Commerce and Industry Minister Piyush Goyal on Tuesday underlined the need for building on the success of initiatives like production-linked incentive (PLI) schemes and free trade agreements (FTAs). Goyal took charge of the ministry for the second time and held detailed discussions with the officials on various issues concerning the ministry. Senior officials also apprised the minister about the progress of talks on the ongoing FTAs. Trade pact talks with Oman and the UK are in advanced stages. Negotiations are also going on with the European Union and Peru. India and the UK launched talks for an FTA in January 2022. There are 26 chapters in the agreement, which include goods, services, investments and intellectual property rights. The 14th round of negotiations was held in January. Chapter-wise textual negotiations are near close, and the schedule on goods and services is at an advanced state of negotiations. Recently, a team from the UK visited India for negotiations on outstanding issues. For India, Oman is the third largest export destination among the Gulf Cooperation Council (GCC) countries. India has already implemented a trade pact with another key GCC member - the UAE. The current government has so far signed trade deals with Mauritius, Australia, the UAE and four European nations EFTA bloc. “We need to build on the success of past initiatives like PLI and recent FTAs,” the commerce ministry said in a statement quoting Goyal. Minister of State for Commerce and Industry Jitin Prasada also attended the meeting. During the meeting, Commerce Secretary Sunil Barthwal and DPIIT Secretary Rajesh Kumar Singh presented a brief on the ongoing proposals and action items of the ministry. Goyal emphasised the importance of continued collaboration and directed that a series of meetings must be scheduled in the coming days to delve into the details of various policies and action items that have to be finalised. He added that there is a need to introspect and coordinate better between departments. “Steering Committee on Advancing Local value-add and Exports (SCALE) Committee and PLI schemes must be utilised to their full potential to boost exports and domestic production,” he added. Goyal noted that the timely sharing of data and transparency in exports and imports will encourage investors to invest more confidently. He said that India is positioned in a sweet spot and it is the right time to convert our challenges into opportunities.
Source: Millennium Post
Synopsis India's Index of Industrial Production (IIP) slowed to 5% in April, a three-month low from 5.4% in March, according to data from the Ministry of Statistics and Programme Implementation (MoSPI). The growth rate was 4.6% in April 2023, a decrease from the previous high of 11.9% in October 2023. The three sectors with the highest growth rates in April 2024 were Mining, Manufacturing, and Electricity.
he Index of Industrial Production (IIP) in India slowed to 5 per cent in April, a three month low, as against 5.4 per cent in March, revealed the data provided by the Ministry of Statistics and Programme Implementation (MoSPI) on Friday.
The IIP growth rate was recorded at 4.6 per cent in April 2023, the government said in a press release. The previous high of IIP was recorded at 11.9 per cent in October 2023, which slowed to 2.5 per cent in November, 4.2 per cent in December and 4.1 per cent in January 2024. As per the data, the growth rates of the three sectors in April 2024, Mining, Manufacturing and Electricity stood ate 6.7 percent, 3.9 percent and 10.2 percent year-on-year respectively. "Within the manufacturing sector, the growth rate of the top three positive contributors to the growth of IIP for the month of April 2024 are – “Manufacture of basic metals” (8.1%), “Manufacture of coke and refined petroleum products” (4.9%), and “Manufacture of motor vehicles, trailers and semi-trailers” (11.4%)," MoSPI said. According to use-based classification, the capital goods segment grew by 3.1 per cent in April, but it expanded by 4.4 per cent in the same month of last year. The output of consumer durables grew by 9.8 per cent during April compared to a decline of 2.3 per cent in 2023. The output of non-durable consumer goods decreased by 2.4 per cent after rising by 11.4 per cent in April 2023. Goods related to infrastructure and construction saw a marginal growth of 8.0 per cent in April 2024, against a 13.4 per cent expansion YoY. The data also revealed that, in comparison to the same period last year, the output of primary goods increased by 7 per cent in April 2024 as against 1.9 per cent. The core sector makes up 40.27% of the Index of Industrial Production (IIP), making it a lead indicator of industrial activity.
