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Cotlook A Index - Cents/lb (Change from previous day)
01-06-2020 65.45 (Unch)
03-06-2019 79.10
05-06-2018 99.60
New York Cotton Futures (Cents/lb) As on 03.06.2020 (Change from
previous day)
July 2020 60.30 (-0.07)
Oct 2020 59.40 (+0.83)
Dec 2020 59.61 (+0.90)
03rd June
2020
Cotton and Yarn Futures
ZCE - Daily Data (Change from previous day)
MCX (Change from previous day)
June 2020 16240 (+260)
Cotton 11455 (+200) July 2020 16450 (+240)
Yarn 18845 (+230)
Future Ready: Will get growth back, reforms on track,
says PM Modi
Express Expressions with Smriti Irani: India has
capability to make world class products
Exports to Bangladesh yet to resume as truckers fear
strict quarantine after return
www.citiindia.com
2 CITI-NEWS LETTER
-------------------------------------------------------------------------------------- Future Ready: Will get growth back, reforms on track, says PM Modi
Express Expressions with Smriti Irani: India has capability to make world class products
CITI hails decisions of Union Cabinet for boosting MSMEs
CITI Chairman Welcomes Centre's Decision To Support MSMEs, Days Confidence To Grow Will Boost
CITI hails Govt for boosting MSMEs, farmers and street vendors
Industries welcome revised definition for MSMEs
Exports to Bangladesh yet to resume as truckers fear strict quarantine after return
Covid takes heavy toll on SEZs; exports plummet 50 per cent, over a third of orders get cancelled
From Zero To Rs 7,000 Crore Industry In Two Months: How PPE Kits Manufacturing Sector Developed Rapidly During Onset
Of Coronavirus Pandemic
Tax relief likely on creation of ‘permanent establishment’
Enhancement of turnover limit of MSME sector to help exporters
Reviving demand is key to India’s economic recovery
Regulating crops doesn't guarantee better profitability for farmers: FSII Director General
India’s lockdown strategy was faulty, economy to contract 10% this fiscal: Former finance secretary SC Garg
SBI creates separate business vertical to drive MSME, agri finance
SBI, ICICI Bank cut savings rates, check new rates
India needs to open up more and knock down import tariff imposed in last 3 years: Arvind Panagariya
Impact of Covid-19 Pandemic on Small Textile Units
Hike in MSME limits is relief for textile industry: SIMA
Increasing MSP on cotton not a sustainable solution, bring back TMC: SIMA
Garments association demands reopening of shops
----------------------------------------------------------------------------- COVID-19: World Bank urges countries to go for comprehensive policies to boost long-term growth
Time to work with Asian partners on a global COVID-19 recovery strategy
Foreign direct investments could contract by 40% this year, hitting developing countries hardest
Eastman Staples supplies PPE manufacturing equipment
A promising approach in the development of antibacterial textiles
-------------------- --- ---------------------------------------------
NATIONAL
---------------------
GLOBAL
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3 CITI-NEWS LETTER
NATIONAL:
Future Ready: Will get growth back, reforms on track, says PM Modi
(Source: Financial Express, June 03, 2020)
PM's assertion follows GDP growth slowing to a 44-quarter low of 3.1% in Q4FY20 and
rating downgrade by Moody's
Prime Minister Narendra Modi on Tuesday expressed his strong resolve to regain the
economy’s growth momentum and asked for industry inputs for ‘more structural reforms’
his government is determined to undertake, in its effort to facilitate the country’s ‘growth-
oriented, big take-off’. “For us the meaning of reforms is the boldness to take decisions
and persist with them till the logical end,” Modi said, addressing the Confederation of
Indian Industry’s 125th annual session, via video conference.
Listing out the steps taken by his governments over the years like the insolvency code,
GST and bank mergers to bolster the economy’s productive capacity and the reform
measures announced recently in the areas of agriculture produce marketing and coal
mining, Modi said these long-pending reforms were among the ones the country appeared
to have abandoned due to their apparent intractability. The prime minister asserted: “Yes,
we will definitely get our growth back… India will get its growth back”.
Modi, accused by many analysts of being content with incrementalism in his approach to
reforms during the tenure of his first government, has clearly changed tack. In the
backdrop of the economic expansion rate having plunged to a 11-year low of 4.2% in 2019-
20, and even the RBI prognosticating the growth to be in the negative territory in the
current financial year, Modi clung tenaciously to his pledge to resort to “systematic,
planned, inter-connected and integrated” reforms to find a way out of the current morass.
Land and labour market reforms are at the top of Corporate India’s wish-list, as it looks
forward to an economic climate for them to resume long-dried-up investments.
Stating that “every sector has to be made future-ready”, Modi said his government was
wedded to create an ‘encouraging eco-system’ for private firms and entrepreneurs,
through continuous decisions and steps. “Corona may have slowed our speed (of growth)
but India has now moved ahead from lockdown with the phase one of unlock. Unlock
Phase-1 has reopened a large part of the economy,” he said. According to him, intent,
inclusion, investment, infrastructure and innovation are crucial for India to revert back
to a high-growth trajectory.
The prime minister’s comments come at a time when the country’s fiscal situation has
deteriorated and the government is struggling to give support to the economy via own
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4 CITI-NEWS LETTER
spending, while also incentivising the players in the economy through what it calls
Atmanirbhar Bharat package consisting mainly of supply side steps.
Advocating the concept of Make-for-the-World, Modi said: “the world is looking for a
trusted, reliable partner. India has that potential, strength and ability”. He noted that
while battling corona at home, India helped over 150 countries with medical supplies.
To boost manufacturing and job creation, Modi said the government has identified
priority sectors such as furniture, air conditioners, leather and footwear for special
attention. India imports about 30% of its air-conditioner requirements while the country
is not a leading player in world markets export of leather and footwear despite being the
second largest producer.
Moody’s Investors Service on Monday trimmed India’s sovereign rating by a notch to the
lowest investment grade of Baa-3 and retained the “negative” outlook, giving effect to
earlier warnings of a downgrade if the country’s fiscal metrics “weaken materially” in the
wake of the Covid-19 pandemic.
Since the agency had warned of downgrade on May 8, the Centre unveiled an economic
stimulus package of close to Rs 21 lakh crore (barely 10% of which was additional
budgetary cost) and the Centre’s fiscal deficit in FY20 was revealed to be 4.6% of GDP,
the highest level since FY13. The fiscal deficits of both the Centre and states are expected
to rise substantially in FY21, most likely to double-digit levels, given the economic slump
and continued reliance on government spending to revive the economy and meet the extra
spending obligations related to Covid-19.
Moody’s expects India’s real GDP growth to contract by 4% in FY21 due to the shock from
the coronavirus pandemic and related lockdown measures, followed by 8.7% growth in
the next fiscal and closer to 6% thereafter. It forecasts the country’s debt burden to rise to
about 84% of GDP in FY21, indicating fiscal stress.
Crisil has said recently that Covid-19 pandemic would likely inflict a 10% permanent loss
to real GDP, so a catch-up to the pre-crisis trend level of GDP won’t be possible over the
next three fiscal years. After the global financial crisis, a sharp growth spurt helped catch
up with the trend within two years.
GDP grew 8.2% on average in the two fiscals following the global financial crisis. Massive
fiscal spending, monetary easing and swift global recovery played a role in a V-shaped
recovery then. “To catch up would (now) require average GDP growth to surge to 11% over
the next three fiscals, something that has never happened before,” Crisil wrote.
Home
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5 CITI-NEWS LETTER
Express Expressions with Smriti Irani: India has capability to make world
class products
(Source: Prabhu Chawla and Kaveree Bamzai, Indian Express, June 03, 2020)
Union Minister for Women and Child Development and Textiles Smriti Irani said India can
make world-class products at a competitive price.
Union Minister for Women and Child Development and Textiles Smriti Irani said India
can make world-class products at a competitive price.
Deep engagement with officials at the state and district levels has yielded positive results,
she said in a conversation with Prabhu Chawla, Editorial Director, The New Indian
Express and author and senior journalist Kaveree Bamzai on TNIE’s Expressions, a series
of live webcasts with people who matter.
Women across classes have shouldered a lot of the burden during the
pandemic. Can you take us through some of the initiatives you have taken in
the past two months, especially for domestic violence — one of the biggest
issues women faced?
We were working to ensure that the one-stop crisis centres across the country were
functional and never shut their doors, irrespective of the country being in lockdown. We
reached out to every one-stop centre. Similarly, we engaged with all child care centres and
women’s homes across the country to ensure that the people living in those homes are
safe and have access to essential commodities.
We also ensured that the anganwadis, which are at the frontline, continued to function.
Even if anganwadis were shut, the take-home rations were delivered at the doorstep. In
the lockdown, we had 9 crore female beneficiaries who received the rations at the
doorstep.
How do you take the incident of anganwadi workers being beaten away?
The PM has been very vocal not only in terms of his words but also his action that the
breakdown of law and order will not be accepted by the Centre. We have taken a Cabinet
decision to protect frontline workers as well. There was also a public outrage over it.
During the COVID-19 crisis, we saw a cohesiveness in the PM’s approach and the people’s
response.
Have cases of child abuse and violence against women gone up?
