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

17-03-2020 68.40 (-1.65)

18-03-2019 84.35

19-03-2018 92.10

New York Cotton Futures (Cents/lb) As on 19.03.2020 (Change from

previous day)

May 2020 56.00 (-0.64)

July 2020 58.95 (-1.81)

Oct 2020 57.86 (-1.19)

19th March

2020

India under no obligation to implement WTO's dispute panel

recommendations on export schemes: Goyal

No timeline fixed for release of e-commerce policy: Piyush Goyal

Yarn makers sees ray of hope with fresh queries from China

Surat's diamond and textile units to remain open amid coronavirus,

slowdown

Textile stock prices tumble across geographies

Cotton and Yarn Futures

ZCE - Daily Data (Change from previous day)

MCX (Change from previous day)

Mar 2020 17630 (-370)

Cotton 11560 (+40) Apr 2020 17900 (-330)

Yarn 17930 (+20) May 2020 18180 (-290)

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2 CITI-NEWS LETTER

-------------------------------------------------------------------------------------- India under no obligation to implement WTO's dispute panel recommendations on export

schemes: Goyal

No timeline fixed for release of e-commerce policy: Piyush Goyal

CITI seeks relief package to mitigate impact of COVID-19

Coronavirus pushes textile industry into a corner

Yarn makers sees ray of hope with fresh queries from China

Covid-19 impact: India Inc seeks moratorium on loans, waiver on levies

Textile body seeks anti-dumping duty removal on raw material

MSME Ministry constitutes Committee on International Cooperation

KVIC seeks ban on silk imports from China

Textile bizmen relieved after GST Council stays tax hike

Surat's diamond and textile units to remain open amid coronavirus, slowdown

Moody's cuts India's GDP growth to 5.3% for 2020 over Covid-19 outbreak

S&P lowers India's growth forecast to 5.2% for 2020 amid Covid-19 pandemic

SIMA, NITMA appeal for moratorium on loan payments

TEXPROCIL urges policy intervention in textile sector

Can global shutdown open new window for ‘Make in India’? These govt schemes may

provide cushion

----------------------------------------------------------------------------- Webinar: COVID-19's impact on global textile supply chain

China ups export rebate rates for over 1,400 products

Bangladesh: 400 textile makers fold operations in 3 years

Textile stock prices tumble across geographies

Nigeria and Benefits of Reviving Cotton Sector

‘Made in Turkey’ home textiles sold to 165 countries as exports surge

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

NATIONAL

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

GLOBAL

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3 CITI-NEWS LETTER

NATIONAL:

India under no obligation to implement WTO's dispute panel

recommendations on export schemes: Goyal

(Source: Economic Times, March 18, 2020)

India is under no obligation to implement the recommendations of the WTO's dispute

panel on its export promotion schemes, which was challenged by the US, as new Delhi

has appealed against that order at the higher level, Parliament was informed on

Wednesday. A dispute settlement panel of World Trade Organization (WTO) in its report

issued to members on 31 October 2019 has ruled that India's export-related schemes

(including SEZ scheme) are in the nature of prohibited subsidies under the Agreement on

Subsidies and Countervailing Measures and are inconsistent with WTO norms.

The panel has given a time-frame of 180 days for withdrawal of Special Economic Zone

(SEZ) scheme. India has appealed at the WTO's appellate body against this ruling. "Due

to non-functioning of appellate body (of the WTO's dispute settle mechanism), the appeal

has been kept in suspension. Till the appeal is disposed of, India is under no obligation to

implement the recommendations of panel," Commerce and Industry Minister Piyush

Goyal said in a written reply to the Lok Sabha. In a separate reply, the minister informed

Parliament that India is involved in 15 trade disputes, mostly against the US, at the WTO

at present.

"Currently, India is involved in 15 disputes at the WTO, in which it is complainant in 4

and respondent in 11," he said. The disputes where India is a complaining party are

countervailing duty by the US on Indian steel products; measures by America concerning

non-immigrant visas; renewable energy programmes of the US; and import duties

imposed on steel and aluminium products by America. WTO disputes where India is a

responding party include prohibition by India on import of poultry and poultry products

filed by the US, and import duties on certain information and communication technology

goods filed by the EU, Japan and Taiwan.

Home

No timeline fixed for release of e-commerce policy: Piyush Goyal

(Source: KIRTIKA SUNEJA, Economic Times, March 18, 2020)

Commerce and industry minister Piyush Goyal on Wednesday said that no timeline has

been fixed to release the national e-commerce policy as e-commerce is a new subject.

“Since e-Commerce is a new issue, it has necessitated detailed consultations over the last

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4 CITI-NEWS LETTER

few months to ensure that the policy is crafted in a manner that interests of all

stakeholders are taken in to account. Therefore, no timeline has been fixed for release of

the same,” Goyal told Lok Sabha in a written reply.

He said the draft National e-commerce policy seeks to create a facilitative regulatory

environment for growth of e-commerce sector. It is aimed at empowering domestic

entrepreneurs and to encourage Make in India while safeguarding interests of the

consumers and facilitating job creation. On February 23, 2019, the first draft of the

National e-Commerce policy was placed in public domain for suggestions. Comments

from over 120 stakeholders- companies both Indian and foreign, industry associations,

think tanks, foreign governments were received. Post this, a series of meetings have been

held with different stakeholders, including major e-commerce companies, start-ups,

industry associations, think-tanks, academicians, data centre providers, logistics

companies, export promotion councils to discuss the issues facing the sector and the

provisions contained in the draft policy.

Goyal also informed the Lower House that the Ministry of Electronics and Information

Technology has introduced the Personal Data Protection Bill, 2019, which seeks to specify

the flow and usage of personal data, defines sensitive data and aims to create a framework

for organisational and technical measures in processing of data, laying down norms for

cross-border transfer and accountability of entities processing personal data. “The

formulation of the National e-Commerce policy and the new Industrial Policy is under

consideration of the government,” he said.

The proposed new industrial policy seeks to boost competitiveness and growth of the

manufacturing sector in India. A working group has been constituted with representation

from the Centre, states and industry associations. Inter-ministerial consultation is

currently going on for framing the new Industrial Policy. In a separate reply, Goyal said

that 362 Indian products have been registered as Geographical Indicators as on March

10, 2020.