Source: The Economic Times
India is set to sign a free trade agreement (FTA) with Oman in the first 100 days of the third term of Prime Minister Narendra Modi, who on Tuesday said that strategic ties between the two countries are destined to scale new heights and the matter figured in commerce minister Piyush Goyal’s review meeting. Prime Minister Narendra Modi with Sultan of Oman Haitham bin Tarik. (ANI/File) Two officials aware of the matter said negotiations between India and the Sultanate of Oman were almost over during Modi’s previous term. However, the FTA deal could not bbe signed with the enforcement of the model code of conduct on March 16 following the announcement of dates for the Lok Sabha polls. The officials, who requested anonymity, said the deal is likely to be concluded soon. “The India-Oman FTA is almost finalised, awaiting [formal] political nod from both sides,” one of the officials said. Days before the elections, India on March 10 signed an FTA with a group of four European countries—Iceland, Liechtenstein, Norway, and Switzerland. The four countries committed to invest $100 billion in India to create one million direct jobs over 15 years. Indian and Omani Officials have prepared the required draft documents and it is a work in progress, the second official said and added the Oman ruler spoke to the Prime Minister congratulating him for his third term. “Thank His Majesty Sultan Haitham bin Tarik of the Sultanate of Oman for his call and deeply appreciate his warm felicitations and words of friendship. The centuries-old IndiaOman strategic ties are destined to scale new heights,” Modi said in a post on X on Tuesday. When signed, the FTA with Oman will be the first important bilateral deal of Modi’s third term and the fourth since 2022. India signed an FTA with the United Arab Emirates on February 18, 2022, followed by another deal with Australia on April 2 of that year. India is negotiating FTAs with the United Kingdom, Peru, and the European Union. The proposed deal with Oman is expected to help India in its energy security and ensure a cheaper supply of fertilisers, besides boosting foreign investments, the second official said. It will help reduce prices of Indian imports to Oman such as rice, tea, coffee, spices, dairy produce, meat, apparel, steel products, and machinery, he said. The FTA talks got a boost after bin Tarik and Modi met in New Delhi on December 16, 2023. The proposed FTA—Comprehensive Economic Partnership Agreement (CEPA)— figured prominently in the discussions between the two leaders. The second official said the proposed CEPA will boost both trade and investments. On the sidelines of the Sultan’s state visit in mid-December, Goyal and Oman’s trade minister Qais Bin Mohammed Al Yousef held discussions on bilateral trade and investment relations. The ministers decided to create an Oman desk in Invest India to boost investments and an India desk in Invest Oman. India and Oman share a longstanding cooperation built on people-to-people ties dating back centuries. The two countries are strategic partners. They have had bilateral trade and investment relationships since diplomatic relations were established in 1955. According to commerce ministry data, bilateral merchandise trade between both countries grew by 82.64% on an annualised basis in 2021-2022 to reach $9.99 billion. It rose to $12.39 billion in 2022-2023. In FY23, India exported goods worth $4.48 billion to Oman and imported merchandise worth over $7.9 billion.
Source: The Hindustan Times
Piyush Goyal who took charge as the minister of commerce and Industry for the second term on Tuesday reviewed the status of various free trade agreements that India is negotiating and the 100-day agenda of the ministry. Along with Goyal, Minister of State for Commerce and Industry Jitin Prasada also assumed charge and participated in the review meeting with the top officials of Department of Commerce (DoC) and Department for Promotion of Industry and internal Trade (DPIIT). When the election process was on, a team of Indian officials had visited London in April for another leg of talks on agreement for negotiations on outstanding issues. With the European Union a stock taking meeting was held in May. Commerce Secretary Sunil Barthwal and Director General of EU had participated in those discussions. While with the UK, the 14th round of negotiations was in progress, With the EU the eighth round of talks are scheduled from 24th of this month in Brussels In May the first Joint Committee Meeting (JCM) under India-Australia Economic Cooperation and Trade Agreement (Ind-Aus ECTA) was held. Both sides are now negotiating on expanding ECTA and converting it into a Comprehensive Economic Cooperation Agreement. In April India and Peru had a 7th round of discussions on the FTA and an eighth round of talks are expected to be held in July. Last month a Joint Committee meeting was also held for the review of the Asean-India Trade in Goods Agreement (AITGA). Officials of DoC and DPIIT have been working on the 100-day agenda when the election process was on and secretaries of DoC and DPIIT made a presentation on it, a statement said. Goyal directed that a series of meetings must be scheduled in the coming days to delve into the details of various policies and action items that have to be finalised. He also said the Steering Committee on Advancing Local value-add and Exports (SCALE) Committee and Production Linked Incentive (PLI) Schemes must be utilised to their full potential to boost exports and domestic production. Some of the proposals that are part of the 100-day agenda drawn up by officials will require legislative changes or approval from the cabinet. The review over the next few days will decide on the best way forward to meet the goals of the agenda, the official added. Some of the items that are part of the agenda include changes in Special Economic Zones Act, steps to boost e-commerce exports, extension of interest equalisation scheme for exporters and wrap up FTA negotiations with Oman and UK. DPIIT’s plans include reforms for Ease of Doing Business, review of Foreign Direct Investment rules, Deep Tech Start-up Policy and enhancing funding for start-ups at the early stage.