When COVID-19 hit India, there was a lot of talks — and it came from international
agencies — that across the world 80 per cent women are getting beaten at home. When
we asked for validated figures, they said this is just a supposition. When we tracked the
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6 CITI-NEWS LETTER
numbers, we found that they have gone down. But because it is an evolving situation, it
would be premature for me to make a generic statement.
What have we achieved in the journey from Make in India to ‘Atmanirbhar
Bharat’?
We studied 580 export-import lines and we alerted the revenue department on increasing
the import duties. In light of Covid-19, we tried to figure out how we can enhance the
opportunities for local artisans. We coordinated with self-help groups for making face
covers which are being locally consumed. I am engaged in further discussions on the
textile ministry with the ministries of finance and commerce which I cannot mention right
now.
Will the existing textile units have to reinvented for new kinds of products?
They have themselves adapted to new market needs.
Home
CITI hails decisions of Union Cabinet for boosting MSMEs
(Source: Fibre2Fashion, June 02, 2020)
The Confederation of Indian Textiles Industry (CITI) has welcomed the decisions
of the Union Cabinet, chaired by Prime Minister Narendra Modi, which will
provide economic support for MSMEs, farmers, street vendors and agricultural
sector. Since they are the backbone of the Indian economy, support to them will result in
growth of the overall economy.
MSMEs, which have 29 per cent share in the country's GDP and 48 per cent share in the
country's exports and provide employment to millions of people, will receive maximum
benefits from the change in the definition of MSME under which turnover limit for
medium enterprises has been revised upward to ₹250 crore from present ₹100 crore,
as announced earlier. Under the new definition, the distinction between manufacturing
and services enterprises has been eliminated.
In the revised definition, even small weaving mills may be included and because of this
many garment manufacturers will benefit, said CITI chairman T Rajkumar. He further
stated that the Centre’s revision in the definition of MSMEs will give MSMEs the much-
needed confidence to grow and will promote its seamless expansion in the country.
Rajkumar also welcomed the decision of Distressed Asset Fund of ₹4,000 crore created
to help weaker MSMEs that are struggling through NPA norms due to the outbreak of
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7 CITI-NEWS LETTER
COVID-19 pandemic. "This fund will bring them back into the business and they can start
the business activities afresh with the help of this fund. Further ₹20,000 crore
subordinated debt for stressed MSMEs is likely to benefit 2 lakh stressed MSMEs."
"This is the first time when the Government has given so much importance to the MSME
sector," said Rajkumar. He further stated that the Government’s announcement of
₹10,000 crore funds for MSME to get listed in the stock market is a welcome measure.
He pointed out that along with the other investment, this fund will reach ₹50,000 crore
and more funds from the market to MSMEs-listing in the stock market will make MSMEs
attract more funds from the market and this will boost the MSME Sector to enhance its
reach to major destinations.
CITI chairman appealed to the Government to consider industry’s urgent demand of
extending the moratorium for repayment of loans and interest up to March 31, 2021 and
extend 25 per cent additional working capital without any collateral or margin money for
all the categories of accounts other than MSMEs also.
He has also hoped that the Government would consider textile and clothing industry’s
demand for one-time debt-restructuring which can solve many financial related problems
of the textile and clothing sector.
CITI chairman also felt that the Government would soon announce a special package for
boosting exports for all the textiles and clothing products including cotton yarn and fabric
to grab the emerging opportunities and also consuming the surplus cotton that might
significantly affect the cotton farmers in the country.
The revised upward limit for the medium enterprises to ₹250 crore, excluding exports
from ₹100 crore as announced earlier, will certainly boost many companies which were
not able to come under MSME category. However, in order to encourage technology
upgradation and scale of operation in the textile sector, the condition of 'investment and
sales turnover' needs to be modified as 'investment or sales turn over', Rajkumar said. He
hoped that the capital-intensive textile sectors like spinning, independent weaving,
processing, etc will also get the much-needed economic package to tide over the ill-effects
of COVID-19 pandemic situation.
Home
CITI Chairman Welcomes Centre's Decision To Support MSMEs, Days
Confidence To Grow Will Boost
(Source: Daily Addaa, June 03, 2020)
Confederation of Indian Textile Industry (CITI) Chairman T. Rajkumary said on Monday
that the centre's revised definitions for MSMEs will increase the confidence to grow
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8 CITI-NEWS LETTER
The revised definition will give micro, small and medium Enterprises (MSMEs)
confidence to grow and will promote their expansion, Confederation of Indian Textile
Industry (CITI) Chairman T. Rajkumary said on Monday.
The industry body welcomed the decisions of the Union Cabinet chaired by Prime
Minister Narendra Modi for providing economic support to MSMEs, farmers, street
vendors and the agricultural sector.
He said MSMEs, which have a 29 per cent share in the country''s GDP and 48 per cent
share in the country''s exports and provide employment to millions of people, will receive
maximum benefits from the change in the definition of MSME under which turnover limit
for medium enterprises has been revised upward.
Under the new definition, the distinction between manufacturing and services enterprises
has also been eliminated.
The CITI Chairman pointed out that in the revised definition, even small weaving mills
may be able to come and because of this, many garment manufacturers will be benefited.
The Centre''s revision in the definition of MSMEs will give MSMEs the much-needed
confidence to grow and will promote its seamless expansion in the country, he said.
He also welcomed the decision of Distressed Asset Fund of Rs 4,000 crore created to help
weaker MSMEs that are struggling through NPA norms due to the outbreak of Covid-19
pandemic. This fund will bring them back into the business and they can start
the business activities afresh with the help of this fund, he said. Further Rs 20,000 crore
subordinated debt for stressed MSMEs is likely to benefit 2 lakh stressed MSMEs.
As per the new definition, businesses with investment of less than Rs 1 crore and turnover
of Rs 5 crore would be classified as micro enterprises while, the businesses with
investment of Rs 10 crore and the turnover of less than Rs 50 crore will come under small
enterprises.
Similarly, companies with investment of Rs 50 crore and turnover of up to Rs 250 crore
would be classified as medium enterprises.
Home
CITI hails Govt for boosting MSMEs, farmers and street vendors
(Source: Millennium Post, June 03, 2020)
T. Rajkumar, Chairman, CITI welcomed the decisions of the Union Cabinet chaired by
Prime Minister Narendra Modi which will provide the economic support for MSMEs,
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9 CITI-NEWS LETTER
Farmers, Street Vendors and Agricultural Sector. He stated that MSMEs, Farmers and
Agriculture Sector are the backbone of the Indian economy.
Rajkumar appreciated that MSMEs which has 29% share in the country's GDP and 48%
share in the country's exports and provide employment to millions of people, will receive
maximum benefits from the change in the definition of MSME under which turnover limit
for MSMEs has been revised upward to Rs 250 crores from present Rs 100 crores.
Home
Industries welcome revised definition for MSMEs
(Source: The Hindu, June 02, 2020)
Industries in Coimbatore and Tiruppur districts have welcomed the revised definition for
Micro, Small and Medium Enterprises (MSME) classification.
According to Cotton Textiles Export Promotion Council chairman KV Srinivasan, the
enhancement in turnover and investment limits for medium enterprises is a positive step.
The cabinet has decided to exclude export turnover from the turnover limits for MSMEs.
This is a welcome decision for textile exporters as many of them will be eligible for 5 %
interest equalisation scheme benefits.
Apparel Export Promotion Council chairman A. Sakthivel said the turnover of exporting
units depended on foreign exchange rates. Rupee value has weakened continuously for
the last 10 years. The decision to exclude export turnover will strengthen the MSME sector
and propel exports.
T. Rajkumar, chairman of Confederation of Indian Textile Industry, said that with the
revised definition, even small weaving mills will be classified as MSMEs. This will benefit
the garment manufacturers too. Decision to create ₹4000 crore Distressed Asset Fund
will help the weaker MSMEs that are struggling due to NPA norms.
According to Southern India Mills’ Association chairman Ashwin Chandran, several
segments of the textile value chain - power looms, handlooms, knitting, processing,
embroidery, garment, etc - that do job works will be encouraged to consolidate and
modernise their facilities. He urged the government to further consider modifying the
definition to investment or turnover from the existing investment and turnover limits
specified.
Tiruppur Exporters’ Association president Raja M. Shanmugham said the upward
revision of investment and turnover limits for medium scale units will benefit the garment
exporting units in Tiruppur and attract investments.
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10 CITI-NEWS LETTER
The Railways Suppliers’ Association in Coimbatore opposed the change in definition
saying micro and small-scale units will stand to lose, especially in getting orders from
public sector undertakings.
Home
Exports to Bangladesh yet to resume as truckers fear strict quarantine after
return
(Source: Economic Times, June 02, 2020)
Exports to neighbouring Bangladesh through the land ports in West Bengal are yet to
resume with around 5,000 trucks stuck at various locations along the border, even as the
government has announced several relaxations, an official of the exporters' body said on
Tuesday. The state administration is not making any intervention to resolve the crisis,
triggered by fear among truckers that they will be quarantined following their return from
Bangladesh after unloading goods, Federation of Indian Exports Organization's regional
chairman (east) Sushil Patwari told .
The trucks are stranded for the last 70 days, causing losses running into crores of rupees,
he said. The trade between the two countries takes place through the land ports at
Mahadipur in Malda district, Changrabandha in Cooch Behar, Fulbari (Jalpaiguri), Hilli
(South Dinajpur), Ghojadanga and Petrapole in North 24- Parganas district. "There is no
change in the status of exports to Bangladesh or Nepal. Trucks remain stranded at the
various borders. For Bangladesh, some 5,000 trucks are stuck at various land ports over
quarantine fears. So far there has been no effective intervention from the state
government regarding this," Patwari said.
