Cotlook A Index - Cents/lb (Change from previous day)

12-11-2019 75.00 (-0.95)

13-11-2018 86.05

13-11-2017 79.90

New York Cotton Futures (Cents/lb) As on 14.11.2019 (Change from

previous day)

Dec 2019 64.36 (+0.14)

Mar 2020 66.22 (+0.14)

May 2020 67.48 (-0.20)

14th November

2019

India world's most open, investment friendly economy: Modi tells BRICS

bloc

Budget 2020: FinMin seeks industry inputs on direct, indirect tax changes

Piyush Goyal seeks complete restoration of GSP benefits

Buy cotton at MSP across India: Smriti Irani to CCI

Facing loss, textile units want Rs 2 per unit power incentive

Cotton and Yarn Futures

ZCE - Daily Data (Change from previous day)

MCX (Change from previous day)

Nov 2019 19170 (+110)

Cotton 12940 (+170) Dec 2019 19070 (+120)

Yarn 20755 (+215) Jan 2020 19200 (+150)

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2 CITI-NEWS LETTER

-------------------------------------------------------------------------------------- India world's most open, investment friendly economy: Modi tells

BRICS bloc

Budget 2020: FinMin seeks industry inputs on direct, indirect tax

changes

Piyush Goyal seeks complete restoration of GSP benefits

Buy cotton at MSP across India: Smriti Irani to CCI

View: By saying no to RCEP, PM Narendra Modi has kept India first

Facing loss, textile units want Rs 2 per unit power incentive

Government to push OSH Code for passage in Budget session:

Santosh Gangwar

Cotton market groping for direction; China holds the key

Slump has bottomed out, but credit worries remain: BK Goenka

Tribunal posting: Amended Finance Act rules struck down

India opting out of RCEP is not an act of courage but cowardice

At 4.6% in Oct, retail inflation breaches RBI comfort level after 15

months

------------------------------------------------------------------------------ Textile Policy of Pakistan 2018-2023

Thailand ends consultations on EU free trade talks restart

Italian mission to Kenya and Tanzania

Kraig Biocraft rears first lot of production silkworms

Textiles assume greater role in ‘soft robots’

--------------- --------------------------------------------------

NATIONAL

---------------------

GLOBAL

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3 CITI-NEWS LETTER

NATIONAL:

India world's most open, investment friendly economy: Modi tells BRICS

bloc

(Source: Business Standard, November 14, 2019)

India has political stability, predictable policy: Prime Minister tells business leaders.

India is the world's most "open and investment friendly" economy, Prime Minister

Narendra Modi told business leaders of the BRICS group in Brasalia, urging them to

invest in the country and take advantage of its "limitless" possibilities.

Modi said on Thursday the five countries of the BRICS bloc were reporting economic

growth at a time of global economic slowdown.

"India is the most open and investment friendly economy in the world due to political

stability, predictable policy and business friendly reforms. By 2024, we want to make

India a five-trillion-dollar economy. The infrastructure alone requires $1.5 trillion

investment," he said at the BRICS Business Forum.

"I invite the business of BRICS countries to build and grow their presence in India," he

said as he spoke about his country’s "limitless" possibilities and "countless" opportunities.

"BRICS countries account for 50 per cent of the world's economic growth. Despite the

recession in the world, BRICS countries accelerated economic growth, drove millions out

of poverty and achieved new breakthroughs in technology and innovation. Now ten years

after the founding of BRICS, this forum is a good platform to consider the direction of our

efforts in the future."

The prime minister said simplifying intra-BRICS business will increase mutual trade and

investment.

"Tax and customs procedures between us five countries are getting easier. The business

environment is getting easier with the collaboration between intellectual property rights,

and banks. I request the BRICS Business Forum to study the necessary business

initiatives to take full advantage of the opportunities thus generated," he said.

"I would also like to request that priority areas in business be identified among us for the

next ten years and based on them blue print of Intra-BRICS collaboration should be

made," Modi said.

The prime minister said the market size, diversity and complementarities of the members

of the BRICS countries were very beneficial to each other and urged the forum to map

such complementarities in the five countries.

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4 CITI-NEWS LETTER

"If one BRICS country has technology, the other is related to raw materials or markets.

Such possibilities are especially in electric vehicles, digital technology, fertilizer,

agricultural products, food processing. I would urge the forum to map such

complementarities in five countries. I would also like to suggest that at least five such

areas should be identified by the next BRICS Summit in which joint ventures can be

formed between us on the basis of complementarities," he said.

"Important initiatives like innovation BRICS Network, and BRICS Institution for Future

Network will be considered during tomorrow's summit. I request the private sector to join

these efforts focused on human resources. Connecting young entrepreneurs with these

initiatives will also give more strength to business and innovation," Modi said.

The prime minister said there was a possibility of making travel, business and

employment between the BRICS (Brazil, Russia, India, China and South Africa) countries

more easy.

He thanked President of Brazil Jair Bolsonaro for his government's decision to give

Indians visa-free entry in his country.

Modi is in Brazil for the 11th BRICS Summit, which will focus on building mechanisms

for counter-terrorism cooperation and strengthen India's ties with the world's five major

economies.

Home

Budget 2020: FinMin seeks industry inputs on direct, indirect tax changes

(Source: Dilasha Seth , Business Standard, November 14, 2019)

'Views may be supplemented and justified by relevant statistical information about the

production, prices, revenue implication of the changes suggested'

The finance ministry for the first time has sought suggestions on changes in direct

and indirect tax rates from the industry. This comes at a time when a revenue shortfall

and consumption slowdown are threatening to upset the government’s finances.

In a letter to industry associations, the department of revenue has sought suggestions for

“changes in the duty structure, rates and broadening of tax base on both direct and

indirect taxes”.

Finance Minister Nirmala Sitharaman announced tax cuts for the corporate sector

besides other sops after the Budget in July as urgent measures to arrest economic

slowdown.

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5 CITI-NEWS LETTER

Sitharaman will be presenting her second Union Budget on February 1. The comments

need to be sent to the department by November 21. The finance ministry will begin its

pre-Budget consultations with representatives of different sectors and stakeholders.

