Synopsis India is seeking compensation from Turkiye following Ankara's decision to extend safeguard measures on polyester staple fibres, impacting trade worth USD 22.18 million in 2023-24. India, citing WTO norms, may impose retaliatory customs duties if consultations do not resolve the issue. India has sought compensation from Turkiye as Ankara's decision to extend safeguard measures on polyester staple fibres has impacted the product's exports, an official said. India flagged concerns and impact from these measures during a recent bilateral consultations with Turkiye under the WTO's safeguard agreement. On October 14, India sought consultations with Turkiye under the agreement following Ankara's decision to extend safeguard measures on polyester staple fibres. "We have sought compensation as we have a loss of trade. India has the option to propose retaliatory customs duties equivalent to the value of exportloss if the issue will not be resolved through consultations," the official said. India has exported these fibres worth USD 22.18 million during 2023-24. It was USD 23.55 million in 2022-23. In September, Turkiye decided to extend safeguard measures against imports of polyester staple fibres. "As a member having a substantial trade interest in the export of products concerned, India had requested for consultations with Turkiye on the extension of the measures," the official added. As per a provision of the Agreement on Safeguards, a WTO member country proposing to apply safeguard measures shall provide adequate opportunity for prior consultations with those members having a substantial interest as exporters of the product concerned, with a view to reviewing the information provided, exchanging views on the measure, and reaching an understanding on ways to achieve the objective set out in the agreement. India's overall exports to Turkiye stood at USD 6.65 billion in 2023-24, while imports were USD 3.78 billion.. An expert said that India has been "very proactive" in the recent past about trade remedy measures and is seeking consultations with its trading partners if its trade is getting affected. Last month, India proposed the imposition of retaliatory customs duties, under the WTO (World Trade Organisation) norms, on certain value of goods imported from the EU, as the two sides have failed to reach a consensus on the European Union's safeguard measures on some steel products. The EU has extended safeguard duties on imports of certain steel product categories with an out-of-quota duty of 25 per cent, for another two years till 2026. In 2022, India had also proposed to impose retaliatory customs duties under the WTO norms on about USD 250 million worth of goods imported from the UK against Britain's move to extend safeguard duty and quota restrictions on the import of certain steel products till 2024.
Source: Economic Times
Synopsis In a bid to fill trade finance gaps in African countries, the State Bank of India and India Exim Bank are supporting businesses by providing credit lines and trade loans. These initiatives, which complement rather than compete with each other, aim to aid smaller corporates and enhance cross-border trade post-COVID-19. The State Bank ofIndia and the India Exim Bank are helping businesses in African countries to fill the gap in trade finance, the South African heads of the two organisations told the India Entrepreneurs Forum (IEF) here. The event was initiated by Consul General of India Mahesh Kumar who said it is the first of a series of ongoing engagements with the IEF. "We did this to assist all companies doing trade or some form of other business with India in their capacity building because generally for bigger businesses they are able to sort out their trade financing needs. For smaller business, a lot of issues look very difficult and insurmountable and they find the complexities of the trade world very bewildering sometimes," Kumar said. CEO of State Bank ofIndia (SBI) Ashutosh Kumar and Shyamashish Acharya, Resident Representative at the Johannesburg Representative office of India Exim Bank, both explained the benefits of using their services in dealing with import and export trade between India and the African continent. "SBI is enabling India's footprint in Africa, playing an important role in African trade by way of funding to South African banks through syndications," Kumar said, adding that the bank had invested fresh capital and retained its earnings for the last 27 years in South Africa. "SBI's offerings include bilateral credit lines to multi-lateral institutions such as Afri-Exim, Africa Finance Corporation, and others. We also offer bilateral lines in the form of trade loans to the other major banks present in African countries," Kumar said. The CEO said such funding indirectly reaches smaller corporates in the African nations whereas direct reach would have been difficult. "With various Indian corporates participating in the bid bonds in various project in Africa, we have ensured to establish reach in majority of the African nations through our correspondent bank," Kumar said. He said that SBI now caters to more than 40 nations on the African continent to help Indian corporates for their bank guarantee requirements. Acharya shared how a trade facilitation initiative called Trade Assistance Programme (TAP) to contribute to reduction in the trade finance gap had integrated India's economic engagement with its partner countries in a postCovid world. "The TAP provides support through credit enhancement to trade instruments, thereby enhancing the capacity of commercial banks to support cross-border trade transactions involving untapped markets where trade lines are constrained or where the potential has not been harnessed," Acharya said. He said that India Exim Bank was already operating in 31 African countries, the largest number on any continent after 17 in Asia, 15 in Latin America and 10 in Europe. Among the African projects supported by India Exim Bank, Acharya cited one by CSM Technologies in Bhubaneswar to provide IT solutions and services for national identity documents rollout in Ethiopia and construction of electrical networks in Burundi by East India Udyog of Uttar Pradesh. Acharya said his bank was also exploring the possibility of extending credit lines to several South African banks for projects in neighbouring states of Zambia and Zimbabwe. SBI COO Kirti Kumar said SBI and India Exim Bank were not competitors but complemented each other in their activities. The COO also said that the current initiatives at BRICS for settlement of debts in local currencies rather than currencies such as the USD would not impact its activities. "How much trade between (the BRICS partners) will happen in USD remains to be seen, but as a banker it would hardly make any difference. We are already trading in several other currencies, so we will just add one more currency," he said.
