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

21-06-2019 76.85 (-1.05)

18-06-2018 96.95

21-06-2017 77.00

New York Cotton Futures (Cents/lb) As on 25.06.2019 (Change from

previous day)

July 2019 62.52 (+1.33)

Oct 2019 65.26 (+0.53)

Dec 2019 65.95 (+0.26)

25th June

2019

India's readymade garment exports stitch recovery, helped by tax break

Exporters and Importers can now find answers related to trade-related matters

via DGFT Call Centre

What does India want on July 5? Here's a ground report from 8 places that matter

Marathwada agricultural university releases first public sector Bt cotton hybrid

seed variety

Bangladesh: Record FDI in 2018

Cotton and Yarn Futures

ZCE - Daily Data (Change from previous day)

MCX (Change from previous day)

June 2019 22070 (-30)

Cotton 14220 (-60) July 2019 21520 (-100)

Yarn 21540 (+55) Aug 2019 21380 (-220)

www.citiindia.com

2 CITI-NEWS LETTER

-------------------------------------------------------------------------------------- India's readymade garment exports stitch recovery, helped by tax break

Exporters and Importers can now find answers related to trade-related

matters via DGFT Call Centre

What does India want on July 5? Here's a ground report from 8 places that

matter

Marathwada agricultural university releases first public sector Bt cotton

hybrid seed variety

Will India Join the Regional Economic Comprehensive Partnership?

Government sets the ball rolling for national retail policy

Plan to increase the number of MSMES in the country

Policy | Data localisation determines taxes, sovereign rights

US Secretary of State Pompeo to discuss ways to strengthen strategic, trade

ties with India

Ludhiana MSMEs take up issues related to cheap imports of Chinese goods &

EPF with state govt

Outlook moderates for manufacturing in quarter 1 of 2019-20: FICCI Survey

Farmers stage sit-in against Tnpcb officials

Global trade war: Some silver lining

Lakme Fashion Week announces new batch of Gen Next designers

------------------------------------------------------------------------------- Bangladesh: Record FDI in 2018

Over 100 million textiles carry CmiA label

DiloGroup presents latest textile machines at ITMA

LMW unveils 3-pronged approach for spinning at ITMA

Lenzing to invest €100 million to reduce carbon emissions

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

NATIONAL

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

GLOBAL

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3 CITI-NEWS LETTER

NATIONAL:

India's readymade garment exports stitch recovery, helped by tax break

(Source: Business Standard, June 24, 2019)

Garment exports rose by nearly 14.05 per cent to $1.528 billion in May 2019 compared to

$1.339 billion in the same month last year.

Readymade garment (RMG) exports are picking up after a slump lasting almost two

years, buoyed by the government increasing tax rebate and helping the sector with other

measures.

Garment exports rose by nearly 14.05 per cent to $1.528 billion in May 2019 compared

to $1.339 billion in the same month last year. Experts said Indian products are costlier

by 10-15 per cent, but buyers are still interested to source from the country.

Exports decreased year-on-year in the last two financial years, but the industry is now

expected to grow by 8-10 per cent.

In 2016-17, the total garment export was worth $17.361 billion. After the introduction of

GST and demonetisation, Made-in-India products became costlier and exports started

declining. In 2018-19, exports dropped by 3.43 per cent in to $16.14 billion from $16.71

billion in 2017-18.

Identifying issues such as low incentives and cost

pressures with the industry, the government

increased Rebate of State and Central Taxes and

Levies (RoSCTL) by 3.2 per cent for some items and

4.5 per cent for the rest. The government's steps have

helped export units, especially MSMEs, come out of

downturn, said Raja M

He said in the last six months the average export growth was about 31.15 per cent over

the corresponding period in 2017-18 for Tirupur. Government data shows from October

2018, exports increased by 12 per cent.

“I feel that we are finally turning the corner after stagnancy or slight de-growth. The

government support has gone up. Bangladesh is becoming expensive and Vietnam is

showing signs of reaching the peak of its capacity,” said Rahul Mehta, president of

Mumbai-based Clothing Manufacturers Association of India.

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4 CITI-NEWS LETTER

China's decision to exit from textile sector, labour in Bangladesh becoming costly, and

Vietnam's industry hitting a plateau have helped Indian exports.

Some of the recent reforms including reduction in costs delivered by a refund of the

Central and State taxes, new benefits under the Merchandise Exports from India

Scheme (MEIS) and renewed 2 per cent duty drawbacks made the industry more

competitive. The other advantages for India is design, value added and skill, which no

other countries are close to.

Mehta agrees that still Made-in-India products are costlier by 10-12 per cent, in addition

to duty concessions which other competing countries enjoy to the tune of 10 per cent.

"Today it is not about the cost alone, customers looking for quality and speedy delivery,

if we can improve this, then we can once again emerge as strong competitor."

The government has little scope to give more sops, but reforms in GST, banking and

labour can help the industry. If the refunds processes are taken care, it will be great

benefit for the industry, as there is a struggle for working capital at present, said Mehta.

Home

Exporters and Importers can now find answers related to trade-related

matters via DGFT Call Centre

(Source: PIB, June 24, 2019)

A call centre to address the doubts/queries/questions of exporters and importers has

been inaugurated by Director General of Foreign Trade, Shri Alok Vardhan Chaturvedi

on his visit to Mumbai today. General information about foreign trade policy and

international trade also can be obtained via the call centre. The public can reach this call

centre at the numbers 022-20820961, 022-20820962, 022-20820963 and 022-

20820927, from 10:00 am to 5:30 pm on all working days. A specially trained dedicated

staff is looking after the call centre. The call centre has been set up by the Mumbai office

of Directorate General of Foreign Trade, Ministry of Commerce & Industry.

During his visit to the office of Additional DGFT, Mumbai, Shri Chaturvedi reviewed the

work and chaired a meeting with Regional Chairmen and Directors of several Export

Promotion Councils, wherein several issues faced by the exporters-importers were

discussed. Shri K L Dhingra, Regional Chairman EEPC (Engineering Export Promotion

Council); Shri Ajay Kadakia of CHEMEXCIL (Chemicals Export Promotion Council) and

Shri Paresh Mehta of FIEO (Federation of Indian Export Organisation) were present

and shared their views. Additionally, inputs from the industry have also been sought for

resolving their issues.

Home

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5 CITI-NEWS LETTER

What does India want on July 5? Here's a ground report from 8 places that

matter

(Source: Economic Times, June 24, 2019)

ET visited eight industrial hubs across India, spanning several sectors, to find out what

businesses want.

Nirmala Sitharaman’s first budget could well be bold, reformist and decisive. First-time

finance ministers have rarely had her luxury: the political vantage of a stable majority

government that has returned with a mammoth mandate. So, there’s little chance that

when Sitharaman rises to present the budget on July 5, it will be a populist one. She

might make allowance for a few doles of gratitude to micro industries, farmers, defence

personnel and certain geographies that helped better the ruling party’s victory from

good to grand. Apart from that, it’s likely to be a prudent balancing act. The main

challenge for Sitharaman is time, or rather the lack of it. She has had about three weeks

from the time she took over as FM to the customary halwa ceremony on Saturday to

mark the printing of budget documents. She lost no time in between in calling for

crowdsourced ideas through social and conventional media — a first. ET Magazine

visited eight industrial hubs across the country, spanning several sectors, to figure out

the wish lists of businesses and to take stock of their concerns, even those not strictly

pertaining to the budget. We travelled to the bicycle town, Ludhiana, in the North and

the knitwear capital, Tiruppur, in the South, to diamond city Surat in the West and to

tea hub Darjeeling in the East. We also went to Andhra Pradesh’s steel city

Visakhapatnam, Uttar Pradesh’s labour-intensive brass city Moradabad, Uttarakhand’s

only major industrial town, Rudrapur, and Madhya Pradesh’s mini-Mumbai, Indore.

We received wide-ranging inputs. A greater thrust on infrastructure and removing the

bottlenecks in GST, even though the latter is not exactly in the budget’s domain, seem to

be pan-Indian wishes. Others are specific to regions or sectors. Darjeeling tea producers

want an anti-dumping duty on tea imports from Nepal. The Ludhiana bicycle cluster is

awaiting a big financial booster. Vizag Steel expects to do better business if Sitharaman

takes a generous approach to infrastructure, real estate and automobile. And what do

the 4,000-plus namkeen factories of Indore want from the FM?

Steel Dreams- Visakhapatnam The steel city of Andhra Pradesh expects an

infrastructure and logistics push from the Union budget. By Shantanu Nandan Sharma

The massive Sardar Patel statue in Gujarat shares something in common with the

Kudankulam Nuclear Power Plant in Tamil Nadu — the sinews of both have been

strengthened by steel from Visakhapatnam Steel Plant, also called Vizag Steel, run by a

Navratna company, Rashtriya Ispat Nigam Limited (RINL). Other landmarks, including

the Tarapur Atomic Power Station, Mumbai’s Bandra-Worli Sea Link and the Yamuna

Expressway in Uttar Pradesh, have also used steel produced in this coastal city of

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6 CITI-NEWS LETTER

Andhra Pradesh. Visakhapatnam, according to the 2011 Census, has a population of 17.2

lakh, with one-fifth of them directly or indirectly dependent on the steel industry. No

wonder the financial capital of Andhra Pradesh is now better known as steel city. Other

major industries include shipping, petrochemicals and pharmaceuticals. Home to one of

India’s busiest cargo ports, Visakhapatnam is also the headquarters of the Eastern Naval

Command. ET Magazine interviewed half a dozen senior executives and workers in the

city’s steel and shipping sectors on what they expect from the Union budget to be

presented by Finance Minister Nirmala Sitharaman on July 5. Their demands are

largely a mix of direct budget benefits and sops to other industries which, in turn, will

help the steel and shipping industries grow. “The budget must consider incometax

exemption for setting up container freight stations, logistics parks et al. A bigger thrust

on ease of doing business is the need of the hour,” says G Sambasiva Rao, managing

director of Sravan Shipping Services, a city-based company with a turnover of Rs 185

crore (2018-19). He then lists other pressing needs which may not necessarily figure in

Sitharaman’s first budget. For example, Rao insists that the arterial road from the port

to the industrial park should be decongested by building 40-60-ftwide service roads.

