Cotlook A Index - Cents/lb (Change from previous day)

06-09-2019 70.65 (+1.00)

06-09-2018 91.55

06-09-2017 84.70

New York Cotton Futures (Cents/lb) As on 10.09.2019 (Change from

previous day)

Oct 2019 59.20 (+0.47)

Dec 2019 58.94 (+0.36)

Mar 2020 59.10 (-0.72)

10th September

2019

All tax refunds under new export scheme may be tough, says

finance ministry

RCEP: Jaishankar says India concerned over 'enormous' trade

deficit with China

Govt inducts first batch of Indian Skill Development Services

McKinsey roped in for first digital capability centre

SIMA elects new chairman

Cotton and Yarn Futures

ZCE - Daily Data (Change from previous day)

MCX (Change from previous day)

Oct 2019 19400 (-30)

Cotton 12880 (-60) Nov 2019 19160 (-50)

Yarn 20795 (-35) Dec 2019 19150 (-40)

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2 CITI-NEWS LETTER

-------------------------------------------------------------------------------------- All tax refunds under new export scheme may be tough, says finance

ministry

RCEP: Jaishankar says India concerned over 'enormous' trade deficit

with China

Aptel hires 8 legal professionals to solve discom issue

Crunch time on RCEP

Govt inducts first batch of Indian Skill Development Services

McKinsey roped in for first digital capability centre

SIMA elects new chairman

Joint Statement of 7th RCEP Ministerial Meeting Held in Bangkok

Bt cotton regains farmers' confidence, acreage under crop goes up to

93.6%

How Bangladesh Has Overtaken India In Garment Exports

Textile entrepreneurs should weigh the strategic options before

them: CavinKare Founder

-------------------------------------------------------------------------------

Germany unveils 'green button' for sustainable textiles

Finance minister discusses trade ties with US secretary of commerce

Decathlon enters Bangladesh

Is govt suppressing data or expecting a turnaround?

China’s surprise slowdown is advantage India; how dragon’s

unexpected export, import fall will help

--------------------------------------------------------- ----------

NATIONAL

---------------------

GLOBAL

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3 CITI-NEWS LETTER

NATIONAL:

All tax refunds under new export scheme may be tough, says finance ministry

(Source: Times of india, September 10, 2019)

As the government works on an “export package”, the finance ministry has said that it

may not be possible for the government to shift all exports to the Rebate of State and

Central Taxes and Levies (RoSCTL) scheme, given the Budget constraints.

Instead, it wants the commerce department to identify priority sectors which need more

support. RoSCTL is a replacement for the existing Merchandise Exports from India

Scheme (MEIS). The commerce department put together the new scheme after the US

dragged India’s export promotion programmes to the World Trade Organization and is

expected to be taken up by the Union Cabinet shortly.

On an average, the government has estimated that the incidence of central and state levies

added up to 4-5%, which needed to be refunded. With merchandise exports estimated at

over $330 billion, refund of levies would add up to over $16 billion or more than Rs 1.1

lakh crore, sources said. For the current fiscal year, the Centre has budgeted for a revenue

impact of Rs 65,720 crore on account of all export-promotion schemes. Of this, MEIS is

estimated to have an impact of Rs 36,615 crore. Already, some of the GST is refunded to

exporters.

The government recently released Rs 6,000 crore for the textiles industry, while insisting

that some of the other sops for exporters should be dropped. While the rebate scheme for

all exporters is being finalised, the government is also working on ways to improve access

to loans for which commerce and industry minister Piyush Goyal has held several round

of deliberations. Sources said that the scheme is almost ready and is expected to be

announced shortly. In an interview last week, finance secretary Rajiv Kumar too had

underlined the need to offer incentives to exporters. This, he said, will help use up idle

capacity in the manufacturing sector and also result in import substitution.

Home

RCEP: Jaishankar says India concerned over 'enormous' trade deficit with

China

(Source: Live Mint, September 09, 2019)

India on Monday said it has reservations on joining the proposed Regional

Comprehensive Economic Partnership with the ASEAN countries and its six FTA

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4 CITI-NEWS LETTER

partners, due to concerns, including the "enormous" trade deficit with China, which has

ballooned to over $57 billion.

The Regional Comprehensive Economic Partnership (RCEP) agreement is being

negotiated among 10 ASEAN members (Brunei, Cambodia, Indonesia, Laos, Malaysia,

Myanmar, the Philippines, Singapore, Thailand, and Vietnam) and their six trade

partners -- Australia, China, India, Japan, Korea and New Zealand to create a free trade

pact covering a third of the world's economy.

External Affairs Minister S Jaishankar, speaking during a panel discussion at the

inaugural session of India-Singapore Business & Innovation Summit here, said India

remained concerned over the unfair" market access to Indian products and the

"protectionist policies" of Beijing that have created a significant trade deficit between the

two nations.

The trade deficit with India in 2018, according to official Chinese data, climbed to $57.86

billion from $51.72 billion in 2017 in about $95.54 total bilateral trade.

The Indian industry has raised concerns over the presence of China in the grouping with

which India has a huge trade. Various sectors, including dairy, metals, electronics,

chemicals, and textiles, have urged the government to not agree on duty cut in these

segments.

"The big concerns of India are of course, one, its relationship with China because we have

an enormous trade deficit with China," Jaishankar said in response to a question on the

ongoing negotiations for the RCEP.