Source: Financial Express
Synopsis Government might consider permitting new Chinese-Indian JVs only if the Indian entity holds a majority stake. Several manufacturing initiatives, particularly in auto and electronics components, have faced delays over the past few years. However, with the government's revised stance and the successful conclusion of the JV between MG Motor India and JSW, discussions between these firms and Chinese counterparts have resumed. The government may allow new joint ventures (JVs) between Chinese and Indian companies only if the Indian partner has a majority shareholding, four electronics and automobile industry chief executives who want to set up JVs with Chinese firms told ET.
Source: The Economic Times
Exports from special economic zones grew over 4% to $163.7 billion in fiscal 2024, despite a 3% decline in the country's overall exports. In fiscal 2023, SEZ exports totaled $157.24 billion, while they stood at $133 billion in fiscal 2022, according to data from commerce ministry. During the same period, India's merchandise exports decreased by 3.11% to $437 billion, while imports saw a decline of over 8% to $677.24 billion. SEZs played a significant role in India's export landscape, contributing more than one-third of the country's total outbound shipments in the last fiscal. SEZs are designated areas treated as foreign territories for trade and customs duties, with restrictions on dutyfree sales outside these zones in the domestic market. The government has approved a total of 423 SEZs, out of which 280 are operational as of March 31. Additionally, there are 5,711 approved units in these zones as of Dec. 31, 2023. States such as Karnataka, Maharashtra, Telangana, Tamil Nadu, Andhra Pradesh, Gujarat, Kerala, and Uttar Pradesh host the highest number of operational SEZs. As of Dec. 31, 2023, these zones have attracted investments totaling over Rs 6.92 lakh crore and employ approximately 30.70 lakh people. Major export destinations for SEZs include the United Arab Emirates, the US, the UK, Australia, and Singapore. To give a push to these zones, the government is considering several measures such as a flexible framework for the sale of products manufactured in SEZs in the domestic market and streamlining approval processes for units. In a report, think tank Global Trade Research Initiative suggested the government allow the sale of products manufactured in SEZs in the domestic market on payment of duty foregone on inputs as that would help promote value addition. At present, units in SEZs are allowed to sell their products in DTA on payment of duties on an output basis (finished goods). SEZs being set up under the SEZ Act, 2005 and SEZ Rule, 2006 are primarily private investment driven. Post enactment of SEZ Act, 2005 the Centre has not set up any SEZ in the country.
Source: NDTV
In a move towards de-dollarisation, the Reserve Bank of India (RBI) has allowed banks from 22 countries to open Special Vostro Rupee Accounts (SVRAs) for settling payments in Indian rupees, according to a report by Bizz Buzz. To increase bilateral trade in local currency, 20 banks operating in India are expected to open 92 SRVAs of partner banks from 22 countries, as per the report. These countries include Bangladesh, Belarus, Botswana, Fiji, Germany, Guyana, Israel, Kazakhstan, Kenya, Malaysia, Maldives, Mauritius, Myanmar, New Zealand, Oman, Russia, Seychelles, Singapore, Sri Lanka, Tanzania, Uganda, and United Kingdom. Meanwhile, the use of the rupee for international trade transactions seeks to enhance the accessibility and convenience of rupee trade settlements, keep a check on the flow of dollars out of India, and reduce transaction costs associated with currency conversions, further strengthening India's economic ties with the participating countries. At the same time, accordibg to the media, industry experts believe that encouraging the use of the Rupee for invoicing and settlement of payments with foreign countries is a positive step. However, replacing the Dollar with the Rupee may not be feasible due to India's low share in global trade in Rupees compared to the dominant position of the Dollar.