Source: Economic Times
Synopsis India aims to double its economy to $7 trillion by 2030 through a strategy focusing on infrastructure, innovation, and inclusive growth. Key points from the Public Affairs Forum of India emphasized the pivotal role of the private sector, the importance of upskilling, and strengthening international partnerships to avoid the middle-income trap and leverage global trade shifts. India’s ambition to double its economy to $7 trillion by 2030 hinges on a broad strategy that includes reforms, infrastructure development, investment in human capital, a focus on innovation, and consistent investment in key growth sectors such as manufacturing, exports, and agriculture. Achieving this target requires collaboration between government, civil society, and the private sector. In this background, Public Affairs Forum of India ( PAFI ) 11th Annual Forum was convened last month in New Delhi with three specific aims: to define required policies, understand crucial partnerships, and identify immediate priorities. The sessions pointed to multiple learnings for advancing India’s ambition for sustainable and inclusive growth. Here are 11 key points that emerged atthe Forum. First, the current strategy for India’s growth is being carried out along four pillars: the first pillar involves investment in social, digital, and physical infrastructure; the second focuses on manufacturing and innovation; the third pillar involves simplification of laws and regulations; and the fourth pillar emphasises a focus on inclusive growth. All four must work in tandem to Second, private sector will drive India’s economic growth and it is crucial to recognise them as the primary driver and not just a contributor to India's growth story. Fostering an ecosystem that empowers domestic businesses to innovate and invest can create inclusive growth and job creation for India's vast workforce. Sectors including agriculture, manufacturing, technology and financial services, healthcare, and renewable energy will be at the forefront of economic growth. Third, India faces a less friendly global trade environment and needs to avoid the middle-income trap. As global supply chains reform, India must leverage this shift through targeted strategies, including reducing tariffs and embracing freer trade, to align India’s exports with global demand. Foreign companies must be encouraged to invest in India to serve international markets rather than just the domestic market. Fourth, technology disruption is in India’s favour. The last decade has marked a surge in basic service provision, putting India at a crucial point in its growth trajectory. The rise of new technologies like AI has presented a leapfrogging opportunity that must be used. This will require structural reform in India’s education system to allow for problem-solving and creative thinking. The industry must work with policymakers to ensure fairness, transparency, and skilling opportunities. Fifth, social development remains a critical issue for inclusive growth for India and the world. Countries in the Global South are facing challenges such as debt servicing, meeting citizens’ fundamental needs, COVID-19-related stress, and geopolitical tensions. India serves as a test case for achieving Sustainable Development Goals, and its success will have a significant global impact. The public and private sectors must come together to ensure health, education, and basic infrastructure for all. Sixth, upskilling and reskilling are imperative for the growth engine to fire on all cylinders. With advancements in technology and the emergence of new work areas such as the gig economy, industries will need to constantly identify required skills for the future and engage the government in providing skilling opportunities.
Seventh, rapidly urbanising India is crucial to economic growth. Urban areas contribute almost 70 % of India's GDP. Urbanisation is expanding beyond city limits, with 50%- 60% of built-up space now outside cities; in 25 years, India’s urban areas will absorb an additional 400 million people, creating approximately 80-90 urban hubs across 450 cities. The infrastructure push to support urban growth and economic hubs is significant, but additional publicprivate partnerships are needed to make a difference on the ground. Eighth, a partnership between the states and the central governments is essential for achieving our 2030 goals. The centre-state relationship is crucial not only to attract investment but also to sustain it. States are responsible for developing ecosystems that can absorb investments nationwide, enabling India to leverage its demographic dividend effectively. Ninth, strengthening India’s international partnerships is of utmost importance. In the neighbourhood, this means using the “Neighbourhood First” policy to meet the varied expectations of South Asian countries at their comfort levels. Elsewhere, coalitions like the QUAD, BRICS, the Mineral Security Partnership, and the Global Partnership on Artificial Intelligence must be utilised. Above all, India must see the multi-faceted and deepening partnership with the United States as what it is—its most consequential relationship currently. Tenth, public-private partnerships to simplify compliances and regulations are a powerful tool for achieving India’s economic and social objectives. The private sector should identify opportunities in sectors for industry and the government to collaborate on. There is an appetite in the government for this approach, and the industry should establish a step-by-step mechanism to measure the impact of steps taken for simplification of processes. Eleventh, using Digital Public Infrastructure to democratise public services is at the core of India’s strategy for inclusive growth. Nearly 500 million people who are still offline are being serviced by 5,00,000 service centres. Over 90% of India's 6,44,000 villages now have 4G coverage, with BSNL set to roll out BharatNet broadband service across gram panchayats. Additionally, Radio Access Networks (RANs) and BTS systems, including a fast 5G rollout, are planned to ensure digital access for those lacking devices or connectivity. Public Affairs integrates government relations, policy advocacy, corporate communications, social responsibility, regulatory compliance, and risk management in today's corporate landscape. The function now requires expertise in business development, geopolitics, and stakeholder engagement while maintaining a long-term strategic vision. Public Policy and Public Affairs have evolved from a singular focus area to encompass multiple, interconnected roles within organisations. Professionals in these fields today advise boards, CEOs, senior management, and investors. At the same time, they influence investment decisions and address critical business challenges. PAFI’s core mission intersects this objective by building a network of individuals and corporations to enhance stakeholder engagement. As public affairs professionals play a bigger role in fostering collaboration, navigating global influences, and preparing for future challenges to contribute to a thriving economic landscape that meets corporate and national ambitions, PAFI aims to project, promote, and strategically position the profession of public affairs at the centre of these changes. The 11 learnings from this year’s Annual Forum will be crucial in designing a roadmap to this end.
