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

10-06-2019 76.35 (-3.00)

12-06-2018 100.65

11-06-2017 87.00

New York Cotton Futures (Cents/lb) As on 12.06.2019 (Change from

previous day)

July 2019 65.46 (-0.19)

Oct 2019 65.02 (-0.44)

Dec 2019 65.10 (-0.47)

12th June

2019

ITF urges textiles ministry to organise engagement events

Cut taxes to boost investments, growth, CII’s Kirloskar tells govt

13 RCEP nations oppose India’s strict country of origin norms

Transition plan to the new GST Return

Cotton and Yarn Futures

ZCE - Daily Data (Change from previous day)

MCX (Change from previous day)

June 2019 21190 (+10)

Cotton 13600 (+115) July 2019 21320 (0)

Yarn 21010 (+100) Aug 2019 21340 (+100)

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2 CITI-NEWS LETTER

-------------------------------------------------------------------------------------- ITF urges textiles ministry to organise engagement events

Cut taxes to boost investments, growth, CII’s Kirloskar tells govt

Australia urges India to play a greater role in shaping regional trade order

13 RCEP nations oppose India’s strict country of origin norms

Transition plan to the new GST Return

Indian, Chinese officials hold dialogue to break deadlock in RCEP trade negotiations

IL&FS case: After auditors, credit rating agencies face govt heat

India-Colombia set bilateral trade target $ 10 bn by 2030; Indian two-wheelers have a huge presence

GDP growth overestimated during 2011-17, says former CEA Arvind Subramanian

What’s India’s true growth rate? Govt stands by its estimates as former CEA questions GDP data

After 12 revenue officers, more may face the heat

India-UK Sports Alliance to encourage greater bilateral trade

Sitharaman holds pre-Budget consultation with industry, trade representatives

New textile processing cluster with zero-discharge units

Labour dept warns employers over seating for staff

Gail moves appellate court to challenge Alok Industries resolution plan

Govt planning new labour legislation by merging 44 laws under 4 categories

------------------------------------------------------------------------------- Will respond firmly if US raises trade tension: Chinese foreign ministry

Apparel buying houses asked to get registered with DoT

Pakistan:Rs100mn allocated for Commerce, Rs202.828mn for Textile in PSDP

Tintex Textiles joins United Nations Global Compact

Old bread becomes new textiles

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

NATIONAL

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

GLOBAL

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3 CITI-NEWS LETTER

NATIONAL:

ITF urges textiles ministry to organise engagement events

(Source: Fibre2Fashion, June 11, 2019)

In view of rising textile imports from Bangladesh,

Indian Texpreneurs Federation (ITF) has

requested the ministry of textiles to facilitate a

meeting of key brands and retailers with selective

manufacturing industry stakeholders at clusters

like Coimbatore and Tiruppur. ITF said it can act

as a platform to bring clusters and brands

together in Tamil Nadu.

In fiscal 2018-19, India’s textile and garment imports from Bangladesh increased by 53

per cent year-on-year to $1.07 billion (₹7,500 crore). If the products were not imported

and produced domestically, the ₹7,500 crore business would have created 1.5 lakh job

opportunities within the country, the Coimbatore-based organisation said in a letter

sent to textiles minister Smriti Irani.

As per ITF analysis, based on the data sourced form DGCI&S, cotton based readymade

garments falling under HS codes 62034200, 62052000, 62046200, and 61091000 are

the top four imported items.

“After witnessing a big jump in cotton-based textile product imports, now synthetic-

based textile product imports are also catching up with a much faster growth rate. These

products (both cotton and synthetic-based textile products) are commonly

manufactured in textile clusters like Tiruppur, Chennai, Surat and Ichalkaranji,” the

letter said.

The letter also mentions that job creation and lower level of participation of women in

the workforce are the twin challenges faced by the country. “By developing textile

manufacturing sector, we can address these two challenges. For example, ₹500 crore

investment in a heavy engineering factory can create 1,000 to 1,500 jobs; whereas textile

and apparel sector can create 40,000 jobs for the same investment.”

As a starting point, ITF convenor Prabhu Dhamodharan requested the newly formed

Narendra Modi-led NDA government and the textiles ministry to facilitate a meeting

with the brands and domestic manufacturers so that all clusters can benefit.

Home

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4 CITI-NEWS LETTER

Cut taxes to boost investments, growth, CII’s Kirloskar tells govt

(Source: Live Mint, June 11, 2019)

The Confederation of Indian Industries (CII) has called upon the government to lower a

broad range of taxes to encourage equity investments by both individuals as well as

corporates.

CII president Vikram Kirloskar said while a strong government gives confidence and

boosts investment sentiment, bringing India back on the high growth trajectory will

require rationalization of taxes, with special emphasis on equity creation.

“There is a debt overhang. One cannot grow GDP (gross domestic product) on debt

alone. We have to encourage equity and grow the equity," Kirloskar said in an interview.

He sought lowering of various types of taxes such as corporate tax and capital gains tax.

“Our request to the government is to look at reduction in tax on equity and not to do

anything that will sentimentally hurt equity growth. If you are talking about reaching 8-

10% GDP growth, we have to make equity highly viable. That is what will encourage

people to invest," Kirloskar said.

The comments of the business lobby group’s chief come at a time when India grew at its

slowest pace in five years at 5.8% in the March quarter. The growth rate during 2018-19

slowed to 6.8% from 7.2% a year earlier. Besides, the banking regulator said last week

that a sharp slowdown in investment and moderation in private consumption is a matter

of concern.

Since January, the Reserve Bank of India (RBI) has cut benchmark interest rates three

times by a cumulative 75 basis points, a move to ease lending rates and boost

consumption. However, banks are yet to fully transmit the rate cuts to retail consumers.

Keeping with the trend of an economic slowdown, domestic automobile sales have also

been on a decline in the past few months. Kirloskar, who is also vice chairman of Toyota

Kirloskar Motor, said one of the reasons behind the fall in automobile sales is financing

costs and the liquidity squeeze in non-banking financial companies (NBFCs). The Lok

Sabha polls also impacted car sales as potential buyers deferred purchases.

“Secondly, there is also some structural change. Metro traffic has increased across the

country. It (metro) was only in two cities. Now, it is all across the country. Shared

mobility has increased dramatically…That could be having a structural affect, which is

good for the country," he said.

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5 CITI-NEWS LETTER

At a time when the government could not meet its direct tax collection target for 2018-

19, Kirloskar believes that there is still scope for a lowering of corporate taxes in the

federal budget that will be presented by finance minister Nirmala Sitharaman on 5 July.

“The only reason we are talking about corporate tax reduction and saying 18% with zero

exemptions because we see it as revenue neutral. So, it may not affect the overall

collection," he said, adding the reduction in tax could be gradual.

On indirect taxes, Kirloskar said he expects rationalization of rates under the Goods and

Services Tax (GST) with fewer items on the bottom and top tax slabs. Without naming

the items, he said more items could come under the ambit of GST.

As far as job creation is concerned, the government needs to look at sectors such as

tourism, agriculture, food processing and textiles that could be big employment

generators. For this, a separate panel or an official can study the hurdles in the process

of job creation. Much like what Nandan Nilekani did for the government’s unique

identification programme, Kirloskar said.

Nilekani is former chairman of the Unique Identification Authority of India and

architect of the biometric-based Aadhaar identification number.

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Australia urges India to play a greater role in shaping regional trade order

(Source: Elizabeth Roche, Live Mint, June 11, 2019)

Australia on Tuesday urged India to play a greater role in shaping the economic

architecture of the Indo-Pacific region and help successfully conclude talks to forge a

new regional trade bloc, the Regional Comprehensive Economic Partnership (RCEP).