Source: Sputniknews
The World Bank on Tuesday retained its growth forecast for India at 6.6 per cent for FY25. “India will remain the fastest-growing of the world’s largest economies, although its pace of expansion is expected to moderate. After a high growth rate in FY 2023/24, steady growth of 6.7 per cent per year, on average, is projected for the three fiscal years beginning in FY 2024/25,” the multilateral bank said in its latest biannual Global Economic Prospects. For FY26 and FY27, the World Bank projected India’s economy to grow at 6.7 per cent and 6.8 per cent, respectively. In FY24, the National Statistical Office has estimated gross domestic product (GDP) to have grown at 8.2 per cent. The World Bank cited the projected moderation in growth to a slowdown in investment from a high base. “However, investment growth is still expected to be stronger than previously envisaged and remain robust over the forecast period (FY25-FY27), with strong public investment accompanied by private investment. Private consumption growth is expected to benefit from a recovery of agricultural production and declining inflation. Government consumption is projected to grow only slowly, in line with the government’s aim of reducing current expenditure relative to GDP,” it added The Reserve Bank of India (RBI) in its latest monetary policy review last week raised its growth projection to 7.2 per cent for FY25 from 7 per cent estimated earlier. “The forecast of above normal south-west monsoon by the India Meteorological Department (IMD) is expected to boost kharif production and replenish the reservoir levels. Strengthening agricultural sector activity is expected to boost rural consumption. On the other hand, sustained buoyancy in services activity should continue to support urban consumption. The healthy balance sheets of banks and corporates; government’s continued thrust on capex; high capacity utilisation, and business optimism augur well for investment activity. External demand should get a fillip from improving prospects of global trade,” RBI Governor Shaktikanta Das said in his statement. The World Bank said in India the fiscal deficit was projected to shrink relative to GDP partly because of increased revenues generated by the authorities’ efforts to broaden the tax base. “India’s economy has been buoyed by strong domestic demand, with a surge in investment, and robust services activity. Some large EMDEs, such as India, are expected to see continued solid per capita growth,” it added.
Source: Business Standard
Synopsis The bridge was inaugurated by Prime Minister Narendra Modi and his Bangladesh counterpart Sheikh Hasina virtually in March 2021. Modi and Hasina had a brief interaction at the Rashtrapati Bhawan on Sunday night after the swearing-in ceremony of Modi 3.0. Hasina is expected to return for an official visit later in June or July. India’s landlocked Northeast is set to get a crucial connectivity link to the Bay of Bengal with the opening of the long-awaited Bangladesh-India friendship bridge, known as Maitri Setu, by September. The bridge was inaugurated by Prime Minister Narendra Modi and his Bangladesh counterpart Sheikh Hasina virtually in March 2021. Modi and Hasina had a brief interaction at the Rashtrapati Bhawan on Sunday night after the swearing-in ceremony of Modi 3.0. Hasina is expected to return for an official visit later in June or July. The Bangladesh PM along with six other leaders from India’s immediate neighbourhood and Indian Ocean Region were invited for the inauguration ceremony. Maitri Setu connects Bangladesh with Tripura giving northeastern states access to ports in Bay of Bengal. The bridge was built over the Feni river which flows between Bangladesh and Tripura. The 1.9-km-long bridge connects Ramgarh in Bangladesh with Sabroom in India. It was built by National Highways and Infrastructure Development Corporation Ltd at a project cost of Rs. 133 crore. Cargo movement through the bridge is seen as strategically important as Bangladesh’s Chittagong port is just 80km from Tripura's Sabroom. "The Maitri Setu has already been inaugurated. The land port is almost ready... The movement of passengers through the bridge will commence in September. It will take two or three months to introduce goods movement after passenger movement gets underway," Tripura industries and commerce department secretary Kiran Gitte said at a press conference in Agartala on Friday. Meanwhile, India will also assist in the transit of electricity from Bhutan to Bangladesh. Hasina reiterated Bangladesh's eagerness to import hydroelectricity from Bhutan through India when the visiting Bhutanese prime minister Dasho Tshering Tobgay paid a courtesy call on her on Sunday in New Delhi. "Import of hydroelectricity will require a tripartite agreement involving India, and we have already brought the matter to their (India's) attention," she told Tobgay.