Source: Economic Times
Synopsis Union Finance Minister Nirmala Sitharaman urged for fair and accurate sovereign ratings for emerging markets and developing economies at the IMF's 2024 Annual Meeting. She emphasized that ratings should reflect economic fundamentals and improve access to capital. Sitharaman also called for governance reforms in global institutions and highlighted persistent global economic risks like geopolitical tensions and weak growth. Union Finance Minister Nirmala Sitharaman addressed the issue of fairness and accuracy in sovereign ratings for emerging markets and developing economies (EMDEs) at the International Monetary Fund's (IMF) 2024 Annual Meeting. Speaking in Washington, D.C., during Friday's IMFC Plenary session on "Managing Director's Global Policy Agenda," Sitharaman emphasized the need for sovereign ratings to reflect the economic fundamentals of EMDEs. She said that this would ensure fair access to capital and attract private investments. "There is need for sovereign ratings to adequately account for EMDEs economic fundamentals to ensure the cost of capital for them and their ability to attract private capital is factored in," she said. Sitharaman also stressed engaging more with credit rating agencies to improve rating methodologies, to better capture a country's repayment ability and economic resilience. "FM also underlined engagement with credit rating agencies and calling for improvements in methodology to ensure that they capture the fundamentals reflecting the ability and willingness to repay," the Ministry of Finance noted on social media. She further called for governance reforms within the IMF and other global institutions to keep pace with the evolving global economic landscape. Sitharaman highlighted how the IMF's role has expanded over its 80-year history, emphasizing the need to adapt to these changes. "Recognising the evolution of the IMF as a multilateral institution over the last 80 years, the Union Finance Minister said that the current global order warrants governance reforms in major global institutions, including the IMF @IMFNews," read another social media post by the Ministry of Finance. Addressing the global economy's outlook for 2024, Sitharaman praised its resilience but noted persistent risks. While some major economies are nearing their potential output and inflation targets, she warned of ongoing downside risks like geopolitical tensions and weak medium-term global growth prospects. "There are several downside risks, including growing geo-political tensions and medium-term global growth prospects, are a concern due to their continued weakness," she said. Sitharaman gave her support to the IMF's Global Policy Agenda, which aims to secure a "soft landing" for the global economy and break away from low growth and high debt cycles. She highlighted the important role of the IMF in providing policy guidance, especially for countries with debt issues, and urged fair application of IMF advice across all member nations. She also praised the IMF's efforts to build unity in a divided world and encouraged it to remain adaptable in areas such as surveillance, lending, and capacity development to better serve its members.
