At a time when the commerce ministry is involved in negotiations on multiple trade deals, a meeting to strategies approach to negotiate free trade agreements (FTA) headed by commerce secretary Sunil Barthwal discussed ways to effectively manage workload and to prevent overtraining of resources, a statement released by the Commerce and Industry Ministry said on Tuesday. This comes after experts pointed out that opening multiple negotiations might not be an effective strategy at maximising gains as India’s FTAs are leading to widening of trade deficit and the negotiators should focus on elimination of non-tariff barriers and better market access in the service sector rather than negotiating tariff that often serves the FTA partners not India. India is currently negotiating an FTA with the UK, European Union and a widening deal with Australia. Moreover, with an eye on narrowing the trade gap, the ministry is reviewing a trade deal with Association of Southeast Asian Nations (ASEAN) countries. During the last couple of years, the ministry completed negotiations with UAE, Mauritius and a mini trade deal with Australia. “The participants also explored robust resource management strategies and its implementation, to prevent overstraining, and ensure proactive problem-solving thereby providing useful and constructive attributions. The discussions highlighted that relevant stakeholder consultations are essential for inclusive and supportive outcomes, how the stakeholders provide critical insights and hence continuous outreach to stakeholders is necessary to keep them informed and engaged,” the commerce and industry ministry said. Department of Commerce, Ministry of Commerce and Industry in collaboration with Centre for Trade and Investment Law (CTIL), Indian Institute of Foreign Trade, New Delhi organised a ‘Chintan Shivir’ on Free Trade Agreement Strategy and standard operating procedures (SoP) for Trade Negotiations from 16 to 17 May 2024 at Neemrana, Rajasthan. Former senior officials, national and international experts in FTA negotiations, academicians, and legal professionals also attended the meet. “Speakers highlighted the importance of interdisciplinary support noting that successful negotiations require expertise in law, economics, data analytics, and industry specific knowledge and how gathering expert opinions and insights from various sectors enhances the negotiation process. Participants explored ways to utilise the resources of India’s embassies or missions abroad, towards leveraging on-ground insights from embassies which would help understand the regulatory regimes of partner countries,” the statement read. The ministry said that the discussions also touched upon changing industrial policy across the globe that is shifting the contours of trade deals. The members noted that the global trend towards partial de-globalisation and the use of industrial policy as a “cover for protectionism, and geopolitics” now play equally an influential role that of geoeconomics in shaping trade policies, the ministry said. Suggestions were made that India should use FTAs to build resilient supply chains, focus on capacity building and interdisciplinary expertise, and adapt to the current trend of partial de-globalisation and geopolitical influences. “India should negotiate a dedicated chapter on Critical Minerals or Critical Minerals-based agreements specially with such mineral-rich countries to protect India from abrupt disruption in supply chain,” the ministry said. ‘Standard Operating Procedures for FTA Negotiations including Stakeholder Consultations’, speakers and participants discussed evolution and drafting of SOP and its benefits in enhancing the objectives of trade agreements and creating documentational or institutional memory for future negotiations, the statement read.