Other demands include fine-tuning of the goods and services tax (GST) and some kind

of protection from being regularly harassed by income-tax officials. Rao is also president

of the Andhra Pradesh Chambers of Commerce and Industry Federation. For the steel

industry, the recent string of problems began with China, Japan and South Korea

dumping excess steel in India after the US raised import tariff.

“The budget must consider income tax exemption for setting up container freight

stations, logistics parks et al. A bigger thrust on ease of doing business is the need of the

hour” G Sambasiva Rao, 59, MD, Sravan Shipping Services. The concerns are

understandable, as imposition of higher import duties on steel may not be possible once

India signs the Regional Comprehensive Economic Partnership (RCEP) — a free trade

agreement likely to be concluded later this year between the 10 ASEAN nations plus

India, China, Japan, South Korea, Australia and New Zealand. The steel industry wants

to be kept out of the purview of the forthcoming trade pact. From the budget, the sector

is hoping only indirect sops. For example, if Sitharaman decides to extend some

incentives to infrastructure, real estate and automobile sectors, the demand for steel will

instantly grow.

Vizag Steel which produces 5 million tonnes (MT) of saleable steel annually (2018-19),

plans to be a 20 MT plant by 2032-33. India presently produces just over 100 MT of

steel as against China’s 800 MT. While the company’s target is ambitious, it needs to

woo new clients or receive more work from its existing customers such as Larsen and

Toubro, Siemens, AFCONS Infrastructure, Tata Motors and Ashok Leyland. That’s why

the steel sector will be closely watching the budget. By October, the Vizag Steel will

begin a new plant in Uttar Pradesh's Lalganj, near Rae Bareli, which is expected to

produce 100,000 train wheels annually. It was recently visited by representatives of

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7 CITI-NEWS LETTER

South Korean majors Posco and Hyundai Steel, giving rise to speculation that they may

invest in the expansion of the plant through a public-private partnership mode. Now,

Vizag Steel is sitting on a mammoth 8,100 hectare land bank.

"Our plant needs to have its own iron mines. That will minimise production cost and

increase profitability. Also, the Centre must give its nod to fill 4,500 existing vacancies,"

says J Ayodhya Ramu, a trade union leader at Vizag Steel.

Population: 17,28,128 (2011 Census) Major Industries: Steel, shipping, petrochemicals

Budget Expectations: Steel industry expects budget sops for infrastructure and auto,

which will push demand for steel Announcement of the Chennai-Kolkata dedicated rail

freight corridor passing through the steel city Surat: Diamond out of rough A year and a

half after the Nirav Modi scam cast a shadow, Surat’s diamond industry wants banks to

ease lending norms and the government to lower taxes By G Seetharaman Just as we

begin talking to Sanjay Chheta, partner of Amrut Gems, about the processing of

diamonds, he asks for the blinds in the room to be rolled up. Across a glass partition, we

see at least two-dozen young men looking at three-dimensional models of rough

diamonds on desktop screens, deciding how these precious stones should be cut. On the

floors below, the gems are laser-cut on the basis of these designs and then polished,

either manually or with a machine. These young men are among the 450 workers in this

unit, which looks like a residential building from outside, owned by Amrut Gems, a

diamond processing company. This is one of 7,000 such units in Surat, a south Gujarat

city synonymous with diamonds and textiles. Around 90% of the world’s rough

diamonds are said to be cut and polished in Surat. Diamond exports from India totalled

$23.8 billion or Rs 1.7 lakh crore, in 2018-19. Surat, Gujarat Population: 44,66,826

(2011 Census) Major Industries: Diamond cutting and polishing, textiles Budget

Expectations: Reduce GST on job work on diamonds from 5% to 1.5-2% Find ways to

increase bank lending to diamond units.

There are around 8 lakh people working in diamond companies in Surat, where a

diamond ex-change is being built to rival the Bharat Diamond Bourse in Mumbai. The

Surat exchange will have a constructed area of 6.6 million sq ft, three times the size of its

Mumbai counterpart. However, ever since diamantaire Nirav Modi and his uncle Mehul

Choksi of Gitanjali Gems were accused of defrauding Punjab National Bank of Rs 14,350

crore in early 2018, banks have become wary of the diamond industry. “After the scam,

we decided to immediately repay 90% of our loans even though we had time. Banks have

become a lot stricter in lending,” says Chheta. In January, ET reported that the State

Bank of India, the largest lender to diamond companies, had set a cap of Rs 1,000 crore

per borrower and imposed restrictions on companies exporting to countries other than

the US and in Europe.

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8 CITI-NEWS LETTER

“After the Nirav Modi scam, we decided to immediately repay 90% of our loans even

though we had time. Banks have become a lot stricter in lending to diamond companies”

Sanjay Chheta, 42, partner, Amrut Gems. “We don’t ask for land like other sectors and

we are a non-polluting industry. The government should do something about bank

lending to our industry,” says Babulal Gaudani, a former vice-president of the Surat

Diamond Association (SDA). While neither the government nor the Reserve Bank of

India can issue explicit directions to banks to lend to the sector, they can informally tell

banks to assess the credit risk of borrowers in the industry appropriately. Besides an

increase in bank lending, diamond makers are also seeking a cut in the goods and

services tax (GST) on work outsourced to a third party in the making of a diamond. It’s

now 5% and should be reduced to 1.5-2%, says Babubhai Gujarati, president, SDA. In

2018, the government slashed the GST rate for polished diamonds from 3% to 0.25%.

Gaudani says Prime Minister Narendra Modi has a good understanding of the sector

and its issues from his time as chief minister of Gujarat between 2001 and 2014.

The immediate demands of the sector may not find a place in the upcoming Union

budget, but Gaudani is hopeful that the government will attend to the issues sooner than

later. “Diamonds are a huge foreign exchange earner for India and it’s important for the

government to protect the industry,” he says.

Tiruppur, Tamil Nadu: Wear, not tear The apparel sector wants a fillip to garment

exports and affordable housing for its workers By Indulekha Aravind

Tiruppur, Tamil Nadu Population: 4,44,352 (2011 Census)

Major Industries: Knitwear and allied industries

Budget Expectations: Increase the Technology Upgradation Fund for

textiles Low-cost housing and ESIC hospital for workers

In the garment hub of Tiruppur in Tamil Nadu, which produces more than 55% of the

country’s knitwear, June is a time of middling business. The festival rush is still a few

months away, when employees have to work longer hours to complete orders that have

to be shipped out on time. But the first three months of 2019-20 point to a promising

year — the industry is optimistic about clocking growth of over 15%, having recovered

from the twin blows of demonetisation and GST. Manufacturers say the revenue target

of Rs 1 lakh crore by 2022 that the cluster had set for itself looks achievable. Yet, they

sound aggrieved.

“The Tiruppur knitwear cluster employs nearly 6 lakh people directly, with people

coming to work from as far as Assam. In today’s market scenario, the garment sector is

the best bet for employment generation,” says Raja M Shanmugham, president of the

Tiruppur Exporters’ Association (TEA) and founder of apparel exporter Warsaw

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9 CITI-NEWS LETTER

International. “This industry can create millions of jobs but it needs to be promoted and

given due attention by the government,” he says at his first-floor office in the leafy

neighbourhood of Sheriff Colony.

Manufacturers rue that over the years, policymakers have given

the industry short shrift. A favourite quip in the city, located 50

km from Coimbatore, is that every time garment industry

representatives travel to New Delhi to meet senior bureaucrats,

they have to explain that Tiruppur is not the same as Tripura.

The Tiruppur cluster is made up of over 20,000 micro, small

and medium enterprises in knitwear and allied sectors, which

clocked revenue of Rs 26,000 crore in the export market and

around Rs 24,000 crore in the domestic market last year,

according to TEA. To achieve its target of doubling this by 2022,

manufacturers say they need more labour and, importantly, the

infrastructure to support them. With at least half the workforce from outside Tamil

Nadu, both industrialists and trade unions have been asking the government to provide

housing for workers. “There should be proper housing for workers and their families,”

says Shanmugham.

“Affordable housing is a big problem. It’s something we have been demanding from the

government for years,” agrees M Chandran, vice-president of the Tamil Nadu unit of the

Centre of Indian Trade Unions (CITU). With countries like Bangladesh and Vietnam

overtaking India in the apparel sector, thanks to their free trade agreements with the US

and Europe that reduce import duty to zero, Tiruppur’s manufacturers hope that India,

too, might be able to hammer out a similar trade deal that would boost its garment

exports.

“With wages in China increasing, Indian cotton garments are becoming more

competitive again,” says CMN Muruganandan, chairman of Gomatha International.

Other demands from the industry include R&D units and an ESIC (Employees’ State

Insurance Corporation) hospital, which Prime Minister Narendra Modi had announced

but on which work is yet to start. “We pay a huge sum as ESI every month, workers need

to benefit from that,” says R Senthil Kumar, CEO of Premier Export Corporation.

Workers are also seeking higher wages and crèches at units employing over 100 women.

“I am happy at my workplace but factories should have crèches for women workers with

small kids,” says S Tamilchelvi, a CITU member who works as a garment checker.

Kumar says the government should restore the Amended Technology Upgradation Fund

Scheme for textiles and the rebate on state levies, which were reduced to Rs 700 crore in

the interim budget from Rs 2,300 crore for 2018-19, and to Rs 1,000 crore from Rs

2,164 crore respectively. “The tech upgradation scheme should be restored and the

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10 CITI-NEWS LETTER

funds disbursed fast,” says Kumar. With India’s share of the global apparel market one-

tenth of China’s and with even smaller countries like Vietnam racing ahead, the industry

is keen to catch up. “We are struggling to be on a par with global competitors. The

orders we are now getting are spillovers. We have to be in a position where we can grab

the orders first,” says Shanmugham.

Darjeeling: Reading the tea leaves Wants an anti-dumping duty on tea from Nepal, and

an infrastructure overhaul to boost tourism By Sruthijith KK

Namoshkar,” estate manager Shubashish Roy booms, feigning obsequiousness. “It’s a

great pleasure to see you after 72 hours.” The target of his sarcasm and scorn is Arjun

Chhetri, his head clerk at the Arya Tea Estate, a spectacular 120-hectare tea plantation

on the misty, sun-kissed hills of Darjeeling. Chhetri, who had been absent without leave

for three days, scratches his head with the affected sheepishness of the familiar

headmastertruant schoolboy routine — both parties know nothing is about to change.