Home

CITI seeks relief package to mitigate impact of COVID-19

(Source: Fibre2Fashion, March 18, 2020)

The Confederation of Indian Textile Industry (CITI) has called for a government relief

package for the textile and apparel sector to mitigate the effect of COVID-19 pandemic.

The suggested steps include a moratorium on loan repayments to banks for the next fiscal

and enhancing the Interest Equalisation Scheme (IES) benefits for textile and apparel

exports to 5 per cent.

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5 CITI-NEWS LETTER

CITI chairman T Rajkumar, in a letter to Prime Minister Narendra Modi, suggested that

all raw materials, dyes and chemicals, intermediaries, spares and accessories should be

exempted from anti-dumping duty and basic customs duty.

Cotton yarn and fabrics should be included under the Rebate of State and Central Taxes

and Levies (RoSCTL), IES and the Merchandise Exports of India Scheme (MEIS) benefits

with immediate effect to prevent job losses for millions in the handloom, power loom and

spinning sectors, Rajkumar said in a statement.

Soft loans equivalent to government dues pending in the books of individual textile units

should be issued that could be adjusted soon as the government clears the dues. Bank

interest rate should be reduced by 3 per cent, the CITI letter said.

The relief package is urgently required to ensure the survival of the sector that employs

over 105 million people and earns around $40 billion in foreign exchange, he added.

Home

Coronavirus pushes textile industry into a corner

(Source: L N Revathy, The Hindu Business Line, March 18, 2020)

Industry seeks moratorium of loan repayments and other sops

The slew of measures being taken by the government to fight the coronavirus pandemic

has put textile manufacturers in a spot. While on the one hand the sector is struggling to

continue with its production schedule as offtake has almost come to a halt, on the other

the pressure to repay its dues to banks is forcing the industry to appeal to the government

for a one-year moratorium on repayment of principal and interest on loan.

“It is affecting every sphere of life globally, be it manufacturing or business,” said Ashwin

Chandran, Chairman, The Southern India Mills’ Association (SIMA).

Stating that the situation is taking a turn for the worse due to closure of malls and retail

showrooms, he said, “The textile and clothing sector is labour and capital intensive. A

majority of workers are migrant labourers; they have now started to return to their native

places. With total disruption in workflow and production schedule, the industry is facing

its worst-ever crisis. Our immediate appeal is for a year’s moratorium for repayment of

principal and interest. It would go a long way in tiding over this crisis.”

Meanwhile, the knitwear garment exporting community in Tirupur, which had only last

week said that the impact of COVID-19 was not yet felt, has now gone on record about its

dire plight. “European buyers, particularly from Italy and Spain, have asked us to defer

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6 CITI-NEWS LETTER

shipments till the situation gets back to normal. Some have cancelled their commitments,

deferring payments on goods sent or not lifting the goods. This is a cause for concern as

production has been taking place continuously to fulfil the committed orders and for

delivering on time. Production plans have gone topsy-turvy and since a majority of the

units are small enterprises, we fear that due to non-clearance of dues, the banks may

classifying the units as NPAs. In addition to this, prices of dyes and chemicals have gone

up by about 30 per cent, impacting production,” said Tirupur Exporters’ Association

President Raja Shanmugham.

Shanmugham did not fail to point out that to overcome the disruption in economic

activity caused by coronavirus (COVID-19), many developed countries like the US,

Germany, Italy, France, UK, Japan, and China have already taken a slew of financial

measures like reduction of bank interest rates and cash reserve, debt moratorium to

MSMEs, deferment of loan and tax payment without interest including announcement of

new bridge loans and credit guarantees. These countries have pumped in billions of

dollars to bring the industries back to normalcy.

In line with the financial measures taken by all the industrialised countries to bail out the

units from the ongoing crisis, the industry in India too is seeking a bailout package, a

financial stimulus package to re-energise the market economy and quantitative easing to

revive and uplift the confidence of entrepreneurs.

Home

Yarn makers sees ray of hope with fresh queries from China

(Source: Financial Express, March 19, 2020)

As per an estimate, Gujarat’s spinning industry accounts for over Rs30,000 crore and

more than 70,000 people are working in the spinning mills across the state.

In the overall gloomy situation due to the outbreak of coronavirus, Gujarat-based yarn

manufacturers are seeing a ray of hope following fresh inquiries from Chinese importers.

Over the past two months, nearly 120 spinning mills across Gujarat have been passing

through a tough period in the wake of sluggish international as well as domestic demands,

said Bharat Boghara, chairman of Spinners Association of Gujarat (SAG).

“Of the total yarn manufactured in Gujarat, over 30% is being exported to different

countries. China is one of the biggest buyers of cotton yarns from India. Due to the

outbreak of coronavirus, Chinese traders have completely stopped buying from India as

well as other countries,” said Boghara, adding that however, since last one week, there

has been fresh inquires from Chinese traders.

According to him, the price of 30 counts cotton yarn was around Rs 205 per kg a couple

of months back, which has come down to almost Rs190 to Rs 195 in the export market.

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7 CITI-NEWS LETTER

Ishwarbhai Ghelani, board member of SAG, said that not only Chinese inquiries but

domestic demand has also spurred slightly, which is encouraging for yarn makers in

Gujarat and other parts of the country. Hopefully, in the coming one or two months

everything will be normalised as the magnitude of the pandemic has reportedly reduced

in China, says Ghelani.

As per an estimate, Gujarat’s spinning industry accounts for over Rs30,000 crore and

more than 70,000 people are working in the spinning mills across the state. The spinning

industry was bullish following good rain and higher sowing of cotton in Gujarat. As a

result, more than 100 lakh bales of crop has been estimated in the current season against

the previous year’s 90 lakh bales. Compared to last season’s 23 lakh hectare sowing of

cotton, in the current season sowing in Gujarat has gone up to 26 lakh hectare. Gujarat

has a lion’s share of 30% in India’s total production of cotton.