At the session, also attended by his Singaporean counterpart Vivian Balakrishnan,

Jaishankar said India fears that the RECP deal, which would call for a lowering of tariffs,

would lead to a flood of goods from China while not assuring India of an equal access to

the Chinese markets, thereby widening its large trade deficit.

On Sunday, the 16 RCEP participating nations that are negotiating a mega free trade

agreement have agreed to work together to iron out outstanding issues which are

fundamental to conclude the talks this year, a joint statement said.

The statement was issued after the 7th RCEP ministerial meeting in Bangkok. Negotiators

have expressed hope that the RCEP would be delivered by the end of the year.

India has registered trade deficit in 2018-19 with as many as 11 RCEP countries, including

China, South Korea and Australia.

Jaishankar also raised concerns that India's forte, its trade in services, was less well

enforced through regulations than the trade in goods.

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5 CITI-NEWS LETTER

The deal had the geo-strategic objective of holding the line against protectionist and

unilateral policies, he agreed. Even so, it had to make economic sense, he said.

RCEP, at the end of the day, is an economic negotiation. It has a strategic implication but

the merits... have to be economic," he said.

Balakrishnan called the deal a "game-changer" that had the potential to secure the

prosperity of its members in the face of a push-back against trade and globalisation.

"For India, China and Southeast Asia, the key political question is, can we arrive at a

formula that would expand a rising middle class and give their children a sense of

optimism," he was quoted as saying by The Straits Times newspaper.

Balakrishnan said Singapore, the largest foreign investor in both India and China, hoped

the two Asian countries would eventually tide over their differences.

"In the next decade or two, China and India are going to be in significant trading

relationship. This is something they will have to sort out. In due course, bilateral

arrangements will be made," he said.

But even as this rapprochement occurs, what we are trying to offer with RCEP is a

multilateral model, a pan-regional model, the centre of gravity in the Indo-Pacific. And if

we can sort out the fair rules which will promote trade and economic integration between

India, China and South-east Asia, there is enormous opportunity.

"I say all this without trying to trivialise or gloss over the difficulties in negotiations," he

said.

"It is worth making an effort because this will be a gamechanger... the mother of all trade

agreements," he said.

The Indian-origin Singaporean foreign minister, also expressed confidence on the Indian

economy and noted that the government of Prime Minister Narendra Modi has set the

goal of doubling India's GDP to $5 trillion by 2024.

"I remain optimistic that because of the nature of the Indian economy and the

transformation which Mr Modi is implementing, India can deal with this from a position

of confidence," he said.

"Let's make the effort," Balakrishnan said.

Home

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6 CITI-NEWS LETTER

Aptel hires 8 legal professionals to solve discom issue

(Source: Economic Times, September 09, 2019)

The power ministry has asked discoms to ensure they maintain bank guarantees against

offtake from power plants since August 1 to stop further piling-up of dues. The Appellate

Tribunal for Electricity (Aptel) has initiated action on overdue payments of nearly Rs

52,000 crore by state electricity distribution utilities to power plants and has appointed

eight independent legal professionals called ‘amicus curiae’ to assist the court in resolving

the issues plaguing the power sector.

The bench comprising Aptel chairperson Manjula Chellur, besides technical members SD

Dubey and Ravindra Kumar Verma, appointed the amicus curiae to assist the tribunal

and has asked all stakeholders to place their problems and suggestions so that suitable

orders can be passed to state electricity regulators. The power ministry has asked discoms

to ensure they maintain bank guarantees against offtake from power plants since August

1 to stop further piling-up of dues. However, government data showed Rs 51,980 crore

outstanding payments to power companies at the end of June. The outstanding amount

at the end of the month was at Rs 69,572 crore. Non-payment of dues by discoms is one

of the key reasons for stress in the power sector. A recent study by the Central Electricity

Authority showed that increasing revenue gaps of discoms due to delay in subsidy

payment by states, irregular tariff hikes and non-payment of dues by government

departments have affected discoms’ ability to pay bills. “Apart from Amicus Curiae, who

assisted the bench on earlier occasion, we invite learned senior counsel Basava Prabhu

Patil, Sanjay Sen, Sajjan Poovayya to assist this bench to come out with resolution

mechanism to resolve the problems faced by the power sector,” the tribunal said in an

order passed on Friday. Senior counsel Buddy A Ranganadhan is the other amicus. “If any

member of the Energy Bar intends to put forth their submissions, irrespective of for whom

they appear, generator / discom etc are at liberty to submit their suggestions /views,” the

order said. The court requested four more counsels to be amicus, other than the four

already appointed, said advocate S Venkatesh of law firm SKV Law Offices. The matter

was initiated suo motu by the tribunal in continuation of an old matter of 2011 pertaining

to irregular tariff revisions by regulatory commissions. That case was started by Aptel on

the basis of a letter received from the ministry of power. The power ministry wrote to the

tribunal in July this year too, flagging concerns on lack of tariff revision in states and

agreeing for deferred tariff hikes called regulatory assets by electricity regulatory

commissions in states. The tribunal has been hearing matters pertaining to non-payment

of generators’ dues by Tamil Nadu and cases related to renegotiation of the renewable

power contracts by Andhra Pradesh government. Sources said the counsels have been

asked to submit their representations before the next hearing on September 14.

Home

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7 CITI-NEWS LETTER

Crunch time on RCEP

(Source: Business Standard, September 10, 2019)

The Union government is shortly going to have to make a momentous decision about

India’s economic orientation. The deadline for the conclusion of talks on a proposed free-

trade agreement (FTA) known as the Regional Comprehensive Economic Partnership

(RCEP) is fast approaching.