“Your suggestions and views may be supplemented and justified by relevant statistical

information about the production, prices, revenue implication of the changes suggested

and any other information to support your proposal,” the ministry said.

Sitharaman in September announced steep cuts in corporation tax, effective April 1 this

fiscal year.

The corporation tax rate was cut to 22 per cent from 30 per cent for existing companies

that do not enjoy any exemptions, and to 15 per cent from 25 per cent for new

manufacturing companies.

With surcharge and cess, the effective tax rate for the existing companies has come down

to 25.17 per cent from 35 per cent.

As against initial estimates of a revenue outgo of Rs 1.45 trillion, the income tax

department is estimating a reduction of around Rs 1 trillion.

The corporation tax rate cut has triggered a demand for a reduction in personal income

tax rates as well.

However, revenue collections have emerged as a big concern for the government with the

corporation tax mop-up at 0.5 per cent in the first seven months as against a target growth

rate of 15.4 per cent.

Similarly, personal income tax has shown a growth rate of just 5 per cent so far, against a

target of 22 per cent for FY20.

As for indirect taxes, goods and services tax collection has been much below expectations.

India’s growth fell to a six-year low of 5 per cent in the April-June quarter and is estimated

to slump to around 4 per cent in the second quarter. The official data on Q2 gross domestic

product will be released on November 30.

“As regards direct taxes, while forwarding your proposals, please take into consideration

the recent initiatives of the government to reduce corporate tax rates applicable to

domestic companies” provided they do not avail of any other tax rebate or concession, the

letter said.

The panel to overhaul the Income-Tax Act, headed by Central Board of Direct

Taxes member Akhilesh Ranjan, has suggested an increase in the threshold for exemption

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6 CITI-NEWS LETTER

from income tax to Rs 5 lakh a year from the current Rs 2.5 lakh. Besides, a new slab of

35 per cent for those earning Rs 2 crore and more has been recommended.

It has also recommended retaining the long-term capital gains tax and the securities

transaction tax while abolishing the dividend distribution tax. The panel has instead

suggested imposing tax on the person receiving dividend, sources in the know said.

“The government policy with reference to direct taxes in the medium term is to phase out

tax incentives, deductions, and exemptions while simultaneously rationalising the rates

of tax. It would be also desirable that while forwarding the

suggestions/recommendations, positive externalities arising out of the said

recommendations and their quantification are also indicated,” it said.

It has also sought suggestions related to central excise duty and Customs duty.

Home

Piyush Goyal seeks complete restoration of GSP benefits

(Source: Banikinkar Pattanayak, Financial Express, November 14, 2019)

Commerce and industry minister Piyush Goyal is in the US to hold talks with US Trade

Representative Robert E. Lighthizer later on Wednesday (Washington time).

India is pushing for a complete restoration of duty-free export benefits under the so-called

Generalised System of Preferences (GSP) by the Trump administration, and not just a

partial relief as indicated by the US earlier, as the two sides are in an advanced stage of

hammering out broad contours of a limited trade deal. Commerce and industry minister

Piyush Goyal is in the US to hold talks with US Trade Representative Robert E. Lighthizer

later on Wednesday (Washington time).

The limited deal could cover India’s willingness to extend greater market access in

agriculture and also sweeten its initial offer on easing price caps in medical equipment,

especially stents, a source told FE.

India is considering loosening its price control regime for medical devices and applying

trade margin on coronary stents and knee implants at the first point of sale (price to

stockiest), instead of imposing it on the landed prices, as was planned initially.

For its part, the US is willing to only partially restore the GSP benefits for India — which

stood at $240 million in 2018, said the source.

Goyal’s visit is aimed at narrowing differences over the deal that is being negotiated by

the two sides for months now.

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7 CITI-NEWS LETTER

“The two sides are targeting low-hanging fruits first and decisions on the more difficult

matters will be taken later, when they will go for a broader deal,” said the source. The visit

takes place at a time when India has pulled out of the RCEP free trade deal, backed by

China, and is toying with the idea of a trade pact with the world’s largest economy.

A broader deal with the US could be clinched later when both the sides end differences

over the American demand that India scrap or cut duties (20%) on seven ICT products —

including high-end cell phones and smart watches, according to the source.

On Thursday, Goyal will be meeting Scott Walker, the president of AdvaMed, the

American medical device trade association that has lobbied Washington to impress upon

New Delhi to remove its price cap regime for medical devices.

The US also wants India to abolish/cut “not justified” tariff on motorcycles (50%),

automobiles (60%) and alcoholic beverages (150%). It is seeking better trade balance with

India through greater market access in agriculture and dairy products. Similarly,

Washington wants New Delhi to remove price caps on medical devices like stents, a move

that will help American companies like Abbott. The US has also expressed concern over

what it thinks India’s “frequent changes” to e-commerce FDI rules, and data localisation.

For its part, India is pitching for an exemption from the extra duty imposed by the US on

steel and aluminium, resumption of the GSP benefits and greater market access for its

products in sectors ranging from agriculture, automobile and auto components to

engineering goods.

The “limited deal” was earlier expected to be announced after Prime Minister Narendra

Modi’s meeting with American President Donald Trump in New York on September 24.

While the US has been seeking greater concessions from India, it’s reluctant to respond

commensurately with its offers and address India’s concerns; instead, it’s still using the

issue of its trade deficit with India to extract more from New Delhi, a source had told FE

earlier.

US President Donald Trump has already indicated that the two countries will announce a

“limited trade” deal soon before sealing a broader trade deal (perhaps a free trade

agreement).

India fears that it could lose as much as $3.2 billion a year in customs revenue if it scraps

duties on the seven ICT products to accede to US demand.

India’s trade surplus with the US has been shrinking in the past two years, as it has stated

importing oil and gas from the largest economy, something that India has been

highlighting.

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8 CITI-NEWS LETTER

According to the US government data, New Delhi’s trade surplus with Washington eased

to $21.3 billion in 2018 from $22.9 billion in 2017. In contrast, China’s trade surplus with

the US widened further to a record $419.2 billion last year from $375.6 billion in 2017,

despite the tariff war between the top two economies. The drop in India’s trade surplus is

important, given that the US’ overall goods trade deficit zoomed further in 2018 to $878.7

billion from $795.7 billion a year before. India’s surplus with the world’s largest economy

stood at $24.4 billion in 2016.