Home

Covid-19 impact: India Inc seeks moratorium on loans, waiver on levies

(Source: Malini Bhupta, Financial Express, March 19, 2020)

While the services sector — aviation, hospitality and retail — is the worst hit,

manufacturing companies too are faced with stretched working capital cycles as their

fixed costs remain even as demand has evaporated.

Hit by near lockdown conditions across the country, Corporate India is expected to seek

relief from the government. On a conference call on Tuesday, members of the Federation

of Indian Chambers of Commerce and Industry (FICCI) decided to request the

government for a moratorium on loans and waiver on GST payments. FICCI secretary-

general Dilip Chenoy said: “We have inputs from members on different sectors and a lot

of working capital is hit due to the lockdown, so we are looking at possibility of banks

giving a moratorium or rescheduling loans. There are many levies that hospitality sector

has to pay, so in the face of the lockdown we are saying if some of these can be waived for

a certain duration.”

Senior bankers told FE on Wednesday that they were in touch with their corporate

borrowers, who had expressed concerns over a possible liquidity crunch that they could

be faced with if the lockdown continued for a few more weeks. Given that almost every

industry from metals, retail, aviation, hospitality to auto are going to be hit by the

lockdown, India Inc has decided it is time to ask for a relief package from the government.

While the services sector — aviation, hospitality and retail — is the worst hit,

manufacturing companies too are faced with stretched working capital cycles as their

fixed costs remain even as demand has evaporated.

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8 CITI-NEWS LETTER

Moody’s has downgraded India’s growth forecast for 2020 to 5.3% on downside risks

emanating from the spread of Covid-19 cases in the country. Industry, however, believes

the cuts to economic growth could be much deeper as demand destruction seen in the last

couple of weeks is unprecedented.

Companies are also worried about raising capital, given that equity markets are in a

freefall as panic stricken global investors have been selling heavily. With equity markets

showing no signs of stabilising, some members of FICCI also are in favour of some steps

to curb the volatility in the markets. Leading listed companies are in favour of a ban on

short-selling. The recent carnage in the markets have also impacted plans of companies

looking to raise capital from public markets. For instance, the initial public offering of

Burger King, Rossari Biotech and Antony Waste Handling have been deferred. India’s

fourth largest airline GoAir was expected to tap the markets to raise Rs 5,000 crore in

2020.

Home

Textile body seeks anti-dumping duty removal on raw material

(Source: Financial Express, March 19, 2020)

The industry body has also sought the exemption for cotton yarn and fabrics under

RoSCTL, IES & MEIS benefits with immediate effect to prevent job losses of lakhs of

people in the handloom, powerloom and spinning sectors.

Hit hard by the deadly pandemic Covid-19, the Confederation of Indian Textile Industry

(CITI) has sought measures, including removal of anti-dumping duties and basis customs

duties levied on the imports of raw material such as dyes & chemicals, intermediaries,

spares and accessories.

The industry body has also sought the exemption for cotton yarn and fabrics under

RoSCTL, IES & MEIS benefits with immediate effect to prevent job losses of lakhs of

people in the handloom, powerloom and spinning sectors.

The demands also include extending soft loan equivalent to government dues pending in

the books of individual textile units that could be adjusted soon as the government clears

the dues (TUF subsidy, RoSCTL, MEIS, GST refund), enhancing IES benefit for all textiles

and clothing exports to 5% and reducing the bank interest rate by 3%, CITI said in a press

release here.

The relief package is urgently required to ensure the survival of the textile and clothing

industry that employs over 105 million people and also earn around $40 billion forex,

apart from contributing substantial revenue in terms of GST and other taxes.

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9 CITI-NEWS LETTER

T Rajkumar, chairman, CITI, observed that several countries across the world have

extended liberal packages to mitigate the COVID-19 crisis. For instance, Germany has

announced a financial package of half trillion euros for companies impacted by the crisis

to boost their liquidity. Under this scheme, any German company hit during this crisis

can borrow as much as necessary by them for a longer duration with zero interest rate till

such time they completely recover; they do not have to pay back.

According to him, the demand for the textile products and also the domestic sales have

come down to a grinding halt due to the panic situation created by the outbreak of COVID-

19 which was first reported in China and which later got spread to EU and the US as well,

which are the final destinations for the textile products manufactured in India.

CITI chairman further said that understanding the gravity of the pandemic and with a

view to control the situation at an early stage, the Union government has issued directions

to close all the malls and retail outlets so that people do not further get infected and this

decision of the government has resulted in substantial reduction in the sales of the

domestic textiles and clothing, he said.

CITI chairman said that he has requested the prime minister to immediately announce a

relief package to mitigate the crisis being faced by the highly-capital and labour-intensive

textile industry which runs on wafer-thin margin.

Home

MSME Ministry constitutes Committee on International Cooperation

(Source: Money Control, March 18, 2020)

Amidst declining exports due to worldwide fears of Corona pandemic, Government seems

to be determined to give a push to exports through Micro, Small and Medium Enterprises

(MSMEs).

The Ministry of MSME has issued an Order constituting a Committee for regular

‘deliberations and discussions regarding various issues and opportunities of

bilateral/multilateral cooperation with other countries’. The Committee shall meet every

month.

MSMEs contribute close to 40% to India’s total exports valuing US$ 330 Bn (2018-19).

Union MSME Minister Nitin Gadkari is aggressively pushing for identification of new

exportable products in the MSME sector and relevant export markets for them.

Ministry of MSME supports MSMEs for market access in select markets.

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10 CITI-NEWS LETTER

The Committee is to look into identification of right trade fairs and market access tools to

enter into focused markets.

Apart fr0m reviewing export promotion policies, it is also expected to deliberate on issues

such as non-tariff measures, logistics and e-commerce.

Besides their traditional strong holds in sectors such as textiles and garments, leather and

gems and jewellery, MSMEs are significant players in auto-components and light

engineering, drugs and pharma.

The committee members include major trade bodies like FICCI, PHDCCI, FISME, FIEO,

export promotion councils and NSIC.

Home

KVIC seeks ban on silk imports from China

(Source: Nishtha Saluja, Economic Times, March 19, 2020)

The Khadi and Village Industries Commission (KVIC) has reached out to the commerce

ministry seeking a ban on import of silk and silk products from China, alleging that it is

hurting the local silk industry in India.