This exchange represents a key woe in the Rs 850 crore industry that employs about

57,000 permanent workers and makes one of the world’s great teas. Work in

Darjeeling’s Britishera tea plantations is not what it used to be. At Rs 176 per day (before

provident fund deductions), wages are so low that more than half of the permanent

workers don’t bother showing up, as they can find more remunerative work outside.

West Bengal’s minimum wages don’t apply to tea plantations, where the wages are a

part of the benefits, which include housing, rations of food supplies and firewood,

medical facilities and myriad others stipulated by law. Managements say that the wages

plus benefits mix is competitive. Workers say that the benefits exist mostly on paper.

They neither receive them fully nor on time. They would rather get the state’s applicable

minimum wages in cash, which would be nearly twice what they get now. “Absenteeism

in the plantations is now more than 50%. We can’t find people to work in the gardens.

It’s a severe crisis,” says Sandeep Mukherjee, principal advisor, Darjeeling Tea

Association, whose members are plantation owners of most of the 87 tea gardens

protected by the Geographical Indication tag, a trade protection for produce originating

in a certain area. The area’s most influential workers’ union leader says this is just the

tip of the iceberg. “If you think 50% absenteeism is bad, wait for a couple of years. If

minimum wages are not implemented, it will be 100%. Nobody wants to work in the

plantations under these conditions,” says Balam Tamang, a local leader of the Darjeeling

Terai Dooars Plantation Labour Union, affiliated to the Gorkha Janmukti Morcha,

which has been agitating for a separate Gorkhaland state carved out of the districts of

North Bengal. Plantation wages are fixed through tripartite negotiations between labour

unions, the state labour department and the DTA, which represents the plantation

managements. DTA’s Mukherjee says managements are happy to pay the minimum

wages if the benefits are taken away. But that would mean amendment of several legacy

Central and state laws implemented at various times since 1852, when the first

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11 CITI-NEWS LETTER

plantations were set up on these verdant hills. If labour issues have been hanging like a

dark cloud over the gardens for years, the owners are alarmed by a new threat ¡X the

entry of tea from Nepal. The districts of Nepal bordering Darjeeling enjoy roughly the

same topography, soil and climate as the vaunted region. This means the difference in

taste is discernible only to true connoisseurs. This is being seen as an existential threat.

India and Nepal allow for free movement of goods. So tea produced a few kilometres

away from Darjeeling can be sold in the domestic market at much lower prices because

Nepal's gardens don't have the socio-economic protections for workers that India

mandates. Mukherjee of DTA says the market erosion due to the interloper is 15-18%.

The domestic market is one thing. For years now, the quantity of ''Darjeeling tea'' sold in

India has been many times what is annually produced in Darjeeling ¡X some 9 million

kilograms. What the industry is particularly upset about is the muscling in on the

lucrative international market. Some 60% of the tea produced in Darjeeling is exported.

When production ground to a halt in 2017, due to a threemonth shutdown as part of

Gorkhaland agitations, traders overseas started promoting tea from Nepal as Himalayan

Tea. This rival is already eroding their negotiating power in the export market. The DTA

wants the government to impose an anti-dumping duty on tea from Nepal, along the

lines of what was done with jute from Nepal in 2017, to protect domestic industry. If the

tea industry exudes a sense of being under siege, Darjeeling's largest employer, the

travel and tourism industry, is feeling the pinch as well. An estimated 1,00,000 people

find employment in this sector. Like all of India's hill stations, Darjeeling town has

become decrepit and overcrowded, with traffic jams, dangling electricity lines,

overflowing sewage channels and acute water shortage. Some 600 hotels dot the town.

Parking is a nightmare. Taxi hubs are overrun by touts.

"The infrastructure dates back to the 1970s. Population has since exploded but the

infrastructure has stayed the same. The residents of this place get municipal water for

one hour in a week. Tourists are spending too much time stuck in traffic jams,'' says

Suresh Periwal, MD of Clubside Tours and Travel, who has been in the business for 40

years. Periwal says that as a destination, Darjeeling and nearby areas are massively

underperforming. The place gets about 5-6 lakh domestic tourists each year, but only

30,000 of them are high-spending foreign tourists. "That's less than 0.3% of the foreign

tourist arrivals in India.'' He says awareness about Darjeeling is low overseas and the

region has been ignored in the government's Incredible India campaign. "We have

tremendous potential. But the roads need to improve and the Bagdogra airport needs to

become an international airport.''

Moradabad: Brass Stroke The cottage brassware industry is gasping for breath; it awaits

a budget booster By Prerna Katiyar Moradabad, Uttar Pradesh Population: 8,87,871

(2011 Census) Major Industry: Brassware Budget Expectations: Lower GST; brass

manufacturing hub on the city’s outskirts It is 65 degree Celsius inside the room and

Arshad Ali, covered in soot, is finishing up a brass pot meant for export. He doesn’t have

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12 CITI-NEWS LETTER

a face mask or gloves to shield him from the heat of the hissing furnace. Ali makes Rs

300 a day and in May, ahead of Eid, brass workers like him slogged for 20 hours a day to

earn a little extra. “We can’t even afford to fall sick,” he says. Here, in the brassware

sweatshops of Moradabad, most houses double up as one-room factories — families are

busy melting copper, zinc and lead in coal-fired furnaces to produce the shiny alloy used

to make utensils and other products. The side effects of running such mini brass

factories that emit carbon monoxide and carbon dioxide are all too apparent.

“Tuberculosis, asthma, cancer, cough and allergies are common among workers and

their families. Children are forced to inhale the toxic fumes,” says ST Hasan, the new

MP from Moradabad, who is also a doctor. He says the only solution to check these

ailments is to shift the brass factories outside the city. The Uttar Pradesh government

did propose to shift all such hazardous, home-based factories to the city’s outskirts. But,

as of now, a new arrangement is not yet ready although existing units are being hastily

shut down. “We are not opposing the shift. But where is the new facility? Do they want

us to die of hunger?” asks Ashok, who runs a brass-making unit. Over 75% of

Moradabad’s population depends on making brass. “Work on setting up a Special

Economic Zone in Moradabad started many year ago and it was supposed to become a

platform for all brassmaking units. But today, the hub is struggling to bring in

companies,” Meanwhile, the brassware industry -the economic lifeline of the city -

continues to decline. What has stayed constant is the health hazard. Moradabad is one

of the 14 cities in India with the worst air quality, according to the Central Pollution

Control Board. "We need a good melting system on the outskirts of the city to reduce

pollution,"says Hasan. In the Peerzada locality, artisans are waiting outside their home-

factories for electricity to return. "There are no fixed hours for power cuts. Electricity

rates are also high. We have to use generators to keep the work going,"says Fahim, who

runs one such brass unit. "The government should give some power subsidy for our

ailing industry." Mohammed Fakir, a daily wager sitting next door, nods in agreement.

The missing middle finger on his left hand narrates another story. "I lost the finger on a

polishing machine. Don't we have the right to a pension or a free health checkup amid

such health hazards?" he asks. Brassware is made in four stages here: moulding-casting,

finishing-polishing, engraving and enamelling.

But rising production cost due to expensive raw materials is forcing many to leave the

profession and try menial jobs. Some blame also goes to the pollution board, says

Mohammed Akhlaq, owner of Bharat Handicrafts. The board is closing down

homebased units, rendering artisans jobless, he says. "The police raid our houses.

Sometimes they take money; sometimes our papers." He also said margins of brass

makers have become less due to intense competition, demonetisation and goods and

services tax. Shahabuddin, who makes brass gate lamps, still does not understand GST.

"Rafta rafta aa rahaa hai samajh (Slowly, it is making sense). What I have understood so

far is that we receive input credits quite late." Agarwal of Udyog Bharati, too, has a GST

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13 CITI-NEWS LETTER

grievance. "If the government spots a mistake in GST functioning, it is covered up under

initial technical glitch'. But if a trader makes a mistake while filing returns under the

new tax system, he is forced to pay a penalty."

Ludhiana Punjab: Pedal on Growth Amid stagnant growth, bicycle manufacturers and

parts makers want a plan to promote the use of cycles and sops for tech upgrade By

Ishani Duttagupta Ludhiana, Punjab Population: 6,18,879 (2011 Census) Major

Industries: Bicycles, garments Budget Expectations: Incentives to help bring down

prices of entry-level units Reduce the 18% GST on raw materials, and 12% on finished

bicycles Unlike China’s bicycle manufacturing hub Wangqingtuo, there is little on

display in Ludhiana to show that the city is India’s bicycle centre, producing an

estimated 1.8 crore units every year. However, the flyover on Grand Trunk Road in front

of Avon Cycles, India’s second largest bicycle maker, is decorated with paintings of

cyclists in lush green parks and on clean roads. The art highlights Avon’s efforts to

beautify the city. It also points towards the bicycle industry’s wish list for the

government. “Cycles are a mode of transport for economically weaker sections and

symbolise social empowerment. And ours is a city of entrepreneurs making cycles and

cycle parts, giving employment to thousands not only here but in other cities and towns

also where people assemble bikes at selling points,” says SK Rai, managing director of

works at Hero Cycles, India’s largest cycle company with a turnover of around Rs 2,100

crore. This is why the All India Cycle Manufacturers’ Association (AICMA), representing

all large cycle companies, says it is pushing the Central government to set up a bicycle

development council along the lines of similar bodies for shipping and surface transport

industries. “Bicycles impact 48% of households, according to the 2011 Census — a lot

more than motorised transport. We hope the Finance Ministry will unveil a national

plan for the bicycle industry and provide funds to promote this short-distance travel

option, as being done in many other countries,” says KB Thakur, AICMA’s secretary

general. While companies are not sure whether the Union budget next month will

address their concerns, the demand in Ludhiana, which is being developed as a smart

city, is that there should be dedicated bicycle tracks here for the safety of riders. “Cities

around the world have public bicycle sharing systems and our government should also

include this in its smart city project. There are massive health and environmental

benefits in promoting the use of bicycles as seen globally,” says Rai of Hero Cycles.

His company has signed a deal with the Punjab government to develop a 100-acre

industrial park, called Cycle Valley, near Ludhiana. “We are inviting other companies as

partners for this project, including some hi-tech players from China. Central schemes to

develop the infrastructure for this project will help us scale up,” says Rai. Presently, the

biggest buyers of Ludhiana’s cycles are the state governments of West Bengal,

Maharashtra, Karnataka, Gujarat and Tamil Nadu, where cycles are given free to school

students.

