The Reserve Bank of India (RBI) has proposed rationalisation of norms governing export and import transactions to promote ease of doing business and empower banks to deliver quicker and more efficient services to foreign exchange customers. According to draft norms, every exporter should furnish a declaration specifying the amount of the full export value of the goods or services. The amount representing the full export value of goods and services shall be realised and repatriated to India within nine months from the date of shipment for goods and date of invoice for services, the RBI said. This was part of the draft regulations released by the central bank on Tuesday under the Foreign Exchange Management Act (FEMA) and directions to authorised dealer banks. It sought comments by September 1, 2024. The draft proposed that the authorised dealer may place an exporter, who has not realised the full value of export within the time specified, in the caution list. An exporter who has been in caution listed can undertake export only against receipt of advance payment in full or against an irrecoverable letter of credit, to the satisfaction of the authorised dealer. The draft said no advance remittance for the import of gold and silver should be permitted unless specifically approved by the central bank. Advance payment for export of goods and services can be received according to the export contract. Rate of interest charged on the advance for export shall not exceed the all-in-cost ceiling of trade credit. The RBI draft norms said if the exporter was unable to meet the export obligation according to the terms of contract, the advance received should be refunded immediately. The authorised dealer could grant extension of time for the completion of the export obligation. As for project exports of goods and services on deferred payment terms, the RBI proposed that the exporter should submit the proposal for prior approval of the authorised dealer before entering into such export arrangement. This rule will be applicable for execution of a turnkey project or a civil construction contract under projects exports. The RBI said banks should put in place a comprehensive, well-documented policy approved by its Board within six months of issuance of this circular for handling payment transactions related to export/import of goods and services. The policy should ensure that the procedures applied are conducive to international trade and are not discriminatory.
Source: Business Standard
The Reserve Bank of India (RBI) has proposed that banks who are authorised dealers of foreign exchange should give reasonable opportunity to exporters of being heard before “caution-listing” them. The proposal is part of the draft of Foreign Exchange Management (Export and Import of Goods and Services) Act Regulations 2024 released on Tuesday by the central bank for public comments. Exporters who fail to realise payments for exports over 24 months are caution-listed. Once a firm gets the tag, then shipments can only be made by it against full advance payment or letter of credit. Under the current rules, all proceeds from exports of goods and services have to be brought back to the country within 270 days or nine months. This is proposed to continue under the new draft. Prior to 2020, caution listing was done by the RBI if payments for exports got delayed beyond 24 months and was done automatically by the computer system if the payment was not reflected against the shipped goods. This job was later given to the Authorised Dealers as sometimes banks failed to update the receipt of payment on time and the system at RBI would automatically caution-list them. With the new proposed guidelines if an exporter can demonstrate that the delayed payments are still being pursued then he might escape the caution list. According to the draft guidelines exporters who have been caution listed can undertake export only against receipt of advance payment in full or against an irrevocable letter of credit, to the satisfaction of the authorised dealer. As per the draft, every exporter should furnish to the specified authority a declaration specifying the amount representing the full export value of the goods or services. “The amount representing the full export value of goods and services shall be realised and repatriated to India within nine months from the date of shipment for goods and date of invoice for services,” the draft reiterated According to the draft, no advance remittance for the import of gold and silver should be permitted unless specifically approved by the RBI . The RBI said the proposed regulations are intended to promote ease of doing business, especially for small exporters and importers. They are also intended to empower Authorised Dealer banks to provide quicker and more efficient service to their foreign exchange customers, the central bank said. The last date for comments on the draft is September 1.