“Despite being the world’s second largest producer of silk and the largest consumer of raw

silk and silk fabrics, the import of low cost and low quality Chinese silk including artificial

silk products negatively impacts the demand of Indian silk in its own markets,” KVIC

chairman VK Saxena wrote in a letter to commerce and industry minister Piyush Goyal.

Home

Textile bizmen relieved after GST Council stays tax hike

(Source: Times of India, March 18, 2020)

City businessmen into textiles and garments have heaved a sigh of relief after the GST

Council, in its meeting held on Saturday, did not hike the rate of 5% GST applicable on

some fabrics and garments costing below Rs1,000. Earlier, there were hints from the

central government that the 5% slab of GST would be abolished, and the minimum GST

on fabrics and garments would be 12%. Welcoming the decision, Knitwear Club finance

secretary Harish Kairpal said, “We are thankful to the GST Council for not going ahead

with the proposed hike in the rate of GST on certain fabrics and garments up to Rs1,000.

Had the GST been hiked to 12%, it would have destroyed the textile and garment

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11 CITI-NEWS LETTER

manufacturers, who are already struggling to cope with the current scenario, where there

is a huge drop in demand, both locally and internationally. We also request the union

government to bring out a package for our industry to face this recession, which is getting

worse day by day.”

According to Atul Saggar, general secretary of Apparel Manufacturers Association of

Ludhiana, “It’s nothing less than a big relief for us, as had the GST been hiked by 7%, it

would have hiked our cost of production significantly, and we would have been forced to

hike the rates of our products, and that too at a time where we are already short of orders.”

According to Sukhwinder Singh — another garment manufacturer, and member of the

Ludhiana Business Forum, “The currently applicable GST of 5% on certain fabrics and

garments costing up to Rs1,000 is already non- refundable, and when the same rate is

into force for more than three years now, why did the government want to change it now.

The stand taken by GST Council is really appreciable, as the hike of 7% GST would have

definitely hit the garment industry hard, and our already low sales would have dropped

further had the new rate of 12% GST been imposed on us.

Home

Surat's diamond and textile units to remain open amid coronavirus,

slowdown

(Source: Vinay Umerji, Business Standard, March 18, 2020)

Industry stakeholders say closure would not only impact the health of the two sectors but

would also lead to massive unemployment

At a time when exports and domestic demand have taken a hit due to

the coronavirus outbreak, Surat-based diamond and synthetic textile industries will

remain open to sustain business. The two sectors in the city together employ 2 million

workers in normal business environment.

Industry stakeholders say closure of units due to reduced capacity utilisation would not

only impact the health of the two industries but would also lead to widespread

unemployment.

The respective industry associations have therefore decided to keep the units open for the

benefit of unit owners and workers, most of whom are migrants from other states such as

Odisha, Bihar and Jharkhand. However, adequate precautions will be made to prevent

spread of coronavirus.

The Surat Diamond Association (SDA) has decided not to shut down units but ensure

cleanliness and create awareness about the outbreak during operations. According to

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12 CITI-NEWS LETTER

Babhubhai Kathiriya, president of SDA, among several decisions taken in a recent

meeting of stakeholders, the industry body has decided that units would run between 11

am and 6 pm daily even as diamond traders are discouraged from entering markets

outside of trading hours.

"All units are required to measure temperature daily, arrange for hand sanitizers and

masks for diamond polishing workers and provide basic health check-ups. On the other

hand, the association will run an awareness campaign on safety measures to be taken to

prevent spread of coronavirus. We will also collaborate with the local civic body and state

government," said Kathiriya.

The Surat diamond industry's decision has been echoed by the larger industry body, the

Gems and Jewellery Export Promotion Council (GJEPC), with regional chairman Dinesh

Navadia stating that the decision will not only ensure that workers remain employed but

will also help limit the spread of the virus.

According to Navadia, with the industry employing over 550,000 diamond workers,

closure for even 15 days would result in large scale unemployment. The industry is already

operating at less than 40 per cent capacity due to a major decline in export orders

following the coronavirus outbreak. "In February alone, exports were down by $860

million on a year-on-year basis," he added. Similarly, the entire textile value chain, right

from weaving to processing to trading, has also decided to continue operations despite

facing slowdown. "As such, several workers haven't returned from their hometowns after

the recent 'holi-dhuleti' holidays. Also, due to the impact on overseas and domestic

demand, especially with major centres like Mumbai and Kolkata remaining closed,

capacity utilisation has been hit. However, it is important that units remain open to

sustain themselves and keep workers engaged," said Ashish Gujarati, president of

Pandesara Weavers' Association, a leading powerloom hub in Surat. Industry players like

Jitubhai Vakharia, president, South Gujarat Textile Processors' Association (SGTPA), are

of the view that shutting down units would make it difficult to keep workers indoors,

resulting in more social movement and increasing chances of the virus spread.

"At least in textile units, workers are spread out beyond one metre and all safety

precautions are being taken. This way, the virus spread can be contained at least for a

month even though units are operating at below par capacity," said Vakharia.

Employing over 1.5 million workers across the value chain, Surat's textile industry

currently churns out 20-25 million metres a day as against a full capacity of 40 million

metres.

Home

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13 CITI-NEWS LETTER

Moody's cuts India's GDP growth to 5.3% for 2020 over Covid-19 outbreak

(Source: Business Standard, March 17, 2020)

Moody's said oil price shock adds to growth and fiscal pressures for exposed sovereigns.

Moody's Investors Service on Tuesday lowered India's GDP growth forecast for 2020

calendar year to 5.3 per cent, on coronavirus implications on the economy.

Moody's had in February projected a 5.4 per cent real GDP growth for India in 2020. This

too was a downgrade from 6.6 per cent earlier forecast.

The 5.3 per cent real GDP growth forecast for 2020 compares to 5.3 per cent growth

estimate for 2019 and 7.4 per cent achieved in 2018.

Stating that there was significant economic fallout from more rapid and wider spread of

the coronavirus, the rating agency on Tuesday said dampening of domestic consumption

demand in affected countries exacerbates disruptions to supply chains and cross-border

trade of goods and services.

"The longer the disruptions last, the greater the risk of global recession becomes," it said.