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14 CITI-NEWS LETTER

Even though a revision of good and services tax rates is not part of the budget, the 2,300

or so small and medium enterprises engaged in making bicycle parts in the city want the

18% tax on raw material and 12% on finished bicycles to be reduced. “We also want

credit-linked capital subsidy and a technology upgradation scheme to help us take on

cheap import of cycle parts from China, especially for high-end bikes,” says Inderjit

Singh, president of United Cycles & Parts Manufacturers Association, and proprietor of

Navyug Engineers that makes wheels parts, hubs and chain wheels. Echoing the wish

list of the bicycle industry in Ludhiana, Punjab Finance Minister Manpreet Singh Badal

hopes Union Finance Minister Nirmala Sitharaman addresses the issue of job creation

in the city, also home to a massive garment and hosiery industry. So will incentives for

the commoner’s ride find a place in Sitharaman’s first Union budget? Many in Ludhiana

certainly hope so.

“We have taken up the issue of creating safe and convenient infrastructure for cyclists

with government many times. We are willing to fund a bicycle track in Ludhiana if the

government unveils a plan” Onkar Singh Pahwa, CMD, Avon Cycles- Rishi Pahwa (L),

joint MD, Avon Cycles.

Indore: Making GST less taxing Indore’s entrepreneurs want a simplified GST and less

red tape in setting up food factories By Malini Goyal Indore, Madhya Pradesh

Population: 32,76,697 (2011 Census) Major Industries: Namkeen, textiles, pharma,

automobile, agri-trading Budget Expectations: Simplify GST. Multiple slab rates and a

complicated compliance system have created a nightmare Boost liquidity. Simplify

licensing process for setting up food factories. With its well laid-out roads and visibly

good upkeep, Indore, a tier-2 city, may make headlines for being India’s cleanest. But

Madhya Pradesh’s most populated city, which is an education hub with an IIT and an

IIM, is also a busy commercial and financial hub often called mini Mumbai. The city

boasts multiple industrial hubs, including Pithampur and Dewas, which host

manufacturing facilities of companies like Tata, Kirloskar, John Deere and Arvind Mills.

It now has a smart city tag as well. Indore is known for something lip-smacking as well

— street food and snacks. Anurag Bothra, secretary, Namkeen Mithai Association, says

there are 4,000-plus small namkeen factories in Indore. “There were many more. But

demonetisation and GST forced them to close down,” he says. Over the last decade,

some of these household namkeen manufacturing units have undergone a big change.

Adhering to the guidelines of the Food Safety and Standards Authority of India, a lot of

investment has gone into automating the manufacturing and packaging processes. For

example, in 2007-08, Bothra’s Om Namkeen introduced automatic fryers and packaging

which have not only improved the production process but also increased the shelf life of

its products. Not surprisingly, its turno-ver has grown five-fold to `40-odd crore. It also

has contract manufacturing orders from companies like Parle, which have pushed up its

material turnover to Rs 100 crore. He has two demands from the upcoming budget.

“The government told us one nation, one tax. All I am asking for is one shop, one tax,”

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15 CITI-NEWS LETTER

says Bothra. For example, he does not get any GST rebate on categories like kachori and

samosa that are sold at his retail outlets but his namkeens get the rebate. “GST is so

complicated that it has made our lives very difficult,” he adds. Not too far away, Deepak

Daryani is the managing director of Asha Confectionery, a Rs 400 crore company with

1,400 employees. Starting from a humble 10 x 14 ft workshopcum-house at Nanda

Nagar in 1984, he now has a sprawling factory spread over 6.2 lakh sq ft, equipped with

a dental clinic and a beauty parlour for workers. “Personal hygiene of the workers is very

important in our line of business. This helps us maintain it,” says Daryani, who also The

factory, which is almost fully automated, churns out a range of confectionery that gets

sold in markets like Uttar Pradesh and Bihar. Among his many budget wishes, the three

big ones are measures to boost liquidity, simplify licencing process to set up food

factories and to support employers in rolling out housing for workers. “The Pradhan

Mantri Awas Yojana can easily partner with employers to offer housing to workers,” he

says. Ramesh Khandelwal, who trades in sugar and dairy products, also represents over

1,000 wholesale kirana merchants as president of the Ahilya Chamber of Commerce and

Industry, Indore. After demonetisation and GST, traders are still suffering from poor

liquidity which has severely constrained their business. “The government has made GST

so complex and compliance so difficult that businessmen, many of them not very

educated, are struggling and have been reduced to being clerks. We request the

government to make it simple,” he says. distributes over 4,000 sanitary pads among its

600-plus women workers.

Rudrapur, Uttarakhand: Labour Pangs Auto ancillary units say doing away with

complexities in labour laws and easing of GST rates can give a spurt to growth By Prerna

Katiyar Uniform and simpler labour laws are what automobile ancillary companies in

Rudrapur want from the government. “Right now, multiple forms have to be filled,” says

Shreekar Sinha, HR and administrative head of Endurance Technologies, which

supplies auto parts to Bajaj, Hero, Honda and Yamaha. “A single comprehensive form

should be made available covering all labour and other applicable laws for the

convenience of the industry. Compilation should be made simpler. Like ‘one nation, one

compliance’.” He welcomes the reduction of the rate of contributions under the

Employees’ State Insurance Act, 1948, from 6.5% to 4%. The government had in June

reduced employers’ contribution from 4.75% to 3.25% and employees’ contribution from

1.75% to 0.75%. Sinha says this would lead to ease of doing business but reiterates the

need for a common compliance form under labour laws. Most business executives in

this industrial hub about 280 km northeast of Delhi say the government should cut the

goods and services tax (GST) on motor vehicles from 28% to 18%. “This will help in

bringing down vehicle costs and lead to an increase in demand, which has been at a low

in the last one year,” says an executive of Ashok Leyland on condition of anonymity as

he is not authorised to speak to journalists. Ashok Leyland’s plant in the vicinity of

Rudrapur had recently announced a production cut. The Hinduja Group’s flagship firm

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16 CITI-NEWS LETTER

said it would close its plant in Pantnagar — an integrated axle machining and assembly

facility — for six days from June 24 to adjust production as sales were down. “The auto

industry is facing a slump right now,” says Gajendra Singh, HR head of Varroc

Engineering, an automotive component manufacturer and supplier for Bajaj, Ashok

Leyland and Tata. “Car sales are down. The cost of raw materials and overall GST on the

sector must come down to spur growth.” Automobile industry representatives say a

discrepancy in the GST regime has been hurting them. “While we pay input cost to our

supplier, we have to assume that he has paid his dues. There is no way to check if our

vendor has paid the amount to the government or not. If he hasn’t, we are made liable

for this non-compliance. This must change,” says Sinha of Endurance Technologies.

Rudrapur saw rapid industrial development after the State Infrastructure and Industrial

Development Corporation of Uttarakhand Ltd was established in 2000. More than 400

companies — primarily in the sectors of automobiles, fast-moving consumer goods,

pharmaceuticals, agriculture and textiles — have units in the region. Parle Agro, an

FMCG major that claims to be the market leader in mass product glucose biscuits, says

the GST on the product is a high 18%. “Parle G (the glucose biscuit brand) is a mass

product. It is not a premium biscuit and is the cheapest product in the segment. 18%

GST is too high. No correction has been made since the launch of the new tax regime.

The tax rate has gone up by 3-4% from the pre-GST regime. It must be cut down to at

least 12%,” says Sandeep Pandey, plant head of Parle Agro at Rudrapur. Referring to the

operating margin of pharma companies, a representative of the industry says: “The

government ought to fix a profit margin of, say, 10-20% for pharma companies. This will

help cut the prices of medicines. Right now their operating margins are very high.” Ajay

Tiwari, HR head of Shirdi Industries, which specialises in plywood, laminate boards.

and particle boards, says the industry needs special incentives to thrive due to certain

geographical factors. “Uttarakhand does not have a port. Raw materials have to be

brought in from outside via road or rail. Finished goods, again, have to be transported to

other states. This inflates transportation costs. There should be a transport subsidy.

Similarly, electricity charges must be brought down.”

Home

Marathwada agricultural university releases first public sector Bt cotton

hybrid seed variety

(Source: Times of India, June 24, 2019)

The long wait of farmers to have the public sector Bt cotton hybrid is over with

Vasantrao Naik Marathwada Agricultural University (VNMAU), Parbhani, releasing the

seed variety (https://timesofindia.indiatimes.com/topic/seed-variety) with brand name

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17 CITI-NEWS LETTER

Bt NHH 44. The Bt Nanded Hirsutum Hybrid (NHH) 44 claims to have key

characteristics such as better tolerance to sucking pest such as Pink Boll Worm (PBW),

drought-tolerance, and better yield stability.

The new cotton variety offers 23 quintal and 38 quintal yield per hectare in rainfed and

irrigated trials, which is claimed as better yield as compared to actual outputs of seed

varieties of private firms. Notably, VNMAU had released non-Bt NHH 44 during 1984

which was popular among cotton cultivators until the Bt cotton hit the Indian market in

2001-02. "The earlier variety was having highest acreage of about 40 per cent of the

total cotton growing area of the country during 1995 to 2000. We hope the same

response to new Bt variety of the cotton. Nearly 26,000 packets of new cotton seed

variety are being made available to farmers of Marathwada for Kharif season," Kapse

said. Priced as per the government norms, Bt NHH 44 is claimed to be the game-

changer in the market of Bt cotton seed varieties in Maharashtra due to its benefits.

NMAU Vice Chancellor A S Dhawan said that NHH 44 was the first Bt cotton hybrid

released by public sector in Maharashtra. "The farmers of the region were eagerly

waiting for the release of this hybrid. Farmers should adopt integrated pest

management strategies while cultivating this hybrid for achieving more productivity and

profitability," he said

Home

Will India Join the Regional Economic Comprehensive Partnership?

(Source: Business Standard, June 24, 2019)

Singapore, June 24 (ANI): Thailand, the current chair of ASEAN, has urged

participating countries to rapidly conclude negotiations on an agreement to

the Regional Economic Comprehensive Partnership (RCEP).

At a business forum in Bangkok ahead of the ASEAN Summit over the June 22nd

weekend, Mr Prayut Chan-O-Cha, former junta leader and the new Prime

Minister of Thailand said: "Thailand is trying to expedite the conclusion of

the RCEP negotiations this year." He added that this is the agreed intention of all the

leaders.