Exporters thought that trade can resume as greater relaxations kicked in on June 1 and
the truckers will be exempted from the strict quarantine norms.
Mahadipur Exporters Association on Tuesday wrote to the Customs Department, seeking
directions to the local administration to resume the trade. The state government allowed
resumption of exports on May 11 following the Centre's notification on cross-border trade,
but fear among locals over the spread of coronavirus from the returning truckers
prevented trade to take off. Even a plan to unload trucks at ground zero failed.
"We had advised full PPE for drivers and helpers and sanitisation of trucks but local
administration is not willing to take the risk," Patwari said. FIEO on May 27 shot a letter
to Chief Minister Mamata Banerjee highlighting plights of the small exporters and raising
apprehensions about thousands of job losses. Even as talks have gained momentum over
trade through rail road and waterways, exports are yet to begin.
Home
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11 CITI-NEWS LETTER
Covid takes heavy toll on SEZs; exports plummet 50 per cent, over a third of
orders get cancelled
(Source: Amiti Sen, The Hindu Business Line, June 02, 2020)
Units ask government to help ease movement across borders, sort out operational issues
Exports from units in special economic zones (SEZs) fell over 50 per cent in April, while
more than a third of the orders placed were cancelled, due to Covid-led disruptions,
revealed an internal survey carried out by the Export Promotion Council for EOUs and
SEZs (EPCES)……..
Home
From Zero To Rs 7,000 Crore Industry In Two Months: How PPE Kits
Manufacturing Sector Developed Rapidly During Onset Of Coronavirus
Pandemic
(Source: M.R. Subramani, Swarajya, June 02, 2020)
On 18 March this year, when the Union Textiles Secretary, Ravi Capoor, chaired a joint
meeting of officials and industry representatives to assess the availability of protective
wears for use by health professionals while attending to novel coronavirus patients, the
country was facing a shortage of body coveralls and masks.
During the joint meeting, the Ministry of Health and Family Welfare (MoHFW) said it
would require 7.25 lakh coveralls as part of the Personal Protection Equipment (PPE) kits,
along with 60 lakh N-95 masks and one crore three-ply masks for its frontline workers to
tend to coronavirus patients.
The MoHFW officials told the meeting that the ministry was facing a shortage of PPE kits
and supplies were not increasing in tune with the demand. The officials, however, were a
little smart to have made a timely import of 2.75 lakh PPE kits in January.
Again, the availability or shortage was in relation to MoHFW needs. It did not include
what each state would require. The meeting then did not have even the slightest idea of
how many Covid-19 cases India would have and how the pandemic would spread across
the globe.
A joint secretary of the Textiles Ministry told the meeting that even state governments
reported difficulties in meeting their requirement and the few available suppliers were
quoting ‘unreasonable prices’.
The meeting then decided to go in for the developing of PPE kits locally, from available
resources within the country, besides imports.
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12 CITI-NEWS LETTER
It also decided that the manufacture of PPE kits would be in full swing and the
Coimbatore-based South India Textile Research Association (SITRA) will test if the
samples of the kits met the specified standards and certify them for use by frontline
workers.
The Hindustan Latex Limited (HLL) was made the centralised handling agency for
procurement and getting intents for supply from manufacturers.
Later, the Defence Research and Development Organisation (DRDO) was added as
another testing and certifying agency to help speed up the manufacturing process.
“When the initiative began, the government had a clear roadmap. Therefore, at no point
of time did we have any doubt of meeting the rising demand for PPE kits,” said an
industrial participant of the 18 March meeting on condition of anonymity. The participant
is not authorised to speak to the media.
In the two months’ time since then, India has developed into a country producing 4.5 lakh
PPE kits a day from zero. It is now a Rs 7,000-crore industry in the making.
“No other sector of the industry has developed so fast and rapidly like this in our country.
An important point is that the industry got no subsidy or incentive from the government
and it sprung to its feet on its own,” said the participant.
Invest India, in a write-up, says that this is a remarkable journey of collaboration between
governments at the central and state levels, industries and workers to revamp existing
production lines and manufacture a completely unknown product, from scratch.
Today, the Centre and States, together, have a buffer stock of nearly 16 lakh PPE kits,
while orders for another 2.2 crore kits have been placed with the industry.
Bengaluru, Karnataka’s capital, has become a major hub for PPE coveralls production in
the country, accounting for nearly 50 per cent of the total output.
The coveralls are also being manufactured at approved production units in Tiruppur,
Chennai and Coimbatore in Tamil Nadu, Ahmedabad and Vadodara in Gujarat, Phagwara
and Ludhiana in Punjab, Kusumnagar and Bhiwandi in Maharashtra, Dungarpur in
Rajasthan, Kolkata, Delhi, Noida, Gurugram and few other places.
Some of the country’s textile majors such as Arvind, JCT Mills, The Trident Group,
Welspun and Shahi Exports are into manufacturing of the coveralls.
Over a thousand companies have got the technical clearance and certification to produce
PPE kits across the country.
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13 CITI-NEWS LETTER
Ashok Naik, head of Delhi-based Grassroot Markmen, told Swarajya that there are two
aspects to the development of PPE kits.
“One, no other job was available for us when the nation-wide lockdown (to curb the spread
of Coronavirus) was announced. Second, we had to do something and so, we got into
making PPE kits,” he said.
Naik’s firm got a prototype of the coverall made from a small unit with which it had
entered into contract manufacturing.
It sent the sample to DRDO and got its clearance and certification within two weeks along
with the Uniform Commercial Code (UCC).
Today, it can supply 6,000 PPE kits a day. In the last three weeks, the firm has supplied
85,000 kits.
Tiruppur Exporters Association (TEA) Executive Secretary S Sakthivel said at least 100
units in the hosiery town were involved in making PPE kits.
“These units are producing 1.25 lakh to 1.5 lakh pieces (mainly masks) every day. They are
supplying to HLL, state governments and even to the private sector,” he said, adding that
the opportunity ensured employment for at least 50,000 workers during the lockdown
period.
SITRA administrator K Sajjan Rao said that the standards for Indian PPE kits were higher
at least by two notches than the one set by the World Health Organisation.
“This is one reason that the death of frontline workers is less compared with other
countries,” Rao said and added that 1,500 firms have got the certification for coveralls
and 2,000 companies for the fabric to be used in the coverall.
Grassroot Markmen’s Naik said the sector got only a ministry notification that specified
60 GSM for the fabric, which means it will not let any fluid to pass through, and 30 GSM
for the material used for laminating the fabric.
“The only problem for us is getting the required number of gloves. In India, we don’t have
units making huge numbers like Vietnam or Malaysia,” said Naik.
He said the manufacturing units seldom faced problems in getting raw material supplies
for making the kits. “At the most, they could have got delayed by a maximum 48 hours,”
he said.
Though PPE kits production is new to India, the manufacturing units were smart to
ensure that each of them specialized in one product than go in for making a complete PPE
kit.
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14 CITI-NEWS LETTER
Naik said that the demand for PPE kits is increasing and could scale up if the general
public, too, begins to use them. “We can easily double our production,” he said, adding
that he had never seen such a production rise at such a rapid pace even during normal
period.
“Small manufacturing units have turned this business like anything,” Naik said.
SITRA’s Rao said though the HLL had announced covering its requirements, many units
continue to apply for certification.
“We are getting between 100 and 150 samples every day for testing. The manufacturing
units expect to supply the kits to various states,” he said and added that the research body
collects Rs 5,750 for testing and certification as fee.
TEA’s Sakthivel said that manufacturing units were quick to import some 300
machineries from China and South Korea required for making these kits. “Now, we need
not worry about importing machinery as a local manufacturer is ready to meet our
requirements,” he said.
Grassroot Markmen’s Naik, who supplies 6,000 PPE kits a day and has supplied 85,000
kits in the last three weeks, said Indian manufacturers have begun to get enquiries from
countries abroad such as Canada and Ghana.
“We can be competitive in price and quality in almost all PPE kit products, barring gloves.
People have stopped buying from China and it also does not have stocks,” said Naik,
adding that Indian manufacturers can match European Union standards.
TEA Sakthivel said PPE kits cannot be exported currently as their shipments abroad have
been banned.
“We have requests from abroad where buyers are asking for matching PPE masks along
with garments. We can export them to the European Union and the US. Units are just
waiting to take off. We expect exports to be allowed next month,” Sakthivel said.
SITRA’s Rao said Indian PPE kits matched US standards but when it comes to export to
the US and European Union, different test parameters would apply.
Naik said the government will have to encourage more small and medium units to
produce PPE kits.
“We need more number of smaller factories because they can also provide huge
employment,” he said.
M.R. Subramani is Executive Editor, Swarajya.