Source: Financial Express
Growth in the Indian manufacturing sector recovered some of the ground lost in May, as the headline Purchasing Managers Index (PMI) figure released by HSBC on Monday rose to 58.3 from 57.5 in May. The recovery in the sector was based on the back of buoyant demand conditions that spurred the expansions in new orders, output and buying levels. Besides, firms raised employment at the fastest rate seen in more than 19 years of data collection. Meanwhile, cost pressures receded from May, but were nevertheless among the highest over the past two years, leading companies to lift selling prices to the greatest extent since May 2022. “Growth in the Indian manufacturing sector recovered some of the ground lost in May, with the headline PMI posting nearly five points above its long-run average. June data showed that buoyant demand conditions spurred the expansions in new orders, output and buying levels,” the survey noted. A figure above 50 in the index denotes expansion and that below signifies contraction. The survey noted that the performance of the consumer goods industry was especially strong, although substantial increases were also noted in the intermediate and investment goods categories. “June saw a stronger expansion in sales at manufacturers in India. Buoyant underlying demand, higher export volumes and successful advertising all fuelled growth. As a consequence of ongoing increases in new order intakes, firms stepped up recruitment,” the survey noted. Maitreyi Das, global economist, HSBC, said that the Indian manufacturing sector ended the June quarter on a stronger footing, supported by increased new orders and output leading firms to increase their hiring at the fastest pace. “On the price front, input costs moderated slightly in June, but remained at elevated levels. Manufacturers were able to pass on higher costs to customers, as demand remained robust, resulting in improved margin. While the overall outlook for the manufacturing sector remains positive, the future output index receded to a three-month low, albeit it remains above the historical average,” she added The survey noted that June saw new export orders increase substantially again with companies attributing higher inflows of new work from overseas to better demand from Asia, Australia, Brazil, Canada, Europe and the US. The June manufacturing PMI came below the flash estimate of 58.5 for the month and it marks the manufacturing output rising for the 36th consecutive month since July 2021.
Source: Business Standard
India wants South Korea to eliminate tariffs on a number of items, such as varieties of meat, milk, fruits, fish, stones, yarn and petroleum products, which were exempted or protected against steep cuts in the India-Korea Comprehensive Economic Partnership Agreement (CEPA) signed about a decade and a half ago, sources said. The two countries are preparing to discuss request lists for tariff cuts later this month in the on-going negotiations to upgrade the CEPA, with narrowing of trade deficit with South Korea high on India’s agenda. “Stakeholders in the Indian industry have been provided the draft request list and asked to suggest more items on which tariff cuts can be sought and even propose deletions if needed,” a source tracking the matter told businessline. The next round of India-Korea CEPA upgrade meeting is likely on July 17-19, sources said. The India-South Korea CEPA, signed in August 2009 and implemented in January 2010, covers trade in goods, investments, services, and bilateral cooperation in areas of common interest. While India offered tariff elimination or concession on 83.8 per cent tariff lines imported from South Korea, the latter offered tariff elimination or concession on 93.2 per cent tariff lines. “The Department of Commerce, which leads the negotiations, has also requested the industry to share the SPS and TBT (standards and technical barriers) related issues being faced while exporting to South Korea,” the source said.
Trade deficit
Bringing down the trade deficit with South Korea is one of the top matters for discussions featuring in India’s negotiating agenda. In 2023-24, India’s imports from South Korea was at $21.13 billion while its exports totalled a mere $6.41 billion. The average exports from India to South Korea before the CEPA (2007-09) were valued at $3.4 billion, while the average imports stood at $7.3 billion, leading to an average trade deficit of $4 billion, per an analysis by research body Global Trade and Research Initiative (GTRI). Post-CEPA (2022-24), the average exports increased to $ 7.1 billion, and imports surged to $19.9 billion, resulting in a much larger average trade deficit of $12.8 billion, it said. “This indicates an increase in the trade deficit by $ 7.2 billion from the pre-CEPA period to the post-CEPA period, marking a 220 per cent increase,” the GTRI report pointed out. Indian exporters face various non-tariff barriers in South Korea, including stringent standards, regulations, and certification requirements which make it difficult for Indian goods to penetrate the South Korean market, the report added.