Source: Economic Times
Synopsis Piyush Goyal, speaking at the 18th Asia Pacific Conference of German Business in New Delhi, advocated for a deeper strategic partnership and a Free Trade Agreement between India and the EU, emphasizing mutual respect in negotiations and highlighting the synergies between India's scaling capabilities and Germany's precision engineering. Piyush Goyal, India's commerce miniser, emphasized the potential for a deeper strategic partnership between India and the European Union (EU), at the 18th Asia Pacific Conference of German Business on Friday in New Delhi. He advocated for mutual respect and understanding in the negotiations of Free Trade Agreement (FTA) between the two sides. "India can offer a very large market with 1.4 billion aspirational and younger. I believe in India, EU, deeper engagement, possibly an FTA will benefit both sides. You have technologies, you have ideas, you have innovations, but you have high costs of manufacturing, high cost of providing those services." said Goyal. Goyal identified three key areas where respect is essential to expedite the FTA process. He stated, "If you respect three things the FTA can happen very fast- Respect each other sensitivities, if we respect each other's sensitivities, with Australia, with UAE, the very first decision we took was we respect each other's sensitivities and not encroach on issues which can moment." Goyal added, "Second, if you respect the sensitivity of USD 1,000 per capita economy with a USD 60,000 per capita economy, where our people also aspire to reach that 60,000 if not more. We have to respect that. We have to return that transition, that opportunity, to get there, India is no more a pushover." Goyal underscored India's growing influence in the Asia-Pacific region, stating, "We do believe we (India and German) can deepen this strategic partnership significantly. Asia Pacific region, home to 60 per cent of the world's population, expected to house two thirds of the global middle class in the next decade, is where the action is." He added, India's robust macroeconomic foundation, with unprecedented infrastructure development, makes it an attractive destination for global investors. "We are building infrastructure never seen before, phase, and therefore we are in a sweet spot where reform, resilience and readiness for the future is available for businesses from across the world today, we stand stronger, smarter." said Goyal. He added, "Prime Minister Narendra Modi being re-elected in these turbulent times for the third Time, once again as the leader of the country, and ready and willing to work three times faster, three times harder than three times more outcomes in his third term, so that India becomes the world's third largest economy in the next three years friends." The minister emphasized the potential for collaboration between India and Germany, leveraging Germany's expertise in precision engineering and India's strength in scaling up infrastructure, both physical and digital. Goyal emphasised, "Germany perfected the art of precision engineering, India's are mastered the art of scaling up, whether it's physical or digital or social infrastructure, we are operating at a scale that very few countries can match together." "We can combine your precision and our large scale to create something truly extraordinary, not just for our nations, but for the world. The synergies between India and Germany can drive unprecedented growth as We gather over the next two days, this conference will be key to identifying emerging trends and tactic local challenges," he added (ANI).
Source: Economic Times
Synopsis High interest rates are a major issue for Indian exporters. Three-fourths borrow at over 12 per cent. A survey shows 40 per cent exporters expect exports to decline this year. The commerce department is exploring solutions to ease credit flow and reduce borrowing costs. Freight rates and logistics also impact competitiveness. High interest rates pose a significant challenge for Indian exporters, with three-fourths of them borrowing at over 12 percent, even after providing collaterals. According to a survey by the Federation of Indian Export Organisations, shared with the Times of India, this issue is a major concern among exporters. The survey revealed that 40 percent of exporters expect a decline in exports for the current financial year, while 22 percent anticipate up to 5 percent growth. India's exports grew by 1 percent, reaching $213 billion in the first half of the current fiscal year. The US and UAE were noted as key growth markets by most exporters. Of the 678 exporters surveyed, 39 percent cited high interest rates as a top concern. Freight rates, which have increased due to tensions in the Persian Gulf and shipping line availability, were identified as another major problem. Although the government has attempted to address freight issues, borrowing costs remain high. Currently, 22 percent of exporters borrow at rates between 10-12 percent. With the Reserve Bank of India's repo rate set at 6.5 percent, lending rates are elevated compared to other regional countries like China (3.1 percent), Vietnam (4.5 percent), Malaysia (3 percent), and Thailand (2.25 percent). Lenders are maintaining a spread of almost 6 percent when lending to exporters, a long-standing issue. Proposals to extend interest subsidies have been stalled. Meawhile, India is reportedly planning a new loan scheme for small and medium-sized businesses (SMEs) and ecommerce exporters that won’t require collateral. This initiative comes as the country aims to reach $2 trillion (around ₹168 lakh crore) in exports by 2030, ET reported citing officials aware of the discussions. Although the specifics of the scheme are still being worked out, the government is in talks with banks and the Reserve Bank of India (RBI) to create a program that provides these loans based on the exporters' past performance. An official, who wished to remain unnamed, explained that the goal is to increase export credit, create new financing options, and lower interest rates for exporters. Also Read: Govt working on easier loans for SMEs, ecommerce exporters Small exporters face additional hurdles, as 82 percent reported having to provide security to obtain loans. The commerce department is exploring ways to ease credit flow and utilise Export Credit Guarantee Corporation (ECGC) guarantees to help lower borrowing costs. Freight costs are particularly impactful, with 82 percent of survey respondents affected by high rates. Additionally, 86 percent reported that logistics affected their competitiveness, with ocean freight being the primary concern.