At the same meeting, Philippines' Trade Secretary Mr Ramon Lopez expressed his belief

that the negotiations have reached a point whereby the different negotiating parties can

be persuaded to be more realistic and pragmatic. He rationalised that the on-going trade

dispute between China and the US which has soured the global economic outlook should

be an impetus for all to "fast-track" the RCEP deal.

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18 CITI-NEWS LETTER

Almost immediately after taking office, President Trump pulled the US out of the TPP

(Trans-Pacific Partnership) which was led by the US during the Obama administration.

It now exists as the CPTPP (Comprehensive and Progressive Agreement for Trans-

Pacific Partnership) but it is less impactful on global trade compared with the TPP. With

the US departure, the CPTPP involves 11 nations including Canada, Chile, Peru and

Mexico, representing 7 per cent of the world's population and USD10.5 trillion or 12.5

per cent of global gross domestic product (GDP). It came into effect on December 30,

2018, 60 days after the sixth nation, Australia, ratified the agreement on 31 October

2018. The agreement requires ratification from six out of the eleven countries to come

into force.

The original TPP would have impacted 11 per cent of the world and USD30 trillion or 35

per cent of global GDP and took 7 years to negotiate.

The US withdrawal opened the door to the China-led RCEP with the framework

endorsed at the ASEAN Summit in November 2012 in Phnom Penh, Cambodia. The first

round of negotiations started in May of 2013 in Brunei.

RCEP is a free-trade agreement covering goods, services and investments that is being

negotiated between the 10 members of ASEAN (Association of Southeast Asian

Nations), India, China, Japan, South Korea, Australia and New Zealand.

If completed, the RCEP will be the largest such trade agreement since

the General Agreements on Tariffs and Trade (GATT) which was implemented in 1948.

It will encompass 30 per cent of global GDP of USD25.6 trillion, affecting 45 per cent of

the world population which contribute to 30 per cent of global income and 30 per cent

of global trade.

The pact is seen as vital in securing the region's continued prosperity. The is even more

so with China and the US engaged in a trade war that is on the verge of being escalated

even further.

Although India is involved in the negotiations, it has expressed reservations for several

reasons.

In general, India is concerned that with RCEP in place, imports from RCEP countries

may grow even faster than its exports to the bloc. New Delhi is reluctant to cut tariffs

and open its markets in the face of strong opposition from it's farming as well

as steel and textiles industries. The dilemma facing India is exacerbated by the fact that

strategic rival China is part of the agreement. In particular, it is worried that decreasing

tariffs for China would lead to Chinese goods flooding the Indian market widening their

trade deficit which in 2018 stood at USD53 billion. India and China do not have an

existing free trade agreement.

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19 CITI-NEWS LETTER

On the other hand, India would like to see better access for its professionals to the

services sector in RCEP countries included in the agreement. The RCEP was first

conceived as a traditional trade pact which cuts tariffs on tradable goods whereas India's

strength is in the services sector.

India is the sixth largest trading partner of ASEAN having signed the India-ASEAN FTA

(free trade agreement) in 2010 and bilateral trade is valued at USD80 billion, but this is

seen by economists as far short of its true potential.

Indeed, Singapore's Minister-in-charge of Trade Relations Mr S Iswaran who was

speaking in New Delhi last week at the Singapore Symposium co-organised by

the Institute of South East Asian Studies and the Confederation of Indian Industry,said

that the RCEP can "bring the region together with a farsighted and high ambition

agreement" and that it would be a loss if India opted out.

He further added that the RCEP can unite the region and create opportunities for

businesses and people.

With the general elections out of the way, it remains to be seen if the Modi

government will be able to look further into the horizon, overlook the short term

complains from some sectors of the economy and conclude that joining this trade pact

will broadly benefit India in the years to come. The RCEP is a promising vehicle that can

help a reluctant India, which traditionally shies away from trade pacts, expands its

markets through incorporation into a large regional trading bloc.

Home

Government sets the ball rolling for national retail policy

(Source: Kritika Suneja, Economic Times, June 24, 2019)

As per a representative of another association who will take part in the meeting, the

department will make a presentation on the issue post which it will give its suggestions.

In line with the BJP’s manifesto to create a national policy on retail trade, the

government has set the ball rolling with the first set of stakeholder consultations slated

for Tuesday. The Department for Promotion of Industry and Internal Trade (DPIIT) has

called a meeting of around ten retailers associations as it takes forward its agenda of

putting in place a policy in 100 days.

“Establish National Traders’ Welfare Board and create a National Policy for Retail Trade

for the growth of retail business,” the BJP said in its Sankalp Patra. DPIIT was made the

nodal agency for internal trade earlier this year. “While informal discussions have been

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20 CITI-NEWS LETTER

on for around two months, this is the first formal meeting,” said a retailer who has been

invited to attend the meeting tomorrow.

The Confederation of All India Traders (CAIT) has already suggested that the proposed

policy should address central and state level trader related aspects, and promote fair and

honest trade. It has sought low rate of interest, short to midterm lending and a

mechanism to review laws, acts, rules and regulations governing trade in the policy

besides the policy to address the issue of physical infrastructure NSE -0.97 % in

traditional and local neighborhood market. “The trade policy must address this critical

aspect so that local Tribunal / Lok Adalats can be established at all major markets,”

CAIT said in its recommendations.

As per a representative of another association who will take part in the meeting, the

department will make a presentation on the issue post which it will give its suggestions.

Home

Plan to increase the number of MSMES in the country

(Source: PIB, June 24, 2019)

The Ministry of Micro, Small and Medium Enterprisesis striving to increase the number

of micro and small industries in the country on a sustainable basis through

implementation of various schemes andprogrammes. The Ministry provides better

credit facility, technology upgradation and skilling to boost the entire MSME eco-

system.

Followings are the major schemes being implemented by Ministry of MSME:

(i) Prime Minister’s Employment Generation Programme (PMEGP): This

is a credit-linked subsidy programme aimed at generating self-employment

opportunities through establishment of micro-enterprises in the non-farm sector by

helping traditional artisans and unemployed youth. The Scheme was launched during

2008-09. A total of 5.45 lakh micro enterprises have been assisted with a margin money

subsidy of Rs.12074.04crore, providing employment opportunities to an estimated

45.22 lakh persons since PMEGP’s inception till 31.03.2019.

An amount of Rs. 2247.10 crore has been allocated under PMEGP for financial year

2019-20 which is substantially higher with respect to allocation in earlier financial year

which would further lead to increased number of units assisted and employment

generation.

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21 CITI-NEWS LETTER

(ii) Scheme of Fund for Regeneration of Traditional Industries

(SFURTI): It is a cluster-based scheme for development of khadi, village industries

and coir clusters by providing them with improved equipments, common facilities

centers, business development services, training, capacity building and design and

marketing support, etc. SFURTI Scheme has been revamped in 2015. A total of 34,791

artisans have benefitted with an assistance ofRs. 143.15 crore during 2018-19.

(iii) A Scheme for Promotion of Innovation, Rural Industry and

Entrepreneurship (ASPIRE): was launched on 18.3.2015 to set up a network of

technology centres and to set up incubation centres to accelerate entrepreneurship and

also to promote start-ups for innovation and entrepreneurship in agro-industry. Under

ASPIRE, 74 Livelihood Business Incubation (LBI) centres and 11 Technology Business

Incubators have been approved since inception of the scheme.

(iv) Coir Board: Ministry of MSME, through Coir Board, is also implementing

various Schemes/programmes to assist entrepreneurs to set up new Micro, Small and

Medium Enterprises (MSMEs) in all coconut producing states. Under Coir VikasYojna,

36,30,653 employment opportunities have been created since 2014-15 till 2018-19 in the

Coir Sector.

(v) Credit Guarantee Scheme for Micro and Small Enterprises

(CGTMSE): The scheme facilitates credit to the MSE units by covering collateral- -free

credit facility (term loan and /or working capital) extended by eligible lending

institutions to new and existing micro and small enterprises. The Scheme has extended

guarantee cover to over 35 lakh enterprises leading to approx. 1 crore employment

generation. During FY 2018-19, a total of 4,35,520 proposals have been approved

providing guarantee to a tune of Rs. 30,168 crore.

(vi) Credit linked Capital Subsidy Scheme (CLCSS): CLCSS facilitates

technology upgradation of small scale industries, including agro & rural industrial units

by providing 15% upfront capital subsidy (limited to maximum of Rs.15.00 lakhs). Since

inception of the scheme in 2000-01 till date, a total of 62,827 MSE units have been

assisted utilizing subsidy of Rs.3888.13 crore.

During 2018-19, a total of 14,155 MSE units have been assisted utilizing subsidy of Rs.

980.44 crore.

(vii) Micro & Small Enterprises-Cluster Development Programme (MSE-

CDP):The Ministry of Micro, Small and Medium Enterprises (MSME), Government of

India (GoI) has adopted the Cluster Development approach as a key strategy for

enhancing the productivity and competitiveness as well as capacity building of Micro

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22 CITI-NEWS LETTER

and Small Enterprises (MSEs) and their collectives in the country. A cluster is a group of

enterprises located within an identifiable and as far as practicable, contiguous area and

producing same / similar products / services.

During 2018-19, 17 Common Facility Centres and 11 Infrastructure Development

projects have been established.

This information was given by Shri Nitin Gadkari, Union Minister for Micro, Small and

Medium Enterprises in reply to a question in Rajya Sabha today.

Home

Policy | Data localisation determines taxes, sovereign rights

(Source: K Yatish Rajawat, Money Control, June 24, 2019)

The RBI and commerce ministry together with tax authorities and technology experts

must define the data localisation issue.

Recently, the Reserve Bank of India held a discussion with several payment companies

and assured them that it will look into their concerns about data localisation. There is a

massive effort to stall the law on data localisation. The RBI as well as the commerce

ministry has been inundated by requests by e-commerce companies to relax the

localisation rules.

These firms have been obfuscating the issue by saying that data localisation is not

feasible, and even citing it as a trade barrier. Late last year Mastercard proposed it

would delete data of Indian customers from global servers but warned that such a move

would weaken “safety and security”. It questioned the Modi government’s push for

RuPay and used the might of the US government to put pressure on India. Washington

is backing Mastercard which has held talks with the RBI while Walmart, which has

acquired e-commerce major Flipkart, has approached the commerce ministry. E-

commerce firms are pushing the debate towards privacy of data and security — this

could be because it is easier to convince the government about the importance of privacy

and security in the West, and thereby swing decisions in its favour.