Moody's forecast a 5.8 per cent growth rate for India in 2021.

"A number of governments and central banks have announced countervailing measures,

including fiscal stimulus packages, policy rate cuts and regulatory forbearance; however,

the effectiveness of policy easing will be blunted by measures to contain the outbreak, and

policy space is constrained for some sovereigns," it said.

Also, tighter funding conditions and exchange rate depreciation could stress sovereigns

with high foreign currency exposure, heavy reliance on external market funding or low

foreign currency reserve coverage, it said.

Moody's said oil price shock adds to growth and fiscal pressures for exposed sovereigns.

"A period of lower oil prices will further weigh on the economic and fiscal fundamentals

of oil exporters, while mitigating the trade shock for importers.

Home

S&P lowers India's growth forecast to 5.2% for 2020 amid Covid-19 pandemic

(Source: Business Standard, March 18, 2020)

The agency had earlier projected a growth rate of 5.7 per cent during the 2020 calendar

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14 CITI-NEWS LETTER

S&P Global Ratings on Wednesday lowered India's economic growth forecast to 5.2 per

cent for 2020, saying the global economy is entering a recession amid

the coronavirus pandemic.

The agency had earlier projected a growth rate of 5.7 per cent during the 2020 calendar.

Asia-Pacific economic growth in 2020 will be more than halve to less than 3 per cent as

the "global economy enters a recession", S&P said in a statement.

An enormous first-quarter shock in China, shutdowns across the US and Europe, and

local virus transmission guarantees a deep recession across Asia-Pacific, said Shaun

Roache, chief Asia-Pacific economist at S&P Global Ratings.

"We lower our forecasts for China, India, and Japan for 2020 to 2.9 per cent, 5.2 per cent

and -1.2 per cent (from 4.8 per cent, 5.7 per cent, and -0.4 per cent previously)," S&P said.

On Tuesday, Moody's Investors Service had lowered India's economic growth forecast for

2020 to 5.3 per cent (from 5.4 per cent), in the wake of the coronavirus impact on the

economy.

Home

SIMA, NITMA appeal for moratorium on loan payments

(Source: Fibre2Fashion, March 18, 2020)

The Northern India Textile Mills Association (NITMA) and the Southern India Mills’

Association (SIMA) want a moratorium on repayment of loan taken by textile mills from

banks in light of the crisis situation generated by the coronavirus pandemic. While SIMA

has written to Prime Minister Narendra Modi for a year’s moratorium, NITMA wants it

for six months.

SIMA has requested for a year-long moratorium from April 1 this year to March 31, 2021,

secretary general K Selvaraju said in a press release. Under the present situation, majority

of textile industry workers are not reporting for work and migrant workers are also

returning to their native places, affecting production, he said.

The pandemic has resulted in demand slump and uncertain growth prospects during

2020, NITMA said in a statement. NITMA president Sanjay Garg said the looming crisis

has come as a double whammy to the already encumbered textiles sector when the

cumulative growth in textiles production has been down.

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15 CITI-NEWS LETTER

The sector is facing severe financial stress leading to growing non-performing assets due

to continued lower production and decline in exports in the wake of prolonged global

slump due to US-China trade war and lack of domestic demand, Garg added.

Home

TEXPROCIL urges policy intervention in textile sector

(Source: Fibre2Fashion, March 18, 2020)

The Cotton Textiles Export Promotion Council of India (TEXPROCIL) has requested the

government for urgent policy intervention to provide fiscal relief and ensure credit flow

to the textile sector. The suggested steps include extending the Rebate of State and Central

Taxes and Levies (ROSCTL) scheme to cotton yarn and fabrics and the Merchandise

Exports of India (MEIS) scheme to all textile products beyond March 31. The spread of

coronavirus has led to cancellation and deferment of orders on a very large scale and this

has caused considerable anxiety among exporters of textile goods, TEXPROCIL chairman

KV Srinivasan said in a statement. Almost 41 per cent of exports of material like cotton

yarns and fabrics are directed to the 10 countries severely hit by COVID-19. Exports are

expected to decline by over 40 per cent in the coming months, if the situation does not

improve, he said

TEXPROCIL has suggested extending interest subvention of 3 per cent beyond March 31

and cover cotton yarn within that to ease the financial burden. It has urged the

government to cover items like quilts and fashion bedding under HS code 9404 and

cotton shopping bags under HS code 420222 in the ROSCTL scheme. These items are

being currently excluded as they do not fall under made-ups HS Chapter 63. The council

also appealed the government to expedite goods and services tax refunds, resolve glitches

in ROSCTL payments and release claims under the erstwhile ROSL scheme.

Home

Can global shutdown open new window for ‘Make in India’? These govt

schemes may provide cushion

(Source: Deepti Ahuja, Financial Express, March 18, 2020)

The current global scenario offers an interesting opportunity for India to compete in

international trade by scaling up its sectors effectively.

The recent coronavirus outbreak has affected the international supply chain, as the novel

disease moves beyond its point of origin in China’s Hubei province to the rest of the world.

The World Health Organization (WHO) has declared this pandemic as a public health

emergency of international concern (PHEIC), prompting countries to mull certain trade

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16 CITI-NEWS LETTER

restrictions to contain the spread. However, they need to ensure that such PHEIC

measures do not, through such trade restrictions, economically stigmatize a nation; else,

they would come under the lens of the World Trade Organization (WTO). With the virtual

shut down of one of the world’s biggest economies and the resulting labor deficits due to

the quarantine measures, there has been a negative impact on the production and

shipping worldwide. Thus, companies are increasingly seeking to identify alternatives and

opening up competitive production markets in countries like Indonesia, Malaysia,

Mexico, and India.

The current global scenario offers an interesting opportunity for India to compete in

international trade by scaling up its sectors effectively. This economic trade surge is

possible through incentive measures for exporters. The country’s exports have seen a dip

of 1.96% to USD 239.29 billion during April to December 2019-20. In fact, the Economic

Survey for 2019-20, which was released before this year’s Union Budget, lamented the

country’s unsatisfactory progress in merchandise exports, for India’s share, has grown at

13.2% per annum since the economic reforms in 1991. As a result, the country’s share in

world exports has increased from 0.6% in 1991 to 1.7% in 2018, but that’s a meager

expansion when compared to China’s 12.8% share in 20181.