India and Australia have developed mutual trust over the past decade to work together

on strategic issues in the Indo-Pacific region, Australia’s high commissioner to India

Harinder Sidhu said on Tuesday. The two countries could now work together to

strengthen the economic order in the region, Sidhu told the Indian Association of

Foreign Affairs Correspondents.

If India plays its part to successfully conclude the RCEP, it would help New Delhi

integrate into the economic landscape of the Indo-Pacific, the high commissioner said.

“India is a leader and an Asian and Indo-Pacific powerhouse. So, for that reason, I think

it’s important that India plays a greater role in shaping the regional trading order,"

Sidhu said.

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6 CITI-NEWS LETTER

“Successfully concluding the RCEP, which includes India, China, and Asean (Association

of Southeast Asian Nations) countries, as well as Australia and New Zealand, will help

shape the regional rules and the norms governing trade," she said.

India has been going slow on RCEP negotiations as it is wary of China’s presence in the

grouping, with which New Delhi already has a massive $60 billion trade deficit. Indian

industry apprehends greater market access to China could harm key manufacturing

sectors such as steel and textiles. It has also been worried about giving greater market

access to other non-free trade area partners, including Australia and New Zealand.

Another area in which Australia and India could work together was financing the

infrastructure in the Indo-Pacific region, Sidhu said. The high commissioner did not

mention any country by name, but the statement comes against the backdrop of China

unveiling its ambitious Belt and Road Initiative, which looks to connect Asia, Europe

and Africa through a series of roads, ports and railway lines.

Australia has announced plans to help investment in the Pacific, South-East Asia and

South Asia, Sidhu said.

This is the result of India and Australia “shaking off our own hesitations of history" and

working together in far more forums at the Indo-Pacific level, she added.

The quadrilateral grouping of the US, Australia, India, and Japan, known as the “Quad",

was a manifestation of this cooperation, she said, pointing to other formats of dialogue

such as the Australia-India-Japan talks and the Australia-India-Indonesia talks, besides

larger fora such as the East Asia Summit. On the bilateral front, the “tempo" of activity

was growing with both countries having concluded a major naval exercise recently,

which was the “largest and most complex of its kind". Activities in the defence arena had

shown a fourfold rise from 11 events in 2014 to 38 in 2018.

One area that was performing below potential though was bilateral trade, Sidhu said.

Australian exports to India had doubled between 2013 and 2018 from 11 billion

Australian dollars to 22 billion Australian dollars. India is now Australia’s third largest

export market after China and the US, she said, but added that despite all these

numbers “our two-way trade with India is the same as our two-way trade with New

Zealand". “So, that gives you a sense of the scope for expansion." The Australian

government had commissioned an India Economic Strategy, which looks at ways to

improve trade. It had set up a trade target of $100 billion by 2035, Sidhu said.

India, too, on its part, had commissioned an Australia Economic Strategy and this was a

welcome move, given that a strong economic relationship forms the “glue" in any

relationship, Sidhu said.

Home

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7 CITI-NEWS LETTER

13 RCEP nations oppose India’s strict country of origin norms

(Source: Kritika Suneja, Economic Times, June 11, 2019)

India wants strict rules of origin to prevent Chinese goods from flooding the country

through member countries that may have lower or no duty levels. At least 13 countries

including Australia, Japan and New Zealand have opposed India’s proposal for strict

criteria to determine the source country of a product, based on which they get tariff

concessions or duties, in the 16-nation Regional Comprehensive Economic Partnership

(RCEP) trade pact.

The 10-member ASEAN bloc too has opposed India’s proposal, an official said. India

wants strict rules of origin to prevent Chinese goods from flooding the country through

member countries that may have lower or no duty levels. Chinese garments are making

their way into India through the duty-free route under the South Asia Free Trade Pact

and the Duty-Free Quota-Free window from Bangladesh. This was a key issue at the

intersessional meeting of RCEP countries in Bangkok last month. “We want clearly

defined rules of origin to ensure integrity and sanctity of tariff differentiation. Led by

Australia, most others want liberal rules of origin,” said the official familiar with the

details. India has said the highest value addition with the help of indigenous inputs

must be done in the country from which a product is exported. Globally, the average

threshold for domestic content to get originating status for a product is 40-60%.

“These countries don’t have the kind of resources and manufacturing like us except

Japan, which is into large-scale value addition and exports. So, they want lenient rules,”

the official said. Strict origin norms are crucial for India, which had a trade deficit with

11 RCEP members including China, South Korea and Australia in 2018-19. The gap with

China alone was $53.6 billion. India’s aluminium and copper industries are worried

about China’s presence in the grouping and anticipate widening of the trade deficit due

to an “alarming” spike in imports and a potential threat to the Make in India initiative.

Niti Aayog said in a study that “if duty is further cut under RCEP, domestic aluminium

industry will be severely hit.” “However, China is conservative and not on either side,”

the official added. The issue will be taken up again at a meeting in Australia during June

28-July 3, followed by a meeting in China at the end of July. A ministerial meeting is

slated in China in August as members try to conclude the mega-trade agreement this

year. “RCEP will not benefit us vis-a-vis China...We already have a deficit with most of

the member-countries,” said a New Delhi-based expert on trade issues. “The Chinese are

already taking advantage of our liberal rules of origin with neighbouring least developed

countries including Bangladesh,” said Biswajit Dhar, professor at the Centre for

Economic Studies and Planning in the School of Social Sciences at Jawaharlal Nehru

University. RCEP is a proposed regional economic integration agreement among the 10

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8 CITI-NEWS LETTER

Asean countries and its six free-trade agreement partners—Australia, New Zealand,

Japan, China, South Korea and India.

Home

Transition plan to the new GST Return

(Source: PIB, June 11, 2019)

The GST Council in its 31st meeting decided that a new GST return system will be

introduced to facilitate taxpayers. In order to ease transition to the new return system, a

transition plan has been worked out. The details of the indicative transition plan are as

follows: -

i. In May, 2019 a prototype of the offline tool has already been shared on the

common portal to give the look and feel of the tool to the users. The look and feel

of the offline tool would be same as that of the online portal. Taxpayers may be

aware that there are three main components to the new return – one main

return (FORM GST RET-1) and two annexures (FORM GST ANX-1 and

FORM GST ANX-2).

ii. From July, 2019, users would be able to upload invoices using the FORM GST

ANX-1 offline tool on trial basis for familiarisation. Further, users would also be

able to view and download, the inward supply of invoices using the FORM GST

ANX-2 offline tool under the trial program. The summary of inward supply

invoices would also be available for view on the common portal online. They

would also be able to import their purchase register in the Offline Tool and match

it with the downloaded inward supply invoices to find mismatches from August

2019.

iii. Between July to September, 2019 (for three months), the new return system

(ANX-1 & ANX-2 only) would be available for trial for taxpayers to make

themselves familiar. This trial would have no impact at the back end on the tax

liability or input tax credit of the taxpayer. In this period, taxpayers shall

continue to fulfil their compliances by filing FORM GSTR-1 and FORM GSTR-

3B i.e. taxpayers would continue to file their outward supply details in FORM

GSTR-1 on monthly / quarterly basis and return in FORM GSTR-3B on

monthly basis. Non-filing of these returns shall attract penal provisions under the

GST Act.