Source: Press Reader
Synopsis Trade experts suggest India should negotiate easy visa norms in bilateral agreements to boost remittances and wages for semi and unskilled workers. These agreements can also help curb illegal entry of Indian laborers into developed nations. India should seek easy visa norms in bilateral agreements with different countries for its semi and unskilled workers as it would help increase flow of remittances, and higher wages to labourers, trade experts said. They said easy visa norms will also help contain illegal entry of Indian labourers into developed and rich nations. Normally in a free trade agreement, two trading partners seek greater market access for its skilled professionals. India, too, asks for easy provisions for its IT and other skilled workforce. "Now, India should start talking for its semi and unskilled workforce also in the proposed free trade agreements. We should take this as a binding commitment. It will help stop illegal entry of labourers from India into developed nations. India provides low customs in trade agreements, so in lieu of that we can seek greater access for our labours," international trade expert He said that wages in other countries, particularly developed, are high and Indian laborers from sectors like agriculture and mechanical would get advantage from that. "We have so many unskilled and semi-skilled labourers in India. Easy visa norms for them will also help India get huge remittances," Dhar added. India has received over USD 111 billion in remittances in 2022, the largest in the world, becoming the first country to reach and surpass the USD 100- billion mark, the United Nations migration agency has said. According to the report's data, India was the top country receiving remittances in 2010 (USD 53.48 billion), 2015 (USS 68.91 billion), and 2020 (USD 83.15 billion), with the remittances crossing the USD 100-billion mark to reach USD 111.22 billion in 2022. Three countries in Southern Asia -- India, Pakistan and Bangladesh -- rank among the top-ten recipients of international remittances in the world, underscoring the significance of labour migration from the subregion. Inflow of remittances has a positive impact on the balance of payments of the country. effective strategy is to negotiate bilateral agreements with individual countries to secure access for unskilled workers. "Bilateral talks based on each country's needs are more effective. India's labourers and unskilled workers going to the Gulf are the best example of this approach," Srivastava said. While access for skilled professionals is negotiated through the Mode-IV services provisions of FTAs (free trade agreements), access for semi-skilled and unskilled workers is generally handled through bilateral agreements, he said. Srivastava added that given the tough employment conditions globally, it is challenging to secure commitments from FTA partners to admit skilled or unskilled professionals. "India is also cautious about granting reciprocal access. The most effective strategy is to negotiate bilateral agreements with individual countries to secure access for unskilled workers. "This approach addresses the complex dynamics of global labour markets and ensures that both parties can manage their employment needs and economic priorities effectively," he added. Securing access for its professionals, technicians, and other skilled workers into the partner country markets on short term assignments remains one of the top priorities for India in FTA negotiation. However, Srivastava said most countries are reluctant to allow access. "Thus, while India's FTAs with Japan, Korea, ASEAN, Singapore, UAE, and Australia, contain provisions facilitating entry for skilled professionals, this access comes with many restrictions like labour market test, certification requirements, long duration in visa processing or local language proficiency requirement. There is no data on how many Indian professionals have benefited from these provisions," he said. He added that India's FTAs with the UAE, Malaysia, and Japan include general provisions on labour mobility, potentially allowing access for semi-skilled and unskilled workers. However, these FTAs typically lack explicit details on the number of semi-skilled and unskilled workers allowed or specific visa quotas. Implementing these provisions requires negotiation and cooperation between Generally entry for semi-skilled and unskilled workers in the partner country is handled through bilateral agreements rather than within the FTAs themselves. Gulf and Southeast Asian countries often use such agreements to facilitate the entry of Indian workers of various skill levels, he said. Srivastava added that almost all countries are hesitant to grant access to foreign skilled or unskilled workers as they worry that increased access for foreign workers could displace domestic workers or put downward pressure on wages.
Source: Economic Times
Synopsis India and Vietnam are emerging as key beneficiaries of the China plus one strategy, with Nomura predicting significant growth opportunities for Asian economies. According to a report by Nomura, India's exports are projected to skyrocket to $835 billion by 2030 from $431 billion in 2023, driven by its vast domestic market attracting companies seeking supply chain diversification away from China. New Delhi: India and Vietnam are gaining the most from the China plus one strategy, which is also expected to unlock new growth opportunities for Asian economies, according to Nomura. India's exports will likely surge to $835 billion by 2030 from $431 billion in 2023 with its large domestic market helping attract firms looking for supply chain alternatives to China, Nomura said in a report on Tuesday. "Firms in electronics, apparel & toys, automobile & components, capital goods and semiconductor manufacturing are looking to invest in India. Given India's large domestic consumer market, firms setting up shop in India are attracted also because of the captive domestic market," Nomura said, predicting a 10% annual growth over the period. The global research firm expects electronics to become the fastest-growing sector, clocking a compound annual growth rate of 24% in exports, with value nearly tripling to $83 billi"We believe the low production linked incentive (PLI) disbursements are not a good reflection of India's potential on global value chain integration. Its large market size, faster growth, lower labour cost and political and economic stability make it an attractive investment destination for consumer goods production to both cater to domestic demand and also for exports," Nomura said, expecting India's share of global trade to rise to 2.8% by 2030. Nomura pointed out that competitiveness of Indian production is also likely to help accelerate exports and improve the country's trade balance and current account. "This points to a structural case for currency appreciation," it said. Nomura's survey of 130 enterprises also showed a growing interest for India and Vietnam. "A majority of the investment into India are from US-based companies, on by 2030. Machinery exports will more than double to $61 billion by 2030 from $28 billion in 2023. especially in the electronics sector. Japan and Korea are also investing in India's auto, consumer durable and electronics sectors to take advantage of the growing domestic demand and to use it as a manufacturing base," Nomura said. It added that strengthening of India's manufacturing sector and its growing share in exports will help the corporate sector to sustain 12-17% earnings growth over the medium term.