On the data protection argument, e-commerce MNCs find it easier to give the

impression that data is more secure in their own data centres based out of the US and

Europe. Unfortunately, there are Indian companies that are distorting the debate so that

it divides and confuses the policy-makers. It is hoped that RBI and commerce ministry

officials do not buy this argument.

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23 CITI-NEWS LETTER

The real issue is about India having sovereign right over every facet of data generated

within the country.

Transactions are crucial because they determine taxation. Taxation determines

sovereignty of a nation state. Digital transactions will be the single largest source for

taxation and innovation in the future. The shift to transaction base taxation has already

happened due to the implementation of the Goods and Services Tax (GST).

Transactions also define and determine markets. Markets used to be geographical hubs

of economic activity. A geographical location determined its tax jurisdiction, but

geographical rules do not apply in the digital world. In the digital world, the location of

the data determines everything. This gap in India’s laws have been misinterpreted by

the international financial services companies for years. Credit and debit card-issuing

companies do not pay tax on transaction income generated in India. The switches for

these transactions reside in countries that are out of reach of Indian tax authorities. This

has been going on for many years which is why China created an alternative sovereign

infrastructure. This is also the reason that card transactions did not take off as the cost

of transaction levied by these companies was always high. It is only after India created

its own public digital infrastructure that digital transactions took off.

Which is why the Unified Payments Interface (UPI) is so important as an infrastructure

as it reduces dependence on payment infrastructure based outside the country.

Moreover, if the data for the transaction does not reside in India then it is easy for the

entity to deny taxation on it. There are several non-digital transactions where

jurisdiction of the transactions has been used to avoid taxes. Hence the jurisdiction of

not just large transactions but even small transactions is important.

In the case of e-commerce, it is clear that almost every consumer in the future will do

transaction on a platform instead of a physical store. This would effectively mean that

the largest transactions in the economy may not happen physically in India if the data is

not localised here. This has repercussion on the trade deficit front and also on how

companies importing will be treated

The laxity of regulatory bodies and their inability to understand transactions as markets

has had its problems. The Singapore Stock Exchange created derivative instruments

based on Indian markets. This was nothing but data arbitrage and financial innovation,

and it happened because the regulators did not ensure the localisation and ownership of

data. Future financial innovation will be based on data and products will be built on it.

The ownership and location data cannot be handed over to transnational corporations.

This has repercussions on the banking and fin tech sector growth and ownership.

Crucial issues such as permanent establishment will be determined by data localisation.

Application of every other law — on royalty payment, profit repatriation — will be

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24 CITI-NEWS LETTER

dependent on the recognition of location. Location for digital firms will be determined

by not registration of the company but by data.

Indian industry has been facing an onslaught from cheap Chinese suppliers using global

supply chains via e-commerce. It is not possible to track these as imports as most of

these transactions between the vendor and e-commerce platform happen outside the

country in Singapore. This has led to the rise of Chinese e-commerce companies

supplying directly into India without setting up a company, all on the basis of an app.

Transactions worth billions of dollars have already taken place destroying jobs in small

and medium sectors such as garments, manufacturing, textiles and others. The only way

that the full extent of the import volume on these products can be gauged is if there is

localisation and disclosure of transaction data.

Data will only be disclosed if it is localised in India. Otherwise, like social media giants

who have been thumbing their noses at Indian regulators, request for data from e-

commerce or other transaction platforms will also be ignored.

This is not an issue that should be addressed in isolation by the RBI or the commerce

ministry. There is a need for the tax authorities and technology experts to be involved in

determining India’s approach on this issue.

K Yatish Rajawat is a policy analyst and journalist.

Home

US Secretary of State Pompeo to discuss ways to strengthen strategic, trade

ties with India

(Source: Amiti Sen, The Hindu Business Line, June 24, 2019)

Will meet PM, Minister of External Affairs and National Security Advisor

US Secretary of State Mike Pompeo will discuss ways to strengthen strategic and trade

relationship with India in a series of meetings lined up with Prime Minister Narendra

Modi, Minister of External Affairs S Jaishankar and National Security Advisor Ajit

Doval, in his three-day visit beginning Tuesday.

“Pompeo is scheduled to have three bilaterals, one each with PM Modi, Jaishankar and

Doval. The meetings will focus on addressing current irritants in Indo-US relationships

including trade issues and India’s relationship with Iran and Russia, so that bilateral ties

can be further strengthened,” an official told BusinessLine. Pompeo will also deliver an

address at US Embassy on Wednesday.

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25 CITI-NEWS LETTER

India-US trade ties are strained at the moment with the Trump regime deciding earlier

this month to withdraw the Generalised System of Preferences scheme for exporters

offering duty-free entry to over 3,000 Indian items. Two weeks later, India decided to

finally implement the retaliatory tariffs on 28 items imported from the US as a quid pro

quo for the unilateral tariffs imposed by the US on Indian steel and aluminium last year.

To add to the tension, the US announced its plans to tighten H1-B visa rules further and

while the State Department clarified that it is not targeted against any specific country,

there is a lot of apprehension amongst the Indian IT industry about it.

US Commerce Secretary Wilbur Ross recently described India as a high-tariff market

and urged the Modi government to carry out reforms that will open up the Indian

economy and market. The US Commerce Department has been specifically making a

case for lowering of restrictions on import of dairy products and loosening price control

on medical devices.

“All the unresolved trade issues will definitely be discussed by the two sides as bilateral

relations can’t improve without addressing these problems,” the official said. The US is

especially interested in improving ties with India as its relationship with China has been

worsening and it wants New Delhi not to warm up to its neighbour, the official added.

Strategic issues, which have a bearing not only on India’s diplomatic ties but also affect

the country’s economy, such as its relationship with Iran and Russia are also likely to be

discussed in details.

“India has so far gone by US sanctions against Iran and has stopped purchasing oil from

the country. But, in the absence of equally viable alternatives, it will hurt India to

continue ignoring Iran. This matter is likely to be discussed by Pompeo and Jaishankar.

Pompeo is also expected to try and persuade India to stop dealing with Russia and

abandon the deal to purchase the S-400 missiles as well,” the official said.

Home

Ludhiana MSMEs take up issues related to cheap imports of Chinese goods

& EPF with state govt

(Source: Money Control, June 24, 2019)

The delegation of various industry associations from Ludhiana met newly appointed

Commerce and Industry Minister of Punjab Som Parkash and raised issues related to

cheap imports of Chinese goods to India and issues of complications in Employees

Provident Fund Procedures.

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26 CITI-NEWS LETTER

With regard to import of Chinese goods to India, delegation apprised the Minister that

during 2018-19 the exports from China to India were around 4.92 Lakh Crores and at

the similar time the exports to China were merely 1.17 Lakh Crores.

Most of the imports from China are coming under invoicing and through SAFTA &

ASEAN Countries to save the custom duties and it is estimated that the total Imports

from China must be more than 7 Lakh Crores.

If government impose restrictions on these items then such items can be easily

manufactured in India and will also provide huge employment opportunities. Not only

this, it will save very precious forex, the delegation opined.

So there is a dire need to check the trade policy with China and also there is dire need to

keep a close watch on imports from SAFTA & ASEAN countries, said the delegation.

Besides, Badish Jindal, President of Federation of Punjab Small Industries Association

(FOPSIA), Tarun Bawa Jain President Bahadurke Road Knitters and Textile association

and Ajit Lakra of Federation of Textile and Knitters association were also present during

the meeting.

With regard to the issue of complications in Employees Provident Fund Procedures, the

delegation apprised him “Due to poverty the employees are reluctant to get their share

deducted for depositing the same to their EPF account. This is the reason that they

prefer to work in such organizations where the employers don’t deduct their

contribution.”

For this either the employers are forced to deposit the Employees share from their own

pocket or they hide the number of such employees those are not interested to contribute

their share. This is the reason that social security compliance ratio in India is very low as

compared to other countries.

In such condition the social security cover of employee remains uncovered as they also

misses the Employers share of contribution.

The delegation opined that mechanism requires being form in EPF, where the

employers should not be made liable for depositing the Employees contribution. This

will give more coverage of EPF and help in providing wider social security network.

The minister assured to hold urgent meeting in this regard with concerned officers in his

presence.

Home

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27 CITI-NEWS LETTER

Outlook moderates for manufacturing in quarter 1 of 2019-20: FICCI Survey

(Source: Business Standard, June 24, 2019)

High input cost continues to impact growth & competitiveness: FICCI Survey

FICCI's latest quarterly survey on Manufacturing portrays a moderation of outlook for

the manufacturing sector in Q-1 (April-June 2019-20) as the percentage of respondents

reporting higher production in first quarter has fallen vis-a-vis the Q-4 of 2018-19.

Overall sentiments in manufacturing remains subdued as the proportion of respondents

reporting higher output growth during the April-June 2019 has fallen to 41% as

compared to Q-4 of 2018-19 (54%). The percentage of respondents expecting low or

same production is 59% in Q-1 2019-20 which was 46% in Q-4 of 2018-19. In terms of

order books, 36% of the respondents in April-June 2019 are expecting higher number of

orders against 44% in January-March 2019.

FICCI's latest quarterly survey assessed the sentiments of manufacturers for Q-1 (April-

June 2019-20) for twelve major sectors namely automotive, capital goods, cement and

ceramics, chemicals, fertilizers and pharmaceuticals, electronics & electricals, leather

and footwear, medical devices, metal & metal products, paper products, textiles, textile

machinery and miscellaneous. Responses have been drawn from over 300

manufacturing units from both large and SME segments with a combined annual

turnover of over 3.5 lakh crore.

Capacity Addition & Utilization

In terms of capacity utilization, FICCI survey noted that the overall capacity

utilization in manufacturing has witnessed a slight fall to 78% in Q-1 2019-20 as

compared to 80% in the previous quarter. The future investment outlook is slightly

subdued than that was perceived in Q-1 of 2018-19. 37% respondents reported plans for

capacity additions for the next six months as compared to 40% in Q-4 of 2018-19.

High raw material prices, high cost of finance, uncertainty of demand, shortage of

skilled labor, high imports, requirement of technology upgradation, low domestic and

global demand, excess capacities, delay in disbursements of state and central subsidies

and competing countries such as Bangladesh and Vietnam enjoying lower wage cost and

export benefits resulting in erosion of competitiveness of Indian exporters are some of

the major constraints which are affecting expansion plans of the respondents.