Source: Economic Times
Synopsis The commerce ministry aims to finalize an SOP document for FTA negotiations by yearend, involving input from 17 ministries. This document will standardize negotiation processes and include best practices, assisting future negotiators. A recent 'Chintan Shivir' addressed various FTA-related topics, reinforcing India's ongoing trade discussions globally. New Delhi: The standard operating procedure (SOP) document for negotiating free trade agreements (FTAs) is expected to be ready by the end of this year, an official said on Thursday. The official said that it is an internal document which aims to standardise the processes of negotiations of these pacts. The commerce ministry is formulating the document and it would seek "guidance" from higher authorities also on this for any changes if required. It has been circulated informally to 17 ministries, including agriculture, labour and environment, for their views as FTA negotiation is a multi-ministerial exercise. "Our target is this year. We would like to have the 2024 version. It will be reviewed after every 2-3 years," the official said, adding that the objective is to document "our process of negotiations so that whatever learning we are having of different FTA negotiations, we are able to document those". It will also include the best practices which gives "best out-comes" so that whenever somebody is doing these negotiations in the future, he/she is able to refer to it. The government officers are mobile, so "we need to document those learnings in the form of SOP," the official said, adding that its an internal document for the ministry and it has nothing to do with FTA content or quality. The European Union, Australia and international organisations have their SOPs for negotiations. To discuss the various aspects of these agreements, the commerce ministry has organised a two-day 'Chintan Shivir' on FTA strategy and SOPs for trade negotiations on May 16-17. The exercise assumes significance as India is engaging with several trade partners to negotiate free trade pacts. In the Chintan Shivir, various issues were discussed, including India's trade strategy and vision 2047; economic assessment and modelling of FTAs; inclusion of new disciplines into FTAs such as labour, environment, gender, and indigenous people; services and digital trade; and SOPs for FTA negotiations. A separate session was also organised on leveraging India's FTAs to address new forms/kinds of measures like CBAM (carbon border adjustment mechanism), supply chain disruptions, critical minerals and Artificial Intelligence. India is negotiating trade pacts with the UK, the EU (European Union), Peru, and a comprehensive trade deal with Australia. It is also in talks with the Eurasian Economic Union for a trade agreement. The country has inked trade pacts with Mauritius, the UAE, Australia and the European Free Trade Association (EFTA) since 2021.
Source: Economic Times
Synopsis Swiss companies are investing more in India, encouraged by a new trade deal with the European Free Trade Association. This agreement will reduce tariffs on exports and open up the Indian market. Swiss firms like ABB and Kuehne+Nagel are expanding their operations, while the deal will also boost Indian exports of pharmaceuticals, clothing, and machinery. Investments in India by Swiss companies such as engineering group ABB and transport firm Kuehne+Nagel are on the rise, with a $100 billion regional trade deal expected to further open it up to businesses long geared towards China. India's appeal has already reflected a broader shift among businesses in Europe eager to balance the costs of a U.S.- China trade spat and recognition that the Chinese economy is, by comparison to India, losing steam. But the trade and economic partnership (TEPA) signed in March with the European Free Trade Association, whose biggest member is Switzerland, is likely, when ratified, to provide an extra incentive to Swiss investment as it will slash tariffs on exports from chocolates to watches and machinery. Under the deal, EFTA, whose other members are Norway, Iceland and Liechtenstein, will invest $100 billion in India and will benefit from easier and cheaper access to the Indian market of 1.4 billion people. India expects the agreement to boost its exports of pharmaceuticals, clothing and machinery. "India is now really booming," said Morten Wierod, CEO of ABB, an electrical and industrial automation supplier expanding its Indian footprint after its orders there increased by an average of 27% per annum in the last three years. To meet demand, ABB has been building factories, offices and showrooms in India, with eight projects completed since 2023, increasing its workforce from 6,000 to 10,000 since 2020. Now ABB's number 5 market, India is on track to become its third biggest after the U.S. and China in a few years, Wierod said. "Our investments in India are supporting that growth, both with more local manufacturing, but with much more R&D so that you can make designs in India, for India," he said. Although India is gaining importance, ABB is still committed to China, Wierod said, a view shared by other companies Reuters spoke to. TARIFFS REDUCED No companies Reuters spoke to said they were investing in India specifically because of TEPA, which has yet to come into force, but the Swiss government and business advocates expect the deal will boost trade and investments. The pact still requires parliamentary approval, and is expected to become effective in either late 2025 or early 2026. Rapid growth in India has fuelled Swiss interest. The IMF expects the Indian economy to grow 7% this year and 6.5% in 2025, outpacing forecasts of 4.8% and 4.5% for China. The IMF expects that trend to continue through the end of the decade. China has long attracted more Swiss direct investment, but in 2021-2022 India took the lead, according to data from the Swiss National Bank. "Doing business in China has become less easy as its economy there has been doing less well, and there is also the risk of large scale conflicts - economic or otherwise - with China," said Philippe Reich, chairman of the Swiss-Indian Chamber of Commerce, who called the trade deal a "game changer". According to Reich, around 350 Swiss companies already operate in India, and more will follow. TEPA will reduce tariffs on 94.7% of exports to zero from an average of 22% now, giving Swiss companies an edge over counterparts in the European Union and Britain, which are still negotiating agreements with India, business minister Guy Parmelin said. In return for EFTA-based firms investing $100 billion over 15 years – which aims to create 1 million jobs - India has promised to provide a favourable investment climate. What this means has not been specified in detail beyond the tariff changes, but both sides have agreed to identify investment opportunities and help companies deal with problems. "The TEPA will benefit everyone," Parmelin told Reuters, pointing to the reduction of tariffs and administrative burdens. 'RED CARPET' Florin Mueller, head of the Swiss Business Hub - part of the Swiss Trade Promotion Agency in Mumbai - said TEPA would put India "on the map" for Swiss companies and roll out a "red carpet for them to come and invest". Smaller firms such as Feintool are setting up there. The precision component specialist is building its first Indian factory near the western city of Pune which will employ up to 200 people when it opens next year. The plant, which will make parts for the reclining mechanism in car seats, will meet demand from Indian and international customers for a local supplier which makes it easier and quicker to get the right components. "We see huge potential in India," said Feintool's India managing director Tobias Gries. Swiss exports to India are still modest. India bought only 1.5% of total Swiss mechanical and electrical exports in 2023, though its share grew by nearly 8%. Meanwhile, Kuehne+Nagel is increasing its India workforce to 4,800 from 2,850 since 2019, and opening new logistics centres in Chennai, Gurugram and Kolkata this year. India managing director Anish Jha said government schemes such as India's National Logistics Plan, which has seen big investments in road, rail and ports, were helping. The initiative is easing transport costs, fuelling growth and supporting Kuehne+Nagel, whose India revenues are rising at more than double the rate of the group overall. "We see significant growth in India and we are committed to increasing our presence here," Jha said. "We're very optimistic."