The survey enumerates some of the crucial reforms taken by the government in the

current financial year, which include

(a) The scheme for Remission of Duties or Taxes on Export Product (RoDTEP) that will

replace Merchandise Exports from India Scheme (MEIS) for reimbursement of taxes and

duties for export promotion. Accordingly, textiles and all other sectors which currently

enjoy incentives up to 2% over MEIS will transit into RoDTEP. In effect, RoDTEP will

more than adequately incentivize exporters than existing schemes put together, as per the

Government.

(b) The SEZ Act has been amended in such a way that any trust or entity notified by the

Central Government will be eligible to be considered for grant of permission to set up a

unit in SEZ.

(c) RBI’s enhanced sanctioned limit will be eligible under priority sector lending norms.

The limit has been raised from INR 25 crore to INR 40 crore per borrower. Furthermore,

the existing criterion of ‘units having turnover of up to INR 100 crore’ has been removed.

(d) Expansion of the scope of the Export Credit Insurance Scheme (ECIS) by the Export

Credit Guarantee Corporation (ECGC) to offer higher insurance cover to banks that lend

working capital for exports. This will enable a reduction in the overall cost of export credit,

including interest rates, especially to MSMEs.

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17 CITI-NEWS LETTER

(e) The Government has also approved the Sugar export policy for the evacuation of

surplus stocks during sugar season 2019-20. This move shall involve providing a lump

sum export subsidy at the rate of INR 10,448 per Metric Tonne (MT) to sugar mills for

the sugar season 2019-20. According to the Survey, the total estimated expenditure of

about INR 6,268 crore will be incurred for this purpose.

(f) For enabling the handicrafts industry to harness e-commerce for exports effectively,

mass enrolment of artisans across India shall be effected in collaboration with the

Ministry of Textiles.

Unfettered by the rising COVID-19 cases in the country, the Cabinet Committee on

Economic Affairs has approved the RoDTEP scheme thus, paving the way for introducing

the scheme to reimburse taxes, duties, or levies at the Central, State or local level. The

export entities are currently not being refunded under any other mechanism but are

incurred in the process of manufacture and distribution of exported products. These

include, amongst others, VAT on fuel used in transportation, Mandi tax, duty on

electricity used during manufacturing, etc. This scheme intends to provide a level playing

field to the Indian producers in the international market, thereby giving the much-

required impetus to the growth of our domestic industry. In line with ‘Digital India,’

refund, as a percentage of the Freight on Board value of exports, would be granted in the

form of transferable duty credit or electronic scrip, which would be maintained in an

electronic ledger. In this regard, the Government has proposed to amend the provisions

of Customs Act 1962 through the Finance Bill 2020. As per the said amendment, duty

credit shall be issued – (i) in lieu of remission of duty or tax or levy chargeable on any

material used in the manufacture or processing of goods or for carrying out any operation

on such goods in India that are exported; or (ii) in lieu of such other financial benefit

subject to conditions and restrictions as may be specified. While the manner of issuance

of such duty credit shall be notified in due course, the same shall be maintained in the

Customs Automated System in the form of an electronic duty credit ledger of the recipient.

Such duty credit can be utilized by the person to whom it is issued or to whom it has been

transferred, for payment of customs duties.

An inter-ministerial Committee shall determine the rates and items for which

reimbursement of taxes and duties would be provided. On the other hand, the sequence

of introducing the scheme across sectors and the degree of benefit to be given on various

items (within the rates set by the inter-ministerial Committee) shall be decided by the

Ministry of Commerce. In this context, the Ministry has invited data/information with

respect to the unrebated taxes, duties or levies embedded in the export products

manufactured, except the incidence of central excise duty/customs duty suffered on

account of petroleum products being used as inputs (raw materials) and the incidence of

GST for any product. The data pertaining to each HSN Code/product should mandatorily

be based on the exports made during the period from January to June 2019. A perusal of

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18 CITI-NEWS LETTER

the three formats, viz. R1, R2, and R3 which require to be certified by a Chartered

Accountant or a Cost Accountant, would show that the manufacturer or manufacturer

exporter is required to provide, amongst others, percentage-wise bifurcation of

cumulative State VAT on fuel used in (i) transportation and (ii) generation of captive

power, Mandi tax, duty on electricity charges, stamp duty on export documents,

embedded GST in purchases from unregistered dealers and in coal used in the production

of electricity, etc. It may be considered that the incidences borne by the export product

should be on account of prior stage cumulative taxes on raw materials/inputs consumed

during manufacture.

Considering that the data requirement is quite comprehensive, as relevant information

for every HSN Code or product and every business unit, be it DTA, SEZ, EOU, or a

warehouse, located in every State must be provided, and this exercise could prove to be

very cumbersome. One may also raise a question about the necessity of delivering the

details of embedded GST components in some instances when the Government has

explicitly clarified that “the incidence of GST for any product should not be included for

calculation of total incidence of duties.” However, considering the government’s objective

to ‘zero-rate’ the exports along with refunds such as the drawback and IGST could

eventually lead to the cost competitiveness of export products in international markets.

Thus, it is recommended that the businesses do not desist from furnishing the requisite

information/data through EPC and industry bodies. Also, with the WTO’s Appellate Body

currently being caught in an impasse due to loss of quorum, India’s appeal against the

Dispute Settlement Panel’s verdict which ruled the export incentive schemes to be in

violation of global trade norms, may not see the light of day in the near foreseeable future.

Nevertheless, it would be imperative that the Government promulgates the new Foreign

Trade Policy without MEIS and in consonance with the WTO norms, at the earliest. It

would be worthwhile to see the interplay between the drawback, GST refund, and

RoDTEP schemes. The future can be an effective determiner if these efforts of the

Government are worthwhile. As the late former-US President John F, Kennedy has said,

“The Chinese use two brush strokes to write the word ‘crisis.’ One brush stroke stands for

danger; the other for opportunity. In a crisis, be aware of the danger–but recognize the

opportunity.”

Deepti Ahuja is Vice President – Global Sales, Business Development and Indirect Tax

at Nexdigm (SKP).