iv. From October, 2019 onwards, FORM GST ANX-1 shall be made compulsory

and FORM GSTR-1 would be replaced by FORM GST ANX-1. The large

taxpayers (i.e. those taxpayers whose aggregate annual turnover in the previous

financial year was more than Rs. 5 Crore) would upload their monthly FORM

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9 CITI-NEWS LETTER

GST ANX-1 from October, 2019 onwards. However, the first compulsory

quarterly FORM GST ANX-1 to be uploaded by small taxpayers (with aggregate

annual turnover in the previous financial year upto Rs. 5 Crore) would be due

only in January, 2020 for the quarter October to December, 2019. It may be

noted that invoices etc. can be uploaded in FORM GST ANX-1 on a continuous

basis both by large and small taxpayers from October, 2019 onwards. FORM

GST ANX-2 may be viewed simultaneously during this period but no action

shall be allowed on such FORM GST ANX-2.

v. For October and November, 2019, large taxpayers would continue to file FORM

GSTR-3B on monthly basis. They would file their first FORM GST RET-01 for

the month of December, 2019 by 20th January, 2020.

vi. The small taxpayers would stop filing FORM GSTR-3B and would start

filing FORM GST PMT-08 from October, 2019 onwards. They would file their

first FORM GST-RET-01 for the quarter October, 2019 to December, 2019 from

20th January, 2020.

vii. From January, 2020 onwards, all taxpayers shall be filing FORM GST RET-

01 and FORM GSTR-3B shall be completely phased out.

Separate instructions shall be issued for filing and processing of refund applications

between October to December, 2019.

Home

Indian, Chinese officials hold dialogue to break deadlock in RCEP trade

negotiations

(Source: Amiti Sen, The Hindu Business Line, June 12, 2019)

Member nations keen to conclude parleys by year-end

In a renewed attempt to break the stalemate in the ongoing Regional Comprehensive

Economic Partnership (RCEP) negotiations involving 16 countries, senior officials from

India and China met in New Delhi this week to try and reach a common ground on

market opening commitments.

“We are trying to reduce the gap between the market access being demanded by China

and what India has to offer. Till this matter is resolved it will be difficult to make

progress in the overall RCEP negotiations,” a government official told BusinessLine. The

Indian and Chinese delegations that participated in the meeting on June 10-11 were

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10 CITI-NEWS LETTER

headed by Commerce Secretary Anup Wadhawan and Chinese Vice-Minister of

Commerce Wang Shouwen, respectively.

The RCEP, being negotiated between the 10-member ASEAN, India, China, Japan,

South Korea, Australia and New Zealand, once implemented, would result in one of the

largest free trade bloc accounting for 45 per cent of the world's population, and a

combined GDP of about $21.3 trillion and 40 per cent of world trade. India, however, is

not comfortable with the steep commitments on opening markets in goods being pushed

by most members, especially China. New Delhi wants to offer much lower market access

in goods to China compared to other members such as the ASEAN, Japan and South

Korea, but Beijing is not willing to accept it.

“In the two-day meeting, discussions happened on goods, services as well as

investments. While there was some positive movement in services with China paring its

demand, a lot more progress needs to be achieved in goods and investments,” the

official said.

India, which has so far offered to eliminate tariffs for 70-80 per cent of goods for China

over an extended period of time, is unwilling to give more as the Indian industry is

apprehensive of being adversely hit due to it. “China already runs a trade surplus of over

$60 billion with India and the domestic industry is reeling under heavy competition

from Chinese goods. The government can't let the situation go out of hand,” the official

said.

A decision, however, has to be taken by the new Commerce & Industry Minister Piyush

Goyal soon on how much more flexible India could get. China is already hinting at going

in for a free trade agreement between the ASEAN, China, Japan and South Korea if the

RCEP talks take too long. The ASEAN, too, is putting pressure on India to move fast so

that the negotiations could be completed by the year-end.

“There are a number of technical discussions scheduled in Melbourne at the end of the

month. By then, India should be clear on its negotiating flexibilities,” the official said.

Home

IL&FS case: After auditors, credit rating agencies face govt heat

(Source: Business Standard, June 11, 2019)

MCA may invoke Section 447 of Companies Act to slap penalty and suspend some of the

rating agencies

The Ministry of Corporate Affairs (MCA) is planning to act tough against some of the top

credit rating agencies in relation to the IL&FS case, according to sources in the know.

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11 CITI-NEWS LETTER

These agencies had rated the debt instruments of IL&FS Financial Services (IFIN),

which went bust.

The ministry may invoke Section 447 of the Companies Act for imposing penalty and

suspending these firms and their executives, one of the sources said. The development

follows the government moving the National Company Law Tribunal (NCLT) on

Monday to ban the auditors of IFIN for five years over failure in ...

Home

India-Colombia set bilateral trade target $ 10 bn by 2030; Indian two-

wheelers have a huge presence

(Source: Financial Express, June 11, 2019)

Colombian economy’s growth is set to climb this year on acceleration in exports. The

investment should surge on infrastructure and oil sector investments; although the

government’s fiscal consolidation efforts could cause domestic demand to decelerate

slightly.

Aiming to increase bilateral trade from the present level of around $1.5 billion to at least

$10 billion by 2030, India and South American nation Colombia will soon finalize terms

of reference of Partial Scope Agreement.

Talking to Financial Express Online, a top Indian diplomat at the Indian Embassy in

Bogota, Colombia said that achieving the target of $ 10 billion by 2030, may seem a

herculean task but should not be difficult. “As Colombia continues to improve its trade

and investment climate, Indian companies should surely look at expanding and entering

this lucrative market.”

Colombian economy’s growth is set to climb this year on acceleration in exports. The

investment should surge on infrastructure and oil sector investments; although the

government’s fiscal consolidation efforts could cause domestic demand to decelerate

slightly.

However, downside risks stem from uncertainties over the pace of fiscal reforms,

challenging external environment, the Venezuelan refugee crisis.

How has India fared in this market?

This year the two countries are celebrating 60 years of diplomatic relations. “The

bilateral trade has now stabilized because in the past it fluctuated at around $ 1.5 -2

billion when Indian exports to Colombia in 2015 were $ 1.19 billion dropped to $ 945

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12 CITI-NEWS LETTER

million in 2016. Since then have recovered and maintained over $ 1billion,” the

diplomat said.

Adding, a number of Indian companies have made serious efforts in accessing this

market. All Indian two-wheeler brands have a presence in Colombia including — Bajaj,

Hero, TVS and Royal Enfield which race past Suzuki, Yamaha, AKT, KTM, etc., on the

Colombian roads.

“Bajaj and TVS three-wheelers can also be sighted in small towns- this mainly on

account of Colombian law which restricts such vehicles to ferry passengers in areas with

a population of less than 55,000. This rule has no scientific basis. Mahindra and

Mahindra pickup trucks are popular in “Eje Cafétero” – Coffee producing region- due to

their robustness. And, its crossovers and SUVs are attracting attention due to design

and price advantage. This is significant as they face stiff competition from the US,

European, Japanese, Korean, Chinese automakers.”

India also has a growing share in pharmaceuticals, agrochemicals, textiles – fabrics,

accessories to make the Colombia textile sector more attractive and competitive. The

Indian IT companies have earned a good name and employ thousands of Colombians in

Bogota and Medellin.

According to the diplomat, the new drivers of Indian exports to this market could be e-

vehicle, undertake EPCs projects and add financing the incentive to make the bids

attractive, biotech, solar energy, the services sector- invest in hospitality and tourism.

What about the Hydrocarbons sector?

Colombia is a member of the OECD since June last year. The current regional oil

production situation remains uncertain and demands that India scale up existing

hydrocarbon investments in Colombia. And the Indian investors will find a welcoming

environment.