Home

Buy cotton at MSP across India: Smriti Irani to CCI

(Source: Times of India, November 13, 2019)

Union textiles minister Smriti Irani asked the Cotton Corporation of India (CCI) to make

minimum support price (MSP) available across the country. She was speaking at the

Indian Cotton Conference 2019 organised by Indian Cotton Association Limited (Ical) at

Gurugram on Sunday.

Farmers also complained that as CCI is shying away from making bulk purchases, growers

are forced to sell cotton at lower rates. Irani, responding to the concern of cotton growers,

assured them that the CCI will support farmers by ensuring they get better price and

urged the industry as well to support them by providing them cotton plucking machines,

which will reduce the input cost considerably.

The Union minister also stressed the need for farmers to ensure contaminationfree

cotton, which will earn them more money. “Cotton has played a role in the growth of

agriculture sector in India. But it had to be compatible with the times. The industry could

support by ensuring seeds and extra long staple of the crop,” said the minister.

Home

View: By saying no to RCEP, PM Narendra Modi has kept India first

(Source: Amit Shah, Economic Times, November 13, 2019)

November 4, 2019 shall go down as an historic milestone for India’s bold decision to stay

away from the Regional Comprehensive Economic Partnership (RCEP). The decision also

cements India’s growing stature as a country that is rock solid in its resolve to not only

protect its own interests, but also to boldly ward off any attempts to being arm-twisted.

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9 CITI-NEWS LETTER

Under Prime Minister Narendra Modi’s leadership, New India reflects a new

selfconfidence.

India’s not joining RCEP was summed up by the PM himself: ‘Whenever I try and gauge

India’s interest in light of her joining RCEP, I do not get an answer in the affirmative;

neither Gandhiji’s policy of self-reliance nor my wisdom allows me to join RCEP.’ What

makes this decision significant is that this has yet again demonstrated that the PM can go

to any extent to safeguard the interests of farmers, small and medium enterprises (SMEs),

textile, dairy and manufacturing, medicine, steel and chemical industries. The PM didn’t

compromise on it since the agreement didn’t seem to accommodate India’s concerns on

issues like trade losses and dumping. India should not be party to any such international

treaty that’s one-sided & against the interests of our farmers and entrepreneurs.

The Congress-led UPA government failed in safeguarding the interests of India. In 2007,

it had already begun thinking of engaging in a regional trade agreement (RTA) with China.

How this affected India’s trade with China is borne out by the fact that during UPA’s

tenure, India’s trade losses with China grew 23 times — from $1.9 billion in 2005 to $44.8

billion in 2014. This hit indigenous industries hard. An example of Congress’ history of

compromising with India’s interests is the 2013 Bali Agreement. While participating in

the WTO conference, then commerce minister Anand Sharma had weakened India’s

stand on its provisions for agriculture subsidy and support prices to farmers. This could

have created havoc for farmers, but for the timely intervention of the PM in 2014, who

ensured that then commerce minister Nirmala Sitharaman rejected the proposal

Rebuilding the Wall

It is ironic that Congress, which has had a shaky history of dealing with such international

treaties, is now desperately trying to take credit for the PM’s decision to stay away from

RCEP. In fact, it was Congress’ lack of foresight that had led to India agreeing to become

part of this bloc. In its original form, other than 10 Asean countries, only China, Japan

and South Korea were to join RCEP.

However, thanks to Congress’ lack of concern for the kind of damages it could pose to

SMEs and farmers, the UPA government agreed to become part of RCEP. It was evident

from the start that this could open the floodgates for Chinese goods to enter India. India

also did not share favourable terms of trade with other countries of the bloc.

Congress had also compromised India’s interests in the Asean free trade agreement

(FTA). Even as countries like Indonesia and Vietnam decided to open only 50% and 69%

of their market share for India, New Delhi decided to open 74% of India’s commodities

for trade. Decisions like these caused India enormous loss in its trades with RCEP

countries — from $7 billion in 2004 to $78 billion in 2014. In the context of current

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10 CITI-NEWS LETTER

exchange rates, this translates into losses of Rs 5,46,000 crore (2014) from Rs 50,000

crore (2004).

Since 2014, in RCEP dialogues, GoI has aggressively protected India’s interests and

worked with member countries to agree to favourable conditions, such as opening up the

services sector for the first time for India, higher exports from India, etc. Congress was so

eager to be a part of RCEP that it had conceded that the import duty as applicable on

January 1, 2014, would be taken as the base rate, assuming the agreement would be

operational by 2016. This could have caused havoc, as the 2014 base rate would have led

to unhindered imports. Also, the import duties on many products have gone up in last few

years. The PM argued for 2019 as the base rate

In the RCEP conference, along with commerce minister Piyush Goel, the PM put forward

the interests of farmers, SMEs and manufacturing industries, and vigorously asked for

amendments vital to India’s interest. The most prominent demands were amendment in

tariff differential, changes in base rate for customs duty, changes in the most favoured

nation (MFN) rule, asking for exemptions built into ratchet obligations as part of the pact,

respecting India’s federal character while determining investments, etc. India was

unwavering in its resolve to bring to the fore these pertinent issues. At one point during

the dialogue, out of the 70 agenda items, around 50 were of concern to India.

GoI has begun to evaluate Asean and the Comprehensive Economic Partnership

Agreement (CEPA) with South Korea. It is working on getting into trade relations with

Japan, the US, EU countries, and other developed nations that shall help in making India

a $5 trillion economy. Considering India’s growing stature, RCEP members can’t afford

to ignore it for long, and will come around to agree to GoI’s terms. Meanwhile, India has

maintained successful economic relations with Asean by the means of FTA.

By rejecting RCEP, India has firmly protected its industries from any adverse effects that

Chinese interests could have caused. For us, India remains first, and foremost.