Source : The Economic Times
As Prime Minister Narendra Modi embarks on his third term, the Northern India Textile Mills’ Association (NITMA) remains unwavering in its dedication to supporting the government's endeavours in positioning India as a worldwide centre for textiles and apparel. Sanjay Garg, president of NITMA, expressed confidence that India, under PM Modi's leadership, will continue to achieve new milestones and pave the way for a brighter future for all. Garg emphasised the importance of continuing the strong partnership with the government to address industry challenges, including raw material security, infrastructure development, and skill enhancement. By working together, sustainable growth can be achieved, contributing to the nation's economic prosperity. In a congratulatory message to Prime Minister Narendra Modi on his third consecutive term, Garg praised Modi's visionary leadership for driving progress and development across various sectors of the nation. He expressed deep admiration and support for Modi’s unwavering commitment to India, NITMA said in a press release. NITMA reaffirms its commitment to collaborating closely with the government to promote innovation, sustainability, and competitiveness within the textile sector. Together, our goal is to enhance India's reputation as a global giant in textiles, Garg added Garg further commended the government's initiatives, such as Remission of Duties and Taxes on Exported Products (RoDTEP), Rebate of State Levies (RoSCTL), and others. Additionally, policy interventions like the Production Linked Incentive (PLI) scheme, PM Mega Integrated Textile Region and Apparel (PM MITRA) parks, and strategic trade agreements have paved the way for creating top-notch infrastructure, promoting investment, and generating employment opportunities within the textile sector coupled with the ongoing support for MSMEs, which have significantly bolstered the industry. On behalf of the entire textile industry, Garg extended congratulations to Prime Minister Modi on this historic accomplishment. He said that Modi's energetic leadership has been crucial in accelerating India's development and securing its standing as a major player in the world economy.
Source: Fibre2fashion
India's Exports Union minister Piyush Goyal has officially taken charge of the Ministry of Commerce and Industry for a second consecutive term. Upon assuming office, he emphasised the need for integrity, speed, skill, and scale among ministry officers. He stressed the importance of fully utilising the Steering Committee on Advancing Local Value-add & Exports (SCALE) Committee and Production Linked Incentive (PLI) Schemes to boost exports and domestic production. In a ceremony in New Delhi, Goyal, along with Jitin Prasada, who has assumed the role of minister of state, Ministry of Commerce and Industry, convened a review meeting with senior officers from both departments within the ministry. The meeting, attended by Prasada, saw presentations by the commerce secretary and DPIIT Secretary on ongoing proposals and action items. Goyal highlighted the need for continued collaboration and directed that a series of meetings be scheduled in the coming days to delve into the details of various policies and actions that need to be finalised. He underscored the importance of introspection and better coordination between departments, emphasising the significance of research and development and strengthening the public private partnership (PPP) model of governance, the Ministry of Commerce and Industry said in a press release. Encouraging the officers to adopt ‘quality’ as the mantra for ensuring India's progress, Goyal noted that timely sharing of data and transparency in exports and imports will foster investor confidence. He stated that India is currently in a favourable position, and it is crucial to convert challenges into opportunities. During the meeting, Goyal recounted the achievements of his previous term, including a boost in overall exports from India, the signing of various free trade agreements (FTAs), and a significant inflow of foreign direct investment (FDI) into the country. With a renewed commitment to driving economic growth and fostering international trade, he expressed hope to lead the Ministry of Commerce and Industry towards new heights, ensuring that India's progress remains steadfast and inclusive. "I am delighted to be part of PM Modi's third term and am grateful to the people of Mumbai North for electing me. As I take charge, I come to you with a lot of fresh perspectives about India and about ground zero," said Goyal.
Source: Fibre2fashion
Synopsis The commerce department is developing a 100-day action plan focusing on various key areas. This includes allowing Special Economic Zones (SEZs) to sell in the domestic market, setting up a comprehensive trade information platform, standard operating procedures for negotiating free trade agreements (FTAs), and establishing ecommerce export zones. The plan also includes the launch of a Trade Connect e-Platform to assist new exporters, the development of ecommerce export hubs, and efforts to boost goods and services exports to $2 trillion by 2030. The commerce department is chalking out a 100-day action plan that is likely to focus on allowing special economic zones (SEZs) to sell in the domestic market, setting up an all-encompassing trade information platform, standard operating procedures to negotiate free trade agreements (FTAs), and ecommerce export zones. According to a senior official, the proposed Trade Connect e-Platform, which the department plans to launch as part of its 100-day agenda, seeks to provide information to new and aspiring exporters on non-tariff barriers, identification of products for export, updated tariff schedule of items, and Also in the works is a scheme to develop ecommerce export hubs for aggregation of ecommerce supplies. India's ecommerce exports, which go through the postal and courier routes, are pegged at $1.5 billion. Cross-border ecommerce is expected to touch $800 billion by 2025 and $2 trillion by 2030. The department is also discussing ways to push goods and services exports to $2 trillion by 2030 In FY24, India's goods and services exports were at an all-time high of $778.2 billion, up by 0.23% from $776.4 billion in FY23. Commerce and industry minister Piyush Goyal, who has taken charge of the ministry for the second time, has sought more ideas from officials. "We have been asked for innovative ideas across areas, and work has begun on making these plans," said an official. On Tuesday, standard operating procedures (SOPs) for trade pacts and capacity building were discussed at the meeting that Goyal had with the ministry. This assumes significance as the country has inked trade pacts with Mauritius, the UAE, Australia and European Free Trade Association since 2021, and is in talks with the UK and EU for such pacts. The official cited earlier said amending the SEZ Act would address the concerns and longstanding demand for these zones to be allowed to sell in the domestic market on payment of duty foregone on inputs, as that would help promote value addition. services obtained from the SEZ units. At present, while domestic firms are required to pay in foreign exchange for services rendered by a SEZ unit, it is not applicable for sale of goods, for which payments could be made in rupees.