Home

GDP growth overestimated during 2011-17, says former CEA Arvind

Subramanian

(Source: The Hindu, June 11, 2019)

In a research paper, Arvind Subramanian attributes the overestimation to a change in

methodology for calculating the Gross Domestic Product

Former Chief Economic Adviser (CEA) Arvind Subramanian has said India’s GDP

growth in the period 2011-12 to 2016-17 is likely to have been over-estimated, and the

tag of fastest-growing major economy may not hold.

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13 CITI-NEWS LETTER

In a research paper, ‘India’s GDP Mis-estimation: Likelihood, Magnitudes, Mechanisms,

and Implications’, published by Harvard University, Mr. Subramanian has argued that

GDP growth during that period was actually 4.5% rather than the 7% presented by the

official data.

“India changed its data sources and methodology for estimating real gross domestic

product (GDP) for the period since 2011-12,” he writes in his paper, ‘India’s GDP Mis-

estimation: Likelihood, Magnitudes, Mechanisms, and Implications’, published by the

Center for International Development at Harvard University.

“This paper shows that this change has led to a significant overestimation of growth,”

the paper adds. “Official estimates place annual average GDP growth between 2011-12

and 2016-17 at 7%. We estimate that actual growth may have been about 4.5%, with a

95% confidence interval of 3.5-5.5%.”

Responding to Mr Subramanian's paper, the Ministry of Statistics and Programme

Implementation late on Tuesday evening reiterated its stance that the methodology

adopted was in line with international standards as set by the United Nations and was as

such robust.

17 indicators

Mr Subramanian, whose term as CEA from October 2014 to June 2018 coincided in part

with this period of "overestimation", stressed that his paper deals with the technical

origins of the GDP overestimation and not the political aspects of it.

He argued that one of the problems with the new methodology for calculating GDP

growth since 2011 was that the growth numbers no longer correlated with other

indicators of economic growth such as electricity consumption, two-wheeler sales,

airline passenger traffic, index of industrial production, and export figures, to name a

few.

One of the problems highlighted by the former CEA was that growth numbers no longer

correlated with other indicators of economic growth such as electricity consumption,

two-wheeler sales, airline passenger traffic, index of industrial production, and export

figures, to name a few.

In total, Mr Subramanian looked at 17 such indicators and found that “the correlations

between most indicators and GDP growth broke down in the post-2011 period”.

Methodological issues

Former Chief Statistician of India and expert on India’s GDP calculations Pronab Sen

countered Mr. Subramanian’s thesis, arguing that it is the result largely of the

methodology.

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14 CITI-NEWS LETTER

“If you think about GDP growth, it can come from three distinct factors,” Dr. Sen

explained. “One is growth in volumes, the amount that is produced. The second is

growth in productivity, and the third is improvement in product quality. What Arvind

has done is that the indicators he has used are all volume indicators, and having done

that, he has said they were very strongly correlated prior to 2011 but not after that

period.”

The reason for this breakdown in correlation, Dr. Sen explained, is precisely because the

shift in methodology in 2011 meant that the value of goods and services were now

considered to estimate growth and not their volume.

“In estimating the growth of the high-frequency indicators pre-2011, he has in a sense

replicated the method in which the GDP growth was calculated during that period, and

then said that there is a correlation between these indicators and GDP growth,” Dr. Sen

said. “Post 2011, when we moved to value indicators from volume indicators, the

relationship is weaker because the other two drivers would start getting picked up by the

values.”

“If he had made the statement that in the post-2011 growth, only 4.5% came from

volumes and the remaining 2.5% came from other factors which we don’t know, then

that would have been correct,” Dr Sen added.

Impact of prices

Mr Subramanian also argued that the shift in 2011 to using values rather than volumes

meant that price changes, especially in important inputs such as oil, would have started

to have a big impact on the final growth number.

“Under the old, establishment-based GDP estimates, price changes mattered less

because real growth numbers were largely based on volumes not values,” Mr.

Subramanian says. “Under the new system, however, values had to be deflated by prices

to get real magnitudes. And this mattered crucially for the manufacturing sector where

the often-dramatic changes in oil prices can heavily influence input costs”

Dr Sen also acknowledged that this problem with the new methodology should be

addressed. However, he pointed out that while price changes did have an effect now, the

direction of that impact was not evident. So, to say that there was only an over-

estimation of GDP growth would not be correct. Gauging the effect of price changes on

GDP growth using the new methodology would be a different exercise, separate from the

one Mr Subramanian has conducted, Dr Sen said.

“Earlier, prices didn’t matter, as he said,” Dr. Sen said. “But it’s not obvious that the

direction of error is constant. When oil prices are falling, then you would be over-stating

GDP, but when they are rising, you would be under-stating GDP.”

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15 CITI-NEWS LETTER

Mr Subramanian’s paper also points towards the fact that the way the informal sector in

India was measured was using formal sector proxies, which was an increasingly

inaccurate approach. This, too, is a correct assessment, according to Dr Sen, who said

this problem has become even more acute post-demonetisation, when the informal

sector’s growth fell away.

“But remember that the period Arvind is talking about is pre-demonetisation, so this

argument I don’t think applies with as much force then,” Dr. Sen said.

Mr. Subramanian derives several implications from the findings of his paper. The first is

that growth needed to be restored to high levels. The second that the quality and

integrity of data in India needs to be improved, something called for by several other

economists. And the third is that “India must restore the reputational damage suffered

to data generation in India across the board”.

He also called for the creation of a taskforce to revisit the entire methodology and

implementation of GDP estimation.

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What’s India’s true growth rate? Govt stands by its estimates as former CEA

questions GDP data

(Source: Money Control, June 12, 2019)

In the paper, Subramanian, who quit as the CEA in June last year, seeks to

estimate the Indian economy’s growth by posing some basic questions: how

often are people buying cars? Are companies and individuals borrowing

more or less during a given period?

The government on June 11, 2019, stoutly defended India’s official growth estimates,

strongly arguing that these were backed by a statistically rigorous method that both the

International Monetary Fund (IMF) and the World Bank has validated.

“GDP (gross domestic product) growth projections brought out by various national and

international agencies are broadly in line with the estimates released by MOSPI

(Ministry of Statistics and Programme Implementation). The GDP estimates released by

the Ministry are based on accepted procedures, methodologies and available data and

objectively measure the contribution of various sectors in the economy,” MOSPI said in

a late evening statement.

MOSPI’s statement came after former chief economic adviser (CEA) Arvind

Subramanian in a new research paper suggested that India’s “real” or inflation-adjusted

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16 CITI-NEWS LETTER

GDP may have grown at an average 4.5 percent in the years between 2011-12 and 2016-

17, instead of about the 7 percent average as shown by official data.

These six years are evenly spread between two regimes, with three years each falling

between the Manmohan Singh-led UPA 2 government (2009-14) and the Narendra

Modi-led NDA 2 government (2014-19).

The Indian economy probably grew at an annual average of 4.5 percent during 2011-12

to 2016-17, and not sizzled at 7 percent as the government’s number crunchers had put

out.

“The results in the paper suggest that the heady narrative of a guns-blazing India must

cede to a more realistic one of an economy growing solidly but not spectacularly,” he

said in the paper.

Hours later, the government, rebutted Subramanian’s claims stating that “the

methodology of compilation of macroaggregates has been discussed in detail by the

Advisory Committee on National Accounts Statistics (ACNAS) comprising experts from

academia, National Statistical Commission, Indian Statistical Institute (ISI), Reserve

Bank of India (RBI), Ministries of Finance, Corporate Affairs, Agriculture, NITI Aayog

and selected State Governments."

The decisions taken by these committees are unanimous and collective after taking into

consideration the data availability and methodological aspects before recommending

the most appropriate approach, it said.

Subramanian’s paper added a fresh round to an ongoing controversy surrounding

India’s national income calculations.