The FTA, which is envisaged to link the 10 members of the Association of Southeast Asian

Nations (Asean) with the People’s Republic of China, South Korea, Japan, Australia, New

Zealand as well as India, is due to be concluded by the time Asean meets next in

November. It has become clear over the past ...

Home

Govt inducts first batch of Indian Skill Development Services

(Source: Economic Times, September 09, 2019)

The Indian Skill Development Service (ISDS) has 263 all India posts.

In an effort to strengthen the skill development ecosystem in the country, the government

has inducted the first batch of the Indian Skill Development Services (ISDS), the newest

central government Group A services, on Monday.

The Indian Skill Development Service (ISDS) has 263 all India posts. The cadre comprises

of 3 posts at senior administrative grade, 28 posts at junior administrative grade, 120

posts at senior time scale and 112 posts at junior time scale.

As part of the training program, a complete overview of management and governance of

skilling in particular, and functioning of the government system in general, will be

offered. After this capsule, there will be a foundation course and then further training will

be provided to the officers to enrich them with the knowledge and skills needed to run the

skill eco-system. “This service has been specially created for the training directorate of the

ministry of skill development and entrepreneurship and is a Group ‘A’ service,” the

ministry said in a statement. The first batch joining the ISDS cadre has after qualifying

the Indian Engineering Service Examination conducted by UPSC. “The aim for this is to

attract young and talented administrators towards institutionalizing the skill

development environment in the country,” it said.

“The new service will give a new impetus to the government’s skilling initiative by

significantly improving the efficiency and effective implementation of the various

schemes,” skills development minister Mahendra Nath Pandey said, adding that the

ministry hopes that in years to come it will be able to create a workforce of trained skill

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8 CITI-NEWS LETTER

administrators who will enable the government to achieve the set goals of the Skill India

Mission.

“Administered training is paramount to face big challenge of skilling Indians. Under the

leadership of Prime Minister Shri Narendra Modi, skill development has taken a priority

with a hope that it will supply critical human resource not only in India but also

internationally. Catering to the highly specific task of skill development, the ISDS services

are a unique combination of skills, technology, management and public service,” he

added.

Home

McKinsey roped in for first digital capability centre

(Source: Economic Times, September 09, 2019)

The Niti Aayog has roped in McKinsey & Company, which supports five such centres

globally — in Aachen, Chicago, Singapore, Venice and Beijing — to develop it here.

India will soon set up its first digital capability centre showcase advanced technologies

and provide a test bed for emerging innovations as the government looks to transform the

country's manufacturing sector.

The Niti Aayog has roped in McKinsey & Company, which supports five such centres

globally — in Aachen, Chicago, Singapore, Venice and Beijing — to develop it here. A

senior official, aware of the deliberations, told ET that the government will act as a

facilitator to bring together industry, academia, and research on one platform to help set

up a digital capability centre (DCC), which has to be driven by the private sector.

The Aayog has lined up extensive stakeholder consultations over the next few months to

firm up the plan. Rajat Gupta, senior partner McKinsey & Company, confirmed to ETthat

deliberations are on with NITI Aayog and industry to understand the needs of the Indian

industry. “However, India is a huge country with diverse set of industries that also

includes large number of MSMEs. The challenge, therefore, will be to design a centre

which is fit for purpose,” said Gupta. DCC is a unique digital manufacturing learning

centre offering company leaders and their workforces hands-on experience and

workshops in next generation technology to help them advance their operations, design

and productivity and can be used at all levels of the value chain.

Home

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9 CITI-NEWS LETTER

SIMA elects new chairman

(Source: Devdiscource, September 09, 2019)

The Southern India Mills Association on Monday elected Ashwin Chandran as its

chairman and Ravi Sam as the deputy chairman and S K Sundararaman as vice-chairman

for the year 2019-2020. Speaking at the 60th general meeting of the association here,

outgoing chairman P Nataraj said the country has been projected as the fastest growing

economy in the world, as the world GDP was estimated at three per cent and India's at 7.4

per cent despite the grim situation the worldover.

The impact of two major reforms - demonetisation and GST (goods and services tax)

affected the performance of manufacturing industries and the economy during the last

two years. Before it could fully recover, worldwide recession, particularly the US-China

trade war, has again affected the national economic growth, he said.

The Indian textiles and clothing industry, especially the capital-intensive spinning sector,

was facing yet another major crisis, he said. The crisis was due to volatility in cotton prices

and currency value, steep fall in exports, piling-up of stocks, production cut, severe

liquidity crunch, significant increase in cheaper imports of MMF (man-made fibre) spun

yarns, synthetic fabrics and ready-made garments, he said.

"We have requested the government to take appropriate remedial policy measures, clear

all the government dues on a fast track and extend the rebate on state and central tax and

levies benefits for all manufactured textile goods across the value chain to enable the

industry to revive itself from the recession, Nataraj said. The Tamil Nadu government had

announced the Integrated Textile Policy 2019 during March which encourages value

addition, strengthening of downstream sectors, encouraging modernisation in spinning,

he said.

On the performance of industry, he said all yarn production during 2018-19 stood at 5,862

million kg, 3.2 per cent higher than previous year's production of 5,680 millions kg, while

production during 2019-20 (April -June) stood at 1,591 million kg, 9.6 per cent higher

than previous year's production of 1,452 million kgs. The cotton yarn export has declined

by over 35 per cent during the first quarter of the current financial year compared to last

year same quarter, Nataraj said.