The writer is home minister, GoI

Home

Facing loss, textile units want Rs 2 per unit power incentive

(Source: Times of India, November 14, 2019)

The textile industries have slashed output and keeping units shut for 5-6 days in a week

due to escalated cost of operations after upward revision in power tariffs. After raw

material, power is the next major expense for textile mills. Electricity forms about 15 per

cent of the production cost in industry.

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11 CITI-NEWS LETTER

Madhya Pradesh Textile Mills Association has demanded power at Rs 2 per unit incentive

to existing textile units to aid them operate and compete in global market.

The association has claimed that the upward revision has escalated cost of operations in

existing textile mills by around 7 per cent. “Unlike new industries and those in Special

Economic Zone that get subsidies on power, existing textile mills should also get

incentives on power tariff. Despite being an electricity surplus state, power tariff is higher

in state,” the association chairman Akhilesh Rathi said.

According to the textile association for existing textile mills with high load factor

electricity tariff is Rs 7.30 per unit, while for units with low load factor electricity is

expensive by another 5 per cent. The association in a letter to state government has

demanded that like other states including Maharashtra, Telangana and Andhra Pradesh,

which have allowed reduction of Rs 2 per unit to 3 per unit to existing textile mills,

Madhya Pradesh should also give power subsidies to existing units to protect employment

in the textile sector, which is the largest employer in the country after agriculture.

Rathi said, “Regional textile mills are failing to compete in the global market due to high

cost of operations.” “To manage the situation mills are shutting down operations for a few

days in a week. This has affected both production and employment,” the association

secretary MC Rawat said.

Home

Government to push OSH Code for passage in Budget session: Santosh

Gangwar

(Source: Economic Times, November 13, 2019)

The government will push Occupational Safety, Health and Working Conditions (OSH)

Code in the Budget session of Parliament for approval, said Labour Minister Santosh

Gangwar on Wednesday.

The Code was introduced in the Lok Sabha on July 23, 2019. It is expected to enhance the

coverage of workers manifold and also merge 13 central labour laws into a single code

which would apply to all establishments employing 10 or more workers.

It will subsume 13 labour laws relating to safety, health and working conditions. These

include the Factories Act, 1948, the Mines Act, 1952, and the Contract Labour (Regulation

and Abolition) Act, 1970.

"We will definitely bring the Occupational Safety, Health and Working Conditions (OSH)

Code, 2019, in the Budget Session. Parliamentary standing committee has sought public

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12 CITI-NEWS LETTER

comments on the Code," the minister told reporter on the sidelines of an event of

Employees' State Insurance Corporation (ESIC).

The Budget session of Parliament is most likely to be scheduled in last week of January.

In labour reforms, the government has already received Parliament approval for Code on

Wages. The OSH Code will be the second in line for the nod. The government intends to

concise 44 labour laws into four broad codes on wages, OSH, social security and industrial

relations.

The minister also said the Prime Minister was apprised and briefed about the third code

(Code on Social Security) and the government wants all four codes to become a reality as

soon as possible.

When asked about status of other two codes on social security and industrial relations he

said, "There is tripartite process to firm up draft laws on labour issues. We dont want to

do anything in haste. The discussions are on. We want to bring those to Parliament at the

earliest". The Code on OSH proposes one registration for an establishment instead of

multiple registrations. Presently, six labour acts out of 13 provide for separate registration

of the establishment. This will create a centralised data base and promote ease of doing

business. At present, separate registration is required to be obtained under the six Acts.

It also provides for for a free of cost annual health checks-up for employees above

prescribed age for prescribed tests and for prescribed establishments. It also provides for

a statutory provision to issue appointment letter to every employee with the minimum

information prescribed by the appropriate government. The provision of appointment

letter will result in formalisation of employment and prevent exploitation of the worker.

Home

Cotton market groping for direction; China holds the key

(Source: G Chandrashekhar, The Hindu BusinessLine, November 13, 2019)

While global cotton prices have begun to show signs of recovering from multi-year lows

seen late August, in recent weeks the rates have improved by close to a fifth to reach about

66 cents a pound. This is the highest level seen in last four months. Earlier, during the

third quarter of the year, speculative investors had built short positions on the bourses

where they are now seen reducing.

Trigger for the welcome price rise has emanated from the definite signs of easing in the

ongoing trade tensions between the US and China. After protracted negotiations between

the two warring sides, there are signs of some kind of reconciliation, even if partial. This

is seen giving a bit of a boost to all commodities in general.

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13 CITI-NEWS LETTER

US price fall

While the US is the world’s largest exporter of cotton, the Asian major is the largest

importer. The standoff between the two has disrupted the global value chain and

impacted prices. China’s imposition of tariffs on the US-origin cotton has pressured down

cotton prices within the US. Other markets are experiencing the fallout, given that

markets are substantially integrated.

Thankfully, things are changing for the better. As the world’s largest consumer, China

builds stocks from time to time. In recent years, it has been destocking, and now there is

greater conviction in the market that the destocking cycle has ended and restocking will

begin. China is reported to have purchased some cotton recently.

The supply-demand fundamentals for 2019-20 too are supportive. According to

International Cotton Advisory Committee (ICAC), consumption at 26.2 million tonnes

trails the production estimate of 26.7 mt. Of course, the market cannot ignore the fact of

burdensome inventory. The year will end with stocks of 18.7 mt, as projected by ICAC.

In other words, a combination of plentiful supplies, modest demand growth and large

inventory will not let the market run amok. At the same time, as and when the trade

conflict shows more concrete signs of easing, there will be a pickup in export trade which

in turn will boost prices.

Once the market begins to move upwards, speculative capital is sure to move in and exert

an exaggerated impact. How soon this will happen is of course the multi-billion dollar

question.

Market participants are also closely watching developments in India, especially on the

production and quality side. Varying estimates are doing the rounds of the market,

ranging from a low of 330 lakh bales (170 kg) to a high of 390 lakh bales. While there is

consensus that this year’s crop is surely better than last year’s (2018-19), damage due to

unseasonal rains in October cannot be overlooked. More clarity on crop size and quality

may emerge by the end of the month as second picking is under way.

So, the domestic market is still beset with unclear crop size and quality on the one hand,

and uncertain demand conditions, especially export, on the other. With the recent price

appreciation in dollar terms and a weakening trend in the rupee, some Indian exporters

are reported to have concluded a few export deals with China, apart from regular buyers

such as Bangladesh.

