSP for cotton, the Southern India Mills’ Association (SIMA) has emphasised the need for Price Stabilisation Fund (PSF) scheme and a Technology Mission on Cotton (TMC) in a revised format to double the income of the cotton farmers and to grow the business of the industry as well.
“Cotton productivity has stagnated at 500-550 kg per hectare against over 1,500 kg/hec achieved by over 20 countries. Australia for instance, has achieved productivity of 2,200 kg/hec. Further the quality of Indian cotton is much inferior when compared to the imported fibre, affecting both the farmers and the industry,” said P Nataraj, Chairman, SIMA, emphasising the need for reintroducing PSF and TMC schemes.
He did not deny that India has emerged as the largest producer of cotton since 2015-16, accounting for 36 per cent of world cotton acreage covering 11.80 million hectares, with close to 2.3 crore farmers involved in cotton cultivation. Though things seemed good, consequent to the removal of cotton from Essential Commodities Act from February 2007, few cotton traders started dominating the cotton economy by covering large volumes during peak season.
The textile industry, which is predominantly MSME in nature could not compete with the multinational traders in covering cotton requirement. They therefore were forced to shell out 10 to 25 per cent higher cost for home grown cotton during off-season.
The price volatility often eroded the working capital and profit margins of the industry, restricting the industry growth rate between 6 and 8 per cent againsr the potential growth rate of 12 to 16 per cent.
Cotton PSF scheme consisting of 5 to 7 per cent interest subvention, 10 per cent margin money and nine months credit limit would enable the spinning mills and the Cotton Corporation of India to compete with multinational cotton traders and cover cotton during peak season, Nataraj said and added that this would enable farmers fetch better price, avoid MSP operations, prevent cotton hoarding and speculation. PSF would also bring more GST revenue and boost exports, the SIMA chief added.
Need for TMC
He pointed out that consequent to the roll out of TMC (between 1999 and 2002) and introduction of Bt cotton, India emerged as the largest producer of cotton. Following the government’s withdrawal of extension of TMC, farmers’ suffering began with spurious seeds, lack of seed technology and technology transfer, agronomy research, quality deterioration of the fibre at ginning stage and so on. This calls for approval of TMC II proposal, which has already been submitted by the Ministry of Textiles, Nataraj said, urging for constitution of a task force comprising of various stakeholders under Ministry of Agriculture and Textiles.
The hike in minimum support price of cotton would make Indian cotton fibre relatively expensive with respect to international prices and inflate prices of its products, the Confederation of Indian Textile Industry said today, while urging the government to establish a delivery mechanism for the industry to procure raw material at reasonable prices.
The government yesterday raised the minimum support price of cotton (medium staple) to Rs 5,150 per quintal from Rs 4,020 per quintal and that of cotton (long staple) to Rs 5,450 per quintal from 4,320 per quintal. “The Textile & Clothing being an integrated industry, the proposed hike in MSP based on 1.5 times the A2+FL costs would impact each segment along the supply chain raising the final price of the product.
“Further, this intervention would also make Indian cotton fibre relatively expensive with respect to international prices. As Textile & Clothing exports are still reeling under the pressure to perform, absorbing a hike of 28% would be difficult for the entire textile Industry,” Confederation of Indian Textile Industry (CITI) Chairman Sanjay Jain said.
He said there was a need to examine the event from different perspectives and understand that the farmers’ gain should not impact the USD 120 billion textile industry which employs over 10 crore people, and hoped the government would devise a direct subsidy route so that interests of both farmers and the industry are protected.
“From 2009-10 to 2017-18, MSP increased by Rs 1,320/quintal and in 2018-19, it has been increased by Rs 1,130/quintal. The impact is huge and possibly unprecedented. Although, China has imposed an additional 25 per cent import duty on American cotton and the rupee has also depreciated against the dollar, still cotton and yarn would face headwinds,” Jain said.
He emphasised that the real impact depends on the movement of international prices of cotton, and also pointed out that higher MSP would further compel huge cotton procurement by the state-run Cotton Corporation of India (CCI).
“In the past, for instance, the Centre raised cotton MSP (medium staple) by a record 39 per cent in 2008-09, driving up CCI’s procurement to an all-time-high of 8.9 million bales. Industry hopes that a clear CCI Policy is spelt out, so that in case they need to make massive procurement, the industry gets regular offering from them throughout the season at international parity prices,” Jain said.
Agriculture Special Commissioner D Muralidhar Reddy has said that officials of the department will take stern action against the traders who sell HT cotton seeds in the State. Agriculture Special Commissioner D Muralidhar Reddy has said that officials of the department will take stern action against the traders who sell HT cotton seeds in the State.
Addressing a review meeting with manufacturers and distributors of cotton and chilli seeds at Agriculture head office in Guntur on Thursday, he directed the cotton traders not to sell HT cotton seeds in the market.
The rupee breached the 69-mark against the US dollar in intra-day trade last Thursday and has continued to trade above 68 for quite some time over the fear of rising crude oil prices.
The rupee on Thursday plummeted by 21 paise to close at an all-time low of 68.95 against the US dollar in the backdrop of rising crude oil prices and concerns over a global trade war. The development comes after the rupee on Monday traded at a near five-year low of 68.80 against the US dollar. The rupee last saw this level on August 28, 2013.
The rupee breached the 69-mark against the US dollar in the intra-day trade last Thursday and has continued to trade above 68 for quite some time as fears over rising crude oil prices, portfolio outflows from the capital market and widening current account deficit have rocked the foreign exchange market
Maintaining that there was no need to be alarmed over the declining rupee value, Niti Aayog Vice-Chairman Rajiv Kumar has claimed it was still overvalued in terms of Real Effective Exchange Rate (REER). “Rupee is overvalued in terms of REER. There is no reason to worry…RBI has maintained that it will not interfere to keep the rupee at any particular level,” Kumar said on Thursday.
Responding to criticism of the government on the issue of handling of the rupee, Kumar said that during the UPA-II regime in 2013, the rupee had weakened from 57 to 68 a dollar in three months, and hence the comparison would be misplaced.
The Indian currency has lost around 8 per cent this year as foreign investors have started pulling out funds and crude oil prices moved upwards with the strengthening of the dollar across the globe adding to the rupee’s slide. Capital outflows of around Rs 60,000 crore — Rs 19,500 crore from the equity market and over Rs 40,000 crore from the debt market —since April this year have put severe pressure on the rupee.