Source: Business Line
The textile industry is seeing signs of recovery, with global retailers and brands reporting that their inventory levels have returned to pre-COVID standards, a recent report of Avendus Spark observed. However, it highlights a cautious outlook on demand as garment companies await a boost in order book momentum. This cautious optimism suggests that the order cycle may remain shorter than usual for the foreseeable future.”Garment companies are still awaiting a revival in order book momentum,” the report added. The report added that Indian cotton prices are currently lower than global prices, helping cotton spinners grow their volumes. In the last quarter of the fiscal year 2024 (4QFY24), the sector’s revenue grew by about 8 per cent compared to the previous year. However, yarn prices fell by 5 per cent, which limited the overall growth. With cotton prices stabilising, the value growth is expected to align with volume growth soon. During this quarter, the home textile companies had a strong quarter, with a 16 per cent value growth, as Indian exporters gained market share, the report observed. Despite the challenges of price changes, the garment manufacturers reported a 4 per cent revenue growth. Cotton spinners enjoyed robust margin expansion due to higher utilisation and stable cotton prices, as per the observation. The Indian Textile report observed that despite a 5 per cent decline in yarn prices, cotton spinning companies achieved 5 per cent revenue growth yoy due to strong volume growth. Cotton-related exports increased by 20 per cent sequentially and 18 per cent yoy. Indian cotton prices were briefly lower than global prices, boosting demand. Currently, Indian cotton prices are about 13 per cent higher than global prices. In 4QFY24, EBITDA margins for garment manufacturers improved by 177 basis points, primarily due to lower input costs. Vertically integrated players reported better margin growth compared to peers, it added. Among the various textile verticles, home segments continue to shine as per the report as home textile companies outperformed with a 15 per cent yoy revenue growth due to strong demand and increased exports. India’s market share in US cotton sheet imports reached an all-time high of 62 per cent, Avendus Spark said. However, EBITDA margins fell by 80 basis points, suggesting a possible slowdown in volume demand. Man-Made Staple Fibers (MMSF) saw a 5 per cent yoy revenue growth. The cheaper imports from countries like China and Bangladesh led to pricing pressures. Capacity constraints limited volume growth opportunities for MMSF players. Several companies plan to increase capacity in the coming quarters, potentially driving growth. The Production Linked Incentive (PLI) scheme is expected to encourage further investments in MMSF yarn production, Avendus Spark observed in the report. “The top layer of exporters has started getting booked. The next couple of layers of exporters in most of the big hubs are getting many enquiries and everyone is hopeful that these enquiries will result in an order book that would be better than last year,” said Pawan Gupta, CEO and Co-founder of Fashinza reacting on the report.(ANI)
Source: The Print
The Production Linked Incentive (PLI) scheme for textiles, which is being further reviewed by the government to possibly include more products, could have a lower minimum investment and turnover criteria to allow smaller entities to be eligible for it, said officials. “The Textile Ministry’s proposed expansion of the PLI scheme to include all garments, including those made of cotton, will be more effective if the minimum investment and turnover criteria are lowered. The revised proposal being worked out is taking this into account,” an official tracking the matter told businessline. The PLI scheme for the textiles sector, launched in 2021 with an approved outlay of ₹10,683 crore, is so far extended only for the production of man-made fibers (MMF) apparel, MMF fabrics, and products of technical textiles. The scheme was re-opened last year as the initial round did not attract enough investments to use up the entire earmarked outlay. While the industry had been pushing for the inclusion of cotton garments in the scheme and lowering the criteria for minimum investment and turnover, no changes were made to the scheme when applications were invited for the second round. “Even after the application window was opened for the second time, enough investments did not flow in. That is why the Textiles Ministry is now working on changing the conditions of the scheme to make it more accessible and attractive to investors,” the official said. Textiles Minister Giriraj Singh recently announced that the PLI scheme may be expanded to cover all garments, ending speculations on the matter. “If the PLI scheme is indeed expanded to cover garments made of all fibres, including cotton, the minimum investment and turnover criteria have to be brought down as garment manufacturing units are generally of smaller scale,” the official said. The existing scheme is divided into two parts, with a minimum investment criterion of ₹100 crore and a minimum turnover criteria of ₹200 crore for the first part and a minimum investment criteria of ₹300 crore and a minimum turnover criteria of ₹400 crore for the second. The incentive offered is higher for entities choosing the higher investment and turnover criteria. However, the proposed changes to the scheme can only be executed after the necessary approvals are received. “Firstly, the Textile Ministry has to be convinced in-house about the proposed changes, and the Textiles Minister has to give his consent. Then the Finance Ministry’s approval needs to be sought,” the official pointed out.