Source: The Economic Times
India saw a trade deficit with nine of its top 10 trading partners in the last fiscal (FY24), official data show. Its total FY24 trade deficit narrowed to $238.3 billion compared to $264.9 billion in FY23. The deficit with China, Russia, South Korea and Hong Kong increased in FY24 compared to FY23, while the gap with the United Arab Emirates, Saudi Arabia, Russia, Indonesia and Iraq narrowed. The FY24 trade deficit with China, Russia, South Korea and Hong Kong rose to $85 billion, $57.2 billion, $14.71 billion and $12.2 billion compared to FY23’s $83.2 billion, $43 billion, $14.57 billion and $8.38 billion respectively. China was India's largest trading partner with $118.4 billion worth two-way commerce in FY24, leaving behind the United States, a news agency reported. India-US bilateral trade stood at $118.28 billion in FY24. The United States was the top trading partner of India during FY22 and FY23. India had a trade surplus of $36.74 billion with the United States in FY24. Surpluses were recorded with the United Kingdom, Belgium, Italy, France and Bangladesh as well in the last fiscal.
Source: Fibre2fashion
Chhattisgarh government mandates e-way bills for intra-state goods over ₹50,000 to curb tax evasion, align with national practices, and enhance compliance. RAIPUR: In a significant move aimed at bolstering the monitoring of tax evasion, govt has issued a new notification, effective immediately, mandating the generation of e-way bills for all intra-state goods movement over ₹50,000. The decision signals the removal of previous exemptions that allowed certain goods to be transported within the state without an e-way bill, an official spokesman said. The state GST department's decision reflects a broader effort to align with national practices, as most states have already instituted similar requirements for intra-state goods movement. Initially, exemptions were granted to facilitate intra-district movements and certain specified items, but these have now been rescinded to enhance compliance and reduce fraudulent activities. This policy shift follows six years of adaptation to the eway bill system, first introduced in 2018. The The familiarization period has enabled businesses and transporters to become accustomed to the system, paving the way for the removal of exemptions. The central tax department's concurrence with this decision underscores a unified approach to curb tax evasion nationwide. By eliminating these exemptions, the state aims to tackle issues such as circular trading and bogus billing, which have exploited the previous leniencies. The move is expected to provide a level playing field for honest businesses, ensuring fair competition and improving the collection of input tax credits (ITC). State Finance Minister OP Choudhary emphasized that this decision will not only help in reducing tax evasion but will also create a more positive compliance environment. "By removing these exemptions, we aim to enhance transparency and ensure that honest businesses can operate without the threat of unfair competition from those engaging in fraudulent activities," he added. The new rules are designed to fortify the state's tax collection mechanism, ultimately benefiting the state's economy. Enhanced monitoring and stricter compliance measures are anticipated to lead to a more robust tax regime, supporting the state's development goals.