Home
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15 CITI-NEWS LETTER
Tax relief likely on creation of ‘permanent establishment’
(Source: Deepshikha Sikarwar, Economic Times, June 03, 2020)
India will provide relief to overseas companies with global income that may be subject to
tax here because the presence of their key management personnel stuck in the country
during the lockdown created a ‘permanent establishment’ or place of effective
management in the country. The respite will be granted on a case-by-case basis. The govt
has exempted individuals by excluding their lockdown stay from residency calculation
and it was widely expected that a similar concession would be given to companies. “We
can provide relief on a case-by-case basis,” an official with the Central Board of Direct
Taxes said. The presence of key decision makers and employees of a business
establishment in a tax jurisdiction due to reasons beyond their control such as lockdowns
and travel restrictions can lead to the creation of a permanent establishment and make
the company liable to pay tax.
According to the Organisation for Economic Co-
operation and Development’s guidelines, a
temporary change in location of the CEO and
other senior executives is an extraordinary and
temporary situation due to the Covid-19 crisis
and should not trigger a change in residency. “It’s only logical that such physical presence
and the work carried out like e-signing of contracts, business decisions on operations
during such time should be ignored while evaluating the business presence/PE exposure.
Interestingly, OECD has envisioned few such situations and provided some guidance on
this subject,” said Vikas Vasal, national leader tax at Grant Thornton in India.
India and other countries imposed nationwide lockdowns including bans on international
flights to contain the spread of the coronavirus.
The CBDT official said each case will be assessed separately as the situation may not have
been the same for all. However, experts said there should be clear guidance for field
officials so that the principle is uniformly applied without subjectivity. “In these globally
difficult and unprecedented times, it’s only fair that India also issues necessary relaxation
to clarify that due to forced presence in India of senior management personnel due to
lockdown will not by itself result in permanent establishment or place of effective
management in India,” said Sanjay Sanghvi, a partner with Khaitan & Co.
Home
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16 CITI-NEWS LETTER
Enhancement of turnover limit of MSME sector to help exporters
(Source: Suman Singh, Your Story, June 02, 2020)
Federation of Indian Export Organisations (FIEO) President Sharad Kumar Saraf said
that exclusion of exports turnover from total turnover will help in the internationalisation
of MSMEs and will bring their focus on exports.
The Indian government's decision to increase the turnover limit for medium units from
Rs 100 crore to Rs 250 crore will help infuse technology and promote automation in
certain sectors, and boost outbound shipments, Indian exporters said.
Federation of Indian Export Organisations (FIEO) President Sharad Kumar Saraf said
that exclusion of exports turnover from total turnover will help in the internationalisation
of MSMEs, and will bring their focus on exports.
The cabinet on Monday approved further increasing the limit for medium manufacturing
and service units to Rs 50 crore of investment, and Rs 250 crore of turnover.
The turnover with respect to exports will not be counted in the limits of turnover for any
category of MSME units whether micro, small, or medium.
"The move is most pragmatic, and will also infuse technology as in certain sectors,
margins are so low that enhancement in investment in plant and machinery would not
have been of much use unless accompanied by an increase in the turnover limit to Rs 250
crore. Such a move will also bring automation of certain processes which are required for
competitive manufacturing," he added.
Hailing the decisions on MSME sector, financial advisory firm Findoc Group MD Hemant
Sood said that MSMEs are the backbone of the Indian economy and the highest employer
of skilled labour.
"The decision by the government to allow the listing of MSMEs will help them in the
longer term and become a growth engine for their revival," Sood said.
Apparel Export Promotion Council (AEPC) Chairman A Sakthivel also said that as the
exporters' turnover depends upon the foreign exchange rates, and since rupee value has
continuously weakened for the last 10 years, the council had requested the government to
remove the turnover criterion for defining MSMEs in the exports sector.
"Today's decision will propel India's exports and strengthen the MSME sector, which is
the key to India becoming self-reliant. Further, the decisions to allow MSMEs get listed
and the provision of distressed asset fund for MSMEs will give a major stimulus to the
sector, job generation, and revival of the economy," Sakthivel said.
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17 CITI-NEWS LETTER
The enhancement in the investment and turnover limits for medium-sized enterprises
will help in increasing exports of textiles by making them more competitive in the global
markets, the Cotton Textiles Export Promotion Council (TEXPROCIL) said. TEXPROCIL
Chairman K V Srinivasan said this is a welcome decision as a large number of exporters
in the textiles sector can now be classified as MSMEs under the new criteria, and will be
eligible to get all the benefits extended to the MSMEs, including five percent interest
equalisation scheme.
He said that these decisions will lead to an increase in exports of textiles by making them
more competitive in the global market, which in turn will lead to employment generation.
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Reviving demand is key to India’s economic recovery
(Source: Sudhir Valia, Financial Express, June 03, 2020)
The real estate and the automobile industry have more than 350 upstream and
downstream linkages. Any revival here will release a cascading stream of benefits in all
other interlinked segments
With the entire nation under lockdown for over two months, demand has slumped.
Almost every sector, be it in services or manufacturing, has reported a drastic plunge in
demand. In April, the automotive industry reported no sales whatsoever. Some of the
biggest engines of economic growth, such as realty and construction, hospitality, aviation,
all reported virtually no activity. Apart from healthcare and essential services, the only
industry that kept working was agriculture. This is the saving grace because the largest
chunk of manpower in India is employed in the agricultural sector. We have seen the
recession of 2008 where millions were unemployed, companies were reluctant to invest,
and factories had fallen silent. Consumer demand was stagnant. But, in no time, the
demand was gushing. A handful of companies were doing exponentially better than their
competitors. They enjoyed runaway growth, premium pricing, and extraordinary
customer loyalty. Companies started growing, profits were robust, and customers were
loyal because these companies continued business.
We must not over-react to the present situation and take stern decisions that eventually
break our businesses. It is very important to take a balanced view, without haste. It is
important to be in business to ensure continuity, and we should retain our employees.
So, how will the economy soar once again after the pandemic, when the crisis is deeper
than the one in 2008?
The economy is based on demand; Other than the necessities, demand is based on
perception. The government has tried to pump liquidity in to the market; however, it is
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18 CITI-NEWS LETTER
perceived that demand hasn’t come back. Demand will come back only when people feel
that prices will go up, or they assume that they are getting an opportunity that they should
encash les it is missed.
Now, with the government pushing for liquidity and asking banks to lend, will this not
bring the economy back on track?
Liquidity will help industry to manufacture, but if industry doesn’t see demand, it won’t
produce.
Demand generation
The government has been coming up with a lot of measures; however, we must agree with
the fact that for an economy to revive, demand should be there. Reforms should be framed
in such a manner that the industries are supported, so that employment continues. If
employment continues, purchasing power will be sustained.
It is cyclical. Money needs to rotate in the market, which is crucial. Once the government
starts ‘give and take’, there are immense possibilities for reviving the economy, and the
government will earn more revenue than it has to give up. Banks are averse to lending in
this gloomy economy. The government, in consultation with banks and industry, should
structure relations in such a manner that it is lenient for all and in benefit of general
public.
RBI has created a perception that it will support mutual funds, and the government has
given an assurance by way of guarantee to banks. Here, banks and the government
together have to work for the same goal.
The Insurance Regulatory and Development Authority (IRDA) is aggressively thinking of
reviving its credit insurance business. This will definitely help the banks, which will be
safeguarded and, thus, encouraged to lend. The government is making a lot of effort, but
money is not reaching the people on the street and purchasing power isn’t going up.
Consider our two major industries: construction/real estate and automotive.
Construction/real estate: Banks must form a scheme for real estate where they give loans
for 35-40 years, with 2-3 years moratorium. Here, RBI support will be required for giving
loans for 35-40 years as there will be no matching deposits that banks will have. Currently,
interest rates are already very low and there is no need to reduce. Based on a ready-
reckoner rate, banks should give loans. In affordable categories, banks should not ask for
more papers, but must get contribution from homebuyers or assurance from developers
that banks will not be left in the lurch. Only pre-approved projects should be funded so
that banks do not take any haircut. However, bank loans on EWS category should be
considered as priority sector lending. The government will get GST on input material. Per
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19 CITI-NEWS LETTER
square feet, at least Rs 300 will go towards GST. There is a huge unmet need in this
segment, and across India, 100 crore sq-ft constructions, which translate into 20 lakh
houses, will be consumed in the next 2-3 years. The government also will earn additional
5% GST on sale of these flats, which will again be about Rs 300-400 per sq-ft. If the
government gives time to homebuyers to pay GST of 5% within five years in five equal
instalments with 7% interest, then it will be a great help to homebuyers. Such a scheme
should be made available for
6-9 months. In case homebuyers are unable to repay to the bank, then a bank can
monetise the asset, or a developer will compensate to the bank. The real estate sector has
a lot of NPAs. If the government pushes work, banks will be able to monetise their
outstanding receivables. People in the retail segment generally do not default unless they
are jobless or face any other critical/unavoidable reason, as in India self-respect in the
community is valued more than anything else.
Automotive: Similarly, in the automobile industry, there can be new bank loans with
margins of 25-35%, and banks must give loans up to Rs 2.5-3 lakh. It will help sales of
small cars, two-wheelers and light commercial vehicles pick up. In this case, car
manufacturers must give FLDG (first loss default guarantee) or will buy-back a vehicle
from banks, where banks will not make any loss. In such a case, automobile
manufacturers and banks both are protected. Easy loans will help people buy vehicles as
public transport will likely be avoided. Automobile manufacturers should develop
attractive schemes to push demand.
If the government gives a waiver of tax on payment of interest for purchase of a house or
a vehicle, it will be widely accepted by the borrowers and will propel demand.
Labourers have migrated, and in such a scenario the revival of real estate seems gloomy.