Gross Domestic Product or GDP, by definition, represents the total value of all the final

goods and services that are produced within a country's borders within a particular time

period, typically a year or a quarter.

It can be calculated by using three methods—the supply or production method, the

income method and the demand or expenditure method and by definition the value of

GDP should be identical, irrespective of the method used.

This is because one person’s or entity’s income is another person’s spending on

expenditure. For instance, what households spend in buying provisions at a local store is

the shop owner’s income. Likewise, an employee’s salary is what his/her company

spends. In the final national income calculations, the income of all individuals will be

equivalent to the spending of all.

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17 CITI-NEWS LETTER

The base year of the national accounts is chosen to enable inter-year comparisons. It

gives an idea about changes in purchasing power and allows calculation of inflation-

adjusted growth estimates.

The new series has changed the base to 2011-12 from 2004-05. Every national accounts

dataset gives GDP calculations for two years: 2011-12 and the current year.

A decision to change the GDP calculation method was taken during the UPA-II years.

The NDA government launched the first set of data, giving out levels of GDP and growth

rates from 2011-12.

The key points of dispute, including those raised by Subramanian, have arisen only after

the new method was adopted effective from 2011-12.

In the previous method, the index of industrial production (IIP) or factory output was

the main measure to calculate manufacturing and trading activity.

The limitation was, that this only counted volume and did not give an idea about value.

For instance, in the old method, the number of motorcycles produced in the plant was

counted, as opposed to the motorcycles’ value that the plant rolled out.

In the communication sector, telecom subscriber base was used in the old sector as

compared to minutes of usage in the new formula.

Previously, the first GDP estimates were based on IIP data. It was updated every two

years factoring in data from the Annual Survey of Industries (ASI). ASI only gave out

goods’ value produced by firms registered under the Factories Act.

Now, the corporate affairs ministry’s MCA 21 records a wide-ranging compilation of

balance sheet data of lakhs of firms.

The use of MCA 21 records for national income calculations have brought to light a

segment of organised activity, which was earlier, for the most part, invisible. This is the

lower end of the corporate segment. These are companies not listed on stock exchanges

and virtually left out of national income calculations.

The new method adopts a gross value added (GVA)-based approach as compared to a

pre-dominantly volume-based calculation previously.

GVA, which is GDP minus taxes, serves as a more realistic proxy to measure changes in

the aggregate value of goods and services produced in the economy.

Earlier, the IIP served as the primary metric to gauge manufacturing and trading

activity. The problem was, it only counted the number of units produced and did not

distinguish, between, say the value of a luxury car and an entry-level hatchback. It is

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18 CITI-NEWS LETTER

possible that factory output would have remained stagnant over a period of time, but its

value would have multiplied.

One can keep selling the same number of cars, but keep improving the quality so the

value goes up. An even better example than cars is computers. A purely output-based

method would not be able to capture the innovations and the value additions in such

products and industrial activity.

The GVA method also factors in value addition and economic action carried out by

activities such as marketing. Such activity can be of very high value in case of large

FMCG companies.

Subramanian’s main question is about the correlation between say growth in bank credit

and car sales weakening considerably after 2011-12, raising questions about the

statistical robustness of the new model.

Simply put, Subramanian’s argument raises a basic question: How come India is still

growing at 7 percent though bank credit has been growing only at 9 percent since 2014?

Subramanian’s view about a weak correlation among proxy indicators such as car sales

and bank borrowing after 2011-12, however, runs contrary to some other experts’

opinion who point out evidence to the opposite.

Such an argument assumes that India’s growth is highly credit-dependent, almost one

for one.

In an article in Mint, Apoorva Javadekar, an assistant professor of finance at the Indian

School of Business (ISB), has contended such an argument was deeply flawed for several

reasons.

Javadekar has produced evidence where bank credit and GDP growth diverged during

multiple periods even using the older GDP calculation method.

“Between the fourth quarter of 2008 and the corresponding quarter of 2009, bank

credit growth tumbled from 26 percent year-on-year to 11 percent, but GDP growth rose

from around 3 percent in the first quarter of 2009 to 11 percent in the same quarter of

2010,” Javadekar pointed out.

Importantly, the correlation between bank credit and corporate and individual finance

has been weakening also because of the rise in the shadow banks of non-banking finance

companies (NBFCs).

According to Javadekar, more than 50 percent of new corporate funding is coming from

non-bank sources—either equity, non-banking financial companies (NBFCs) or foreign

debt. “Hence, one cannot expect a very strong link between bank lending and corporate

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19 CITI-NEWS LETTER

investment. The bottom line is that bank credit is not a great variable to smell the level

of GDP growth,” he said in the article.

The government has responded to Subramanian’s paper by saying that as with any

international standard, the data requirements are immense and diverse economies like

India take time to evolve the relevant data sources before they can be fully aligned with

the System of National Accounts 2008 (SNA) requirements.

SNA is the latest version of the international statistical standard for the national

accounts, adopted by the United Nations.

“In absence of data, alternate proxy sources or statistical surveys are used to estimate

the contribution of various sectors to the GDP/GVA,” the MOSPI statement said.

The SNA also prescribes that the base year of the estimates may be revised at periodic

intervals so that changes in the economic environment, advances in methodological

research and the needs of users are appropriately captured.

Base year revisions, MOSPI said, not only use latest data from censuses and surveys, but

they also incorporate information from administrative data that have become more

robust over time.

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After 12 revenue officers, more may face the heat

(Source: Economic Times, June 11, 2019)

Allegations against some of the officers who were compulsorily retired on Monday range

from extortion and forging a will to helping late godman Chandraswami.

The government, which compulsorily retired 12 revenue service officers for misconduct

and corruption, hasn’t ruled out more action under similar provisions. Allegations

against some of the officers who were compulsorily retired on Monday range from

extortion and forging a will to helping late godman Chandraswami. On the other hand,

Reserve Bank of India board member S Gurumurthy on Tuesday tweeted in support of

one officer, SK Srivastava, who he said was one of the “very few capable investigators

and legal brains” in the Income Tax Department. Action taken against the 12 officers on

Monday afternoon was prompted by the government’s resolve to clean up the system

and send a strong message that it will not spare those who are tainted or not

performing. “Further action under this provision is not ruled out,” a government official

said. The government has taken measures to improve tax administration and reduce the

scope for discretion in decisions to lessen corruption and harassment of taxpayers.

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20 CITI-NEWS LETTER

The government invoked clause ‘j’ of Rule 56 of the Fundamental Rules to retire the 12

officers The rules allow if deemed in public interest the appropriate authority absolute

right to retire any government servant by giving notice of less than three months in

writing or three months’ pay and allowances in lieu. Gurumurthy said in his tweet, “If

reports I hear are true that Sanjay Shrivastava a totally honest, courageous IT

commissioner who exposed the NDTV fraud & fought PC Chidambaram for 15 yrs, bore

all persecution, is being compulsory retired, it means Lutyens, PC & NDTV lobbies are

still at work in this govt.” He also tweeted, “Since Shrivastava has been sacked PC,

NDTV have got hopes to escape. He had been behind most action against them. IT dept

has very few capable investigators & legal brains like him. To club Shrivastava with

corrupt is the biggest joke. Great injustice.” However, finance ministry officials

defended their action, saying the officers faced serious charges. Some have been under

the scanner of the Central Bureau of Investigation for holding disproportionate assets

and others face criminal cases for forgery. One senior revenue service officer has been

charged with lapses and irregularities in his administrative work and has been accused

of sexually harassing two senior lady revenue service officers. This officer was known to

threaten senior officers and level unsubstantiated allegations against them, using

slanderous language, said a ministry official who did not wish to be identified.

