In late 2021, when the UAE and India agreed to pursue a Comprehensive Economic Partnership Agreement (CEPA), both countries arrived at a free-trade deal with a difference. The goal wasn’t simply to reduce tariffs on goods entering each other’s markets – although that was a key element – but to bring the two nations closer together, align our growth visions, and work to deliver long-term, sustainable prosperity in an ever-evolving global economy. It meant building private-sector networks to identify opportunities, facilitating investment flows into key sectors, strengthening pivotal East-West supply chains, and creating an ecosystem in which entrepreneurs can scale and innovate. The subsequent UAE-India CEPA, signed in February 2022 and implemented in May that year, was an acknowledgement that both countries can only benefit from deeper economic integration. The visits of crown prince of Abu Dhabi, Sheikh Khaled bin Mohamed bin Zayed Al Nahyan, to India this week is another crucial part of realising its promise. The delegation will secure a range of new partnerships and projects and, at the UAE-India Business Forum in September, will explore opportunities in high-potential sectors such as logistics, RE, agritech, healthcare and AI. CEPA is a framework of collaboration that can, with proper coordination and support, drive new growth opportunities and accelerate diversification goals of bot countries. Action is already evident. In January, interest in the UAE pavilion at the Vibrant Gujarat Global Summit in Gandhinagar was palpable, as was the desire from delegates to leverage the CEPA’s provisions. At nearby Kandla, UAE ports operator DP World has entered a $500 mn deal to build and operate a new container terminal that will improve access to global markets for northwest India’s manufacturing and agriculture sectors. Abu Dhabi Investment Authority, the UAE’s largest sovereign wealth fund, has now announced plans to set up an office in Gujarat. The state will also be home to the first of the UAE’s $2 bn chain of proposed food parks. This is being replicated across India. In 2023, the UAE became the fourth largest foreign investor in India, with a $3.35 bn commitment representing 3x increase on 2022. This capital is targeting sectors of transformational potential, including logistics, healthcare, food production systems, retail, RE, aviation, tourism and financial services. In Bengaluru, the UAE’s leading industrial companies Ducab has opened a new regional office to serve its rapidly expanding customer base in India, while LuLu Group is establishing multi-million-dollar retail malls and food processing plants in Tamil Nadu and Uttar Pradesh. VPS Healthcare Group is now expanding its footprint across the country’s healthcare sector. This is far from one way. In 2023, Indian FDI into the UAE totaled $2.05 bn, more than the total invested in 2021 and 2022 combined. This included the decision of Malabar Gold & Diamonds, one of the world’s largest jewelry retail chains, to maximise the impact of CEPA by consolidating its international operations in a new facility in the UAE. This was followed by the announcement of Bharat Park, a showroom and warehouse that will facilitate the growing global demand for Indian goods, and the inauguration of IIT Delhi Abu Dhabi, the first international IIT campus. CEPA is now helping private sectors project themselves onto the world stage. In June this year, AD Ports Group partnered with India’s Adani International Port Holding to acquire, via the newly formed East Africa Gateway, 95% of Tanzania International Container Terminal Services and begin to unlock Africa’s vast economic potential. Of course, market access and connectivity remain the connective tissue of UAE-India ties. In the first half of 2024, bilateral non-oil trade reached $28.2 bn, a near 10% increase on the same period in 2023 – not only far higher than the average global trade growth of 1.5%, but also in stark contrast to India’s 6% global trade decline. In fact, India now represents 7.4% of the UAE’s total non-oil foreign trade, a figure that will continue to accelerate as the target of $100 billion by 2030 gets closer. The CEPA is also supporting new and stronger supply chains. Major sea freight operators such as Maersk add services between the UAE and India, while a new Bengal Middle East Express has been launched to connect Kolkata with Jebel Ali in the UAE. Etihad has also increased cargo capacity on flights to India and Asia to meet growing demand. A new era of rupee-dirham trade has also been unlocked, with the Local Currency Settlement System established by central banks increasing efficiencies and reducing costs during transactions. By harnessing collective resources, creativity and talent, it’s accelerating growth, creating opportunity and unleashing innovation in industries that can power economies of the two countries for decades to come.