A lot of action has been taken and labour laws are getting reformed. Now, 12-hour working
shifts should start. Everyone must contribute towards economic development, and extra
labour must be provided with a suitable pay package. Moreover, the government must
come out with an order that all the workers have to report on a particular restart date or
within 30 days of a restart date. If they do not report, action can be taken.
The real estate and the automobile industry have more than 350 upstream and
downstream linkages. Any revival here will release a cascading stream of benefits in all
other interlinked segments. As a result, myriad employment and entrepreneurial
opportunities will be generated, and this will be key in driving a faster turnaround of the
Indian economy. The prime minister’s ambitious vision of a self-reliant India, or
Atmanirbhar Bharat, will then become a ground reality sooner rather than later.
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20 CITI-NEWS LETTER
Everyone has to work to overcome the economic crisis. The government is a saviour, but
it alone cannot solve all the problems of the people. All of us Indians need to contribute
towards this.
The author is on the board of The Investment Trust of India Ltd.
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Regulating crops doesn't guarantee better profitability for farmers: FSII
Director General
(Source: C R Sukumar, Economic Times, June 02, 2020)
Regulating crops is not an end in itself and does not guarantee better profitability for
farmers, Federation of Seed Industry of India (FSII) director general Ram Kaundinya told
ET in an interview as Telangana prepares to be the first state to introduce regulated
agriculture policy. Edited excerpts:
How do you view the decision of the Telangana government to choose a
regulated agriculture policy in general and for cotton cultivation in 7-8
million acres out of about 12 million acres in particular?
Crop planning is a very difficult exercise because it has to satisfy many stakeholders.
Ideally, this should be done at the national level. This is the first attempt by any state in
India. The success of this exercise will depend on the achievement of the objective, which
is better profitability for the farmer. Emphasis on cotton does seem to be on the higher
side. We understand that this decision is taken because the data analysed by the state
government showed that farmers made more money in cotton than in other crops, which
might be true.
What opportunities would this decision create for hybrid cotton seed
producers, and fertiliser and pesticide makers?
Demand for cotton is on the higher side this year. We do not see any special opportunity
for cotton seed companies in this. We believe that the overall cotton area in the country
may grow by about 8-10%. Fertiliser consumption in the state may not undergo much
change because corn would have also consumed fertilisers, if it was grown in place of
cotton. On the pesticide front, this might provide a better selling opportunity for the
companies since cotton consumes more pesticides than corn. In view of labour shortage,
weed control is the real issue that farmers will face. We expect higher offtake of weedicides
in all crops.
What adverse effects do you anticipate with such high focus on cotton
cultivation in Telangana, especially since most farmer suicides in India have
been attributed to cotton crop related distress?
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21 CITI-NEWS LETTER
Cotton needs more investment from farmers than corn and hence, the distress could be
more in the face of lower commodity prices. The state government will have to step in at
that point of time and ensure that the produce is picked up by the Cotton Corporation of
India (CCI) at the minimum support price (MSP). Cotton price is expected to be good this
year, but it has dropped in the last one month. We cannot predict the commodity prices
that will prevail when kharif crops come into the market. Agricultural supply chains
across the globe have been disrupted due to coronavirus and it is not easy to predict the
price volatility this year. If the prices of cotton turn out to be good, it will be very good for
the farmers. If not, then it will depend on how the CCI buys cotton at that time.
What would you advise stakeholders in the backdrop of the proposed
regulated agriculture policy?
Regulating crops is not an end in itself. It is no guarantee of better profitability for the
farmer. A lot of hard work needs to be done for providing market access to farmers,
encouraging competition and ensuring better price realisation for the farmer when he
sells his produce. Digital markets have to be made available to the farmer so that he is
free to reach buyers anywhere in the country. Challenges of labour availability have to be
handled through higher mechanisation.
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India’s lockdown strategy was faulty, economy to contract 10% this fiscal:
Former finance secretary SC Garg
(Source: Financial Express, June 02, 2020)
The former finance secretary went on to say that the 2020-21 fiscal will go down in the
history of India as the year when India got way-laid from its story of three decadal
outstanding growth.
Former finance secretary Subhash Chandra Garg on Tuesday said the Indian economy
will shrink by 10 per cent or Rs 20 lakh crore in the ongoing fiscal, the first contraction in
over 40 years, due to a “faulty” COVID lockdown. Garg also said that the government’s Rs
21 lakh crore stimulus package is actually of only Rs 1.4-1.5 lakh crore or about 0.7 per
cent of the country’s gross domestic product (GDP).
“It is certain that India’s GDP will contract after 40 years in 2020-21,” he said in a
blogpost, adding that “it also appears fairly certain that this would be a very large
contraction of about 10 per cent of GDP or loss of about Rs 20 lakh crore of income”.
The former finance secretary went on to say that the 2020-21 fiscal will go down in the
history of India as the year when India got way-laid from its story of three decadal
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22 CITI-NEWS LETTER
outstanding growth. Pointing out that India was not in the pink of economic health in
2019-20, he said, the economy grew barely by 4 per cent for the year which happens to be
the lowest growth rate in last 11 years.
Recently, rating agencies Fitch and Crisil drastically cut India’s economic growth forecast
for the current fiscal year due to a prolonged lockdown.
Fitch forecast 5 per cent contraction in 2020-21, a sharp decline from 0.8 per cent growth
projected by the global rating agency in late April. Crisil also predicted the economy to
shrink by 5 per cent in the current fiscal. Earlier, it projected a growth of 1.8 per cent.
The former finance secretary termed India’s lockdown strategy to contain spread of
coronavirus as faulty. “The lockdown was imposed under a naive belief that India would
be able to eliminate COVID-19 from the face of India in three weeks’ time.
“India decided to use the brahmastra – total economic and human lockdown – on the
entire country when only a tiny part was infected,” he argued. The nationwide “lockdown”
was first announced by Prime Minister Narendra Modi on March 24 for 21 days in a bid
to contain the spread of the novel coronavirus. The lockdown was first extended till May
3 and then again till May 17. It was further extended till May 31 and now has been
extended in containment zones till June 30.
Home
SBI creates separate business vertical to drive MSME, agri finance
(Source: Business Standard, June 03, 2020)
Under FI&MM, the bank will offer loans predominantly for agriculture & allied activities,
and micro/small enterprises and vastly improve customer experience for the citizens in
the hinterland
In a major restructuring exercise, SBI has created a separate business vertical to focus on
financial inclusion and micro-markets (FI&MM) in semi-urban and rural areas.
Under FI&MM, the bank will offer loans predominantly for agriculture & allied activities,
and micro/small enterprises and vastly improve customer experience for the citizens in
the hinterland.
About 8,000 branches in rural and semi urban areas have been identified for providing
specialised services to the micro segment, including micro credit for small businesses and
farmers under new vertical.
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23 CITI-NEWS LETTER
SBI, ICICI Bank cut savings rates, check new rates
(Source: Financial Express, June 03, 2020)
Data from the Reserve Bank of India (RBI) showed that deposits with the banking system
grew 10.65% year-on-year(y-o-y) during the fortnight ended May 8.
State Bank of India (SBI) and ICICI Bank cut interest rates on savings deposits by five
basis points (bps) and 25 bps, respectively, at a time when the repo rate has undergone
massive cuts and liquidity remains in surplus.
All savings accounts with SBI will now earn 2.7% per annum. At ICICI Bank, a savings
account with a balance of less than Rs 50 lakh will now yield 3% per annum, while those
with a balance of Rs 50 lakh or more will earn 3.5%.
This is SBI’s second cut to the savings rate in as many months. Last week, the country’s
largest bank had slashed term-deposit rates to levels not seen in the last 17 years.
The rate cuts by banks follow a steep drop in the repo rate over the last two months. In
two back-to-back monetary policy reviews, the monetary policy committee (MPC) has
lowered the repo rate by 115 bps between March 27 and May 22. As a portion of banks’
loan books are now linked directly to the repo, they have been quick to pass on the rate
cuts to depositos as well.
SBI’s is currently the lowest savings rate being offered in the banking system, followed by
that of ICICI Bank. Savings deposits with HDFC Bank and Bank of Baroda (BoB) yield a
little more at 3.25%.
Lenders have also gained confidence about paying depositors less as the latter seem
unlikely to pull their money in the current environment. Data from the Reserve Bank of
India (RBI) showed that deposits with the banking system grew 10.65% year-on-year(y-
o-y) during the fortnight ended May 8, while non-food credit grew much slower at 6.48%
y-o-y.
Analysts expect deposit rates to continue to fall across the banking system, with lender
shaving a strong liability base better-positioned to cut rates and preserve margins. In a
recent report, Motilal Oswal Financial Services said, “The continued monetary easing
would drive further reduction in lending yields under the external benchmark and a
decline in the one-year MCLR rates (20-50 bps reduction since January 2020) while
banks have also been sharply cutting the retail and bulk deposit rates over the last few
months (large banks have reduced TD rates by up to 150 bps) to offset margin pressure.
Overall, we believe that large banks with strong/granular liability franchise would be able
to tackle the margin pressure v/s their mid-sized peers.”
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24 CITI-NEWS LETTER
India needs to open up more and knock down import tariff imposed in last 3
years: Arvind Panagariya
(Source: Financial Express, June 02, 2020)
Panagariya said India should continue to engage with Asia Pacific partners and get into
RCEP as it prepares to take over the multinational companies from China in areas of
textiles, footwear and other labour intensive sectors.