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India-UK Sports Alliance to encourage greater bilateral trade

(Source: Business Standard, June 11, 2019)

The UK government on Tuesday brought together business leaders from high-profile

sporting companies based in India and the UK to showcase international trade

opportunities in London as part of a new India-UK Sports Alliance.

The UK's Department for International Trade said the India-UK sports delegation will

showcase opportunities for British sporting exporters during the ongoing 2019

Cricket World Cup in England.

Latest data released by DIT shows exports of sporting goods to India increased by 30.6

per cent in 2018, with overall exports of British sporting equipment at an all-time high

and rising by 10 per cent to 500 million pounds last year.

The UK wants to be India's partner in delivering world class sporting events using our

experience and expertise gained from delivering some of the biggest global sports events

in the world, UK's Secretary of State for International Trade Liam Fox said.

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21 CITI-NEWS LETTER

There are significant benefits of hosting large sporting events to local economies. By

showcasing the success of British business at the Cricket World Cup, the UK stands

ready and able to help our Indian sporting partners realise their own success, he said.

The DIT noted that India is already the UK's 11th largest export market outside of the

EU and accounts for 7.5 billion pounds of existing investment in the UK.

Bilateral trade is valued at more than 20.5 billion pounds per year and estimates show

that the Indian sports market can become a USD 10 billion industry by 2026.

This means there is exponential potential for growth in British sports exports to the

region, DIT said.

Representatives from Indian commercial giant Reliance Industries, part of the Indian

sports delegation, welcomed the India-UK Sports Alliance organised by the DIT

in London and said that it would help broaden the scope of our relationships in the UK

with both the wider sports sector and policymakers.

Sundar Raman, Chief Executive Officer of Reliance Sports, said: Reliance Sports has had

strong connections with the UK since inception particularly the partnership between

the Indian Super League and the Premier League, which was renewed again earlier this

year.

This is an exciting time of exponential growth in India's sports sector, and I am pleased

that the UK government and businesses are engaging with us to strengthen bilateral

trading relationships, Raman said.

Premier League Interim Chief Executive, Richard Masters, said that the

English football league is keen to develop existing relationships in India and identify

new ones.

He also highlighted that the Premier League has worked extremely closely with

the Indian Super League (ISL) and other organisations for more than a decade to

support the growth of football in India.

Earlier this year we brought the first Football Development Week to Mumbai, in

conjunction with the ISL, the DIT and Star Sports. This provided a great opportunity for

our clubs to share their knowledge with coaches and young players from across India,

Masters said.

Home

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22 CITI-NEWS LETTER

Sitharaman holds pre-Budget consultation with industry, trade

representatives

(Source: Business Standard, June 11, 2019)

Union Finance Minister Nirmala Sitharaman on Tuesday started her pre-Budget

consultations here with different stakeholder groups in connection with the

forthcoming General Budget 2019-20.

After her first meeting with the stakeholder groups from agriculture and rural

development sectors, Sitharaman met with representatives from industry, trade and

services sectors in the second meeting.

In her opening remarks, Sitharaman said that the central government has taken several

industry specific initiatives since 2014 that had significantly improved the overall

business environment, read a statement from the ministry.

She said that the emphasis was given to simplification and rationalisation of the existing

rules and introduction of Information Technology to make governance more efficient

and effective. As a result, the Finance Minister said that India has considerably

improved its ranking to 77th position among 190 countries and has kept 23 ranks over

its rank of 100 in the Doing Business Report 2018 as per the World Bank Doing

Business (DB) Report, 2019, the statement from the ministry added.

Sitharaman also mentioned that since 24 per cent of the total work force in India is in

the industrial sector, in order to reap the benefits of demographic dividend, industry

should be able to accommodate more work force.

The meeting was also attended by Anurag Thakur, Minister of State for Finance and

Corporate Affairs, Subhash C Garg, Finance Secretary, Girish Chandra Murmu,

Expenditure Secretary, Ajay Narayan Pandey, Revenue Secretary, Rajeev Kumar,

Secretary, DFS, Atanu Chakraborty, Secretary, DIPAM, Yogendra Tripathi, Secretary,

Ministry of Tourism, Amit Khare, Secretary, Ministry of Information and Broadcasting,

Ramesh Abhishek, Secretary, Department for Promotion of Industry and Internal

Trade, Anup Wadhawan, Secretary, Department of Commerce, Ministry of Commerce

and Industry, Pramod Chandra Mody, Chairman, CBDT, PK Das, Chairman, CBIC, KV

Subramanian, CEA and other senior officials of the Ministry of Finance.

With a view to give boost to the Indian economy, the representatives of industry,

services and trade sectors submitted several suggestions concerning industrial sector,

land reforms, special economic zones, industrial policy, investment in research and

development, simplification of tax regimes, tapping potential in tourism sector, Foreign

Direct Investment (FDI), Goods and Services Tax (GST), Capital Gains Tax, Corporate

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23 CITI-NEWS LETTER

Tax, MSME Sector, e-commerce, skill development, education and healthcare sectors,

start-ups, media and entertainment sector and food manufacturing industry.

Representatives of industry, services and trade sectors included Vikram S Kirloskar,

President, Confederation of Indian Industry (CII), Balkrishan Goenka, President,

ASSOCHAM, Sandip Somany, President, FICCI, Pramod Agrawal, chairman, Gem &

Jewellery Export Promotion Council, Animesh Saxena, president, Federation of Indian

Micro and Small & Medium Enterprises (FISME), Ajit Kumar, Director, Hinduja Group,

Rajni Aggarwal, President, Federation of Indian Women Entrepreneurs (FIWE),

Panaruna Aqeel Ahmed, Chairman, Council for Leather Exports, Florence Shoe Co. Pvt.

Ltd, Rahul Bothra, CFO, Swiggy, Bundl Technologies Pvt. Ltd, Ajay

Sahai, Director General and CEO, Federation of Indian Export Organisations, Raj Nair,

President, IMC Chamber of Commerce and Industry, Gopal Srinivasan, Chairman, TVS

Capital Fund Pvt. Ltd, PR Venketrama Raja, Vice Chairman, MD and CEO, Ramco

Systems, Sachin Taparia, Chairman and CEO, local Circles India Pvt Ltd.

Home

New textile processing cluster with zero-discharge units

(Source: The Hindu, June 11, 2019)

To boost eco-friendly trade, especially with other countries

A textile processing cluster is all set to be established at a private industrial estate at

Thamaraipatti in Virudhunagar district to reduce environmental impact of textile

processing.

“Everyone loves bright white shirts and coloured fabrics but the environmental impact

that comes with the process of manufacturing them is damaging,” Project Director of

Southern Districts Textile Processing Cluster K. R. Gnanasambandam told The Hindu.

To promote more inclusive and eco-friendly garment production, 36 textile processing

units had agreed to be part of the cluster that would spread over 104 acres, he added.

The cluster would comprise textile units where 96% of the water used for processing

would be recycled. “The remaining water, which is primarily dye-based, will evaporate.

Steam will not pollute the environment. Sediments, which contain a large amount of

limestone, will be shipped to cement factories,” he said.

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24 CITI-NEWS LETTER

Primary operations at the processing units would include bleaching, dyeing and

spinning different types of yarn. The units would deal with a variety of fabrics, but

primarily focus on cotton, silk and jute, he said.

A sum of ₹ 200 crore had been allocated for the projected under the Ministry of

Textile’s Integrated Processing Development Scheme (IPDS). While the Centre would

bear 50% of the cost, the State and private industry promoters would contribute 25%

each, he added.