On the bourses, notwithstanding recent reductions, short position holders are still large,

betting on softer prices. This opens up opportunity for price recovery if a trade deal

between USA and China is inked. Because stocks within China stand reduced, purchases

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14 CITI-NEWS LETTER

by the country will boost prices, but the escalation may be limited by stocks held outside

of China.

(The writer is a policy commentator and global agribusiness specialist.)

Home

Slump has bottomed out, but credit worries remain: BK Goenka

(Source: Karunjit Singh, Economic Times, November 14, 2019)

Economic slowdown has bottomed out, but India Inc is still facing difficulties in getting

credit, Assocham president BK Goenka told ET. He said the recent trends indicate that

there would not be a further large dip in the growth but that a lack of availability of credit

could hamper recovery.

“If you see the numbers in Diwali sales and if you see automobile sales numbers, they

have bottomed out... Here on, I think, there should be some kind of a U-turn,” said

Goenka, adding that the recovery would not be sharp and that it would take 2-3 quarters

for the government efforts to stimulate the economy to have an impact on growth.

“The biggest issue industry is facing is liquidity,” said Goenka, adding that while banks

were flush with liquidity, small enterprises were still not getting credit. Goenka said the

government had made efforts to make credit available to the industry but banks dragged

their feet on it.

“RBI has reduced rates five times by almost 1.5% where the bankers have reduced lending

rates less than 0.5%,” he said, adding that the government needed to lower the rate at

which it borrows funds to allow bankers to lower their cost of funds.

The Assocham president also highlighted that India needed more development finance

institutions to fund long term infrastructure projects as commercial banks did not have

the risk appetite to fund such projects. Goenka said the recent announcement of a fund to

revive real estate projects would have a positive knock on effect on the rest of the

economy. “Once people who have invested their savings get a roof over their head, it will

have a huge impact and the cycle of purchasing will start,” said Goenka.

Home

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15 CITI-NEWS LETTER

Tribunal posting: Amended Finance Act rules struck down

(Source: Financial Express, November 14, 2019)

A five-judge Constitution Bench led by Chief Justice Ranjan Gogoi directed the law

ministry to conduct an impact study and submit a report to the apex court.

Striking down the rules framed under the amended Finance Act 2017 for appointments

to tribunals, the Supreme Court has directed the government to reframe fresh norms for

such appointments on the basis of existing statutes and not the rules framed under the

Finance Act of 2017, which was passed as a Money Bill.

A five-judge Constitution Bench led by Chief Justice Ranjan Gogoi directed the law

ministry to conduct an impact study and submit a report to the apex court. It said that

there is a need-based requirement to conduct ‘Judicial Impact Assessment’ of all the

tribunals so as to analyse the ramifications of the changes in the framework of tribunals

as provided under the Finance Act, 2017. However, it referred the issue challenging the

validity of passage of Finance Act 2017 as Money Bill to a larger bench of seven judges.

It struck down the Tribunal, Appellate Tribunal and other Authorities (Qualifications,

Experience and other Conditions of Service of Members) Rules, 2017, saying it suffers

from various infirmities as these Rules formulated by the central government under

Section 184 of the Finance Act, 2017 are contrary to the parent enactment.

And in the meantime, it asked the government to make appointments as per the existing

laws that govern the tribunals.

The apex court, however, upheld Section 184 of the Finance Act which had entitled the

Central government to frame rules to determine appointment, service conditions,

removal and other aspects of tribunals. “Section 184 does not suffer from excessive

delegation of legislative functions as there are adequate principles to guide framing of

delegated legislation, which would include the binding dictums of this Court,” the

judgment stated.

The CJI writing the judgment for himself, Justices RV Ramana and Sanjiv Khanna said

that the Centre should revisit the provisions of the Finance Act and consult the Law

Commission of India or any other expert body and place appropriate proposals before the

Parliament for consideration of the need to remove direct appeals to the Supreme Court

from orders of tribunals. A decision in this regard should be taken by the government

within six months, it said.

“The new set of Rules to be formulated by the Central Government shall ensure non-

discriminatory and uniform conditions of service, including assured tenure, keeping in

mind the fact that the Chairperson and Members appointed after retirement and those

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16 CITI-NEWS LETTER

who are appointed from the Bar or from other specialised professions/services, constitute

two separate and distinct homogeneous classes,” it directed.

Justice Deepak Gupta and Justice Chandrachud wrote separate but concurring

judgments.

The decision has come in a batch of petitions led by Roger Mathew and Revenue Bar

Association challenging the Constitutional validity of Finance Act, 2017 and the Tribunal,

Appellate Tribunal and other Authorities (Qualifications, Experience and other

Conditions of Service of Members) Rules, 2017 (Rules). The petitions had stated that the

provisions of Finance Act 2017 affected the powers and structures of various judicial

tribunals such as National Green Tribunal, Income Tax Appellate Tribunal, National

Company Law Tribunal and National Company Law Appellate Tribunal.

The petitioners stated that the provisions of twenty-five different enactments were

amended to effect sweeping changes to the requisite qualifications, method of

appointment, terms of office, salaries and allowances, and various other terms and

conditions of service of the members and presiding officers of different statutory

Tribunals.

Attorney-general KV Venugopal had stressed on the need to streamline and harmonise

the applicable rules, which he said was attempted through the Finance Act, 2017.

One of the major grounds of challenge to the Finance Act was on the ground that the same

was passed as a Money Bill. It was the petitioners’ case that the passage of the Finance

Act in the form of a Money Bill’ was entirely inappropriate and amounted to a fraud on

the Constitution.

Money Bills are those Bills which exclusively contain provisions for imposition of taxes

and appropriation of moneys out of the Consolidated Fund. They can only be introduced

in the Lok Sabha. The Rajya Sabha can only suggest amendments to money bills.