Source: Times of India
Ludhiana’s textile industry is navigating through a sea of challenges, adapting to a new normal of subdued demand, while pinning its hopes on governmental support for the establishment of a mega textile park and the signing of free trade agreements (FTAs) with developed economies. The past eight years have been a rollercoaster ride for this labour-intensive industry. All this began with demonetisation in 2016, followed by the introduction of a revamped indirect tax regime – goods and services tax — in 2017. The Covid-19 pandemic in 2020 added to the woes, and the geopolitical tensions since 2022 have led to high inflation and recessionary trends in the West, impacting demand. Vinod Thapar, president of Knitwear Club, an apparel industry association, stresses the urgent need for a mega textile park in Ludhiana. He believes that such a park, akin to those in China, could be a game-changer, creating thousands of jobs and reviving the industry. “We need the government’s intervention on this at the earliest. Discussions on setting up a textile park have been going for the past two-three years and there has been delay due to unavailability of adequate land,” Thapar says. However, the road to recovery won’t be without obstacles. The Indian textile industry faces stiff competition from several countries in the region, such as China, Bangladesh, Sri Lanka, Vietnam, and even Pakistan. The industry is eagerly awaiting the signing of FTAs with the United Kingdom and the European Union. India has been losing ground to competitors like Bangladesh and Vietnam, which enjoy lower duty benefits. Amit Jain, managing director of Shingora Textiles, suggests a shift towards value-added textiles as a potential growth driver. He warns that relying solely on low-cost production may not be sustainable in the long run, as “new-age FTAs negotiated with developed economies require commitments on labour and sustainability”. The implementation of quality control orders (QCOs) by the Centre has also raised concerns, particularly among smaller players in the industry. These non-tariff barriers aim to prevent the import of low-quality products and strengthen India’s position in the supply chain. However, some industry executives argue that QCOs should be imposed judiciously, after consultations with stakeholders, and not disrupt domestic businesses. “QCOs need to be imposed on products that are equally available in India. The government cannot stop the import of certain raw materials… (more so when) the local seller’s quality is not up to mark. Such a hasty implementation of QCOs end up benefiting large Indian companies,” argues a senior industry executive. Businesses in Ludhiana, Punjab’s largest industrial hub, say the city is in dire need of improved connectivity. The nearest airport is in Chandigarh, about 100 km away. Industry insiders also stress the need for a world-class exhibition-cum-convention centre in Ludhiana to boost industrial growth. “These things are crucial if you want industrial growth,” underscores the executive cited above. While some of these issues need to be addressed at the Centre’s level, Ludhiana’s textile industry is hopeful that the state government will consider its demand for a mega textile park and an exhibition-cum-convention centre. In the political arena, Ludhiana, which votes on June 1 in the final phase of the Lok Sabha election, is witnessing a fierce contest between candidates from the Congress, the Aam Aadmi Party, and the Bharatiya Janata Party. While those in the poll fray in Ludhiana haven’t made textile industry-specific promises, BJP candidate Ravneet Singh Bittu, who won the 2019 polls on a Congress ticket, has promised an exhibition-cum-convention centre in the city. Amrinder Singh Raja Warring of the Congress and Ashok Parashar Pappi of the AAP are the main challengers this time. According to industry insiders, Prime Minister Narendra Modi remains highly popular and the Lok Sabha elections will test the AAP, which swept the Punjab Assembly polls in 2022. “The Lok Sabha elections will be a reality check for the AAP,” says one of them. “Although the BJP is unlikely to lead in the rural areas because of anger among farmers, a large chunk of the urban (non-Hindu) votes in this constituency may go to the BJP.” Punjab is witnessing a four-cornered battle in the 2024 polls, a first in nearly three decades. This election will also mark the first time that the BJP is contesting independently, following the end of its alliance with the Shiromani Akali Dal (SAD) in 2021 over the now-repealed farm laws. Similarly, the Congress and the AAP are also contesting separately in Punjab, despite forming an alliance at the national level.