The yarn export was the lowest in June 2019 in the last five years recording only 57 million

kg, which has also affected the domestic market, he added..

Home

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10 CITI-NEWS LETTER

Joint Statement of 7th RCEP Ministerial Meeting Held in Bangkok

(Source: Press Information Bureau, September 09, 2019)

Union Minister of Commerce & Industry and Railways PiyushGoyal participated

in 7th RCEP Ministerial Meeting held in Bangkok, Thailand on 8th September 2019.The

meeting was attended by Senator Simon Birmingham, Minister for Trade, Tourism and

Investment, Australia, Dato Dr. Amin Liew Abdullah, Minister at the Prime Minister’s

Office and Minister ofFinance and Economy II, Brunei Darussalam, Pan Sorasak,

Minister of Commerce, Cambodia, Wang Shouwen, Vice Minister, Ministry of Commerce,

People’s Republic of China, Enggartiasto Lukita, Minister of Trade, Republic of

Indonesia, Hiroshige Seko, Minister of Economy, Trade and Industry, Japan, Ms. Myung

Hee Yoo, Minister for Trade, Ministry of Trade, Industry and Energy, Republicof Korea,

Mrs. Khemmani Pholsena, Minister of Industry and Commerce, Lao PDR, Darell Leiking,

Minister of International Trade and Industry, Malaysia, Thaung Tun, Union Minister for

Investment and Foreign Economic Relations, Myanmar, Damien O’Connor, Minister of

State for Trade and Export Growth, New Zealand, Ramon M. Lopez, Secretary of Trade

and Industry, Republic of the Philippines, Chan Chun Sing, Minister for Trade and

Industry, Singapore, Jurin Laksanawisit, Deputy Prime Minister and Minister of

Commerce, Thailand, Tran Quoc Khanh, Deputy Minister of Industry and Trade, Ministry

of Industry and Trade,Viet Nam (representing Tran Tuan Anh, Minister of Industry and

Trade, Viet Nam) andDato Lim Jock Hoi, Secretary-General of ASEAN.

Following is theJoint Statement issued after the meeting:

The Ministers from the 16 RCEP Participating Countries (RPCs) gathered in Bangkok on

8 September 2019 for the 7th RCEP Ministerial Meeting to review developments in the

RCEP negotiations since the Ministers last met in Beijing on 2-3 August 2019. The

Meeting was chaired by Jurin Laksanawisit, Deputy Prime Minister and Minister of

Commerce of Thailand.

The Ministers recognised that negotiations have reached a critical milestone as the

deadline for the conclusion of negotiations draws near. Notwithstanding the remaining

challenges in the negotiations, RPCs are working on addressing outstanding issues that

are fundamental to conclude the agreement this year as mandated by the Leaders.

Continuing uncertainties in trade and investment environment have dampened growth

outlook across the world, with likely impact on businesses and jobs, adding to the urgency

and imperative of concluding the RCEP. While noting that certain developments in the

global trade environment may affect RPC’s individual positions in the course of the

negotiations, Ministers agreed that RPCs should not lose the long-term vision of

deepening and expanding the values chains in the RCEP. The Ministers underscored that,

successfully concluded, the RCEP will provide the much-needed stability and certainty to

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11 CITI-NEWS LETTER

the market, which will in turn boost trade and investment in the region. To this end,

Ministers reaffirmed their collective resolve to bring negotiations to a conclusion.

The Ministers committed to avail negotiators with the necessary resources and mandate

to bring negotiations to a close. The Ministers made the collective call to negotiators at all

levels to translate this commitment into constructive actions and positive outcomes.

Home

Bt cotton regains farmers' confidence, acreage under crop goes up to 93.6%

(Source: Dilip Kumar Jha, Business Standard, September 09, 2019)

With this, the insect resistant transgenic crop has regained farmers' confidence which had

been shaken three years ago

The total acreage under Bacillus thuringiensis (Bt) cotton jumped to 93.5 per cent this

kharif sowing season after falling to 90 per cent three years ago.

A Kotak Securities’ Commodity Insight report highlights India’s total cotton acreage

under Bt at 11.7 million ha during the current kharif sowing season. Total area under non-

Bt cotton was reported at 0.8 million ha. Data compiled by the Ministry of Agriculture

estimates total area under cotton sowing this year at 12.5 million ha as of August 31, a rise

of 7.3 per cent from the previous year.

Farmers were encouraged by two major factors this year to bring back cotton sowing

under Bt. Firstly, the crop damage last year due to deficient rainfalls prompted farmers

to sow insect resistant transgenic crop which has a potential to fetch some output even

with normal traits. Secondly, the increase in the minimum support price also lured

farmers to go back to their old farming practice. Until 2016-17, Indian farmers were

sowing Bt cotton in around 95 per cent of the area allocated to this cash crop.

“Of the 12.5 million ha of overall acreage under cotton, 93.6 per cent or 11.7 million ha has

come under Bt this year,” said Ravindra Rao, Head of Research, Kotak Securities in a

report titled Commodity Insight.

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12 CITI-NEWS LETTER

With this, the insect resistant transgenic crop has regained

farmers’ confidence which had been shaken three years ago due

to a stagnation in cotton yield after significant a pick up in the

initial years of its launch.

Cotton prices remained highly volatile last year. After trading

below the minimum support prices (MSP) for a long period,

cotton prices recovered to surpass this benchmark level. The

government raised the cotton MSP by Rs 100 to Rs 5,550 a

quintal this year again from Rs 5,450 a quintal last year.