Source: The Hindu
Thane, July 2 (PTI) Navi Mumbai Municipal Corporation Commissioner Kailas Shinde on Tuesday provided an overview of the Consumer Textile Recycling Pilot Project, initiated by the Ministry of Textiles, during a meeting of housing society office bearers. During the interaction, Director of the Union Ministry of Textiles Tapan Kumar Raut highlighted Navi Mumbai’s consistent efforts towards cleanliness and its proactive stance in adopting innovative cleanliness activities, making it an ideal candidate for this project. He stated that the project will involve cooperation from the Central Clothing Committee, Navi Mumbai Municipal Corporation, and NGOs, with clothes collection being organised at the society level. In Navi Mumbai, daily waste is classified into three categories: wet, dry, and household hazardous. Now, waste clothes will also be classified separately. Navi Mumbai has been chosen for this innovative pilot project aimed at recycling discarded clothes. A survey is being conducted in this regard keeping in mind that the discarded clothes that are not in use by the citizens are not waste, they can be reused and recycled. Currently, the innovative concept of ‘3 R’ centres is being implemented by NMMC at 94 locations, where citizens can donate items they no longer need, which are then available to those who can use them. This includes clothes, and a new recycling hall is planned for future implementation. Additional Commissioner Sunil Pawar appealed to the society office bearers for their full cooperation in ensuring the success of this project. PTI COR NSK.
Source: The Print
The rupee depreciated 12 paise to 83.56 against the US dollar in early trade on Tuesday, weighed down by the strengthening of the American currency in the overseas markets and elevated crude oil prices. Forex traders said oil importers and foreign portfolio investors (FPIs) bought US dollars amid rising US yields, and this dragged down the local unit. At the interbank foreign exchange market, the rupee opened at 83.51 and lost further ground to trade at 83.56 against the greenback in initial deals, registering a fall of 12 paise from its previous closing level. On Monday, the rupee depreciated 10 paise to settle at 83.44 against the US dollar. The rupee had dollar inflows and rose to 83.37 on Monday, but was sold-off to 83.44 levels, as oil and FPIs bought dollars looking at rising US yields, said Anil Kumar Bhansali, Head of Treasury and Executive Director Finrex Treasury Advisors LLP. On Tuesday, rupee is likely to touch 83.55 before cooling off to 83.45, Bhansali said, adding that the narrow range for the day could be 83.40 to 83.55. Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading at 105.91, higher by 0.02 per cent, following a surge in US treasury yields as investors contemplated a second Trump US presidency. Brent crude futures, the global oil benchmark, advanced 0.22 per cent to $ 86.80 per barrel. In the domestic equity market, benchmark indices, Sensex and Nifty, touched lifetime high levels in early trade. However, the indices pared the initial gains and were trading 64.46 points, or 0.08 per cent, lower at 79,411.73 points. The broader NSE Nifty fell 25.55 points, or 0.11 per cent, to 24,116.40 points. Foreign Institutional Investors (FIIs) were net sellers in the capital markets on Monday, as they offloaded shares worth Rs 426.03 crore, according to exchange data.