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India opting out of RCEP is not an act of courage but cowardice

(Source: Yashwant Sinha, Business Standard, November 14, 2019)

I was disappointed when India decided to opt out of the RCEP. We had all the time in the

world to negotiate and get a good deal for ourselves

I travelled for one such meeting (summit with ASEAN) to Cambodia in the PM’s special

plane (the year was 2003). During the flight Vajpayee asked me whether I had seen the

speech which had been prepared for him.

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17 CITI-NEWS LETTER

The PMO used to prepare his speeches based on inputs received from various ministries,

specially the ministries of commerce and external affairs. The final version was not

shown, even to me, and was a trade secret of the PMO. So, I frankly told Vajpayee that I

had not seen the final draft.” “He immediately told his officials to show it to me. ‘It is a ...

Home

At 4.6% in Oct, retail inflation breaches RBI comfort level after 15 months

(Source: Abhishek Waghmare, Business Standard, November 14, 2019)

But core inflation, which excludes the volatile components of food and fuel, stood at 3.3 per

cent in October; this is its lowest in eight years

Consumer prices rose at 4.6 per cent in October, the fastest rate since June last year,

reflecting that vegetables and pulses have become more expensive in the country.

This is an inch above the median 4 per cent target set by the Reserve Bank of India under

its inflation-targeting framework.

But the core inflation rate, which excludes the volatile components food and fuel, dropped

to its lowest in the past eight years, at 3.3 per cent, in October.

Core inflation represents the demand and pricing power in the economy, and a sharp drop

in October portends feeble prospects of recovery in the current quarter also.

The food inflation rate rose to 7.9 per cent, the highest in 39 months, with vegetables (up

26 per cent) and pulses (up 11.7 per cent) contributing the most to this.

Food inflation in urban areas, at 10.7 per cent, is the highest in six years.

But in part, this ramp-up is due to a low-base effect, as food prices were stagnant for the

most of 2018.

Experts said low core inflation would prevail over rising headline inflation as the

monetary policy committee (MPC) gears up for its December meeting, staring at another

slowing quarter.

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18 CITI-NEWS LETTER

“While volatile food inflation is an idiosyncratic factor, core inflation

reflects weaknesses in the economy. While it is generally sticky (rarely

moves fast), it has been hammered down by a weak economy,” D K

Joshi, chief economist at CRISIL, told Business Standard.

He said growth was slowing fast, and it had opened up further the

space for monetary easing.

Ananth Narayan, who teaches finance at a premier business school in

Mumbai, said a declining core inflation rate showed that pricing power

in the economy had diminished.

“While this makes growth the chief concern before the MPC, the struggle to ensure

efficient transmission in lending rates would assume even more importance in coming

months,” he said.

Economists also said inflation would stay at above 4 per cent for some more months,

owing to the low base effect.

“Food price inflation is likely to increase further at least till

March next year, mainly due to food price deflation till February

2019 and low inflation in March 2019,” said Devendra Pant,

chief economist at India Ratings.

Core inflation was flying above 6 per cent in 2018, which had

prompted the then MPC led by former governor Urjit Patel to

raise policy rates, and change stance to calibrated tightening.

This was followed by a gradual fall in core inflation, a rate cut

cycle that has spanned 135 basis points since February 2019.

“Overall, CPI inflation may remain higher than 4 per cent in the

remainder of FY20, complicating policy choices in light of the slowdown in the economic

growth momentum,” Aditi Nayar, principal economist at ICRA, said.

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19 CITI-NEWS LETTER

GLOBAL

Textile Policy of Pakistan 2018-2023

(Source: Khayyam Munawar, The Nation, November 14, 2019)

The inconsistent growth rate in the textile industry is the result of lack of implementation

of the preceding two textile policies. Political instability, Cyclical fluctuations in the

international market and the inauspiciousness of the government to work out an efficient

system that benefits the production process has seized growth and held back the capital

influx. This has led to a deficit in the balance of payments. Textile industry being a major

player in the exports of Pakistan succumbs and numerous businesses discontinue

operations as the textile policies of past fail to get a stable foothold.

The increasing energy crisis, unfavorable business conditions consequential of adverse

government policies, up surging inflation lead to a decline in investor’s confidence and

has sent the entire textile value chain in a state of distress. The SWOT analysis indicates

that whilst the textile industry contributes to a substantial portion of the country’s

economy namely exports, GDP and tax turnover, growth remains stunted due to inferior

cotton production, increased cost of doing business and a lack of implementation of

governmental policies. This compounding with rigorous foreign competition, Pakistan’s

share in the foreign market continues to plummet. With the Textile Industry facing such

strong headwinds there are segments such as synthetic fibers and the garments industry

that can be tapped to improve the overall profitability of the sector and increase export.

The negative effects of the lack of implementation of the previous textile policies can be

ameliorated if the Government adopts the following. The declining investment confidence

can be lifted by providing sustainable, fair priced, un-hindered energy resources. The

Textile Industry is ready to adopt renewable (solar hybrid) energy solutions to deal with

sustainability and competitiveness issues. Such energy resources should be researched

upon, funded, explored and their installment incentivized mainly at Industrial zones

enabling the producer to be self-sufficient to a degree and decrease dependency over a

single source of energy. This is ever so vital because 35% of the total conversion cost in

the textile Industry is absorbed as energy cost.

Quality and availability of raw materials can be improved by subsidising the cotton

production cycle and enforcing quality control checks. Institutes working in this respect

(eg.PCCC) are mere formalities who are ignorant to the Improvement and development

of cotton. This is evident given that 90% of their annual expenditure is administrative.

Lack of a quality control system over locally produced raw material means that for good

quality cotton the Industry is heavily dependent on import channels.

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20 CITI-NEWS LETTER

Production of synthetic fibers should be introduced into the textile value chain keeping in

mind their popularity and demand in the international market. Pakistan’s footprint in

such foreign markets can be further broadened by facilitating the entry of new brands by

giving them assurance of a healthy business environment, introduction of investment

friendly policies and exploration of new potential markets for our exports such an Africa.