“The government must allow farmers to sow the latest high yielding seeds available in Bt

series with more traits that global farmers have already been sowing. Indian farmers are

using Bollgard I and II varieties of Bt transgenic seeds which have reported stagnation in

yield. In the absence of any option, farmers are continuing with the seeds available,” said

Arun Sakseria, a city-based cotton trader and exporter.

The uneven distribution of the monsoon rainfall caused severe damage to the cotton

crop in its major growing states like Maharashtra, Gujarat, Andhra Pradesh and

Telangana.

By the end of August, cotton acreage in Maharashtra had crossed 4.37 million ha against

4.1 million ha sown during last year. A minor decline was seen in Gujarat cotton sowing

this year which reached at 2.65 million ha as compared to 2.69 million ha last year.

Meanwhile, cotton supply across the country in the first four days of September reached

3,370 tonnes, nearly double the supply seen in same period last month. Positive cues from

international market and reports of some crop losses in Madhya Pradesh are likely to

support the cotton prices to some extent for the next couple of sessions.

“However, bearish broader fundamentals like slack demand from the textile industry,

limited yarn export demand and upcoming new crop arrival season will keep cotton prices

under check for near future,” said Rao.

Cotton prices are currently quoting at Rs 9,100 a quintal in the benchmark Rajkot mandi.

Home

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13 CITI-NEWS LETTER

How Bangladesh Has Overtaken India In Garment Exports

(Source: M.R. Subramani, Swarajya, September 09, 2019)

In 2013, the Bangladesh textile industry faced one of its toughest tests. Two mishaps at

different textile units within a span of five months could have led to Dhaka losing markets

abroad for its garments.

In November 2012, a fire in one of the garment factories had killed 117 workers. Five

months later, in April 2013, a huge garment unit collapsed, leaving over 1,100 dead.

This led to Western buyers, particularly brands that source garments from Bangladesh,

to threaten that they wouldn’t buy from the country until manufacturers adhered to

stringent fire and building safety regulations.

Consequently, over 1,250 units were shut down but nearly 350 new ones have come up

since then. Currently, Bangladesh has 4,560 garment factories involved in exports.

To Bangladesh’s credit, the mishaps of 2012 and 2013 have not bogged down its garment

exports. In the last couple of years, it has emerged as the second-largest exporter of

garments in the world, only behind China.

In 2017, Bangladesh exported $27 billion (up at $32.92 billion in 2018) worth of garments

and enjoyed a 6 per cent share in the global clothing market.

In contrast, India exported only $18 billion (down to $16.14 billion in 2018) worth of

garments with a 4.1 per cent market share.

A study of how Indian and Bangladeshi apparel sectors have progressed since 2000

throws up some interesting data.

In 2000, India enjoyed 3 per cent of the global market share compared with Bangladesh’s

2.6 per cent. Since then, Dhaka has more than doubled its share in the world market,

while India has gone up by only 1.1 percentage points.

It is another story that global buyers used the 2012 and 2013 mishaps to arm-twist their

Bangladeshi suppliers to cut the prices of their products.

However, all of this doesn’t mean that the Indian apparel or clothing sector is faring

poorly. India’s apparel market size has increased from Rs 2.4 lakh crore in 2009-10 to Rs

6.5 lakh crore during 2017-18.

Which means that India has a huge captive domestic apparel market going by the above

statistics.

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14 CITI-NEWS LETTER

According to Care Ratings, the domestic market has witnessed a 13.8 per cent

compounded annual growth rate compared to 9.8 per cent of the export market.

Nonetheless, Bangladesh enjoys a huge advantage over India in the global apparel market,

on three counts. As does Vietnam.

The first advantage is the cost of labour. The World Bank — quoting Japan’s External

Trade Organisation survey — put the monthly labour wage of a Bangladesh worker at $101

— the lowest in Asia.

In comparison, an Indian garment worker earns $257, while a Chinese worker gets $470.

The monthly wage of a worker in Vietnam is $216, while that of a Sri Lankan worker is

$148.

An interesting feature of the wage data is that the productivity of a Bangladeshi worker is

better than that of his Indian counterpart.

The second advantage is the preferential duty treatment accorded to garments from

Bangladesh, an LDC (least developed country), by the European Union (EU) and other

developed countries. Under the World Trade Organisation (WTO) agreement, LDCs are

given preferential treatment in trade so as to help their economies to improve.

Vietnam and Sri Lanka also enjoy the same treatment for respectively signing a free trade

pact and meeting some of the EU’s expectations on sustainable development.

As a result, while Indian garments exports to the EU attract 9-10 per cent import duty,

similar goods from Bangladesh, Vietnam, and Sri Lanka are allowed to be imported duty-

free.

The third advantage that Bangladesh enjoys — as a consequence of the first two

advantages — is increasing foreign direct investment (FDI).

In the last few years, the Bangladeshi garment sector has been able to attract $2.15 billion

FDI compared to the $3.2 billion that India has attracted from April 2000 to March 2018.

In fact, from 2008 to June 2015, FDI investment in India was just $230 million.

Though India has slipped behind Bangladesh in garment exports, it does not mean that

the sector is facing problems. No doubt, its garment exports have not topped $17.5 billion

yet but overall exports of textile products are around $35 billion.

The Indian textile industry’s market size is worth $150 billion. The garment sector — the

second largest employer after agriculture — provides employment to 45 million people

directly and another 65 million indirectly.