Economic liberalisation has done good to India, and the country needs to knock down
import tariffs imposed on many products in the last three years, former Niti Aayog Vice-
Chairman Arvind Panagariya said on Tuesday. Panagariya also pointed out that COVID-
19 pandemic may lead to integration of global labour market.
“Liberalisation has done good to us. We are reversing something from which we benefited.
I thought that in 1991, India had give(n) up import substitution, but in the last three years,
import tariff on many products have been raised,” he said while addressing CII Annual
Session 2020.
“India needs to open up more and knock down import tariff imposed on many products
in the last 3 years. We should bring tariff to 7 per cent and sign trade agreement with the
US, RCEP and European Union,” he said.
The eminent economist also expressed hope that down the line, India will sign trade
agreements with the US, Regional Comprehensive Economic Partnership (RCEP) and the
European Union.
Panagariya said India should continue to engage with Asia Pacific partners and get into
RCEP as it prepares to take over the multinational companies from China in areas of
textiles, footwear and other labour intensive sectors.
The professor of economics at Columbia University also pitched up for setting up
Shenzhen-style coastal employment zones to boost manufacturing and creating
employment.
Panagariya pointed out that there will be greater globalisation post COVID-19 pandemic
in terms of integration of labour markets. “Boundaries of the labour market will extend
beyond H1 B visa as workers will work from their remote countries,” he said, adding India
could emerge as winner if it brings in major reforms in the education sector.
Panagariya observed that multilateralism had taken a hit even in the pre-COVID 19 days
with bodies like the WTO Dispute Settlement mechanism becoming inoperative due to
non-cooperation by the US.
“The COVID-19 crisis which has been currently sweeping the world is not likely to affect
the process of globalisation,” he stressed. Panagariya said India needs 2-3 large
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25 CITI-NEWS LETTER
employment zones with full autonomy to change rules. “Today 44 per cent of Indian
workforce still involved in farming, you can’t combat poverty without lot of farm workers
moving out of farming to low skill industry,” he argued.
Also, speaking at the event, Jeffrey Sachs, director of sustainable development, Columbia
University, said that India made a big mistake in not joining the RCEP because this is an
economic group catering to 3.2 billion people. He stated that in light of the COVID-19
pandemic, countries sealing off their borders to prevent the virus from spreading in the
country was not the same thing as reversing globalisation.
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Impact of Covid-19 Pandemic on Small Textile Units
(Source: Srishti Tewari, Fibre2Fashion, June 02, 2020)
The COVID-19 crisis is set to have a huge impact on small labour-intensive textile units,
mostly dependent on migrant workforce. While the focus around the world right now is
on food, medicine and protective gear, the pandemic has posed a serious threat to all the
sectors of the economy. Economies everywhere have been predicted to hit rock bottom.
The Indian textile industry faces some grave challenges: from maintaining production
and addressing the need for protective clothing to coping up with the deficit due to
lockdown and retain migrant labourers.
Punjab, Gujarat, Maharashtra and Tamil Nadu, the hubs of textile manufacturing in
India, are amongst the worst hit states by the pandemic. The industry is mostly dependent
on migrant workforce from Bihar, Jharkhand Uttar Pradesh and Orissa. Due to the
seriousness of the pandemic, the textile units were shut in March. The absence of wages
and imminent risk to life made the migrant labourers go back to their respective native
places.
As reported by the scientists and doctors, the pandemic might last longer than expected
and that again may pose a challenge to small textile units as migrant labourers may not
return until safety can be assured to them. Unlike big companies, these smaller units are
operated either manually or semi-automatically. Majority of these textile processing units
function on a seasonal basis based on the availability of raw material and the demand for
products. The machines installed in these units are ill spaced; hence violate the standard
six-feet social distancing norm between workers. These are some of the issues that may
affect the production and economic state of the small textile units:
Availability of raw material: Due to the pandemic, agriculture has also
suffered. With more emphasis on food crops, cash crops are being sidelined due to
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26 CITI-NEWS LETTER
decreasing demand. This will lead to lower availability of raw materials like cotton
and silk. For synthetic textiles too, a similar situation has arisen as the majority of
chemical units are either closed or are focussing on meeting the demand for
sanitisers and essential chemicals to deal with the pandemic.
Transportation: Transportationis the spine of any supply chain, be it raw
material or finished goods. Due to the long duration of the lockdown,
transportation has severely suffered, and that has affected both established as well
as small businesses. It may take awhile to repair the broken supply chain and bring
production, transportation and delivery on track.
Cash flow: Big companies have larger turnover and profits, and so, they have a
continuous cash flow unlike smaller textile units, which are more precarious.
Limited sources of capital combined with low production size may lead to shutting
down of many small textile units.
Availability of labour: Small textile units mostly rely on manual operation. Due
to the pandemic and the lockdown, migrant labourers have moved back to their
native places and are less likely to return soon to work. This problem is more
serious for smaller textile units and this could hamper their production and overall
business.
In this crisis situation, the textile industry is also motivated to contribute to the fight
against coronavirus. As a result, the focus has shifted from aesthetic clothing to functional
clothing that impart protective function to apparel. In the last two months, the production
of personal protective equipment (PPE) kits, gloves and masks has shot up and is expected
to rise further. But the production of PPE kits is still concentrated among the highly
specialised manufacturing units that happen to be only 110 in number. Right now, due to
increased domestic demand, India has not started exporting protective gears. Once the
production rate rises and the domestic demand is met, India will soon export such items.
The new mantra of ‘Aatmanirbhaeta’ (self-reliance) and ‘Be vocal about local’ given by
Prime Minister Narendra Modi will hopefully boost the morale of the small textile units.
His address emphasised on using more and more domestic products and brands. This on
one hand will support local companies, and simultaneously will decrease dependence on
foreign products. This will surely lead small textile units to recover from the losses
incurred by them during the lockdown. This also poses a huge challenge for domestic
brands, which have to match the quality of global brands and satisfy consumers to that
extent.
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27 CITI-NEWS LETTER
Hike in MSME limits is relief for textile industry: SIMA
(Source: Fibre2Fashion, June 03, 2020)
Considerably increasing the investment and sales turnover thresholds for MSMEs will
significantly benefit various segments of textile value chain, The Southern India Mills’
Association (SIMA) has said. It has also welcomed the increase in minimum
support price (MSP) of cotton as it would benefit cotton farmers and sustain the area
under cotton cultivation.
The government has focused on farmers and MSMEs under its Atmanirbhar Bharat
Abhiyan, a slew of financial relief measures to enable the country to tide over the
unprecedented economic crisis being posed due to the COVID-19 pandemic.
Subsequently, the Cabinet Committee has now announced further relief measures
focusing on farmers and MSMEs and also hiking the MSP for 14 kharif crops including
cotton.
Prior to the recently announced changes, the investment limit for a medium sized
industry was only ₹10 crore when compared to the new limit of ₹50 crore. Increasing
the sales turnover limit to ₹250 crore from the recently announced turnover of ₹100
crore, while excluding export sales turnover from this calculation, would greatly benefit
the highly labour-intensive and fragmented textiles and clothing industry, SIMA
chairman Ashwin Chandran said in a press release.
"Since most of the decentralised sectors, especially powerloom, handloom, knitting,
processing, embroidery, garmenting and made-up segments operate on job work basis
and where traders play a major role, the new definitions would encourage consolidation
and modernisation of the decentralised sectors. This will improve economies of scale, help
boost exports and also help to grow the domestic textile and clothing industry," Chandran
said.
He also welcomed the allocation of ₹4,000 crore towards distressed fund to bailout
MSME units under NPA category and also allocating ₹10,000 crore fund on fund to
enable the high performing MSME units to get listed in the stock market and gain
advantage.
He, however, appealed to the Government to consider modifying the definition of MSMEs
from “investment and turnover basis” to “investment or turnover basis” to further extend
the benefits to the capital-intensive sectors of the textile industry viz spinning, weaving,
processing and technical textiles. "This will encourage modernisation and increase scale
of operation so that these segments can improve their global competitiveness."
SIMA chairman also welcomed the MSP increase of 4.75 per cent for medium staple
cotton and 4.95 per cent for long staple cotton that would greatly benefit the cotton
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farmers and sustain the area under cotton cultivation. The minimum support price for
seed cotton (kapas) for medium staple has been increased from ₹5,255 per quintal to
₹5,515 per quintal. For long staple, it has been increased from ₹5,502 to ₹5,825 per
quintal.
"Increasing the minimum support price is not a sustainable solution and the Government
needs to focus on bringing back the Technology Mission on Cotton in a revised format, to
increase the productivity which is half that of other major cotton producing countries,
improve quality by reducing contamination and trash cotton by adopting global best
practices," said Chandran.
He also pointed out that with the current market price for cotton and expected
accumulation of stocks due to COVID-19, the Government would need to allocate huge
funds for the forthcoming cotton season as the country would produce at least 25 per cent
higher than the domestic requirement, apart from a carryover of 125 to 150 lakh bales of
closing stock in the current season.
Home
Increasing MSP on cotton not a sustainable solution, bring back TMC: SIMA
(Source: Outlook India, June 02, 2020)
The Southern India Mills Association (SIMA) welcomed the increase of MSP on cotton as
it would benefit cotton farmers, while saying it was not a sustainable solution and called
for bringing back the Technology Mission on Cotton.