The government should introduce positive tax reforms that facilitate entry into the

industry. Examples of such are reduced corporate taxes similar, quicker refunds of input

sales tax and a revamped minimum tax regime. It is necessary that the sales tax refund

system be streamlined and the refund process made more efficient. In addition to this the

government should address the issue of DTRE bonds (bonds issued as refunds) not being

discounted by the scheduled banks in order to avoid a liquidity crisis and the State Bank

of Pakistan needs to address this issue. This is more crucial now than ever since the

Government stripped the textile industry off its zero-rated status. The new government

had initially announced that energy, both gas and electricity, will be provided to export

oriented industries at regionally competitive prices and refund of taxes and duty

drawbacks will be paid on time. Although being a welcoming decision on paper, proper

implementation is still awaited.

Numerous Industrial units categorized as sick have seized production all together because

given the current situation of up surging costs the continuation of operations no longer

stood viable. The government needs to work out a policy paradigm for upward growth of

such sick units. Positive steps should be taken regarding business facilitation of these

units so they may have a chance to reconnect to their past glory. Implementation of

internal reforms such as relief over loan terms from financial institutions, incentivising

new entrants and facilitating the current manufacturers of the Textile sector would yield

favorable results.

Tariffs on imported textile materials are applied to provide protection to domestic

industry which has built inefficiencies in the manufacturing process. The government

should curtail down on customs and duties to facilitate the import of modern, state of the

art textile machinery and allow a higher percentage of initial depreciation as deduction

while calculating income taxes. Rigorous anti-dumping laws should be adopted which

would protect the domestic market and provide a level playing field for the local producer.

Government funded labour training schemes should be put in practice with special focus

upon women employment programs, this would increase the skilled labour turnover .The

existing schemes offered require the business to follow a tedious screening process

therefore leniency over the terms would be very welcoming . Once implemented these

policies would yield a turnover increase of $45 billion, create 3-4 million jobs in the

upcoming 5 years and improve the socio-economic profile of Pakistan.

Home

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21 CITI-NEWS LETTER

Thailand ends consultations on EU free trade talks restart

(Source: Fibre2Fashion, November 13, 2019)

The Thai ministry of commerce is preparing to wrap up consultations with relevant

agencies and organisations across the country on a proposal to resume free trade talks

with the European Union (EU). A summary of opinions would be submitted to a

committee on international economic policy chaired by deputy prime minister Somkid

Jatusripitak.

Many parties support the resumption of trade talks, but there are concerns over the

possible influx into Thailand of products like wine and liquor on a zero-per-cent tariff if a

trade pact is signed, said Auramon Supthaweethum, director-general of the department

of trade negotiations.

She said Thailand would meanwhile hold free trade talks with Turkey next month,

according to a report in a Thai newspaper.

The European Free Trade Association (EFTA), which represents Iceland, Liechtenstein,

Norway and Switzerland, has yet to be consulted as to whether it wishes to resume talks

with Thailand.

Those negotiations have been stalled for more than 13 years since the initial two rounds

held in 2005 and 2006.

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Italian mission to Kenya and Tanzania

(Source: Innovation in Textiles, November 13, 2019)

An institutional and commercial mission of Italian textile machinery manufacturers took

place in Kenya and Tanzania last week. The initiative’s organisers Italian Trade Agency

and ACIMIT, the Association of Italian Textile Machinery Manufacturers, wanted to

strengthen contacts between the Italian textile machinery industry and the textiles sector

in these two African Countries.

The world’s textiles and garment sector is closely watching manufacturing countries in

Sub-Saharan Africa, an area that is emerging as a manufacturing hub for the industry,

firstly for obvious reasons relating to production costs, but also for the incentives offered

by local governments. Consequently, investments in machinery are also increasing and

Italian manufacturers do not want to be caught unprepared in this growth scenario.

“Following several promotional initiatives focusing on Ethiopia over the past few years,

together with the Italian Trade Agency, we’ve decided to explore the business

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22 CITI-NEWS LETTER

opportunities in Kenya and Tanzania, two Countries whose respective Governments are

currently promoting the development of their textile and garment industry,” explained

Alessandro Zucchi, ACIMIT President.

Vision 2030

Kenya, in particular, is an especially interesting market for textile machinery

manufacturers, the association reports. The development programme known as Vision

2030 put forward by the local authorities places the textiles sector among the primary

beneficiaries of the incentives made available by the government, in addition to providing

Kenyan manufacturers with access to the US market, thanks to AGOA (the African

Growth and Opportunity Act), which has boosted the Country's exports.

“Both Kenya and Tanzania need to develop their respective textile sectors, through a

massive modernization process of existing technology,” continued Mr Zucchi. “This

mission offered us with an opportunity to kick start a fruitful and cooperative partnership

with major textile manufacturers in both Countries, while preventing China from

monopolizing the textile machinery market in this area of Africa.”

Outcome of the mission

During the mission, Italy’s representatives met up with textiles companies and

authorities, as well as the industry’s main institutional representatives in the two

Countries. The nine Italian machinery manufacturers associated with ACIMIT that took

part in the initiative included Bianco, Brazzoli, Cibitex, Danitech, Itema, Ferraro, Marzoli,

Mesdan and Tmt Cimi. The outcome of the initiative was positive: Italian textile

technologies were highly appreciated locally, both in Kenya and in Tanzania, considering

them an opportunity for upgrading the production plants in order to achieve a greater

competitiveness in the world scenario. About 50 operators of the two countries attended

the initiative.

ACIMIT will also be on hand at ITME Africa, the industry’s top trade show in Sub-Saharan

Africa, to be held in Addis Ababa from 14-16 February 2020.

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Kraig Biocraft rears first lot of production silkworms

(Source: Fibre2Fashion, November 13, 2019)

Kraig Biocraft Laboratories’ Vietnamese subsidiary, Prodigy Textiles, has reared the first

batch of production silkworms. The company’s recombinant spider silk silkworms were

hatched over a 7-day period starting October 8. The silkworms began spinning cocoons

on October 27 and finished on November 2. Kraig Biocraft Laboratories develops spider

silk fibres.

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23 CITI-NEWS LETTER

After removal of the cocoons from the mounting frames, the cocoons will be prepared for

the silk moths to emerge. The entire population of emerging silk moths will be dedicated

to breeding stock, in order to rapidly expand the company silk production capacity at

Prodigy Textiles.