Source: Economic Times
Confident that India’s technical textile industry will cross the target of $10 bn set for 2030. This was stated by Union Minister of Textiles, Giriraj Singh during the inauguration of the international conference-cum-exhibition titled ‘Viksit Bharat Technical Textiles for Sustainable Growth & Development’ in New Delhi. The Union Minister emphasised the increasing consumption and importance of manmade fibres and technical textiles in all spaces of life, at both a global and domestic level. Singh also launched the Compendium of the National Technical Textiles Mission and also awarded confirmation certificates to 11 approved Start-Ups under NTTM. The Union Minister stated that the Government is fully dedicated in the development of the technical textiles industry of India and has taken various steps such as launch of the technical textiles industry of India and has taken various steps such as launch of National Technical Textiles Mission, PLI Scheme for MMF Fabric, Apparel and Technical Textiles. Highlighting the key initiatives taken under the NTTM mission, the Union Minister stated that 156 research projects have been sanctioned including development of carbon fibres and support to start-ups under different areas of technical textiles. He emphasised on the potential of Meditech, especially hygiene products as a major contributor in achieving this target. He displayed confidence in the ability of the local industry, government and stakeholders in the development of High-Performance Fibres that have huge applications in different field including aerospace, automobile and construction. Concluding his speech, the Union Minister reiterated the complete support of the government to become a global leader and the largest manufacturer and market of technical textiles. Singh also launched the Compendium of the National Technical Textiles Mission and also awarded confirmation certificates to 11 approved Start-Ups under NTTM. The international conference was organised by Ministry of Textiles in association with Federation of Indian Chambers of Commerce & Industry (FICCI) and Indian Technical Textile Association (ITTA) at The Ashok Hotel – New Delhi, India under its flagship scheme National Technical Textiles Mission. Union Minister of State for Textiles, Pabitra Margherita stated that the nation is advancing towards becoming Atmanirbhar in all sectors including Technical Textiles. He also mentioned that multiple state governments have taken initiatives for promoting investments, including FDI, in the technical textiles industry and urged other states to do the same. Secretary, Ministry of Textiles, Rachna Shah emphasised the role of technical textiles in Viksit Bharat. Highlighting the large market opportunity in technical textiles, the Secretary stated that the global trade of technical textiles is around $300 bn, while India’s domestic market size stands at $25 bn with an export of $2.6 bn. Talking about the National Technical Textiles Mission, she mentioned that high focus on introducing standards, Quality Control Orders, and interdepartmental collaboration is being given under the mission. Dr. S Somanath highlighted the importance of composites and high-performance fibres in the area of aerospace and the lack of commercial production facilities of these products in India which leads to high import reliance. He urged the industry and stakeholder to carry out large scale investments in this sector, including the development of complex machinery to not only cater the local demand but also tap the large global market. Joint Secretary and Mission Coordinator, NTTM, Rajeev Saxena provided an overview of the policy initiatives and support being provided under six guidelines of the NTTM. He also shared the progress made so far in the mission including release of Quality Control Order for 57 technical textiles items, including QCO on fire retardant furniture fabrics, inclusion of 37 new HSN Codes under the ambit of technical textiles.
Source: Economic Times
With foreign direct investments (FDI) growing 47.8 per cent to $16.17 billion during April June 2024, India is expected to see further acceleration in the inflow on account of a potential Fed rate cut, modest growth outlook in the US, and the country's favourable economic outlook, experts say. They also said that investment destinations have changed over the decade and have got more diversified, with capital flowing into new emerging sectors. Compared to eight years ago, power, construction, healthcare, chemicals, and nonconventional energy have now been attractive investment destinations, Rumki Majumdar, Economist, Deloitte India, said. "We foresee this trend of strong FDI to accelerate in the coming quarters. The anticipated US election results, a potential Fed rate cut, modest growth outlook in the US, and India's favourable economic outlook will likely attract global investors to India," she added. Aakash Dasgupta, Partner, Indus Law, said that while the FDI inflow seems to have jumped exponentially in the first quarter of 2023-24 in comparison to the same period in the previous financial year, it must also be remembered that FDI in Q1 of FY23 was particularly low. FDI inflows were at $10.94 billion in April-June 2023-24. He said that the current FDI inflows are closer to the numbers in the years preceding the last year. Hence, while the jump is significant in relative terms, it must be viewed as correcting back to previous levels. "Irrespective, it's a positive indication and can be attributed to various factors, including deployment pressures mounting on the dry powder that foreign institutional investors are sitting on, performance of Indian capital markets in various sectors and favourable amendments to the FDI policy, such as allowing 100 per cent automatic route investment in the space sector," Dasgupta said. With the US elections coming up, one may have to wait and watch the impact of FDI inflows over the next few months, but the overall outlook remains positive, he added. The government data showed that overseas inflows in May rose to $5.85 billion and in June to $5.41 billion from $2.67 billion and $3.16 billion, respectively, in the year-ago periods. In April, FDI inflows were down marginally at $4.91 billion against $5.1 billion in April 2023. Total FDI, which includes equity inflows, reinvested earnings and other capital, grew by 28 per cent to $22.49 billion during the first quarter of this fiscal from $17.56 billion in April June 2023-24. During the period, FDI equity inflows rose from major countries, including Mauritius, Singapore, the US, the Netherlands, the UAE, Cayman Islands and Cyprus.