Source: The Economic Times
The World Bank on Tuesday (June 11) predicted that India is set to remain the fastest growing major economy globally, though its growth rate is expected to slow. The June ‘Global Economic Prospects’ report maintained the GDP growth forecast for India at 6.6 per cent for FY25. “This moderation is mainly due to a slowdown in investment from a high base. However, investment growth is still expected to be stronger than previously envisaged and remain robust over the forecast period, with strong public investment accompanied by private investment,” the report said. In April, the global agency increased its projection for India’s GDP growth by 20 basis points to 6.6 per cent for the current financial year. After a robust performance in FY24, the World Bank projected an average growth rate of 6.7 per cent (6.7 per cent in FY26 and 6.8 per cent in FY27) annually over the three fiscal years starting from FY25, as outlined in its Global Economic Prospects for June 2024. In the January-March quarter, India's GDP growth surpassed expectations, reaching 7.8 per cent, although this was a decline from 8.4 per cent in the third quarter. For the entire fiscal year 2023-24, GDP growth has been revised upwards to 8.2 per cent from the second advance estimate of 7.6 per cent, according to the Ministry of Statistics and Programme Implementation data released on May 31. The Reserve Bank of India, in its recent Monetary Policy announcement forecasted GDP growth at 7.2 per cent for FY25, an increase from the earlier projection of 7 per cent. Key highlights of the World Bank’s June economic forecast report,
Global growth outlook According to the World Bank’s latest Global Economic Prospects report, for the first time in three years, the global economy is showing signs of stabilisation in 2024. However, this stabilisation remains weak compared to historical standards. Globally, GDP growth is now anticipated to be 2.6 per cent for 2024-25, a 20 basis point increase from the January estimate. For FY26 and FY27, global growth is expected to be 2.7 per cent amid modest growth in trade and investment. Over the next three years, the forecast suggests that countries representing over 80 per cent of the world’s population and GDP will experience slower growth compared to the prepandemic decade
India’s economic trajectory India, the largest economy in South Asia, has significantly contributed to regional growth, particularly through its manufacturing and services sectors, the World Bank report noted. The country’s growth rate for FY24 is estimated at 8.2 per cent, a notable increase of 1.9 percentage points from earlier projections, the report said. India’s economic growth has been driven by its industrial and services sectors, which have offset a slowdown in agricultural production caused by monsoon disruptions. Domestic demand remains strong, buoyed by infrastructure investments, even as post-pandemic pent-up consumption demand eases, the World Bank report noted. Inflation in India has remained within the Reserve Bank’s target range of 2-6 per cent since September 2023, contributing to a stable economic environment, the report added. However, in other parts of the region, inflation remains elevated, driven by persistently high food prices due to local supply disruptions and increased energy costs. In Pakistan, inflation has moderated over the past year due to high base effects and exchange rate stabilisation. Yet, it remains high.
Fiscal and trade balances: The fiscal health of South Asian countries is gradually improving, the report said. In India, the fiscal deficit relative to GDP is projected to decrease due to increased revenues from a broadened tax base. While regional fiscal imbalances are expected to improve, the scale of improvement is smaller outside India. Trade deficits are narrowing, particularly in India, contributing to overall economic stability in SAR, the report said.