Mr. Gnanasambandam said more textile processing industries were moving towards

environment-friendly means of conducting business, because the European Union, one

of the largest importers of Indian textile, expected a certification stating that the

garments were produced without causing environmental damage.

The units’ zero waste design also had the approval of researchers at the Indian Institute

of Technology – Madras, he said, adding, “The foundation stone for the cluster will be

laid in a month.”

Office-bearers of different organisations, including Madurai District Tiny and Small-

Scale Industries Association president K. P. Murugan, welcomed the project and said

such initiatives would lead to more job creation.

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Labour dept warns employers over seating for staff

(Source: The Hindu, June 11, 2019)

The Labour Department has warned of stringent action against employers who fail to

provide seating arrangements for their staff as per the directions issued earlier.

Labour officers in Ernakulam inspected nine textile and commercial establishments in

the district on Tuesday to ascertain whether employees had been provided with

adequate seating arrangements.

K. Sreelal, Regional Joint Labour Commissioner, said directives had been issued to the

employers who were found to have not provided seating arrangements. “We will initiate

prosecution steps against the violators, if the fail to implement the directives,” he said.

The government had made it clear that employees cannot be forced to stand for long

hours during their work and employers should make arrangements to ensure seating

arrangements for their staff.

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25 CITI-NEWS LETTER

Gail moves appellate court to challenge Alok Industries resolution plan

(Source: Economic Times, June 11, 2019)

Gail has opposed the resolution plan because it did not consider the government-owned

gas and petrochemical company’s claims.

A joint resolution plan submitted by JM Financial NSE 0.45 % Asset Reconstruction Co

Ltd and Reliance Industries NSE 0.76 % to take over distressed textiles company Alok

Industries NSE -3.95 % has hit a roadblock after Gail NSE -0.39 % India, an operational

creditor to Alok, challenged the plan before an appellate court.

In a petition filed before the National Company Law Appellate Tribunal (NCLAT) in

Delhi on May 27, Gail has opposed the resolution plan because it did not consider the

government-owned gas and petrochemical company’s claims, people familiar with the

development said. The appellate tribunal will hear the matter on July 16. The

development is likely to further delay the resolution plan for the Mumbai-based fully

integrated textile company that was in the Reserve Bank of India’s first list of 12 large

corporate debtors to be referred for insolvency proceedings, released in 2017. “Gail was

not in the picture when the resolution plan was finalised,” a banker involved in the

process said. “It came in late and has filed a petition to be considered. It has claimed

outstanding dues of Rs 506 crore, but the total amount that operational creditors got

was just Rs 4.3 crore in the approved plan so it remains to be seen whether Gail gets

anything.” In March, National Company Law Tribunal (NCLT), Ahmedabad had

approved the sole JMRIL joint bid. The bid amount was Rs 5,000 crore, just above the

Rs 4,500 crore liquidation value of Alok. The company owes lenders a total of Rs 30,000

crore, which means they are taking a haircut of a whopping 83%.

State-run GAIL India has argued that while submitting the revival plan the resolution

applicant didn’t give equal weightage to the operational creditors. Bankers however said

the amount of recovery is too small to consider anything for non-financial creditors.

“The resolution plan submitted by the resolution applicant (JM Financial-RIL) is totally

silent towards the operational creditors and that is against the spirit of the law,” said

one of the persons privy to the development. “Gail has challenged the resolution plan,

approved by the National Company Law Tribunal.” Gail has made Ajay Joshi, resolution

professional (RP) of Alok Industries, as one of the respondents of the case. Joshi did not

respond to messages on his mobile phone as of press time Monday. The banker quoted

earlier said, “Operational creditors below Rs 3 lakh were accommodated in the plan.

GAIL was a large supplier and so it wasn’t on the list.” Nishant Awana, partner at law

firm NMA Law Chambers, who is advising Gail India in the matter, declined to

comment since the matter is sub judice.

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26 CITI-NEWS LETTER

Govt planning new labour legislation by merging 44 laws under 4 categories

(Source: Economic Times, June 12, 2019)

The Modi government is planning a new labour legislation that would merge 44 labour

laws under four categories.

Aimed at helping investors and accelerating growth, the Modi government is planning a

new labour legislation that would merge 44 labour laws under four categories-- wages,

social security, industrial safety & welfare, and industrial relations. The decision has

been taken at an interministerial meeting chaired by Home Minister Amit Shah and

attended by Finance Minister Nirmala Sitharaman, Labour Minister Santosh Gangwar,

Commerce and Railway Minister Piyush Goyal among others. "A new Labour Bill will be

introduced in the coming session of the Parliament," Gangwar told reporters Tuesday

after the hour-long meeting. Gangwar said the draft bill will be placed before the Union

Cabinet after which it will be introduced in Lok Sabha, possibly in the second week of

the coming Parliament session. "All major labour unions in the country were consulted

by the government for the new labour laws," he said. The four categories will deal with

wages, social security, industrial safety and welfare, and industrial relations, an official

said.

It is expected that the laws related to social security, including the Employees' Provident

Fund and Miscellaneous Provisions Act, Employees' State Insurance Corporation Act,

Maternity Benefits Act, Building and Other Construction Workers Act and the

Employees' Compensation Act will be merged to create a single social security law or

code. Several industrial safety and welfare laws such as the Factories Act, the Mines Act

and the Dock Workers (Safety, Health and Welfare) Act, will be merged to create a

single category on industrial safety and welfare. The Minimum Wages Act, the Payment

of Wages Act, the Payment of Bonus Act, the Equal Remuneration Act and a few others

are likely to be merged. The Labour Code on Industrial Relations will combine

Industrial Disputes Act, 1947, the Trade Unions Act, 1926, and the Industrial

Employment (Standing Orders) Act, 1946. The proposed new labour law will help

investors and is expected to accelerate growth, another official said.

Home

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27 CITI-NEWS LETTER

GLOBAL:

Will respond firmly if US raises trade tension: Chinese foreign ministry

(Source: Reuters, June 12, 2019)

On Monday, Trump said he was ready to impose another round of punitive tariffs on

Chinese imports if he cannot make progress in trade talks with Xi in Osaka

China will respond firmly if the United States insists on escalating trade tensions,

the foreign ministry said on Tuesday after US President Donald Trump said further

tariffs were ready to kick in if no deal was reached at a G20 summit this month.

Trump has repeatedly said he is getting ready to meet Chinese President Xi Jinping at

the Osaka summit at the end of June, but China has not confirmed it.

Trump said last week he would decide after the meeting of the leaders of the world's

largest economies whether to carry out a threat to impose tariffs on at least $300 billion

in Chinese goods.

On Monday, Trump said he was ready to impose another round of punitive tariffs on

Chinese imports if he cannot make progress in trade talks with Xi in Osaka.

Chinese Foreign Ministry spokesman Geng Shuang again would not be drawn on

confirming a Xi-Trump meeting at G20, saying information would be released once it

was available to the ministry.

"China does not want to fight a trade war, but we are not afraid of fighting a trade war,"

he said, adding China's door was open to talks based on equality.

"If the United States only wants to escalate trade frictions, we will resolutely respond

and fight to the end." U.S. Commerce Secretary Wilbur Ross on Tuesday downplayed

this month's summit in Japan, saying it would not be "a place where anyone makes a

definitive deal." "At the G20, at most it will be ... some sort of agreement on a path

forward, but certainly it's not going to be a definite agreement," Ross told CNBC in a

television interview.

Tensions between Washington and Beijing rose sharply in May after the Trump

administration accused China of having reneged on promises to make structural

economic changes during months of trade talks.

The United States is seeking sweeping changes, including an end to forced technology

transfers and theft of US trade secrets. It also wants curbs on subsidies for Chinese

state-owned enterprises and better access for U.S. firms in Chinese markets.