Home

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19 CITI-NEWS LETTER

GLOBAL

Webinar: COVID-19's impact on global textile supply chain

(Source: Fibre2Fashion, March 18, 2020)

Global textile and apparel industry's huge dependence on China as a manufacturing base,

where the novel coronavirus (COVID-19) first struck, and the subsequent spread of

the virus to other countries leading to store closures and dwindling demand have

impacted the industry. The capacity of other countries to benefit from this situation is

limited.

A webinar "COVID 19 - The Superstorm in Global Supply Chain" will discuss the situation

arising from the pandemic, and the extent to which other manufacturing countries like

Bangladesh, Vietnam, Turkey and India are able to take advantage in terms of increasing

orders, etc. The webinar is to be held on Thursday, April 2, 2020 at 7:30 a.m. Eastern

Time (US & Canada).

Rick Helfenbein, renowned apparel consultant and the former president and CEO of

the American Apparel & Footwear Association (AAFA), along with

Fibre2Fashion’s Market Intelligence team will discuss the impact of COVID-19 on brands,

retailers, manufacturers and consumers. China's challenged position, emerging

beneficiary countries, and contingency plans for future will also be discussed.

The webinar would also deliberate on the industry's expected performance in the year

2020 in view of challenges like COVID-19, the US-China trade war, and Brexit.

Home

China ups export rebate rates for over 1,400 products

(Source: Xinhua, March 18, 2020)

China will raise export rebate rates for 1,464 types of products starting March 20,

authorities said Tuesday.

The rebate rate for 1,084 products including ceramic sanitary ware will be increased to 13

percent, and that for 380 goods including plant growth regulators will be increased to 9

percent, according to the Ministry of Finance and the State Taxation Administration.

Higher export rebate rates will facilitate foreign trade by lowering operating costs and

easing cash shortages for manufacturers, said Li Xuhong, a professor of the Beijing

National Accounting Institute.

Home

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20 CITI-NEWS LETTER

Bangladesh: 400 textile makers fold operations in 3 years

(Source: Financial Express, March 18, 2020)

Some 400 textile and readymade garment factories have closed operations during the last

three years, leaving more than 0.11 million workers jobless in different industrial zones.

In contrast, a total of 259 new units were set up during the period, Industrial Police data

shows.

About 60,636 have been employed in the new factories, the data revealed.

The data was collected from the zones such as Ashulia, Gazipur, Narayanganj and

Chattogram.

Industry people said entrepreneurs are making fresh investments in setting up new units

with safety compliance, modern and green technology while the small and non-compliant

ones are failing to sustain in the highly-competitive market.

They also identified insolvency of the owners followed by rising production cost, failure

to maintain the strict compliance and wage structure for the shut-down.

Out of the 400 closed factories, some 318 units were members of the Bangladesh Garment

Manufacturers and Exporters Association, or BGMEA, 71 were registered with the

Bangladesh Knitwear Manufacturers and Exporter Association, or BKMEA, while 13 were

associated with the Bangladesh Textile Mills Association, or BTMA, according to data.

In 2018, Gazipur witnessed the highest number of factory closure, followed by 97 in

Ashulia, 57 in Narayanganj and 28 in Chattogram.

On the other hand, 118 new textile and garment factories have been set up in Ashulia zone.

During the period, 72 factories registered with the BGMEA and the BKMEA have been

established in Gazipur, in Chattogram and nine in Narayanganj.

The BGMEA has presently around 4,500 member factories. Around 40 per cent of

BGMEA member factories are knitwear and sweater manufacturers, and the remaining

60 per cent are woven garment manufacturers, according to the trade body.

Woven garment exports account for 100 per cent member factories of the BGMEA and

more than 95 per cent of sweater exports, while around half of the light knitwear exports

are made by them.

On the other hand, some 1,100 factories are registered with the BKMEA and the BTMA

has 1,500 members.

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21 CITI-NEWS LETTER

The country earned $ 34.13 billion from exports of knit and woven items during the last

fiscal year, according to official data.

RMG exports, however, witnessed a negative growth of 5.53 per cent to $ 21.84 billion

during the July-February period of the current fiscal year (FY 2019-20).

Home

Textile stock prices tumble across geographies

(Source: Fibre2Fashion, March 18, 2020)

Share prices of textile-apparel companies in the US, India, Europe and Hong Kong

have fallen in double digit percentage during the fortnight from March 2 to March 17. The

sharp drop in prices is due to the impact of the current novel coronavirus crisis that

has resulted in disruption of supply chain along with a decline in demand as consumers

stay indoors.

Shares of global advanced textiles and materials processing company Albany

International Corp, listed on Nasdaq, were traded at $67.25 at close on March 2, 2020.

The price dropped sharply by 44.62 per cent to $37.24 at close on March 17.

German footwear and apparel company Adidas' share price decreased 30.75 per cent to

$95.20 on March 17 from $137.49 on March 2 on the OTC stock exchange. Indian

conglomerate Reliance Industries Ltd also saw its share price falling on the Bombay

Stock Exchange (BSE) from ₹1314.85 to ₹1008.9, i.e. a decline of 23.27 per cent during

the March 2-17 fortnight.

Share price of Aeffe SpA, an Italy-based company engaged in the fashion and luxury goods

sector, dropped 39 per cent during the fortnight from €1.28 to €0.78 on the Milan stock

exchange. Brunello Cucinelli, another Italian luxury fashion brand which sells menswear,

womenswear and accessories, reported that its share price dropped 13.25 per cent during

the period.

Share price of Anta Sports Products Limited, listed on the Hong Kong Stock Exchange,

was down 19.28 per cent from HK $64.3 to HK $51.9 during the said fortnight. American

clothing and home decor retailer Lands' End's share price on Nasdaq declined 21.78 per

cent from $9.32 on March 2 to $7.29 on March 17.