Source: Economic Times
With the finance ministry seeking “justification” for continuing the Interest Equalisation Scheme (IES) for exporters, the commerce department is exploring ways to revamp it to ensure the scheme meets the objectives outlined during its launch nine years ago.
The scheme is currently set to expire on December 31.
IES is an interest subvention initiative under which banks offer reduced interest rates to exporters on their pre- and post-shipment rupee export credits. Lenders are then compensated by the government.
Launched in 2015 for five years, the scheme aimed to alleviate stress among exporters, particularly in labour-intensive sectors, as well as micro
Source: Business Standard
KARACHI - The 5th International Textile & Leather Exhibition (TEXPO) at the Karachi Expo Centre concluded with orders amounting to $1.875 million placed for Pakistani textile products, signalling a positive uplift for the country’s export industry. Organized by the Trade Development Authority of Pakistan (TDAP), the 3-day event attracted both local and international delegates, marking another milestone in fostering trade ties and promoting Pakistani textiles globally. The Pakistan Southern Africa Trade Federation (PSATF), led by Chairman Muhammad Rafiq Memon, represented Southern Africa’s interests in the exhibition. Alongside Mr Memon, notable PSATF representatives Chaudhry Nasim and Chaudhry Karamatullah were also present, actively engaging with Pakistani exporters. The PSATF delegation met with TDAP CEO Zubair Motiwala, who provided an in-depth overview of TEXPO’s objectives, showcasing the participation of companies from Pakistan and abroad, including key importers, exporters, and trade delegates. Motiwala emphasized TEXPO’s role in strengthening Pakistan’s trade alliances, specifically with markets like Southern Africa. With initial orders reaching $1.875 million, the PSATF delegation expects total orders to exceed $2 million following their planned visit to Faisalabad, Pakistan’s textile manufacturing hub. Rafiq Memon conveyed optimism about the impact of this event, noting that scheduled shipments would likely be completed by January-February 2025.“These orders are a testament to the quality and global appeal of Pakistani textiles,” Memon stated. “They will significantly enhance Pakistan’s export footprint worldwide, particularly in Southern Africa, where demand for our textiles continues to grow.” The TEXPO 2024 stands as a pivotal moment for Pakistan’s textile industry, reinforcing the nation’s export capabilities and fostering deeper trade relations with Southern Africa and beyond.
Source: Nation.com
Bangladesh has been struggling to recover lost work orders in the home textile segment, a significant volume of which shifted to Pakistan nearly two years ago. This shift occurred mainly due to the sudden doubling of gas prices in Bangladesh and significant devaluation of the Pakistani rupee against the US dollar. More recently, labour unrest in industrial belts and months of political unrest in Bangladesh have contributed to lower receipts. Moreover, Pakistan possesses some inherent advantages. For example, it is the world's seventh-largest producer of cotton, according to Statista. Pakistan also enjoys benefits under the European Union's Generalised Scheme of Preferences Plus (GSP+), while Bangladesh only enjoys standard GSP facilities. When Bangladesh's government suddenly hiked gas prices by 150.41 percent in February 2023, from Tk 11.98 per unit to Tk 30 per unit, major home textile exporters refrained from booking work orders due to the abnormal surge in expenses in production and a good volume of work orders
Khorshed Alam, chairman of Little Group, a textile miller, added that this move caused local home textile exporters to incur huge losses since work orders were based on lower prices before the hike in gas prices. For instance, if a big local company paid Tk 68 crore in monthly gas bill prior to the hike, it would cost Tk 126 crore after, he added. As a result, local millers did not book new work orders for some time. "However, the export of home textile is gradually recovering," Alam said. Another major advantage of Pakistan is that it has readily available cotton while Bangladesh relies on imports to meet more than 98 percent of the demand for cotton in the country. Pakistan's performance in the home textiles segment is also noticeable in the country's export figures.