Source: Business Standard
India's exporters are facing a severe credit crunch despite overall economic lending growth. Export credit has dropped by 5% over two years, with priority sector lending for exports falling by 41%. The Federation of Indian Export Organisation (FIEO) has raised concerns, urging the Reserve Bank of India and the finance ministry to address this issue urgently. India’s exporters are grappling with a significant credit crunch despite a surge in overall lending across the economy. Over the past two years, credit available to exporters has dropped by 5%, a troubling trend that contrasts sharply with the growth seen in other sectors. This decline is particularly evident in priority sector lending for exports, which has plummeted by 41%, from Rs 19,861 crore to Rs 11,721 crore. As India targets $2 lakh crore worth of goods and services exports by 2030, addressing the credit crunch is crucial. The reduction in credit has prompted the commerce department to raise concerns with the Reserve Bank of India (RBI) and the finance ministry. The As India targets $2 lakh crore worth of goods and services exports by 2030, addressing the credit crunch is crucial. The reduction in credit has prompted the commerce department to raise concerns with the Reserve Bank of India (RBI) and the finance ministry. The Federation of Indian Export Organisation (FIEO) has highlighted this issue as a major obstacle for exporters, who face mounting pressures due to rising commodity prices, increased freight rates, and geopolitical tensions from West Asia to Red Sea impacting shipping routes. The situation has become increasingly dire. FIEO Director General Ajay Sahai told PTI, "We have seen a decline in export credit between March 2022 and March 2024 despite the need for more credit for longer duration due to hike in prices of commodities, sharp spurt in freight (both sea and air) and the Red Sea crisis, leading to longer voyage time and delayed payment." Despite frequent warnings from exporters and the growing urgency of the situation, the government and the RBI have yet to implement effective measures. The issue is expected to be revisited during an upcoming meeting of the Board of Trade, led by Commerce and Industry Minister Piyush Goyal later this week. Challenges Highlighted by Industry Experts An industry expert pointed out that while post-Covid guarantee-based loans initially helped industries secure credit, the landscape has shifted drastically. "The lack of collateral-free and non-recourse finance is a big challenge," the source told ToI. Many banks have set their own stringent policies, making it difficult for exporters to access the necessary funds. To address these challenges, FIEO has proposed additional support from the Export Credit Guarantee Corporation (ECGC) and an increase in interest subsidies. According to Sahai, FIEO has suggested that the RBI consider prescribing a sub-target for export credit within the existing 40% target for priority sector lending. This move could help alleviate some of the credit flow issues that exporters are facing Comparing India’s Export Financing to Global Standards Indian exporters face high logistics costs and elevated credit costs, putting them at a disadvantage compared to their counterparts in countries like Canada, Italy, the UK, and China. Despite opportunities presented by the "China Plus One" strategy, which encourages businesses to diversify their supply chains, additional funding is essential for Indian exporters to capitalise on these prospects. The declining credit is poised to impact the sector negatively. According to FIEO, the value of outstanding export credit decreased from Rs 2,27,452 crore in March 2023 to Rs 2,17,406 crore in March 2024. The consistent decline in credit to exporters during recent times requires urgent attention, Sahai told PTI.