The minimum support price for seed cotton (kapas) for medium staple has been increased
from Rs 5,255 to Rs 5,515 per quintal (by 4.75 per cent) and for long staple, it has been
increased from Rs 5,502 to Rs 5,825 per quintal (4.95 per cent) on Monday.
Reacting to the announcement, SIMA Chairman, Ashwin Chandran said though increase
in MSP would benefit the farmers, it was not a sustainable solution and the government
should bring back the TMC, in a revised format.
This, he said was to increase the productivity which is half that of other major cotton
producing countries, improve quality by reducing contamination and trash cotton by
adopting global best practices.
With the current market price for cotton and expected accumulation of stocks due to
COVID-19, the government would need to allocate huge funds for the forthcoming cotton
season as the country would produce at least 25 per cent higher than the domestic
requirement, apart from a carryover of 125 to 150 lakh bales of closing stock in the current
season, he said in a statement.
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29 CITI-NEWS LETTER
With reference to modifying the definition of MSMEs, he said though five-fold hike in
MSME limits is a great relief for the textile industry, the government should consider
modifying the definition from "investment and turnover basis" to "investment or turnover
basis" to further extend benefits to capital intensive sectors of the textile industry like
spinning, weaving, processing and technical textiles.
This will encourage modernisation and increase scale of operation so that these segments
can improve their global competitiveness, he said.
Stating that prior to the recently announced changes, the investment limit for a medium
sized industry was only Rs 10 crore when compared to the new limit of Rs 50 crore,
Ashwin said that increasing the sales turnover limit to Rs 250 crore from the recently
announced turnover of Rs 100 crore, while excluding export sales turnover from this
calculation, would greatly benefit the highly labour intensive and fragmented textiles and
clothing industry.
Ashwin also welcomed the allocation of Rs 4,000 crore towards distressed fund to bail
out MSME units under NPA category and also allocating Rs 10,000 crore fund on fund to
enable the high performing MSME units to get listed in the stock market and gain
advantage.
Home
Garments association demands reopening of shops
(Source: Roshan Kumar, Daily Pioneer, June 03, 2020)
The fifth phase of the Covid-19 lockdown has begun with certain relaxations in terms of
economic activities in State. Shops selling non-essential items such as TV, Mobile,
consumer electronics shops, refrigerator and air conditioners alongwith their service
centres. Intra-district public transport in small commercial vehicles and other economic
activities have been allowed. But, shops selling clothes and footwear have to wait as the
Soren Government is yet to take any decision on this issue.
Associations associated with shoe-slippers and clothes & apparels from Dumka, Dhanbad
and other districts on Tuesday staged a protest demanding permission from the
Government to open their shops. The shopkeepers’ grievances is that their shops are
closed for two months further delay will create more economic problem for them as they
don’t have even money to give salaries to their staff. The shopkeepers claims that all units
such as hardware, sanitary ware, stationary and others have received permission from
government for starting their business, but the government feels that the corona is a
product of the textile business and it has been ignored.
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30 CITI-NEWS LETTER
Mahesh Agarwal who runs a garment shop at Upper Bazar said, “The State Government
is much bothered to bring migrant labourers from across the country, but at the same
time is ignoring millions of workers directly and indirectly linked with textile industry.”
The clothes merchants under the banner of Jharkhand Thok Vastra Vikreta Sangh on
Tuesday met Federation of Jharkhand Chamber of Commerce & Industries (FJCCI)
president Kunal Ajmani and other members and demanded trade body to intervene on
the issue.
Jharkhand Thok Vastra Vikreta Sangh, president Anil Jalan said, “We urge the Chamber
member to apprise our problem to Chief Secretary, Industries Secretary or Chief Minister
so that like other states garments shop too are opened.” Jalan claimed that the loss that
garment industries have incurred in last two months is immense. “As the shops are closed
for two months we are concern about the clothes as festive and wedding session have
passed,” added Jalan.
Chamber Vice-President Ram Bangar said, “We had a meeting with members from
Jharkhand Thok Vastra Vikreta Sangh today. We assured them we will apprise concerned
officials and ministers about the problem faced by textile industries.” Sources said that
many states have given permission to garment shops to open their outlets.
Sources said that textile industries in Country is going to affect a lot as there could be as
many as one crore job cuts in the textiles sector, which has been severely hit by the
ongoing lockdown. If the garment industry closes down, it would impact the entire value
chain from fabric supply industry to brand to the zipper and label industry.
Home
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31 CITI-NEWS LETTER
GLOBAL
COVID-19: World Bank urges countries to go for comprehensive policies to
boost long-term growth
(Source: Economic Times, June 02, 2020)
The World Bank on Tuesday urged countries to go for comprehensive policies to boost
long-term growth along with short term measures to address health emergencies and
secure core public services in the wake of the coronavirus crisis, amid indications that 60
million people could be pushed into extreme poverty in 2020. The scope and speed with
which the COVID-19 pandemic and economic shutdowns have devastated the poor
around the world are unprecedented in modern times, World Bank Group President
David Malpass said. "Current estimates show that 60 million people could be pushed into
extreme poverty in 2020. These estimates are likely to rise further, with the reopening of
advanced economies the primary determinant," he told reporters during a conference call
as the World Bank released analytical chapters from its flagship Global Economic
Prospects report.
Noting that the coronavirus pandemic and the economic shutdowns are dealing a severe
blow to the global economy, especially poorer countries, the report said developing
nations and the international community can take steps now to speed up recovery after
the worst of the health crisis has passed and blunt long-term adverse effects. "Policy
choices made today - including greater debt transparency to invite new investment, faster
advances in digital connectivity, and a major expansion of cash safety nets for the poor -
will help limit the damage and build a stronger recovery," Malpass said.
"The financing and building of productive infrastructure are among the hardest-to-solve
development challenges in the post-pandemic recovery. We need to see measures to speed
litigation and the resolution of bankruptcies and reform the costly subsidies, monopolies
and protected state-owned enterprises that have slowed development," he said.
Short-term response measures to address the health emergency and secure core public
services will need to be accompanied by comprehensive policies to boost long-term
growth, including by improving governance and business environments, and expanding
and improving the results of investment in education and public health, the World Bank
report said. To make future economies more resilient, many countries will need systems
that can build and retain more human and physical capital during the recovery - using
policies that reflect and encourage the post-pandemic need for new types of jobs,
businesses and governance systems, it said. According to the report, in the long-term, the
pandemic will leave lasting damage through multiple channels, including lower
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32 CITI-NEWS LETTER
investment; erosion of physical and human capital due to closure of businesses and loss
of schooling and jobs; and a retreat from global trade and supply linkages.
These effects will lower potential output - the output an economy can sustain at full
employment and capacity - and labor productivity well into the future. Pre-existing
vulnerabilities, fading demographic dividends, and structural bottlenecks will amplify the
long-term damage of deep recessions associated with the pandemic, it said. "When the
pandemic struck, many emerging and developing economies were already vulnerable due
to record-high debt levels and much weaker growth. Combined with structural
bottlenecks, this will amplify the long-term damage of deep recessions associated with the
pandemic," said Ceyla Pazarbasioglu, World Bank Vice President for Equitable Growth,
Finance and Institutions. "Urgent measures are needed to limit the damage, rebuild the
economy, and make growth more robust, resilient and sustainable," Pazarbasioglu said.
During the recovery period, countries will need to calibrate the winding down of public
support and should be targeting broader development challenges. The Bank analysis
discusses the importance of allowing an orderly allocation of new capital toward sectors
that are productive in the new post-pandemic structures that emerge. To succeed in this,
countries will need reforms that allow capital and labour to adjust relatively fast - by
speeding the resolution of disputes, reducing regulatory barriers, and reforming the costly
subsidies, monopolies and protected state-owned enterprises that have slowed
development, the report said.
Home
Time to work with Asian partners on a global COVID-19 recovery strategy
(Source: Peter Drysdale, ANU and Chatib Basri, University of Indonesia, East Asia Forum, June 03, 2020)
As the world contemplates the savage impact of the COVID-19 virus on the global
economy, there’s need to seize initiative in global cooperation to escape the slump caused
by the health lockdown. International economic cooperation will be vital to managing the
crisis and to supporting the recovery through trade, stabilising markets, faster reopening
of business supply chains and international travel. Without it, the world is facing a
prolonged health crisis and lasting economic stagnation on a scale not seen since the
Great Depression.
In this geopolitically fractured world, international cooperation is no easy call. The United
States, the world’s biggest power, has lost its appetite for multilateral cooperation and is
at odds strategically with China, the world’s second largest power. Strategic competition
between the United States and China ultimately limits both countries’ capacity to
contribute constructively to global recovery.
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33 CITI-NEWS LETTER
A compact for multilateral cooperation between Asian nations can be the starting point.
Because of the weight and potential they have in the world economy, Asian economies are
central to recovery from the COVID-19 crisis. Struck first by the virus, they are positioned
to restart their economies sooner. Asia can help lead the exit from the crisis and be a vital
source of global economic recovery.
Asia, like the rest of the world, has to deal simultaneously with twin challenges: the big
international health challenges and the economic policy challenges of exit from the crisis.