Pakistan's textile exports surged to a 26-month high in August, reaching $1.64 billion -- a 13 percent year-on-year increase -- due to government policies and facilitation by the Special Investment Facilitation Council (SIFC), according to a report by SAMAA TV, a private television channel.
According to the Pakistan Bureau of Statistics, textile exports stood at $1.46 billion last August. Significant growth was recorded across various sectors, with knitwear and bedwear exports increasing by 15 percent, and ready-made garment exports up 28 percent compared to last year. "Analysts attribute the rise to Pakistan's strategic positioning in the global textile market, especially in light of political instability in Bangladesh and international sanctions on China, which have led global importers to seek alternatives," the SAMAA TV report also said. On the other hand, Bangladesh's exports of home textiles, which include bedsheets, tents and rugs, declined 2.05 percent to $851.01 million in the fiscal year 2023-24, according to data from the state-owned Export Promotion Bureau (EPB). The country's home textile exports had crossed the $1-billion mark in FY21, registering a whopping 49.17 percent year-over-year growth. That momentum continued into the following year, with exports rising by another 40-odd percent to $1.62 billion. However, the gas crisis upended that trend the following year, with home textiles fetching $1.09 billion, down by almost a third. "As per our previous plan, we were supposed to export $30 million worth of home textiles each month. But we are now exporting $25 million a month," said Md Shahidullah Chowdhury, executive director of Noman Group, which accounts for which accounts for more than 70 percent of Bangladesh's home textile exports. "This is even less than the previous monthly amount, which was supposed to increase," he said. Of the exported amount, $15 million comes from home textiles and $10 million comes from the shipment of terry towels, Chowdhury said. "We are trying to recover the lost business but some factors like low gas pressure and labour unrest are posing major barriers at present," Chowdhury said. Monsoor Ahmed, former chief executive officer of the Bangladesh Textile Mills Association, echoed Chowdhury's views. Ahmed said five to seven major home textile makers are currently exporting while a few big companies faced closures a few years ago for various reasons. Textile mills cannot run at full capacity due to low gas pressure and they cannot produce the goods adequately to be more competitive, he said. Furthermore, Pakistan has enjoyed zero-rated or preferential tariffs on nearly 66 percent of tariff lines, enhancing the country's ability to export to the EU market under the GSP+ since 2014.
From 2014 to 2022, Pakistan's exports to the EU increased by 108 percent whereas imports from the EU increased by 65 percent. The total trade volume increased from 8.3 billion euros in 2013 to 14.85 billion euros.
Source: Daily Star
KARACHI: The textile sector has called on the government to establish a long-term textile policy, developed in consultation with industry stakeholders, to double exports and significantly increase foreign exchange earnings for the country. Ijaz Khokar, former Chairman Pakistan Readymade Garments Manufacturers and Exporters Association (PRGMEA), on side-line of Texpo 2024 told Business Recorder that Pakistan’s government, in collaboration with the textile associations, should finalize a comprehensive textile policy for 5 years under the title “Textile Destination of the World” to double the textile exports. “This long term textile policy should focus on exports, technological innovation, human capital, SME upliftment, and access to finance. The policy should be reviewed at the end of each quarter, and its recommendations should be implemented in true letter and spirit,” he added. Textile exporters urged to discover opportunities in emerging markets He said that the country’s textile sector has the ability to double the export, but it needs continuity in the economic policies and special utility tariff for the export sector. In order to promote the country’s textile sector on international markets under the umbrella of the PRGMEA, local textile and apparel producers are planning to organize the World Fashion Convention in Pakistan in 2026 he said and added that this will be the second time that Pakistan will host this global mega-event, as the country hosted this event in 2019 for the first time. Khokhar said that this event will positively impact us in multiple directions, particularly boosting exports and improving the country’s image on the international front, but its needs the government’s support to organise this mega event in Pakistan. In addition, in collaboration with the private sector, the government should set up multiple research and development centres, textile clusters, packaging and fashion design centres. These centres will strengthen garments and apparel producers to enhance their exports to different countries, he suggested. Former Chairman PRGMEA said that Pakistan currently exports a significant amount of raw and semi-processed materials like cotton yarn and fabric. Shifting focus towards value-added products such as branded garments, home textiles, and technical textiles, sports and medical wear can command higher prices in international markets, he added. He recommended that the government should offer incentives like tax breaks, rebates, and subsidies for manufacturers focused on value-added products and those expanding into new markets. The government should also simplify the tax procedure for exporters by reducing bureaucratic hurdles and improving customs procedures, in addition providing access to finance for SMEs in the textile sector. Khokhar said that government and textile companies are required to invest in vocational training and technical education to improve the skills of the textile workforce, especially in areas such as design, fabric technology, and production management. “To promote the field of fashion design, the government and private sector should collaborate with universities to offer specialized courses aligned with the evolving needs of the textile industry,” he added. Women are naturally good at fashion design, ideas innovation, and quality assurance and the private sector can bring more diversification in garment products, by providing jobs to females in different departments of the textile sector, he mentioned.