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15 CITI-NEWS LETTER

According to the World Bank, India exports $2.25 billion-worth textile and clothing

products to Bangladesh. In turn, it imports $336 million-worth textile and clothing

products from Dhaka.

India is one of the major raw material suppliers to Bangladesh; Dhaka depends on New

Delhi for ginned cotton (pressed raw cotton), yarns and fabrics.

South Asia is seen as a big player in the global textiles market. Yet, interestingly, the

nations in the sub-continent don’t compete with one another.

According to an ICRIER (Indian Council for Research on International Economic

Relations) study, Sri Lanka specialises in swimwear and ladies undergarments, while

Pakistan ships out denims, bed linen and household apparels.

Bangladesh caters to the lower segment of the market, exporting T-shirts and shirts in

bulk, while India has emerged as the supplier of superior woven and knit products.

Since India supplies to the upper end of the market, it will likely begin to earn more for

its products once the global market stabilises from the current problems it is facing.

The Indian textile industry, however, has been irked by issues such as Goods and Services

Tax (GST), pruning of export concessions by the government and the credit squeeze.

While the centre can look at addressing these issues, it can also look at a few other things

too to help textile exports.

One, India should sign the long-pending Free Trade Agreement with the EU.

Two, it can also look at signing a similar agreement with Russia, which will help it access

the European market better. Once signed, the agreements can help India take advantage

of lower import duty rates that could be agreed upon bilaterally, and which could become

nil in due course of time.

Third, India could sign the Regional Comprehensive Economic Partnership Agreement

with China and Australia. This will help Indian exporters to tap the huge markets in both

those countries.

The industry and government should join hands to look at other markets such as Japan,

Israel, South Africa, and Hong Kong.

All these measures could help India meet its $82 billion textile exports target for 2021,

although it has already missed its $45 billion target set for the 2017-18 fiscal.

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16 CITI-NEWS LETTER

Textile entrepreneurs should weigh the strategic options before them:

CavinKare Founder

(Source: LN Revathy, the Hindu Business Line, September 09, 2019)

“Digital transformation could dramatically change the way we do business in the coming

years. So be prepared. Look for the leading edge and not the losing end,” said CK

Ranganathan, founder-Chairman, CavinKare Private Ltd.

Delivering the inaugural address at the SIMA Texpin 2019 (13th CEO Conference) at The

Residency Towers this morning, Ranganthan urged textile industry stakeholders to stay

ahead of the change, instead of blaming others or waiting for the Government.

“Assuming that there is no revival in sight, will you go back?” he asked, before retorting

“when the going gets tough, the tough gets going. Therefore, change your mind-set, look

inwards – at the pulls and pressures that are happening around and take the right

recourse.”

Sharing some tips on how he would have handled the situation (such as the one that the

textile sector is now facing with cheaper imports coming from neighbouring countries and

Indian textiles losing its sheen in the global marketplace), Ranganathan said, “businesses

have to be analysed from four angles such as strategy, structure, people and process.”

“Evaluate strategical options such as value-addition, creating a brand image, increasing

efficiency and above all at the way e-commerce and Artificial Intelligence are being used

by Gen Z to buy clothes. Use of AI in garment fitting has already started to pick up in

certain parts of the world,” he said, urging the participants to evaluate options without

delay.

Reverting to structure, he said “one can’t be idealistic about this (referring to structure).

However, if you foresee an opportunity, you should not hesitate to put the right kind of

people.”

Earlier, Ranganathan gave away SIMA Technofacts Award for 2018-19 to the top ten

performing group of mills. GHCL Limited topped the list of performers followed by Sri

Jayajothi Company and Precot Meridian respectively.

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17 CITI-NEWS LETTER

GLOBAL

Germany unveils 'green button' for sustainable textiles

(Source: DW, September 09, 2019)

Development Minister Gerd Müller has said the new initiative guarantees a responsible

supply chain. But critics say it is too weak to make a difference.

German Development Minister Gerd Müller (above right) presented the country's new

"Green Button" seal for sustainable textiles on Monday. The new scheme is meant to

ensure that consumers can purchase clothing that has achieved certain social and

environmental standards, including a minimum wage for textile workers and a ban on

child labor, as well as the use of certain chemicals and air pollutants.

"Everyone said that there was no way you could certify an entire supply chain right up

into the storefront," Muller told the Augsburger Allgemeine newspaper. "But we have

shown that is indeed possible with the example of textiles."

Müller has said that he was inspired to ensure the social responsibility and safety of the

clothing industry after being moved by the 2013 Rana Plaza disaster in Bangladesh. About

1,130 people were killed and 2,5000 injured when a garment factory collapsed in the

capital Dhaka, affecting workers who made clothes for major chains like Benetton,

Primark, Walmart, and Mango. The seal has already been applied to products from some

smaller German brands, but also large chains like Lidl and Tchibo.

'Too weak'

However, the new scheme has been heavily criticized by the textile industry, which says it

is superfluous and has created duplicate structures to those that already exist. They also

pointed out that if only Germany was taking part, it wouldn't make any real difference in

a globalized sector. "The initiative is good, but the implentation is not," said Uwe Wötzel

of the "Clean Clothes Campaign."

Wötzel told the news organization RedaktionsNetwerk Deutschland that "the criteria are

simply too weak" to make a difference with regards to sustainability and ensuring that

textile workers are employed in fair and safe conditions. For example, he said, the

minimum wage laid out in the framework is "so low that no one could live off it."