Home

Nigeria and Benefits of Reviving Cotton Sector

(Source: Idris Hassan, All Africa, March 18, 2020)

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22 CITI-NEWS LETTER

In the 1980s and 1990s, Nigeria had, unarguably, one of Africa's largest textile industry

with over 180 textile mills functioning optimally, employing close to over 450,000

workers and contributing in excess of 25 per cent of the workforce in the manufacturing

sector. Sadly, that once vibrant textile industry, due to lack of vision on the part of those

managing the economy at some point in time, became a shadow of its former self as most

of the factories have all shut down, in some cases, taken over by churches and other

sundry uneconomic ventures. Presently, less than 25 per cent of those can be said to be

functioning.

It is from that perspective that one is inclined to assess the initiative by the Central Bank

of Nigeria (CBN), under the management of Mr. Godwin Emefiele, to revive the sector

and restore it to its pristine position. The driving force is the determination on the part of

the CBN to help the cotton and textile industry bounce back while at the same time

working on its production capacity to create job opportunities and as such boost the

economy.

Cotton and textile manufacture launched some Asian economies and helped them find a

foothold in the technological space. China and India used their processed cotton materials

to compete in the international market place.

In the heydays of the textile sector in Nigeria, India, for instance, used to boast of being

the second largest employer of labour after the federal government and they were

referring to their dominance in the textile manufacturing sector. At that time, they

produced their textile materials locally using the nation's cotton. This, invariably,

contributed immensely to the Nigeria's Gross Domestic Product (GDP). It is with

nostalgia that we recall the Aswani Company among many others. They lost steam due

the import substitution policies of various administrations that did not see the harm being

caused to the economy by that preference for cheaper, highly subsidised imported brands.

Nigerian companies that were doing very well in the sector soon buckled under fierce

foreign competition.

It got so bad that when the United States of America put in place the Africa Growth and

Opportunity Act (AGOA), a piece of legislation that was approved by that country's

legislature, The Congress, in May 2000, Nigeria could not participate in the benefits of

that legislation the purpose of which was to assist the economies of sub-Saharan Africa

and to improve economic relations between the United States and the region. One of the

key components of AGOA was the expansion of market access for textile and apparel

goods into the United States.

Regrettably, this policy came into effect at a time the Nigerian Cotton and textile sector

was in distress as the cultivation of cotton as a cash crop was in sharp decline with a

catastrophic effect on textile material production in Nigeria. Local production of cotton

fabrics became unattractive due to a combination of factors largely related to preference

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23 CITI-NEWS LETTER

for cheaper imported brands. Also local farmers were bugged down by inadequate

financial support where it is available at all, a situation that was made worse by the

absence of high yielding and improved seedlings, lack of other inputs that would have

encouraged and enhanced activities in the sector.

It is, however, gratifying, that the situation in that sector of the nation's economy is

improving with the audacious intervention of the CBN under Emefiele, who, through a

deliberate policy, designed efforts to diversify the economy by supporting the increase of

production of various goods and services in the country especially in the agricultural

sector.

Specifically, and in a bid to revive the cotton and textile sector, the CBN approved a loan

of N19.18 billion to nine cotton-producing firms disbursed at a single-digit interest rate.

Suddenly, the once almost moribund National Cotton Association of Nigeria and Ginning

Companies were revitalised and incentivised which led to a steady off-take and processing

of cotton lint and cotton seeds.

This policy was and still is part of the thinking directed at enabling the firms to retool

their processing plants, assist in sustaining their operations and improving their

production capacity by making available to them improved, and high yielding seedlings.

The general idea is to improve the linkage between cotton farmers and ginneries, by

ensuring that ginneries are able to off-take the high-quality cotton produced by these

farmers. Textile and garment firms were not left out in the arrangement. The decision to

ban the importation of textiles was part of it. Even more helpful is the support of the

federal government. It directed all Ministries, Departments and Agencies (MDAs) to give

preference to local content in their procurement of goods and services. In that direction,

the CBN is collaborating with the uniformed agencies.

It is interesting to note that the intervention in the cotton sector had previously taken

about N50 billion which may eventually run into N100 billion. To drive the process, the

Textile Revival Implementation Committee was set up to ensure the success of the sector.

It is pertinent to point out that this policy of the apex bank is progressing satisfactorily in

its implementation.

It is also having the desired impact on the sector and the economy at large. This is in spite

of the unpatriotic activities of those who had benefitted from the past policy missteps

channeled at sabotaging what is, to all intents and purposes, a well thought out

development oriented framework to return the nation to the path of sustained growth and

placing agriculture where it used to be as the mainstay of the economy.

The current policy of the apex is one that has a long gestation period. That is why those

presently driving it must remain steadfast, focused to ensure its irreversibility so that

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24 CITI-NEWS LETTER

succeeding managers will recognise its viability and the necessity of ensuring its

continuity. The way to achieve that is through capacity building and synergy that will

guarantee a buy-in by all stakeholders who will appreciate the inherent benefits that

derives from its sustainability. The gains derivable therefrom are such that cannot be left

to slip by.

Hassan is a public affairs analyst

Home

‘Made in Turkey’ home textiles sold to 165 countries as exports surge

(Source: Daily Sabah, March 18, 2020)

Turkish-made home textiles were exported to 165 countries in the first two months, as

overseas sales surged, according to Uludağ Exporters' Associations (UİB) data

Wednesday. Sales in January and February surged by 5.76% year-on-year to hit nearly

$415 million, up from $392.2 million in the same period of 2019.

Germany, one of the country’s top export markets, took the lead in sales, seeing an

increase of 9.2% from $65.2 million to $71.2 million.

Coming in second, the U.S. saw a 17.5% decrease. Having received $43.9 million worth of

products in the first two months of last year, the U.S. customers were sent $36.2 million

worth of products in the same period of this year. Italy, on the other hand, came in third

with a rise of 8.27% from $21.8 million to $23.6 million.

Exporters also achieved $20.9 million in exports to the U.K., $18.2 million to France,

$14.9 million to Belarus, $14.5 million to Bulgaria, $13.6 million to the Netherlands, $11.5

million to Spain and $11.3 million to Poland. Elsewhere, sales to India in the said period

skyrocketed by 350% year-on-year. Exports to the country jumped from $264,000 to $1.2

million in January and February.

Ireland received some $616,000 worth of Turkish home textiles, up from last year’s

$303,000, a 103% year-on-year increase. The volume of exports to Singapore jumped by

190% from $174,000 to $506,000.

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