Talking on the environmental issues, he said that as environmental sustainability becomes a primary concern for global buyers, implementing green practices, sustainable sourcing, reducing carbon emissions, and using renewable energy will make Pakistani textiles more attractive in eco-conscious markets. He urged the government to improve the gas supplies to textile exporters on a priority basis and fix the utility tariff at least for 2 to 5 years, so exporters can finalize deals with foreign buyers without any tariff confusion. Khokhar said that due to the political upheaval in Bangladesh, Pakistan has an opportunity to get textile export orders as Pakistan can meet foreign buyers’ deadlines. He appreciated the arrangements at Texpo 2024, organized by Trade Development Authority of Pakistan (TDAP) and said that Pakistan has got a very good response in Texpo this year, due to which Pakistan’s textile and garment exports will be increased. He suggested that Pakistan should organise Texpo in Dubai once a year as he believed that this will lead to a significant increase in export sales.
Source: Business Recorder
Pakistan’s tariff structure has long been a topic of contention, both domestically and internationally. While intended to protect local industries and boost revenue collection, the country’s tariff policies have inadvertently stifled competitiveness, discouraged exports, and worsened the trade deficit. At a time when economic recovery hinges on international trade and investment, a reform of the existing tariff system is critical for fostering economic growth and stability. The current tariff system is designed with the intent of protecting local industries through high import duties and regulatory barriers. While this might seem beneficial in the short term, long-term effects are alarming. High tariffs discourage innovation and competition, leading to inefficiencies in production and ultimately limiting export potential. Pakistan exports only 10 per cent of its GDP -- a stark contrast to more export-oriented economies like Vietnam, which exports 100 per cent of its GDP. This low export-to-GDP ratio is indicative of deeper structural problems that high tariffs exacerbate. Moreover, the tariff regime tends to penalise industries that rely on imported raw materials. Rather than nurturing domestic production, high tariffs raise costs for businesses that depend on foreign inputs, limiting their ability to compete both locally and globally. Pakistan’s manufacturing industries, particularly in textiles and automobiles, are prime examples of sectors that have been insulated from competition for too long. Local manufacturers often charge higher prices for lower-quality goods, stifling innovation and making it difficult to compete internationally. According to the World Bank, nearly 50 per cent of Pakistan’s tax revenue comes from customs duties, much higher than regional peers like India, where customs revenue accounts for only 12 per cent. This over-reliance on border taxes distorts markets and creates inefficiencies, disincentivising exports and encouraging rent-seeking behaviour. As a result, Pakistan’s export basket remains heavily concentrated in low-value-added goods like textiles, while high-potential sectors like electronics and chemicals are underdeveloped. Equally problematic is the lack of a coherent data-driven approach to tariff management. Pakistan’s tariff policy has historically been driven more by short-term revenue needs than by strategic economic goals. A more sophisticated approach -- one that leverages data to identify sectors ripe for export growth -- could help Pakistan shift toward a more dynamic, open economy. Countries like South Korea and China have successfully used targeted tariff reductions and free trade agreements to boost their competitiveness and attract foreign direct investment, a model that Pakistan could emulate. In addition, the issuance of Statutory Regulatory Orders (SROs) by the Federal Board of Revenue (FBR) has added to the complexities of Pakistan’s trade regime. While SROs are often used as quick fixes to adjust tariff rates or grant exemptions, they contribute to policy inconsistency and unpredictability. Businesses, both local and foreign, find it difficult to plan their investments in such an unstable policy environment, further dampening economic growth. To move forward, Pakistan must adopt a more holistic approach to trade policy. The role of tariffs should be redefined from being a primary revenue-generating tool to one that promotes trade and industrial growth. Reducing import tariffs, particularly on intermediate goods and machinery, could enhance industrial competitiveness, allowing local businesses to integrate into global supply chains. Moreover, reforms should aim to balance protection for nascent industries with incentives for innovation and export growth.
On the global front, Pakistan’s participation in trade agreements like the China-Pakistan Economic Corridor (CPEC) offers significant opportunities for growth. However, without a robust tariff policy that complements trade agreements, these opportunities could be missed. Integrating trade and investment policies with a focus on export diversification could help Pakistan reduce its dependence on a narrow range of export goods and markets, thus making the economy more resilient to external shocks. The future of Pakistan’s tariff policy should focus on fostering competitiveness, boosting exports, and creating jobs. High tariffs on finished goods should be replaced with policies that encourage industrial upgrading and investment in high-value-added sectors. Moreover, moving toward a low-tariff regime with a clear and predictable policy environment could attract foreign investment, stimulate innovation, and drive economic growth. Pakistan stands at a crucial juncture. By implementing tariff reforms that prioritise competitiveness and economic integration, the country can unlock its potential for growth and development. However, without decisive action, the existing policy will continue to hinder progress, leaving Pakistan’s industries struggling to keep pace in an increasingly globalised world.
Source: The News