In most sectors covered in the survey namely Automotive, Cement and Ceramics,

Leather and Footwear, Paper Products and Textiles Machinery average capacity

utilization has either decreased or remained almost same in Q-1 of 2019-20 as compared

to Q-4 2018-19.

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28 CITI-NEWS LETTER

Table: Current Average Capacity Utilization Levels as Reported in Survey (%)

Sector Average Capacity Utilization in Q-1 2019-20 Average Capacity

Utilization in Q-4 2018-19 Average Capacity Utilization in Q-3 2018-

19 Average Capacity Utilization in Q-2 2018-19Automotive 80 80 80 73Capital

Goods 76 74 74 73Cement and Ceramics 80 80 60 70Chemicals, Fertilizers

& Pharmaceuticals 76 77 74 82Electronics & Electricals 67 72 68 69Leather & Footwear

60 60 60 60Metals & Metal Products 76 88 74 86Paper Products 95 95 80 88Textiles 84

82 80 83Textiles Machinery 60 60 60 60

Inventories

86% of the respondents are expecting either more or same level of inventory in April-

June 2019, which is substantially higher than 69% as was the case in Q-1 of 2018-19.

This has been largely due to subdued domestic and export demand.

Exports

The outlook for exports is moderate as per the Survey as 34% of the participants are

expecting a rise in exports for Q-1 2019-20 and 27% are expecting exports to continue to

be on same path as that of same quarter last year. However, exchange rate fluctuations

have not led to any significant change in exports as 79% of the respondents reported

that the exports were not affected much by rupee fluctuation. Thereby, emphasizing that

there were other global factors that are restricting the growth of our exports.

Hiring

Hiring outlook for the sector shows a bleak picture as 65% of the respondents

mentioned that they are not likely to hire additional workforce in the next three months.

This shows a slight improvement from the hiring scenario in the previous quarter Q-4 of

2018-19, where 70% of the respondents were not in favor of hiring additional workforce.

Interest Rate

Average interest rate paid by the manufacturers has slightly decreased to 9.9% p.a. as

against 10.3% p.a. during last quarter, but the highest rate remains as high as 14%. The

recent cut in repo rate by RBI should come as a relief for the industry if banks pass it on

and it expects more reduction in the rates in coming months to drive investments.

Sectoral Growth

Based on expectations in different sectors, it is noted that except sectors

like Electronics & Electricals which is likely to register strong growth in Q-1 2019-20,

whereas most other sectors are likely to have either moderate or low growth.

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29 CITI-NEWS LETTER

Table: Growth expectations for Q-1 2019-20 compared with Q-1 2018-19

Sector Growth Expectation: Electronics & Electricals Strong Textiles Moderate

Chemicals, Fertilizers & Pharmaceuticals ModerateCapital Goods ModeratePaper

Products ModerateTextile Machinery ModerateCement & Ceramics

ModerateMiscellaneous ModerateAutomotive LowMetals and Metal

Products LowMedical Devices & Technologies LowLeather and Footwear Low

Note: Strong > 10%; 5% < Moderate < 10%; Low < 5%

Production Cost

The cost of production as a percentage of sales for manufacturers in the survey has risen

for 63% respondents. This, of course, is significantly lower than 72% for Q-4 of 2018-19.

This is primarily due to increased cost of raw materials, wages, power cost, rising crude

oil prices and increase in finance cost.

Farmers stage sit-in against Tnpcb officials

(Source: Times of India, June 25, 2019)

More than 70 people, including farmers and residents, staged a sit-in on Vazhai

Thottam-Karaipudur Road at Karaipudur near Palladam in the district on Monday

condemning the Tamil Nadu pollution control board for failing to act against textile

dyeing units that pollute waterbodies and land. A farmer said, “Many of the dyeing units

violate the mandatory zero liquid discharge (ZLD) norm by releasing industrial effluents

either in unused borewells or in open wells. Some also stack sludge generated in effluent

treatment process without following safety measures.” “It causes severe pollution in

land and water. In agricultural wells, fishes have died due to the pollution. We have

been continuously complaining to the Tnpcb, but the officials are not acting against the

violators. We have suffered for more than a decade,” said the farmer. The farmers

warned that if the situation continued, they would be forced to intensify the protest.

Later, Tnpcb officials met the farmers and agreed to hold talks with them. The talks

between farmers and Tnpcb officials is likely to be held in next three days.

Home

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30 CITI-NEWS LETTER

Global trade war: Some silver lining

(Source: Kritika Suneja, Economic Times, June 24, 2019)

As US-China trade war unfolds, there is likely to be big disruption in flows and a certain

manufacturing diversification of risks away from China. Is there an opportunity for

India in this upheaval even as the country fights its own battles with the US. Kirtika

Suneja takes a look.

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Lakme Fashion Week announces new batch of Gen Next designers

(Source: Business Standard, June 24, 2019)

Aggarwal's clothing line epitomises self-empowering women of the latter day.

Honouring the efforts of artisans, Saikia will explore "timeless silhouettes and

impression of handmade textiles" through her collection. Palmo will celebrate the

design process that focuses on weaves, work of artisans and unexplored techniques of

his home, Ladakh.

The Lakme Fashion Week (LFW) on Monday announced the fresh line-up of Gen Next

designers, who are set to showcase their collections at the upcoming Winter/Festive

2019 edition. The six designers who will get an opportunity to share their artistic vision

at the fashion gala are Sahib Bhatia, Ankita Srivastava, Akanksha Aggarwal from New

Delhi, along with Gaurav from Ghazipur, Mumbai’s Manjushree Saikia and Stanzin

Palmo hailing from Ladakh. While Bhatia’s range is inspired by textures and pushes the

envelope of darkness without feeling basic, Gaurav’s collection is based on the shape,

texture and feel of a banana leaf. In her collection, Srivastava will showcase the diversity

in women – “who believe and love themselves and are not afraid to show their strengths

as well as their vulnerabilities”.

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31 CITI-NEWS LETTER

Aggarwal’s clothing line epitomises self-empowering women of the latter day.

Honouring the efforts of artisans, Saikia will explore “timeless silhouettes and

impression of handmade textiles” through her collection. Palmo will celebrate the

design process that focuses on weaves, work of artisans and unexplored techniques of

his home, Ladakh.

“Gen Next is a platform which supports fresh talent and their innovative approach

towards fashion. This season is more special as we have received a large number of

entries not just from Mumbai and New Delhi but also from other parts of the country.

Gen next is the future of fashion and we look forward to seeing the creative collections of

the winners on the runway this Winter/ Festive 2019,” Ashwath Swaminathan, Head of

Innovations, Lakme in a statement said.

Jaspreet Chandok, Vice President and Head of Fashion, IMG Reliance said they are

looking forward to the upcoming edition of LFW 2019. “We are always on the lookout

for fresh talent with a flair for innovation. We have had some exceptional talent come to

the forefront and are excited to see what these young designers bring to the ramp,”

Chandok said.

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32 CITI-NEWS LETTER

GLOBAL:

Bangladesh: Record FDI in 2018

(Source: The Daily Star, June 24, 2019)

Bangladesh received net foreign direct investment (FDI) amounting to $3.61 billion in

2018, its highest yet thanks to the one-off payment of $1.47 billion by Japan Tobacco

Inc. to purchase Akij Group’s tobacco business.

The inflows are an increase of 67.94 percent from a year earlier, according to the United

Nations Conference on Trade and Development (Unctad).

The power sector attracted the highest amount of FDI of $1.01 billion, followed by food

at $729.69 million, textile and weaving at $408.08 million, banking at $282.54 million,

telecommunication at $219.87 million, leather and leather products at $110.55 million

and trading at $101.91 million.

The other sectors received $748.65 million, according to the Bangladesh Investment

Development Authority (BIDA), which unveiled the compiled investment data of the

Unctad at a media briefing at the capital’s Pan Pacific Sonargaon hotel yesterday.

Of the $3.61 billion that came into Bangladesh last year, $1.12 billion were in the form of

equity, $1.30 billion as reinvested earnings, and $1.18 billion as intra-company loan.

Country-wise, China was the biggest source for FDI inflows last year at $1.03 billion,

followed by the Netherlands at $692 million, the UK at $371 million, the US at $174

million, and Singapore at $171 million.

Japan though does not feature in the top five as Japan Tobacco has thus far released

$600 million and that too from the Netherlands.

FDI flows have declined all over the world, but in Asia they increased, particularly in

Bangladesh, said Ahsan H Mansur, executive director of the Policy Research Institute of

Bangladesh.

Merger and acquisition of big companies is one of the reasons for the higher inflows to

Asia.

“Such deals indicate that foreign companies’ interest in local assets is growing,” Mansur

said.

In future, more deals such as Japan Tobacco’s acquisition of Akij’s tobacco business may

take place in Bangladesh.

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33 CITI-NEWS LETTER

“Bangladesh is now a proper place for FDI as every indicator of the country is in favour

of business,” Mansur added.

The government is working with the BIDA to introduce one-stop service with a view to

enhancing the ease of doing of business in Bangladesh, said Salman F Rahman, prime

minister’s adviser on private industry and investment.

By next year the government wants to improve in the World Bank’s ease of doing

business ranking and move below 100. It has set a target to improve the rank to below

50 within the next two years, he said.

In the most recent iteration of the ranking, Bangladesh came in 176th out of 190

countries, the lowest amongst South Asian nations.

The government is considering withdrawing the proposed 15 percent tax on retained

earnings as it is double taxation and investors will feel discouraged, Rahman added.

Some $2 billion worth of investment is expected to come to one of the economic zones

within the next two years, said Paban Chowdhury, executive chairman of the Bangladesh

Economic Zones Authority (BEZA).

Some major Japanese companies have already signed agreements with the BEZA for

investing in Bangladesh.

“I am expecting $5 billion investment from China soon,” he added.

Previously, the economy was confined to exports and imports, but now it is expanding to

investment, said Abul Kalam Azad, principal coordinator for the SDG affairs at the

Prime Minister’s Office.

Ample scope to make profit accounted for such a big amount of FDI last year, said Kazi

M Aminul Islam, executive chairman of the BIDA.

But Bangladesh’s inflows pale in comparison with neighbouring India, up 6 percent to

$42.29 billion from the previous year.