Germany's office for consumer protection said that they would have to wait and see what

effects, if any, the seal had on the clothing industry in the country.

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18 CITI-NEWS LETTER

Finance minister discusses trade ties with US secretary of commerce

(Source: Daily Sabah, September 09, 2019)

Treasury and Finance Minister Berat Albayrak exchanged views with U.S. Secretary of

Commerce Wilbur Ross Monday during a meeting. The two ministers discussed bilateral

economic and commercial relations in great detail, Albayrak said in a tweet.

"We have once again emphasized our resolution to reach $100 billion in bilateral trade

volume," the minister said. As part of his four-day visit to Turkey, the U.S. secretary of

commerce also met with Trade Minister Ruhsar Pekcan on Saturday and representatives

of the Turkish business world.

Turkey and U.S. have ramped up efforts to reach their goal for bilateral trade volume,

which was set at $100 billion by President Recep Tayyip Erdoğan and his U.S. counterpart

Donald Trump during a G20 meeting in late June.

Turkish exports to the largest economy in the world were $8.3 billion, while it imports

totaled $12.3 billion, according to data from the Turkish Statistical Institute (TurkStat).

In the January to July period of this year, the sale of Turkish goods and products to the

U.S. was $4.6 billion and U.S. exports to Turkey were $6.6 billion.

During Ross' visit, Turkish and American officials have discussed ways to unleash

Turkey's export capacity to the U.S., particularly in the sectors of civil aviation,

automotive, sub-automotive, jewelry, furniture and textiles, Pekcan previously said.

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Decathlon enters Bangladesh

(Source: The daily Star, September 10, 2019)

French sporting goods retailer Decathlon has recently opened its first store in Dhaka’s

Uttara targeting Bangladesh’s growing market of health consciousness and fitness

business.

Items for football, cricket, basketball, swimming, cycling, trekking, hiking and walking

alongside sports textiles, backpacks, tents and other accessories and fitness products are

available in the new store.

The company will source products for the Dhaka store mainly from its warehouse in India

and it will provide after sales service and accept returns.

It also says prices of products are “very affordable” in the store, such as a football ranging

between Tk 449 to Tk 1,599.

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19 CITI-NEWS LETTER

The French family-owned company opened the store on July 12, Deepak Dsouza, country

manager of Decathlon in Bangladesh, said last week.

With an annual revenue of over €12 billion, Decathlon has 1,500 stores in 54 countries,

including almost all major economies. In South Asia, it has 70 stores in India and one big

store in Sri Lanka.

Surprisingly, Bangladesh has long been one of the over 28 countries, including India and

Sri Lanka, which the company has in its list of sourcing destinations, currently ranking as

the third biggest after China and then Vietnam.

The company first made an appearance here 20 years ago and 10 years later established

its own office in Dhaka and Chattogram, employing some 200 staff in total.

Annually, the company sources 100 million pieces of items like tents, shoes and metal

frames of bicycles from 50 suppliers in Bangladesh, creating employment for some

50,000 people.

“We have some four (dedicated) industrial partners,” said Dsouza.

Explaining why it went for opening a store in Bangladesh, he said, “Decathlon is trying to

make sports accessible for everybody in Bangladesh. So we are initially concentrating only

on sports equipment.”

Cricket is the first choice of people in Bangladesh and football second, he said.

Despite this, interest on other sports is growing, especially in Dhaka, such as cycling and

running, which have a very big sports community, said Dsouza.

“Obviously, Bangladesh is now a very potential country with more than 160 million

people.”

There is also a growing group of middle-income people and many of them are becoming

health conscious and taking part in sports to remain fit, he said. It is creating an

opportunity for Decathlon to come and strengthen its presence in Bangladesh, Dsouza

said.

“Bangladesh is still growing and that’s exactly the reasons why we came. Because we

understood that there is a rapid growth that is really not comparable to other countries,”

he said.

Asked, Sabrina Jacksteit, retail leader of Decathlon, declined to reveal the Dhaka store’s

monthly sales figure. It is too early to reveal such data as it had been little over one month

past its opening.

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20 CITI-NEWS LETTER

“But we have a target. We are very close to achieving the target. We are happy with the

first month sales and we are quite optimistic,” she said.

She said it was impossible to exactly state the size of the market for sports items as

organised sports retailing is yet to start in Bangladesh.

However, the company’s full year market study states that Bangladesh’s sports market

was going to turn bigger soon.

“Bangladesh is like a blue ocean for the company as still there is no competitor here. We

definitely hope that one day we will be able to open our typical Decathlon store in different

cities in Bangladesh in future,” said Jacksteit.

“The company has been planning to sell the goods through online like Amazon. We will

open the website soon for selling the products online,” she added.

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Is govt suppressing data or expecting a turnaround?

(Source: The Print, September 08, 2019)

There is polarity in views on the economic performance of the country under PTI’s 13

month rule, with only government functionaries claiming a turnaround in sight, while

almost all economists see no light at the end of the tunnel.

Even economists in the government panel openly criticise state policies. Dr Ashfaque

Hasan Khan is amongst them. Independent economists see the economy going down as a

result of flawed policies, and Dr Hafeez Pasha, the veteran respected economist issues

frequent warnings in this regard.

Businessmen in the government panel also wonder at what is happening on the economic

front. The Pakistan Bureau of Statistics has held back the trade figure for the month of

July even in the second week of September; probably waiting for the public to forget what

Advisor to Prime Minister on Commerce Razzak Dawood boasted about exports in the

second week of August.