Proposed Solutions and Government Response
FIEO has recommended several measures to improve the situation. They suggest enhancing the availability of pre- and post-shipment credit in foreign currencies through International Financial Services Centre (IFSC) Banking Units (IBUs). This move could help Indian exporters compete more effectively on a global scale by reducing the financing cost gap between Indian and international competitors. Additionally, FIEO has advocated for an increase in the insurance coverage provided by ECGC, which could act as a substitute for collateral and reduce credit risk assessments. Sahai also proposed that the government popularize the Gold Card scheme for exporters, which offers easier access to credit for those with a proven track record. Banks may be asked to automatically issue gold cards to all eligible customers to extend the benefits, Sahai suggested. Interest Subvention and Export Growth Concerns FIEO President Ashwani Kumar emphasised the need for better interest equalisation policies. Each bank has framed its own rule and applies its own logic, which is detrimental to export promotion, Kumar said. He recommended increasing the interest subvention rate to 4-5% to counteract the rising costs. The current cap on annual net subvention at Rs 10 crore per Importer Exporter Code (IEC) has also been problematic for some exporters. The denial of interest subvention beyond Rs 10 crore makes exports uncompetitive for some SMEs, Kumar explained. FIEO also highlighted that the Interest Equalisation Scheme (IES) excludes exporters who benefit from production-linked incentive (PLI) schemes, affecting their competitiveness. Sahai called for improvements in the Export Data Processing and Monitoring System (EDPMS) to streamline the settlement of outstanding entries. Mumbai-based exporter Sharad Kumar Saraf voiced concerns about the uncertain global situation and its potential impact on export growth. With exports rising 4.15% to USD 144.12 billion during April-July of the current fiscal year, and imports growing 7.57% to USD 229.7 billion, the need for effective solutions to the credit crisis is more pressing than ever. The upcoming discussions with Commerce and Industry Minister Piyush Goyal will be pivotal in shaping the future of India’s export sector.
Source: Economic Times
Synopsis the GST Council's 54th meeting announced significant rate cuts and policy adjustments, including GST exemptions for foreign airlines' import of services, reduced GST on namkeen products, and lower rates on critical cancer drugs. These changes aim to provide relief across various sectors, with ongoing discussions about online gaming taxation. New Delhi: The industry leaders welcomed the GST council's decision on rate cuts and policy adjustments in various sectors. In a significant move to provide relief across various sectors, the GST Council, during its 54th meeting held on Monday, announced several key decisions that received a positive response from industry leaders. One of the most notable decisions was the exemption of GST on the import of services by foreign airlines operating in India through branch offices. This relief comes as a major win for the airline industry, especially after the Directorate General of GST Intelligence (DGGI) had raised demands amounting to nearly Rs 39,000 crore in taxes from these airlines. "In a major relief to the airline industry, GST has been exempted on import of services by foreign airline companies operating in India through branch offices, from their head offices or other establishments outside the country. Further, it appears that past period issues will be regularised as well. This will put to rest the recent show cause notices where a GST demand of approx. Rs 39,000 crores was raised by the DGGI on foreign airlines operating through branch offices in India" said Rajat Bose, Partner, Shardul Amarchand Mangaldas & Co. The food industry also saw a significant reduction in the GST rate on namkeen products, with the rate being slashed from 18 per cent to 12 per cent. As per the industry leaders, the amendment clarifies the tax treatment prospectively, ensuring no further ambiguity on applicable rates "Extrusion is a technique used to create ready to eat puff snacks. As this process is mentioned in the HSN entry 1905 liable to tax @ 18 per cent, the authorities were alleging that products are liable at the higher rate. However, the industry was classifying the said products under entry 2016 which covers Namkeen, etc. liable to tax @ 12%. With this amendment, the issue of classification on these products has been put to rest prospectively," said Harpreet Singh, Partner, Deloitte India. The Council also introduced reductions on critical cancer drugs, lowering the GST from 12 per cent to 5 per cent, and introduced GST exemptions on services linked to helicopter-sharing for religious pilgrimages. "The council has taken various rate rationalisation measures like reduction of GST on cancer drugs from 12 per cent to 5 per cent, namkeens, sharing helicopters for pilgrimage which will lessen the burden on consumers. " said Shivashish Karnani, Head of GST at DPNC Global. He also pointed out the Council's decision to explore lower GST rates for life and health insurance services through a newly formed Group of Ministers (GoM), with a report expected by October 2024. With a growing emphasis on research and development, the Council also granted GST exemptions to government universities and research centres on grants received for research activities, a move seen as critical to boosting India's position as a research hub. Meanwhile, discussions around online gaming taxation remain ongoing, with no decisions made in the latest meeting.