Source: Indian Express
After a four-year hiatus, the traditional border trade point between China and Nepal in Shigatse, Xizang autonomous region, has officially reopened, marking a significant milestone in the economic partnership between the two countries. The reopening occurred over the weekend and was celebrated with a ceremony in the town of Chentang, Dinggye county, Shigatse. At the Chentang Traditional Border Trade Point, 110 Chinese merchants and 47 Nepalese merchants conducted transactions involving over 50 types of goods. The reopening was formally announced by Silang Nima, deputy chairman of the autonomous region, and Narayan Kaji Shrestha, Nepal's deputy prime minister and foreign minister. "We will steadfastly implement the Chinese government's friendly policies toward Nepal, continue to pursue an open strategy of mutual benefit and win-win cooperation, and deepen practical cooperation in areas such as border trade infrastructure construction, customs clearance capacity enhancement and project implementation to continuously create a bright future for China-Nepal relations," said Chinese media reports quoting Silang Nima. The event was attended by government officials, leaders from both nations, and over 300 local residents, highlighting the importance of the occasion. Additionally, other traditional trade points between China and Nepal in Shigatse, including those in Mayum (Drongba county), Tubarong (Saga county), Zonga (Gyirong county), Zhashigang (Nyalam county), Rongshar (Dingri county), and Ri'og (Dinggye county), also reopened. Japan and Bangladesh discussed trade in goods, rules of origin, customs procedures and trade facilitation, investment, e-commerce, intellectual property and the method of negotiations at the first round of talks for an economic partnership agreement (EPA) in Dhaka recently. The meeting was attended by Taketani Atsushi, ambassador in charge of economic diplomacy at the Japanese embassy in Dhaka, and Ahmad Munirus Saleheen, chairman of Bangladesh Trade and Tariff Commission (BTTC), a release from the embassy said. On May 19, Japanese ambassador to Bangladesh Iwama Kiminori participated in the opening session of the negotiations with Bangladesh state minister for commerce Ahasanul Islam Titu, commerce secretary Mohammad Selim Uddin and BTTC chairman and chief negotiator from the Bangladesh side Ahmad Munirus Saleheen.
Source: Fibre2fshion
Looking for those interest-rate cuts markets once breathlessly anticipated is beginning to feel like sorting through cardboard boxes after moving house. What you seek is in there somewhere. Just one more container ought to do it. Reductions that had been penciled for midyear — in some market wagers, earlier than that — have been regularly pushed back. It’s fair to wonder whether they will instead be a feature of 2025. New Zealand contemplated a further hike last week; the country was once expected to be among the first to offer relief and and should, by some reckoning, have done so by now given its languishing economy. South Korea, one of the first to move against inflation, will have to wait. Resilient price gains in India have likely postponed a decision. Barely a week passes without a big Wall Street name pushing back their timetable. Goldman Sachs Group Inc economists are now projecting the Federal Reserve will ease in September, as opposed to July. The company’s chief executive officer takes a less nuanced view: David Solomon sees none this year. Inflation is proving stickier than anticipated in most economies and, with a few exceptions, growth has held up without cuts. (The European Central Bank is likely to break away from the pack, given officials have talked so often about trimming in June.) The discouraging news is there may be more to this wait-and-see than a couple of months’ worth of data. Inflation has come down, though in many places the pace of price increases still exceeds central bank targets. Given the opprobrium heaped on them for being slow to tighten as inflation spiked in 2021 and early 2022, who can blame authorities for being cautious? Time and again, the experience of the 1970s — when high inflation became entrenched — is rolled out by hawks as a kind of morality play.
Source: Money Control
The purchase orders of Bangladesh made apparel are increasing in the international market. During July to March of 2023-24 financial year, readymade garments were exported worth $37.20 billion. This export is 5.53 percent more than the same period last year. Of this, exports of RMG in January were $4.97 billion, the highest exports in a single month for the garment sector. Exports reached $4.49 billion in February, the highest for any February in the history. And exports in March were $4.34 billion, which is 11.57 percent more than the previous year. Although Bangladesh's main export destinations, US and EU, are experiencing a decline in garment exports due to record inflation, Bangladesh were able to maintain a steady position. At present the two largest markets i.e., the European Union increased and the US market returned to a positive trend as the New markets are playing a significant role in exports, have increased 10 times in the last 14 years. That is, it has increased from $849 million to $8.37 billion dollars. In the 8th month (July-February) of the current financial year, the export of garments to the new market has increased by 10.83 percent. According to industry insiders, garment exports will cross $50 billion by the end of 2024.
