Textile and garment exporters importing inputs (polyester and viscose fibres) under Advance Authorisation, Export Oriented Unit, and Special Economic Zone schemes are exempted from the mandatory quality control order (QCO). However, the export obligation period for such imports is restricted to 180 days from the date of clearance of import consignments in respect of QCO exemption, the Directorate General of Foreign Trade said in a notification on Thursday.
Source: The Hindu
The rupee appreciated 6 paise to 83.47 against the U.S. dollar in early trade on Friday ahead of the RBI monetary policy announcement. Forex traders said the outflow of foreign funds and an upward movement in the crude oil prices weighed on the Indian currency even though the local unit found support from positive domestic equity markets and softening American currency overseas. They said that market participants are likely to take cues from the decision of Reserve Bank's rate-setting panel. The Monetary Policy Committee (MPC) of RBI, which began its three-day deliberations on Wednesday, will announce the outcome on Friday. At the interbank foreign exchange market, the local unit opened at 83.46 and then slipped to 83.47 against the greenback, registering a gain of 6 paise from its previous close. On Thursday, the rupee settled 9 paise lower at 83.53 against the dollar. Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.02% higher at 104.07. Brent crude futures, the global oil benchmark, advanced 0.14% to $79.98 per barrel. On the domestic equity market, the 30-share BSE Sensex climbed 251.40 points or 0.33% to 75,325.91 in early trade. The NSE Nifty went up 91.65 points or 0.40% to 22,913.05. Foreign investors were net sellers of Indian equities on Thursday as they offloaded shares worth ₹6,867.72 crore on a net basis.
Source: The Hindu
India and the European Union (EU) will resume talks for a free trade agreement (FTA) with the eighth round slated to start on 23 June, two people aware of the matter said. The two sides will likely take up sticky issues like the carbon tax, services, and India's demand for the EU to relax its rules on the maximum level of pesticide residues allowed in agricultural commodities, one of those mentioned above said requesting anonymity. "India intends to take a firm stand on persistent challenges such as non-tariff barriers. To that extent, Indian negotiators have prepared an elaborate list of roadblocks and challenges in key sectors," the person added. Non-tariff barriers hinder trade in sectors like agricultural commodities, pharmaceutical items, engineering goods, and electrical items. However, defining non-tariff barriers can be tricky. Some rules enforced by the EU to protect the health and safety of its citizens, such as those over pesticide levels, are described as non-tariff barriers by India. The matter centres around the EU's maximum residue level (MRL) rule. MRL is the highest level of a pesticide residue that is legally tolerated in food or feed when pesticides are applied correctly Sticky issues on table The negotiators will also discuss sticky issues such as stringent EU safety standards for agricultural commodities and drugs, and high tariffs, the second person added. As things stand, a phytosanitary certificate is necessary for exporting agricultural products to the EU, which comprises 27 countries. This certificate confirms that the produce is free from pests and diseases and complies with health standards, including traceability to the farm. Geographical indications (GIs) will also be on the agenda, with both sides aiming to advance discussions in this area, the second person mentioned above said, requesting anonymity. The previous round of talks, held for about a week in New Delhi from 19 February, discussed services and investments, building on earlier talks that covered goods and public procurement. Interestingly, the government has restructured its negotiating team to expedite the deal, assigning senior bureaucrat Darpan Jain to lead the negotiations. Other key issues likely to be discussed include India's trade disputes with the World Trade Organization regarding products like mobile phones and components, as well as integrated circuits and optical instruments. Push for relaxation India is also pushing for its labour-intensive textiles and apparel products to be exempt from duty. EU nations impose higher import duties, at about 10-12%, on textile products, placing India at a disadvantage compared to China, the EU's leading supplier of apparel and textiles. Meanwhile, the EU is aiming to bargain hard to gain access to India's services and public procurement markets, ensure the protection of geographical indications, and uphold its ambitious commitments on trade and sustainable development. These commitments include imposing maximum residue level (MRL) limits on agricultural products. The EU's proposed Carbon Border Adjustment Mechanism (CBAM) and Deforestation-free Regulation (EUDR), a key topic of discussion between both sides, are expected to impact around 8-10% of Indian agricultural, steel, and aluminium exports to the bloc. "There is a concern that Indian products entering the EU and UK might face additional tariffs, potentially ranging from 20 to 35%, under the CBAM charges. A suitable text may be inserted in the FTA chapters dealing with this possibility," economy think tank Global Trade Research Initiative (GTRI) said in a recent report on India's trade. More regulations "Other regulations that are expected to increase the cost of imports include the Deforestation Regulation, the Foreign Subsidies Regulation, and the Supply Chain Due Diligence Act.The path to a successful FTA requires a delicate balance of economic interests, political sensitivities, and a commitment to improving the quality of Indian goods," it added. Queries emailed to the spokespersons of the commerce ministry and the EU remained unanswered till press time. India's exports to Europe have been steadily rising since FY21, in tandem with the global economy emerging from the pandemic. India's exports to Europe, in value terms, stood at $98.88 billion in FY24, while imports stood at $93.67 billion during the same period.