Growth outlook in other South Asian economies In the South Asia region, GDP growth is projected to decrease from 6.6 per cent in 2023 to 6.2 per cent in 2024, largely due to a slowdown in India from its high growth rates in recent years. However, steady growth in India is expected to keep the region’s growth rate at 6.2 per cent in 2025-26, the World Bank noted. Other economies in the region, such as Bangladesh, are expected to maintain robust growth, though at a slower pace, while growth in Pakistan and Sri Lanka is anticipated to strengthen. Pakistan and Sri Lanka are expected to see strengthened economic activities, despite facing challenges such as weak private sector activity in Pakistan and industrial disruptions in Bangladesh due to import restrictions, it noted. Nonetheless, the World Bank notes that risks to this outlook are tilted to the downside. These downside risks include disruptions in commodity markets due to escalating conflicts, abrupt fiscal consolidations, financial instability from banks’ large exposure to sovereign borrowers, more frequent severe weather events, and slower-than-expected growth in China and Europe.
Poverty reduction in SAR The report noted that per capita income growth in the South Asian region is expected to decrease from 5.6 per cent in 2023 to 5.1 per cent in 2024-25, then slightly rise to 5.2 per cent in 2026. “While this indicates a renewed decline in poverty, the anticipated rate of poverty reduction outside India in 2024-25 is slower than initially projected in January,” the World Bank said. This slower pace is due to weaker-than-expected growth in private consumption and fiscal adjustments that may reduce household income.
Projection for global inflation Beyond GDP growth, the World Bank projects global inflation to moderate, but more slowly than previously expected, averaging 3.5 per cent this year. Due to ongoing inflationary pressures, central banks in advanced and emerging market economies are likely to remain cautious about easing monetary policy. Consequently, average benchmark policy interest rates are expected to stay about double the 2000-19 average over the next few years.
Risks to global growth Despite improved near-term prospects, the global outlook remained subdued by historical standards, with downside risks including geopolitical tensions, trade fragmentation, higherfor-longer interest rates, and climate-related disasters. The World Bank report noted that global cooperation is essential to safeguard trade, support green and digital transitions, deliver debt relief, and improve food security.
Source: Business Standard
Jakarta. The relaxation of import regulations has led to the closure of several textile companies and significant layoffs in Indonesia. With nearly 14,000 job losses due to declining orders, many factories now face survival challenges.
According to Ristadi, President of the Confederation of Nusantara Workers' Union (KSPN), since the beginning of 2024, 13,800 people have been laid off in Indonesia's textile industry due to plummeting orders, with some companies even experiencing a complete halt. Currently, only textile industries oriented towards the export market are managing to survive. "Textile factories continue to collapse. Most recently, on June 6, S Dupantex shut down, resulting in layoffs of over 700 workers. This is just at one factory where KSPN members work. Many layoffs involve dozens of workers, but some cases go unreported, and others are dismissed without notice," he said. Ristadi revealed that companies like Sritex Solo subsidiaries, including Sinar Panca Djaja (Semarang), Bitratex (Semarang), and Johartex (Magelang), have also conducted layoffs. He urged the government to intervene promptly to prevent further job losses. "Restrict textile imports unless the raw materials are unavailable in Indonesia. Crackdown on illegal imports as they damage the domestic market, causing local products to become increasingly unpopular," he emphasized.
Ristadi said that companies sometimes hesitate to report layoffs due to concerns over banking trust and buyer confidence. "However, if layoffs are not disclosed, mass layoffs may be dismissed as mere speculation. People might think there are no issues in the textile industry, that everything is fine, but little do they know, many workers have fallen victim to layoffs," he said. The Chairman of the Indonesian Textile Association (API), Jemmy Kartiwa Sastraatmaja, reported that two textile factories have already shut down—one in Bandung and another in Pekalongan. "In Bandung, one factory decided not to reopen after the Eid holiday, effectively closing down. Similarly, a factory in Pekalongan ceased operations on June 6," Jemmy told Investor Daily on Wednesday. Jemmy warned that if the government does not address this issue, another textile factory might close soon. "I foresee that by the end of August, another major industry could shut down," he said. The wave of closures is primarily triggered by the Trade Minister Regulation (Permendag) No. 8 of 2024, which amends the previous Trade Minister Regulation No. 36 of 2023 concerning import policies and regulations. According to Jemmy, this regulation is detrimental to the textile sector.
Permendag 8/2024 relaxes import restrictions on ready-made garments, flooding the domestic market with imported clothes that were previously held at ports. This influx of imported goods has reduced the utilization of the local textile industry.