Upward Trend Continues
The upward trend in exports of over 10 percent has largely continued since 2018-19. In the financial year 2018-19, the export value of ready-made garments was $34.13 billion. The growth in that year was 11.49 percent. However, in the financial year 2019-20 due to the impact of Covid-19, garment exports fell to $27.95 billion but increased again by $3.5 billion to $31.45 billion in FY 2020-21. In FY 2021-22, the apparel exports was boomed with a tremendous growth rate of 35.48 percent and jumped to $42.61 billion. Apparel 2exports increased by 10.27 percent to $46.99 billion in the next financial year 2022-23. If this trend of exports (more than 10 percent growth annually) continues, it is possible to achieve export income close to $100 billion in 2030. Earlier, the export was $21.5 billion in 2012-13, $24.49 billion in 2013-14, $25.49 billion in 2014-15, $28.09 billion in 2015-16, $28.1 billion in 2016-17 and $30.6 billion in 2017-18.
Investments
Despite various adversities i.e., Covid-19, Russia-Ukraine war, fuel price hike and much interrupted supply and the Red Sea crisis, Bangladesh continued investment in this sector vigorously. According to Bangladesh Garment Manufacturers and Exporters Association (BGMEA) and Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), in 2023, 264 factories received new investment. In 2022, this number was 330. The data says that in the last two years, new investment has come in 594 factories in the country. According to BGMEA data, 603 factories in the country have taken temporary membership of the organization in the six years from 2018 to 2023. Of these, 565 factories (an average of 94 per year) received permanent membership. Half of these factories have come up in the last two years, i.e. 2022 and 2023. Meanwhile, in the midst of Bangladesh's bright prospects, the lack of skilled workers in China has increased the production cost of apparel made in the country. So Chinese investors are showing interest in Bangladesh and investing in textile and apparel sector. Despite national and international challenges, progress in green industrialization continues. The number of LEED certified green factories in Bangladesh has increased to 214. 21 out of 23 LEED certified facilities with the highest score in the world are located in Bangladesh. Investment and exports in the non-cotton sector are also increasing. Cotton made up about 74 percent of total apparel exports in FY 2020-21, which declined to 70 percent in FY 2022-23. New vistas of potential will open up in the non-cotton sector if proper and timely steps are taken. The value addition capacity of the industry at the local level has increased, thereby increasing our flexibility on the one hand, we are able to offer a full package to the buyers, on the other hand saving foreign exchange and increasing employment.
Challenges
However, after 2026 LDC graduation, local production will have to go through a double transformation. Then both fabrics and stitching must be at local level to get GSP plus benefits. That’s why a lot of investment in the textile sector in the country has to be done now. Besides, current double-digit interest rates along with gas and fuel price hike and dollar crisis are hindering production. The interest rate on term loans in the industrial sector has increased from 8 percent to 13.11 percent. Interest in trade and import sector was 9 percent till last June which has now increased to 13.11 percent. In the export sector, foreign currency loans were given from EDF at 2 percent interest which is now 4.5 percent. Also there is a shortage of skilled manpower in this sector which we can meet through on-the-job training and comprehensive training related to latest innovation in the sector. Therefore, Bangladesh's apparel export growth should be maintained at more than 10 percent. Quick resolution of existing challenges can ensure the growth that is needed to meet the $100 billion target.
Source: Textile Today
To $20 Bn Cambodia recently requested Vietnam to raise bilateral trade volume to $20 billion in the near future. The request was made by Cambodian deputy prime minister Sun Chanthol to his Vietnamese counterpart Lee Minh Khai on the sidelines of the two-day Nikkei Forum 29th Future of Asia in Tokyo. Ambassador of Cambodia to Japan Tuy Ry was present at the meeting. Both sides reaffirmed their commitment to further deepen existing cooperation for mutual benefit, a news agency reported. Chanthol also briefed Khai about the Funan Techo Canal project, saying it would balance environmental sustainability and ecological systems, establish all kinds of mixed habitats and prevent floods from Cambodia into Vietnam.
Source: Fibre2fashion