Source: Live Mint
Indian government bond yields were flattish in the early session on Friday as investors awaited the Reserve Bank of India's monetary policy decision due at 10:00 a.m. IST, with a major focus on guidance. India's benchmark 10-year yield was at 7.0143 per cent as of 9:45 a.m. IST, following its previous close of 7.0112 per cent. "The policy is largely expected to be a non-event as major decisions are unlikely. It would take some strong positive commentary for the benchmark yield to dip below 7 per cent again," a trader with a primary dealership said. Bond yields shot up on Tuesday and have largely remained elevated after a weakened mandate for Prime Minister Narendra Modi's party and alliance raised concerns about a potentially slower pace of fiscal consolidation, alongside increased welfare spending. The RBI is widely expected to keep interest rates steady and retain its tighter monetary stance at its policy review, amid robust economic growth and an uncertain inflation outlook. A weaker majority for the Modi-led alliance may increase welfare spending but not result in additional borrowing, limiting a rise in bond yields, said Rajeev Mohan, president of treasury and global markets at Kotak Mahindra Bank. Fund managers have also said Indian government bonds will continue to attract foreign flows even as a narrower-than-expected victory margin could prompt a shift in policy. Traders will also await fresh supply via a weekly debt auction from the central government as it aims to raise 290 billion rupees ($3.47 billion), which includes 200 billion rupees of the benchmark paper. Meanwhile, the 10-year US yield stayed closer to the 4.30 per cent mark ahead of Friday's highly anticipated government employment report for May. The latest data has boosted expectations that the Federal Reserve will deliver two rate cuts of 25 basis points (bps) each in 2024.
Source: Business Standard
Synopsis Fitch Ratings anticipates minimal policy shifts in India post-election losses. The upcoming July budget will detail economic reform plans and fiscal goals for the next five years, crucial for addressing fiscal metrics, reducing debt, potential deviations from capital expenditure commitments, the risk of heightened social spending, progress in judicial reforms at the state level, and reforms in the manufacturing sector. Fitch Ratings expects that the recent losses of seats for Narendra Modi-led BJP in Lok Sabha elections will not lead to substantial policy shifts. Instead, the forthcoming budget in July will likely provide concrete details on the government's economic reform plans and fiscal goals for the next five years. India's latest election results indicate that the National Democratic Alliance (NDA) will remain in power but with a reduced majority. The Bharatiya Janata Party (BJP), the primary party within the NDA, saw a notable decline in support, leading to the coalition's decreased mandate. Ratings expects that this outcome will maintain general policy continuity but may complicate efforts to advance ambitious reforms due to the coalition's dynamics and a weaker mandate. Over the past decade, the NDA's governance has delivered mixed results on economic reforms. Notable successes include the implementation of the Goods and Services Tax and the Bankruptcy Code in 2016. Additionally, significant public investment in infrastructure has helped propel India to become one of the world's fastest-growing major economies. For the fiscal year ending in March 2024 (FY24), the country's real GDP growth reached 8.2 percent. Fitch projects a strong growth rate of 7 percent for FY25. Fitch expects India's medium-term growth to average around 6.2 percent through FY28, despite the coalition's narrower majority. Sustained public investment in infrastructure, ongoing digitalization efforts, and improved balance sheets for banks and corporations compared to the prepandemic period are expected to support a positive outlook for private investment. The Production-Linked Incentives scheme, aimed at boosting foreign direct investment in sectors like electronics, is likely to remain a key policy tool. However, private investment has not yet picked up significantly, posing a potential risk to the economic outlook. The new government is expected to continue pursuing significant reforms in Powered By land and labor laws to bolster India's manufacturing sector. These reforms have historically faced considerable resistance, and the weaker mandate may complicate their enactment further. Nonetheless, some progress may still be achieved at the state level, where local governments might independently advance these reforms. Additionally, judicial reforms to lower costs and expedite court case resolutions show promise under the new administration. India's fiscal health remains a crucial concern. Weaker fiscal metrics compared to peer countries have constrained its rating, which Fitch affirmed at 'BBB-' with a Stable Outlook in January 2024. The new government's ability to address high fiscal deficits and reduce debt will be vital for maintaining this rating in the years ahead. Gradual fiscal consolidation has been a consistent focus. The FY24 budget deficit was reported at 5.6 percent of GDP, below the revised estimate of 5.8 percent and in line with Fitch's projections. The 5.1 percent deficit target for FY25 appears achievable. The goal of reducing the deficit to 4.5 percent by FY26 also seems within reach, although the recent election results could potentially increase the risk of heightened social spending or deviations from capital expenditure commitments.