The central Bank has finally come out with figures that are much lower than what the

commerce advisor stated. The government side is playing politics on economic progress.

For instance they insist that exports in terms of quantity have increased, but the unit value

has declined.

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21 CITI-NEWS LETTER

They do not explain why the unit price has declined. If they analyse the performance of

all subsectors of our textile (mainstay in exports), they will find that every time the rupee

was devalued by 5-7 percent in one go, the unit value declined.

The imprudent manner in which the currency was devalued gave foreign buyers

ammunition to force the exporters to pass on major share of increase to them. The unit

price of textile products declined in other economies as well, but marginally, and much

less than the decline in unit values in Pakistan.

The need of the hour is to increase our exports in terms of value. July was the first month

in this regimes tenure when the exports in value increased by double digit. But this month

alone cannot be taken as an indication that the exports are on rise. The performance of

subsequent months (at least a quarter) would indicate the way exports are performing.

Opposition MNA Dr Ayesha Ghaus Pasha has rightly pointed out the increasing policy

rates when the inflation cost push is further dampening demand. The Indian central bank

has been easing its policy rate for over a year in order to increase demand.

The United States did so for over a decade to avoid recession. We were already in

recession, and the higher policy rates are further drowning the economy. It seems to be a

ploy to enrich the banks where the main client is the government. Higher interest rates

increase the debt servicing of the government on domestic debt that is higher than foreign

debt.

Debt service on foreign debt has already skyrocketed because of massive devaluation of

rupee. The debt servicing expenditure would continue to grow as we are set to acquire

billions of dollars of foreign loans and over trillion rupee domestic loans in foreseeable

future. Only reduction in policy rates would provide any reprieve to the state.

Inflation has remained in double digit despite change of base year. The CPI basket has

also been changed. Is it based on ground reality? The government has increased the

weight of energy in the basket, but has not touched the weight of food that remains at 34

percent.

The minimum wage has been fixed this year at Rs17,500/month – up from

Rs15,000/month. Can any economist make out a budget for households earning

Rs17,500/month based on the CPI index.

Majority of the population earns this amount (approximately (60 percent) assuming that

40 percent live below poverty line. Around 30 percent middleclass earns from Rs25,000-

Rs50,000/month.

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22 CITI-NEWS LETTER

The remaining 10 percent are from upper middle class (high salaried class) and rich

industrialists or landlords. For the sixty percent of the population the cost of food is over

50 percent of their monthly income.

For poorer segments it may go up to 80 percent. Why was this aspect ignored in the CPI

basket? Why we continue to twist statistics according to our wishes and not on ground

realities. Pakistanis would continue to suffer until reality based statistics are released.

This would facilitate planners to remove the deficiencies in planning and set priorities to

help the poor.

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China’s surprise slowdown is advantage India; how dragon’s unexpected

export, import fall will help

(Source: Samrat Sharma, Financial Express, September 09, 2019)

The Chinese economy witnessed an unexpected rocky trade in August with the exports

dropping by 1 percent on-year, against the market expectation of a 2 per cent growth.

The surprise fall in China’s exports last month, contrary to predictions, shows the extent

of a global economic slowdown, but may spell some relief for India, which is grappling

with its own slowing economy. The Chinese economy witnessed an unexpected rocky

trade in August with the exports dropping by 1 percent on-year, against the market

expectation of a 2 per cent growth. At the same time, its imports fell too, by 5.6% for the

month. Amid the ongoing trade war with the US, the sales for many major commodities

from China such as unwrought aluminium and its products, coal, coke and semi-coke,

steel products, refined products, and rice fell up to 44 per cent, according to the General

Administration of Customs, China.

On the import side, since China is the largest importer of metals, a slowdown there show

its impact at global levels. The declining demand for commodities in China and the global

market is likely to bring down the prices of major commodities, which in turn would cut

India’s import bill, say experts. As far as trade is concerned, India is not immune to the

global slowdown. “The global slowdown has several channels of contagion. For India,

export volumes moderated in spite of a modest real depreciation, showing that it is

external demand that is the key determinant of export performance,” says RBI’s latest

annual report.

However, economists believe that apart from maintaining the current account and the

balance of payment, turbulent global factors add only a little worry to India. “Indian

economy is mostly driven by domestic demand and the global demand has a minor role

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23 CITI-NEWS LETTER

to play,” Madan Sabnavis, Chief Economist, Care Ratings, told Financial Express Online.

He added that the weakness in demand for commodities such as steel, aluminium in

China is likely to bring down the commodities prices in the global market and this can

reduce India’s imports bill too. However, oil-driven imports form bulk of Indian

purchases from overseas, and thus the relief on the overall import bill will be small.

“China has cut its RRR by 50 basis points last week and has given hint for further

reduction to boost the growth. Looking at the recent changes in the fundamentals, a

further fall in the base metal prices will be capped,” Manoj Jain, Director-Commodities

and Forex banking, India Nivesh, told Financial Express Online. As far as the Indian

scenario is concerned, the import bill is already reduced due to slower domestic demand

as automobile and other manufacturing sectors are highly stressed.

China and the US have agreed to hold the 13th round of China-US high-level economic

and trade consultations in Washington in early October. Before that, the two sides have

decided to maintain close communication this month, according to the Ministry of

Commerce, China. The move has given hopes that the global slowdown will gradually

improve. Meanwhile, Chinese exports to the US fell by 16 per cent and Australia by 17 per

cent.

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