Source: Economic Times
Synopsis India is revising free trade agreements with South Korea, Malaysia, and ASEAN countries to benefit domestic industries. Union Minister Jitin Prasada highlighted the importance of these revisions at the ACMA annual session. He also emphasized the need for increased investment in R&D and boosting exports while reducing import dependence. India is revising FTAs with South Korea, Malaysia and various other ASEAN countries to benefit the domestic industries, Union Minister of State for Ministry of Commerce and Industry Jitin Prasada said on Monday. At the 64th annual session of ACMA (Automotive Component Manufacturers Association) here, he noted that the free trade agreements (FTAs) with the UK and the European Union are being spearheaded by Prime Minister Narendra Modi. Prasada also urged the auto components industry to increase investment in R&D activities. "We are not investing enough in R&D, I believe this is 1 per cent of the revenue that is being invested so this is very crucial," he noted. He also emphasised the importance of boosting exports, reducing import dependence and ensuring growth.
Source: Economic Times
Synopsis India and Japan have agreed to enhance financial cooperation and strengthen bilateral relations during the second India-Japan Finance Dialogue in Tokyo. Key discussions included macroeconomic situations, financial sector issues, and regulatory matters. Both sides plan to continue these discussions and explore holding the next round in New Delhi. India and Japan have agreed to promote financial cooperation and strengthen bilateral relations at the second India-Japan Finance Dialogue in Tokyo, a finance ministry statement said. The participants exchanged their views on the macroeconomic situation in both countries. "They discussed cooperation in third countries, bilateral cooperation, and international issues. The participants also shared views on financial sector issues, including regulation and supervision, financial digitalisation, as well as other policy initiatives in both countries," it said. The participants were also joined by representatives of Japan's financial services industry for a session to discuss various financial regulatory issues towards further expansion of investment in India, it said. "They discussed cooperation in third countries, bilateral cooperation, and international issues. The participants also shared views on financial sector issues, including regulation and supervision, financial digitalisation, as well as other policy initiatives in both countries," it said. The participants were also joined by representatives of Japan's financial services industry for a session to discuss various financial regulatory issues towards further expansion of investment in India, it said. Both sides agreed to continue discussions for further promoting financial cooperation and strengthening bilateral relations and agreed to explore holding the next round of the Dialogue in New Delhi. The second India-Japan Finance Dialogue was held in Tokyo on September 6. The Indian delegation was led by Economic Affairs Secretary Ajay Seth while Atsushi Mimura, Vice Minister of Finance for Japan led the other side. The Japanese delegation included representatives from Ministry of Finance and Financial Services Agency. From the Indian side, representatives from Ministry of Finance, Reserve Bank of India, SEBI, Pension Fund Regulatory and Development Authority, Insurance Regulatory and Development Authority of India, and International Financial Services Centres Authority participated in the discussion.
Source: Economic Times
LONDON - The UK Fashion & Textile Association (UKFT) has launched a competition for small and medium (SME) sized fashion and textile firms to join an apparel and textile extended producer responsibility (EPR) project. Funded by UKFT, the project will give the selected SMEs the opportunity to work with specialists in EPR on a three-month project aimed at gathering data to help develop an “intelligent, fair and balanced EPR fee system” for the UK.
Source: Eco Textiles
Morocco’s Prime Minister Aziz Akhannouch recently met Lei Xu, chairman of Chinese textile company Sunrise Group, in Shanghai and conveyed his government’s support for implementing a 4.1-billion-dirhams ($421.3 million) strategic investment project by the latter in Morocco. The meeting, held on the sidelines of the Summit of the Forum on China-Africa Cooperation (FOCAC), was attended by Moroxxo’s minister of investment, convergence and evaluation of public policies Mohcine Jazouli and director general of the Moroccan Agency for Investment and Export Development Ali Seddiki. The project will help revitalise Morocco's textile sector, integrating it fully into global value chains, and is expected to create 11,000 direct jobs over the next three years across several regions in the country. The industrial initiatives under the project are expected to integrate the entire ecosystem, media outlets in Morocco reported. A study by French association Evalliance this year said Morocco has the third highest minimum wage among apparel suppliers to the European Union. At $307 per month, the country surpasses those of Bangladesh, Pakistan and Myanmar by a significant margin and stands 50 per cent higher than Tunisia’s.
Source: North Africa Post