In South Asia, Pakistan received $2.35 billion, Sri Lanka $1.61 billion, the Maldives

$551.8 million, Nepal $160.8 million and Bhutan $5.9 million.

Home

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34 CITI-NEWS LETTER

Over 100 million textiles carry CmiA label

(Source: Fibre2Fashion, June 24, 2019)

More than 100 million textiles carry the Cotton made in Africa (CmiA) label. A total of

580,000 tons of cotton were certified according to the CmiA standard in 2018.

All textile companies pay license fees to the initiative to use the certified cotton. CmiA

reinvests the money in the farming regions to fund e.g. the costs of certification.

Currently, 46 international fashion brands and textile companies purchase CmiA cotton

on the international textile production markets. The Otto Group is the largest buyer

with Bonprix heading the list. Roughly 93 per cent of the cotton purchased and

processed by Bonprix is CmiA-certified. “The close collaboration with Cotton made in

Africa is an important leverage for us in achieving our goal of exclusively demanding

sustainably produced cotton by 2020,” said Stefanie Sumfleth, head of quality

management, corporate responsibility & digital product development at Bonprix. “We

are convinced that together with CmiA, we make a valuable contribution to protecting

people and the environment.” Other major buyers of the sustainably produced cotton

are the REWE Group, Tchibo, Aldi SuD, and Asos as well as Ernsting’s family, Vlisco

Group, Engelbert Strauss, and Bestseller. In addition to the big players, smaller fair

fashion brands such as Hiitu, Cooee Kids, and Weaverbirds also rely on the

sustainability label. Aldi Nord recently joined as new licensing partner.

In 2018, around one million smallholder farmers from ten African countries were part

of the initiative and trained in sustainable and efficient farming methods. The demand

for CmiA cotton on the market also rose by more than 14 per cent compared to 2017.

“With Cotton made in Africa, textile companies get more than just cotton. They show

that sustainability and profitability go very well hand in hand,” said Tina Stridde,

managing director of CmiA. “At the same time, international textile companies and

brands are strong partners for smallholder farmers. For each textile piece, they pay

licensing fees which finance the work in Africa. We are pleased that we have been able to

successfully expand the demand for CmiA in the market thanks to 46 retailers and

fashion brands.”

CmiA is working with smallholder farmers in Burkina Faso, Cameroon, Côte d’Ivoire,

Ethiopia and Ghana, as well as in Mozambique, Tanzania, Uganda, and Zambia. With

the addition of new partners in Nigeria and Benin, the initiative expands its network

from the 2018-19 season. Whereas more than 100 registered spinning partners and

textile producers worldwide work with CmiA in the textile chain now – 85 have been

registered in 2018. About 37 per cent of the total cotton production in Africa is CmiA-

certified. CmiA-cotton is processed in 19 textile production markets worldwide – thereof

seven in Africa.

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35 CITI-NEWS LETTER

“It is the courage and strength of our partners in Africa and around the world that spurs

us on and motivates us every day to continue working with them on the success of our

initiative and that allows us to look to the future with great optimism," founder

professor Dr Michael Otto concluded.

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DiloGroup presents latest textile machines at ITMA

(Source: Finre2Fashion, June 24, 2019)

DiloGroup is showing new innovations in textile machinery at the 18th edition of ITMA

2019 exhibition. The leading textile and garment technology exhibition for effective

solutions and collaborative partnerships is being held from June 20-26, 2019, in

Barcelona, Spain. DiloGroup is a company in the field of complete staple fibre nonwoven

production lines.

Needled products can be found in many applications such as floor covering, automotive

interior linings, technical needlefelts, filtration media, geotextiles, mattress, bed and

upholstery, wipes and papermachine felts. By large investments in research and

development, DiloGroup contributes significantly to the exploitation of new applications

based on increase in production capacity, improvement of quality features and increased

efficiency in the production process. At ITMA in Barcelona, the company is setting a

new focus on the further development alongside existing well-known technical

components, the company said in a press release.

The UniFeed vibration chute principle includes components for a precise fibre

distribution in cross and longitudinal direction and requires low space in width and

height including the fine opening stage. The cross profile of the web mat before the card

ensures a precise matching of the edges in the longitudinal profile of the cross-laid web.

In combination with the VQC card with double transfer and double doffer rolls, these

components can be seen at the extended Textile Research Centre after the show.

The card is followed by the refined crosslapper HyperLayer “NT”, an example of high

speed, high precision cross-lapping design. The precision of the laydown even at high

speed up to about 190 m/min. and a layering width of about 4 metres makes this

extraordinary machine very suited for use in hydroentanglement lines. Currently, there

is no comparable cross-lapping technology which can achieve these values in regard to

speed and precision and also for viscose fibres. The Dilo crosslapper HyperLayer HLSC

30/40 will be installed and available for trials in a hydroentanglement line in the new

Textile Research Centre of Messrs. Trützschler in Egelsbach after the show.

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36 CITI-NEWS LETTER

A high speed crosslapper needs aprons to compensate for speed differences between

cross apron of the lapper and constant infeed of the needleloom. This high-frequency

start-stop- adjustment is realised by our new “FC-II apron” with double arrangement.

DiloGroup will show at ITMA 2019 several development modules to illustrate the future

potential degree of automisation in nonwoven production. The I4.0 modules are meant

to facilitate operation and to improve data transparency in production, operation

control, quality and maintenance. The solutions offered by Dilo, ‘Bale Timer’, ‘Smart

Start’ for a fully automatic starting aid or ‘DI-LOWATT’ for energy savings, are

supplemented by Siemens based solutions which can be chosen via app and data cloud

‘MindSphere’.

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LMW unveils 3-pronged approach for spinning at ITMA

(Source: Fibre2Fashion, June 24, 2019)

Lakshmi Machine Works (LMW) has unveiled a 3-pronged approach of automisation,

digitisation and innovation for addressing the emerging challenges of the spinning

industry at the ongoing ITMA 2019 in Barcelona, Spain. LMW’s technology and features

in hall 6 booth C108 are being well appreciated and received by customers at

the textile machinery fair.

LMW is displaying innovative products for ring spinning segment, open end segment

and air jet spinning segment at the 7-day fair that concludes on June 26.

Committed to address the challenges being faced by the spinning industry, LMW’s RAP

(Ringframe Autopiecing) system by regular underpiecing method is a revolutionary

automation for the spinning industry. It will lead to major labour saving. With a

benchmarking piecing time of less than 45 seconds, this innovative product is ‘talk of

the town’, according to the company.

To shorten the yarn manufacturing process LMW has launched Lakshmi jet spinning

LJS9—an economical jet spinning yarn manufacturing solution which gives a reduction

in manpower to the tune of 50 per cent.The key features include: delivery speed up to

550 mpm; max up to 200 drums; individual drive for each spinning unit; dual side

spinning for better space utilisation; robotic piecing system; and dual filter system—

independent on each side.

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37 CITI-NEWS LETTER

Lakshmi auto winder LAW 60 has delivery speed up to 2200 mpm, max drums up to 60

for linkconer; individual drive for all machine elements, dual preparation station for

courser counts, auto doffer for package handling, RFID technology for

peg identification–individual spindle monitoring, same pegs moves from RF to link

winder, position of HMI near to preparation station – ease in trouble shooting, drum

with 2 / 2.5 & 3 turns are available, and compatible for cone angles – 3deg37mins /

4deg20 mins / 5 deg 57 mins.

The Fix Fil can changer mechanism with minimal movement of can (approx. half of can

dia) leads to efficiency improvement as can change happens at the running speed

without reduction. Centre to centre distance of card is minimum (3.3m for 1000mm can

dia & 3.8m for 1200mm can dia). It also has dual can plate with individual drive

arrangement, in-built can pusher arrangement, and doffed can monitoring sensor

inbuilt.

In Magnus Can dia up to 1200mm is possible with height of 1200mm & 1300mm with

the can content increase up to 44% & 56% respectively. Advantages are related to

minimal can movements, reduction in number of doff and thereby increase in efficiency

in card, drawframe, etc.

The Card with Drafting System (CDS) has 2/2 drafting system with servo control,

pneumatic loading of top rollers – easy adjustment of pressure & release, auto levelling

of sliver in CDS through servo drive control, auto piecing of sliver, speed up to 700

m/min, and electronic sliver cutting mechanism. Moreover, with CDS, simplified

process is possible for air jet spinning yarn preparation.

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Lenzing to invest €100 million to reduce carbon emissions

(Source: Fibre2Fashion, June 24, 2019)

To become first carbon neutral fibre producer in the world, Lenzing Group has set

targets to drastically reduce its CO2 footprint. Lenzing will invest €100 million over the

coming years to reduce carbon emissions both inside its operational boundaries (scope

1+2) and in its supply chain (scope 3). It has set net-zero CO2 emissions target by 2050.

Due to its ambitious CO2 emission reduction strategy, Lenzing will further contribute

towards helping customers to transition their business to a lower CO2 base. The

milestone set for 2030, is where Lenzing plans to reduce CO2 emissions per ton of

product by almost 50 per cent (scope 1+2 and 3) compared to a 2017 baseline. The total

CO2 reduction of all the planned initiatives will yield 1.3 mt.

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38 CITI-NEWS LETTER

“Climate change is the most important issue mankind is facing. With this commitment

we are fully in line with the Paris climate agreement and will further help the world to

reduce the speed of global warming. Our ambitious decarbonisation targets make us a

front runner, not only in the world of fiber producers but also among major industrial

companies. Despite the substantial investment that is necessary, we are convinced that

this is not only a very responsible step but that it will also be a value-generating move,"

said Stefan Doboczky, chief executive officer of the Lenzing Group.

"It is our responsibility towards our children and grandchildren to act now," Doboczky

adds. A series of measures in production as well as new innovations and adaptations to

new technologies will help achieve these ambitious targets. A major contribution will

also come from investments in the production of highly eco-responsible products such

as Tencel branded lyocell fibres. On top of that, the drastic improvement of energy

efficiency and an increase in the share of renewable energy in the energy mix will deliver

the targets set.

“To underpin this strategy, Lenzing will commit itself to the Science Based Targets

initiative, the most recognized organization in the field of climate-relevant target

setting. This step is a significant contribution to green up the textile industry, and will

help our partners to offer consumers textiles with an ecologically responsible footprint,"

said Robert van de Kerkhof, chief commercial officer of the Lenzing Group.

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