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28 CITI-NEWS LETTER

On May 10, Trump raised tariffs on $200 billion of Chinese goods up to 25% and took

steps to levy duties on an additional $300 billion in Chinese imports. Beijing retaliated

with tariff hikes on a revised list of $60 billion in US goods.

The US government has also angered China by putting Huawei Technologies Co Ltd on a

blacklist that effectively bans US companies from doing business with the Chinese firm,

the world's biggest telecoms equipment maker.

Investors worry China will retaliate by putting US companies on a blacklist or banning

exports to the United States of rare earth metals, which are used in products such as

memory chips, rechargeable batteries and cell phones.

President Donald Trump said he’s personally holding up a trade deal with China, and

that he won’t complete the agreement unless Beijing returns to terms negotiated earlier

in the year.

“It’s me right now that’s holding up the deal,” Trump said. “And we’re going to either do

a great deal with China or we’re not going to do a deal at all.”

Last month, the US accused China of reneging on provisions of a tentative trade deal,

bringing talks to a halt. “We had a deal with China and unless they go back to that deal I

have no interest,” Trump said. Trump’s comments came a day after he threatened to

raise tariffs on China if President Xi Jinping doesn’t meet with him at the upcoming

Group of 20 summit in Japan.

Home

Apparel buying houses asked to get registered with DoT

(Source: New Age Business, June 12, 2019)

The government has recently directed all the buying houses in the garment and textile

sector in Bangladesh to get registered with the Department of Textiles to run business in

the country.

In a gazette notification issued on May 28, the textiles and jute ministry said that as per

the section 14 of Textile Act 2018, all the buying houses must have to be registered with

the DoT within 60 days of the issuance of the notification.

The ministry also said that if any buying house sought time extension with valid reasons,

the registrar could allow 60 more days.

If any buying house fails to obtain registration on time, the government will take legal

action against the company as per law.

According to the Textile Act 2018, the Department of Textiles is the sponsoring

authority of all textile and clothing industries. The buying houses will have to get

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29 CITI-NEWS LETTER

registered with the department for running their business in the country.

Earlier, on April 1, the ministry issued a gazette notification detailing what would be the

procedure for the registration of buying houses with the DoT.

It said that the buying houses would have to file application with the DoT with the

documents of updated trade licence, income tax certificate, certificate of incorporation

as limited company, estimated yearly turnover and bank solvency certificate.

The ministry has set Tk 20,000 as fee for the registration and it would have to be paid

through bank draft or pay order.

Subject to receiving documents and if necessary, inspection report, the registrar would

give registration within 60 days of submitting application and the validity of the

registration certificate would be three years.

‘All the buying houses with local and foreign investment and liaison offices of buyers

and brands will have to come under registration and it is a good initiative to bring the

sector under regulation,’ Bangladesh Garment Buying House Association president Kazi

Iftequer Hossain told New Age on Monday.

Many of the buying houses are running their business in the country unregulated and

the government does not know how many companies are working in the sector, he said.

‘There are some foreign buyers who work with Bangladeshi readymade garment

factories through their liaison offices and if they use any unfair means, we cannot take

any action against them as they remain outside the purview of regulations,’ Iftequer

said.

He said that all the companies who were working in the sector would have to comply

with the laws of land and the government initiative to bring buying houses under

registration would ensure accountability of the companies.

According to the Bangladesh Garment Buying House Association, there are more than

1,200 buying houses operating in the country. Of them, around 400 are members of the

association.

Since April 1 this year, 10 buying houses got registered with the DoT.

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Pakistan:Rs100mn allocated for Commerce, Rs202.828mn for Textile in

PSDP

(Source: Business Recorder, June 11, 2019)

The government has allocated Rs 100 million for one new scheme of the Ministry

of Commerce and Rs. 202. 828 million for Textiles Industry Division in one on-

going and two new schemes in Public Sector Development Programme (PSDP) 2019-

20 for the promotion of trade and commerce in the country.

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According to the details, the government has allocated Rs 100 million for re modeling

and expansion of Karachi Expo Centre, Component -1 to develop and promote the local

industry and to attract the foreign and local investment in the country.

The total estimated cost of the Karachi Expo Centre, Component -1 Rs 2677.430 million.

Meanwhile, Rs 2.828 million has been earmarked for Faisalabad garments city training

Centre, Faisalabad and also Rs 100 million for 1000 Industrial stitching Units (All over

Pakistan) in two on-going schemes in PSDP-2019-20.

The government has also allocated Rs. 202.828 million in PSDP 2019-20 for the

establishment of Faisalabad garments city (Phase-II) Faisalabad in one new scheme.

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Tintex Textiles joins United Nations Global Compact

(Source: Fibre2Fashion, June 11, 2019)

Sharing the responsibility to achieve a better world, Tintex Textiles has joined the

United Nations Global Compact initiative. By sharing common conviction with

thousands of like-minded companies Tintex – as a business reality constantly striving

for a responsible change in textiles – is concretely contributing to a more stable and

inclusive global market.

The United Nations Global Compact initiative is a voluntary leadership platform for the

development, implementation and disclosure of responsible business practices. It is a

real demonstration of the 'Naturally Advanced' ongoing commitment to responsible

business action. Expertly controlled processing, and advanced dyeing and finishing

solutions drive material innovation to create responsible supply chains to transform

fashion systems.

“Being part of the UN Global Compact means to publically commit with all the

principles that are the basis of our business," Ana Silva Tavares, head of sustainability.

Tintex's department of sustainability optimises fashion solutions that not only provide

high performance nature based textiles, but enable Tintex to rise as a global leader

striving towards superior responsible fashion systems that are transparent and fully

traceable throughout the supply chain.

"We strongly believe that transparency and traceability are paramount in today’s

business landscape, indeed, we have established a framework for the entire complex

supply chain, products, processes and suppliers. To achieve qualitatively better and less

impactful results is crucial to implement a structured strategical plan that foresees

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31 CITI-NEWS LETTER

innovative approach, smart sourcing and ongoing research and development continuous

experimentation, shared and interconnected internal actions and the ability to move and

to react faster to the market needs," Tintex said in a press release.

“Working and challenging ourselves every day we get to know that a real change can

only start from a mindset change – which is clearly the most difficult thing to do for a

company but definitely the most important for a long-term success," continued Tavares.

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Old bread becomes new textiles

(Source: Physics.org, June 11, 2019)

Is it possible to create textiles from old bread? Akram Zamani, senior lecturer in

resource recycling at the University of Borås, wants to find out. And she has already

come a long way. "We have seen that much of the food waste from grocery storesis

from bread and therefore we wanted to see how we could turn it into a new product,"

says Akram Zamani. Filamentous fungi will be grown on bread waste in bioreactors, and

will then be used in two different processes to create yarn and to produce nonwoven

textiles (see fact box). "When the bread has become a biomass of fungi, we remove the

protein which in turn can be used as food or animal feed. We use the cell wall fibres that

remain of the fungi partly to spin a yarn, and partly to create nonwoven fabrics."

"We have done a large part of the cultivation already, and it has worked well, so now we

are working on a wet spinning process to create yarn, and test different methods to

improve the yarn's properties," she says.

It is hoped that the fungus will be able to be transformed and used for clothing, medical

applications, or furniture textiles. During the first two years, the product will be made

on a smaller scale, in order to be scaled up during the third and fourth years.

Unique research

"There is no previous research on this; therefore it is difficult to know what to expect,"

says Akram Zamani and continues: "We get the bread from a local grocery store, and we

are able to collect as much as we need, which gives us the opportunity to test different

things and make sure it becomes a good product."

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