This situation has led to delays or cancellations of orders in small and medium industries or garment manufacturers. Additionally, many local products are unable to compete with cheaper imported goods. Jemmy explained that order delays or cancellations increase costs for textile manufacturers, who are still struggling to recover from the pandemic. Consequently, many manufacturers are unable to sustain their operations and are forced to close. Jemmy advocates for a return to the previous regulation, specifically for textiles and textile products. He argued that Permendag 8/2024 favors general importers by removing the technical consideration regulations that were under the Industry Ministry’s authority. These technical regulations were intended to control the flow of imported goods. Without them, imports are uncontrolled, devastating the domestic industry. In May, the government revised the regulation on import policy in response to import delays. Additionally, the Finance Ministry has issued a new decree reinstating the List of Prohibited and Restricted Import Goods. The revised regulation has led to the release of several commodity groups that have met the import licensing relaxation requirements, including iron and steel products, textiles, bags, and electronics. The Customs and Excise Directorate has released around 25,000 containers of imported goods that were previously detained.
Source: Jakarta Globe
Yemen’s textile, clothing and sewing factories will be fully exempt from taxes as per a directive of the President of the Supreme Political Council Mahdi Al-Mashat, the government announced in capital Sanaa recently. The announcement came during an event organised by the Chamber of Commerce and Industry, the ministry of industry and trade, and the tax authority, a domestic news agency reported.
The cent per cent tax exemption will be implemented next month.
Source: Fibre2fashion
HO CHI MINH CITY: Vietnam’s exports to key markets in the first five months of the year increased by 15% over the same period last year, with textiles, furniture and household appliances leading the recovery. Ta Hoang Linh, director of the European-American Market Department under the Industry and Trade Ministry, said that export turnover of Vietnam’s textile and garment sector year-to-date had reached US$12.8bil, up 7.4% over the same period. The footwear and handbag sector reached nearly US$7.9bil, an increase of 7.3%. Wood and wood products accounted for a large proportion of the furniture and household appliances industry, reaching US$4.9bil, an increase of more than 25% compared to last year. Duong Thi Minh Tue, a member of the Handicraft and Wood Industry Association of Ho Chi Minh City, said that possible cuts in US interest rates could stimulate consumer demand and demand for imports even more. The European market is also emerging from a recession and with inventory running out, demand has begun to increase again. Many Vietnamese wood industry enterprises have orders until the end of 2024, she said. Regarding the textile sector, deputy president of Vietnam Textile and Apparel Association Tran Nhu Tung said that the target export turnover of the textile and garment industry in 2024 was set at US$44bil. Through the first five months of the year, the orders for textile and garment enterprises had improved. Vietnamese fashion products had many competitive advantages in product quality and the ability to meet strict labour and environmental requirements. More importantly, Vietnam’s textile sector is taking advantage of the many combined incentives of 16 bilateral and regional free-trade agreements. In addition, these countries were continuing to promote strategies to diversify sources of supply, supply chains and investments, with Vietnam’s exports playing an important role in global production and value chains. However, many businesses are facing difficulties because key export markets such as the United States, European Union, north-east Asian countries or Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) countries were increasingly setting new and more stringent standards such as environmentally friendly, sustainable development and circular production criteria. Export products need to meet higher requirements on material traceability, safety certification, business reporting, as well as regulations on forest management and chemical use. To be able to meet the requirements of these markets, Vietnamese businesses need to modernise production lines and apply the circular-economy model. — Viet Nam
Source: The Star
ISLAMABAD: Pakistan’s government has announced a series of tax changes aimed at boosting government revenue and combating illegal activities.
Presenting the budget before the National Assembly, Finance Minister Mohmmad Aurangzeb said that the government will scrap exemptions and concessional rates on various goods, from basic necessities to luxury items and will impose standard sales tax rates on various goods.
Luxury Vehicles: Luxury vehicles, particularly those valued at $50,000 or more, will no longer enjoy import tax exemptions and will face higher taxes and duties. Import duties on glass products will be eliminated, while those on steel and paper products will be increased.
Taxes on Cigarettes: The government is also cracking down on counterfeit cigarettes, with stringent penalties for shops selling them and a hefty tax of Rs 44,000 per kilogram on materials used in cigarette filters, a common component in smuggled cigarettes.
Federal Excise Duty on Construction Sector
In the construction sector, the Federal Excise Duty (FED) on cement has been raised from Rs 2 per kilogram to Rs 3 per kilogram, and a new 5% FED will be imposed on new plots and residential and commercial properties.
GST on Textile and Leather Industries
Retailers in the textile and leather industries will experience changes, with the GST on branded clothes and shoes raised to 18%. These measures are part of a broader strategy to improve tax collection and promote fair market practices.
Source: We News