Source: Business Standard
A business delegation from China, comprising representatives from leading garment and textile companies visited the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) on Tuesday2. The BGMEA side was headed by President S. M. Mannan (Kochi) while the Chinese delegation was represented by XuJinshan, President of Fujian Qunfeng Machinery Co., Ltd. BGMEA Vice President (Finance) Md. NasirUddin, Directors Rajiv Chowdhury and Md. JakirHossain, were also present at the meeting. The meeting was also attended by Solaiman, Director, M & H Corporation (Pvt) Ltd. From Chinese delegation, XuJinshan, Chen Qi Ping and Yang Ming Ming spoke at the meeting. The discussions centered on exploring trade and investment opportunities between Bangladesh and China, particularly focusing on enhancing cooperation in the textile and apparel industries. Both sides highlighted the potential for expanding business ventures, with a specific emphasis on Bangladesh’s capabilities in producing high-value, man-made fiber-based garments and its ongoing efforts to upgrade technological infrastructure. The BGMEA leaders highlighted Bangladesh’s growing emphasis on producing high-value products, particularly man-made fiber-based garments and upgrading technology and machinery to enhance capabilities in manufacturing more high-value garments. They also emphasized on the prospect of Chinese investment in high-end textile and backward linkage industry in Bangladesh, saying it would benefit both sides. They expressed optimism about collaborative efforts aimed at increasing the country’s garment production capacity through knowledge exchange and technical skill enhancement.
Source : Bangladesh Post
Ambassador Asim Iftikhar Ahmad inaugurated the Pakistan Pavilion at Texworld Evolution in Paris, France, showcasing attractive textile products from 12 Pakistani exhibitors enthusiastic to work with international customers. The Texworld Evolution Paris will continue till July 03, 2024, said a press release issued on Monday. Trade Development Authority of Pakistan and Embassy’s Trade & Investment Section aim to project country's prowess in textile world & open new vistas of growth and development by facilitating B2B contacts with potential clientele.
Source: Mettis global News
Indonesia is preparing to impose tariffs and use other means to protect its textile industry from imports from China, the latest in a series of nations which are responding to the flood of goods out of the world’s largest manufacturing nation. Local textile associations requested the government step in after imports surged, hurting their business. The trade safeguards committee is investigating the issue and once they report the government will decide how to respond, Budi Santoso, the trade ministry’s director-general of foreign trade, said on Monday. It’s unclear whether the government is considering imposing only safeguard duties or also other tariffs, but last Thursday the head of fiscal policy at the finance ministry said that they were planning to bring back safeguard duties on some fabric products which had expired in November 2022. On Friday, Trade Minister Zulkifli Hasan said that Indonesia could impose up to 200% tariffs on imports to protect local industries from cheap goods from countries like China.
Source: Fashion Network
The EU-Kenya Economic Partnership Agreement (EPA) has officially entered into force, marking a significant milestone in the EU-Kenya Strategic Partnership. This agreement is set to boost bilateral trade in goods, increase investment flows, and strengthen ties between the two partners. It aims to facilitate mutually advantageous economic relations in a sustainable manner, thereby stimulating job creation and economic growth. The EU-Kenya EPA stands out as the most ambitious deal negotiated with an African country in terms of sustainability. It is expected to serve as a template for other sustainable trade agreements. Key commitments within the agreement include binding provisions on labour issues, gender equality, environmental protection, and the fight against climate change, the European Commission said in a press release. Kenya, known as East Africa's main economic hub, has substantial growth potential in its trade relations with the EU. The agreement is anticipated to unlock new economic opportunities, given that the EU is Kenya's primary export destination and its secondlargest trading partner. In 2023, total trade between the EU and Kenya reached €3 billion (approximately $3.219 billion), reflecting an increase of 16 per cent compared to 2018. The EPA will create more opportunities for Kenyan businesses and exporters by fully opening the EU market to Kenyan products. Additionally, it will incentivise EU investment in Kenya due to increased legal certainty and stability, the release added. The Economic Partnership Agreement between the EU and Kenya was concluded in June 2023 and signed by both parties on 18 December 2023. The agreement aims at implementing the provisions the EU-East African Community (EAC) EPA, and it remains open to other EAC countries.
Source: Fibre2fashion