The second round of production is slated to begin later in November and the resulting silk

cocoons will be reeled and spun into finished silk thread. This thread will be the first

recombinant spider silk thread available from Prodigy Textiles and is scheduled to be

delivered to a collaborative partner the company has been working with to develop new

materials and applications. With operations fully underway, the company expects to

maintain a continuous production output at Prodigy Textiles and will plan to bring

additional materials to market to address the backlog of inquiries in the coming months.

“The Prodigy Textiles production ramp up continues to demonstrate the efficacy of our

manufacturing strategy. The success of this first wave of operations will serve as the

blueprint for the successive expansion. Our direct, drop-in strategy is already proving its

effectiveness to scale Dragonsilk 2.0. We believe this demonstration of rapid expansion

will clear the path to fast-track our operations growth and quickly reach our targeted

capacity,” Jon Rice, the company’s COO, said.

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Textiles assume greater role in ‘soft robots’

(Source: Marie O'Mahony, Innovation in Textiles, November 13, 2019)

Next year marks the centenary of the word robot in Karel Capek’s play R.U.R., where the

intelligent machine in the workplace is portrayed as a threat to mankind. Their physical

hardness and rigidity has become a visual shorthand for their non-human or otherness.

As applications for robotics have moved to include the human body as well as the

workplace and the environment, there has been a noticeable emphasis on robots that are

softer and more flexible with textiles assuming a greater role in how they are now

imagined.

In his first editorial for Soft Robotics launched in 2013, Editor-in-Chief Barry Trimmer

explained the motivation behind the journal: “by building soft materials into the

fundamental design of machines, or by building them completely from soft materials, we

add a new dimension to design and create an untapped resource for entirely new types of

machinery”.

This marks an important shift in the technological mindset around what a robot can be

and how it can function alongside, even augmenting humans. In space, military, medical

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24 CITI-NEWS LETTER

and material applications robots are finding new ways to bring benefit made possible by

their unique attributes that can include strength, intelligence, flexibility and softness.

Space

Before mankind set foot on the moon, NASA had sent Ranger, Surveyor and Lunar Orbiter

robots to gather and transmit information in preparation for human travel to Space.

Designed for performance and ruggedness, these look and behave in ways that are most

commonly associated with robots for Space research.

However, designers of soft-goods at NASA are combining robot technology with apparel

in the design of their Robo-Glove. Sensors placed in the fingertips of the glove allow for

the fingers to be set rigid to grip tools or equipment, then pressed again to release. This

provides muscle support without compromising dexterity through the thick protective

layers of the glove. Molly Harwood, one of the NASA designers describes it as “feeling like

power steering for your hands”. Sensors and actuators can be incorporated as wearable

technology, which, of course, this robo-glove is. But in bringing it to the level of robotics

the expectation and approach are shifted towards a higher level of physical support

beyond what a textile-first design might deliver.

Military

Much of the emphasis in US military close to or on-body robotics has been focused on

exoskeletons with developments such as the Human Universal Load Carrier (HULC)

relieving muscle strain on the wearer traversing rough terrain in strenuous and stressful

conditions. However, treatment of injured soldiers is also an area of research.

A multidisciplinary team from the University of Pittsburgh School of Medicine is

developing TRAuma Care in a Rucksack (TRACIR). Robotics are brought together with

Artificial Intelligence (AI) to develop a hard and soft robotic suit with embedded sensors

capable of assessing the injuries of the patient as they are placed within it. AI algorithms

help to direct critical care and apply stabilising treatments such as intravenous fluids and

some medication.

Ron Poopatich MD, Director of Pitt’s Centre for Military Medicine Research and Principal

Investigator (PI) on the US$ 3.1 million contract sees it as being particularly beneficial in

remote combat zones where soldiers cannot be evacuated easily: “By fusing data captured

from multiple sensors and applying machine learning, we are developing more predictive

cardio-pulmonary resuscitation opportunities, which hopefully will conserve an injured

soldier’s strength.”

Medical

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25 CITI-NEWS LETTER

The approach to soft robot research at the Wyss Institute for Biologically Inspired

Engineering exemplifies the breadth of approaches to the field. In one project a

collaboration with Harvard SEAS has led to the development of a multi-joint soft exosuit.

The use of a machine-learning algorithm allows them to efficiently personalise the control

strategies for individual soft wearable exosuits. In another development origami has

inspired a design for soft yet strong artificial muscles capable of lifting up to on thousand

times its own weight. A Pop-Up Mems manufacturing technology is allowing the creation

of a flexible hybrid sensor small enough to be used with a surgical endoscope. Four layers

of laser-machined stainless steel and sandwiched with a flexible polymer layer and

laminated to allow for self-assembly with copper providing the electrical contacts.

The manufacturing process sees the material agitated in an ultrasonic bath so that the 2D

material “pops up” into a 3D sensor via an integrated spring with a footprint of just

2.7mm. This mixing of hard and soft layers in not unlike the hard abalone shell, something

that Biomimicry-inspired textile technologists have long looked to emulate.

Robot skin

A couple of decades ago artificial skin was focused on replicating human skin in

appearance. Usually made of a polyurethane, it often acted as an inert aesthetic covering

for robotics or prosthetics. Now, just as e-textiles look for greater integration between

electronics and textiles, roboticists are seeking ways for robot and skin to become as one.

Researchers at the Institute of Ion Beam Physics and Materials Research in Dresden are

working on an electronic skin that is bifunctional, capable of simultaneous tactile and

touchless stimulation using a magnetic microelectromechanical (m-MEMS) system. The

ability to distinguish between different types of stimuli has the potential to offer new

capabilities in areas such as Augmented Reality (AR) and Medicine. In a paper published

in Nature Machine Intelligence, researchers at the University of Southern California

point to the potential for new developments in soft robotics and multi-sensory abstraction

to lead to a new field of machine intelligence where they would exhibit equivalence to

feelings and offer a way to investigate consciousness, intelligence and the process of

feeling. As textiles and apparel look to encourage non-textiles industries to consider the

advanced and smart capabilities of textiles, these developments emerging from robotics

are a timely reminder that an openness to new ideas and product development works both

ways and the textiles industry too has much to learn from other fields.

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