Source: The Economic Times
Cambodia’s foreign trade rose significantly in the first five months this year, growing by 12 per cent year on year (YoY), according to commerce ministry data. The country’s total trade volume reached over $21.6 billion, up from $19.2 billion during the same period last year. It exported goods worth $10.18 billion during the period—a YoY increase of 10.8 per cent, while it imported goods worth $11.4 billion—a 13.6-per cent YoY increase, said a report document by the ministry. China, Vietnam and the United States were Cambodia’s biggest partners during the period, with a trade value of $5.99 billion, $3.55 billion and $3.52 billion respectively. The United States was the biggest market for Cambodia’s exports with a value of $3.42 billion during the period—33.68 per cent of the country’s total exports. Vietnam ranked second with imports from Cambodia reaching $1.88 billion. The country’s trade with the member countries of the Regional Comprehensive Economic Partnership (RCEP) rose to $14.17 billion during the period—up by 14.2 per cent YoY. Such trade accounted for 65.6 per cent of its total trade volume during the period. It exported products worth $3.97 billion to RCEP countries during the period—up by 12.4 per cent YoY and imported goods worth $10.2 billion from such countries—up by 14.9 per cent YoY, domestic media outlets reported citing the ministry document. China, Vietnam, Thailand, Japan and Singapore are Cambodia’s top five trading partners under the RCEP. Cambodia’s free trade agreement with China and South Korea and the RCEP have contributed to the rise in trade, the ministry noted.
Source: Fibre2fashion
European Union (EU) regulations on waste shipments and textiles will be more effective if they are supported by capacity-building measures for producers in major EU textile trading partners like India, panelists said at a meeting last month in Brussels. This is especially true for small-scale producers, which in practical terms follow most of the sustainable methods of production, but may find the norms for traceability reporting onerous, they felt. The EU Strategy for Sustainable and Circular Textiles outlines the need for sustainable production and consumption of textiles, calling for all textile products sold in the EU market to be designed, produced used and repurposed to be circular by 2030.
Source: Fibre2fashion
Synopsis In May, China's exports surged by 7.6% year-on-year to $302.35 billion, surpassing expectations, despite ongoing trade tensions. Imports, however, grew only by 1.8%, missing forecasts of 4% growth. This led to a widened trade surplus of $82.62 billion. The rise in exports is partly due to a low base from last year. China's exports for May beat analyst expectations despite trade tensions, though imports shrank, according to customs data released Friday. Exports jumped 7.6% in May from the same time last year to USD 302.35 billion. Imports however rose by 1.8% to USD 219.73 billion, missing estimates of about 4% growth. The uptick in exports is also partly due to a lower base from the same period last year, when exports declined 7.5%. In comparison, imports grew by 1.5% in April compared to the same period last year while April imports rose by 8.4%. Strong exports also saw China's trade surplus widen to USD 82.62 billion, up from April's USD 72.35 billion. China's growth in exports come as it faces escalated trade tensions with the US and Europe. The US is ramping up tariffs on China-made electric cars while Europe is considering levying similar tariffs. Factory activity in China slowed more than expected in May, according to an official survey released last week. The manufacturing purchasing managers index from the China Federation of Logistics and Purchasing fell to 49.5 from 50.4 in April on a scale up to 100 where 50 marks the break between expansion and contraction.
Source: The Economic Times
Berlin (d.de) – On World Environment Day, Germany’s Development Minister Svenja Schulze has called upon the textile industry to recycle more and protect scarce resources. “Too many textiles are produced worldwide that are worn too rarely and discarded too quickly,” explained Schulze. “This throw-away mentality poses an excessive burden on our planet.” She said that an important part of the solution involved buying less clothing and shopping more consciously. She added that less waste and more recycling in textile production was also necessary, however. According to the German Development Ministry, the textile industry worldwide is responsible for around 20 percent of global fresh water pollution and around ten percent of global carbon emissions – more than international aviation and shipping combined. Despite the enormous resources used in production, less than one percent of global clothing waste is currently recycled.
Source: Deutschland.de