Failure to navigate judiciously between these two will cause social disruption, more
deaths and economic hardship. The task of defining the way forward on both fronts at the
same time is urgent.
An Asian experts group convened by the Asian Bureau of Economic Research, of which
we were members, today released its Asian COVID-19 recovery strategy paper, calling for
ASEAN+6 nations (ASEAN plus China, Japan, South Korea, India, Australia and New
Zealand) to move rapidly to coordinate financial, trade, public health and food security
action to avoid prolonged stagnation and push the United States and Europe to join them.
The foundations for gearing up regional policy action in Asia were laid at an ASEAN+3
summit last month that included leaders from Southeast Asia, China, Japan and South
Korea, and committed to health and economic policy coordination. Australia, given its
record in managing the virus and its economic policy heft, has an important and
influential contribution to make in working with its neighbours in ASEAN, Japan, India,
South Korea and China in meeting the challenge posed by the virus.
There are six important objectives of this initiative in regional policy cooperation
To get global central banks and finance ministries to expand bilateral currency
swap arrangements and agree on a new issuance of Special Drawing Rights (SDRs)
to create a stronger regional financial safety net. This would provide
macroeconomic policy space and financial stability simultaneously to combat the
public health and economic dimensions of the crisis in developing countries in the
region and is a key Indonesian interest.
To support the development, production and equitable distribution in Asia of
diagnostic tests, a vaccine and treatments through collective commitment of funds
to the WHO’s COVID-19 Tools (ACT) Accelerator and the expansion of the COVID-
19 ASEAN Response Fund to include ASEAN+6 nations.
To keep regional medical and food markets open. It is essential to avoid restrictions
on trade in medical equipment and supplies after critical domestic needs have been
met. This requires commitment by the region to reducing or eliminating tariffs and
non-tariff measures on medical goods and services. Similarly, regional food
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34 CITI-NEWS LETTER
security will depend on access to international markets and the removal of export
restrictions that have been imposed. Current bilateral initiatives to keep food trade
open can be consolidated into a regional agreement.
To speed up the development of protocols for health certification for international
travel to fast-track the resumption of international commerce, travel for study,
scientific exchange, temporary labour movement, and tourism. Getting experts
together to work through the issues is the first step.
Embrace the digital transformation that COVID-19 has brought to health
management. Asia can initiate a proactive agenda for collective governance of
digital infrastructure that includes regulatory coherence, privacy standards and
data sharing. This is now essential to new work practices, innovation in
production, supply chain management and delivery of goods and services,
including government services.
Conclude the Regional Comprehensive Economic Partnership (RCEP) agreement
immediately to ensure regional trade solidarity. Early conclusion of RCEP with 15
members will send a global signal on keeping trade open, ensure food security and
keep markets open in East Asia. The RCEP group needs to keep open a path for
eventual Indian membership and actively promote economic cooperation with
South Asia.
The COVID-19 crisis is now at the centre of the maelstrom that is engulfing global
economic and political affairs.
Asia can act to implement this agenda through its ASEAN, ASEAN+3 and ASEAN+6
arrangements, engaging the East Asian Summit countries including the United States,
and the APEC and G20 forums, while stepping up to lead WTO and IMF reforms.
Coordination through regional and multilateral frameworks will increase the capacity of
all Asian nations to contribute constructively to regional and global recovery beyond
conflictual geopolitics. Mobilising the political energy and will in Asia to deal with the
international ramifications of the COVID-19 crisis immediately will be central to dealing
with big global problems we face, to securing regional political stability and to restoring
the early prospect of prosperity.
Peter Drysdale is Professor Emeritus and Head of the Asian Bureau of Economic
Research in the Crawford School of Public Policy at The Australian National University.
Chatib Basri is Professor at the University of Indonesia and former Indonesian Finance
Minister.
Home
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35 CITI-NEWS LETTER
Foreign direct investments could contract by 40% this year, hitting
developing countries hardest
(Source: World Economic Forum, June 03, 2020)
Coronavirus has dramatically impacted globalization, with flows of foreign direct
investments (FDI) being disrupted as a result.
According to the UN Conference on Trade and Development (UNCTAD), global
FDI flows are expected to contract between 30 to 40% during 2020/21.
If the contraction in global FDI lasts for a while, the consequences for developing
countries will be severe.
COVID-19 is uprooting economic globalization. With both supply and demand
experiencing simultaneous shocks due to containment measures, global production
networks are being disrupted on a scale never witnessed before. The pandemic has
exposed how globally interconnected the flow of goods and services has become, and
countries are now rethinking their international trade strategies to reduce their
vulnerability to global economic shocks.
Disruptions to flows of foreign direct investments (FDI) — which are part and parcel of
economic globalization — are no exception. In late March, the International Monetary
Fund announced that investors had removed 83 billion US$ from developing countries
since the beginning of the COVID-19 crisis, the largest capital outflow ever
recorded.1 According to the UN Conference on Trade and Development (UNCTAD),
global FDI flows are expected to contract between 30 per cent to 40 per cent during
2020/21. All sectors will be affected, but sharp contractions in FDI are especially evident
in consumer cyclicals, such as airlines, hotels, restaurants and leisure, as well as
manufacturing industries and the energy sector.2
The contraction in FDI is going to hit developing countries particularly hard. The reasons
for this are that first, FDI inflows to developing countries are expected to drop even more
than the global average, considering that those sectors that have been severely impacted
by the pandemic account for a larger share of FDI inflows in developing
countries.3 Second, developing countries have become more reliant on FDI over the last
few decades. FDI inflows to developing countries increased from 14 billion to 690 billion
US$ (current prices) between 1985 and 2017. This represents an increase from 25 per cent
to 46 per cent as a share of world FDI inflows. The increase in FDI to developing countries
is underpinned by a rise in both offshoring and global fragmentation of economic
activities, especially within the manufacturing and services sectors. The drop in global
FDI is therefore very much related to the disruptions in global supply chains, which we
have also witnessed as a result of the COVID-19 pandemic.
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36 CITI-NEWS LETTER
FDI inflows to developing countries are not uniform in either quantity or quality. Fast-
growing economies in Asia with large populations have been driving the surge over the
past few decades, most importantly China, but also Cambodia, India, Indonesia,
Malaysia, Myanmar, Philippines, Thailand and Viet Nam.4 The inflows of investments
into these countries are mainly concentrated in manufacturing and services. If we look at
dependence on FDI inflows rather than their quantity, African countries enter the picture.
The FDI inflows to Africa tell a different story to those of developing countries in Asia. In
Africa, the extractive industries, such as oil and mining, attract most FDI inflows.5 This
type of direct investments tends to be more volatile, which explains the erratic swings in
FDI inflows in the cases of Congo and Mozambique. Ethiopia is an exception with the
growth in FDI inflows being largely concentrated in the manufacturing sector.
The consequences of FDI contraction (and resumption) for developing
countries
Making predictions about the economic consequences of COVID-19 is a thankless task.
We do not know how quickly economic activities will resume, we cannot yet determine
the scale of the damage from the fall in global demand and supply, and we cannot envisage
the nature of potential future fiscal stimulus packages.
Comparing recent data on business confidence in China and the United States — two
countries that have an important impact on global investment flows — might give us a
hint though as to the future of global investment flows. From the chart below, we see that
China is following a different trend compared to the United States: business confidence
in China is improving towards pre-pandemic levels.
What does this mean? At the most obvious level, it means that China is resuming
production and work earlier than other countries (business confidence in most other
countries are showing trends similar to the United States). Monthly production data in
China confirms this trend, as we see that manufacturing output rebounded sharply in
March.
Taken together, this could indicate that we are seeing the start of a global V-shaped
recovery of business activity, and that, assuming other countries’ recoveries, the global
slump in FDI will not be as dire as predicted by some people. Or, it could indicate that
Chinese companies are using this crisis as an opportunity for further expanding their
global influence. In fact, FDI outflows from the Global South, primarily China, has been
on the rise for a number of years now.6 So it is not unthinkable that this pandemic will
influence the composition of global FDI flows in the future.
It should be borne in mind, however, that the measure we are using here to indicate
business confidence in China, the Purchasing Managers Index (PMI), has been subject to
scrutiny.7 Yet more importantly, the PMI reflects a trend, and that trend reveals that
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37 CITI-NEWS LETTER
levels of production are improving, and not that they have returned to pre-pandemic
levels. Additionally, due to the nature of FDI, we should be prepared for a slow recovery.
In many instances, cross-border business ties need to be re-established; investors are
normally more risk averse abroad than at home, and there are a number of complicated
operations and logistics challenges involved in restarting production in a foreign country.
The consequences of a global FDI contraction could be more dire for developing countries
with a more diversified portfolio of FDI inflows because the potential economic benefits
of those inflows are greater.
If the contraction in global FDI lasts for a while, the consequences for developing
countries will be severe. It will impact them in different ways, however. Countries whose
extractive sectors depend on FDI inflows, many of which are in Africa, will first and
foremost experience a loss in export revenues (which many already have due to the plunge
in prices for primary commodities, especially oil8). The consequences of a global
contraction in FDI could be even more serious for developing countries with a more
diversified portfolio of FDI inflows, because the potential benefits of such inflows are
greater: FDI inflows do not only boost export revenues in these countries, they also boost
employment, tend to have a more positive impact on infrastructure development, and can
result in technology transfers to the host economy, particularly in the manufacturing
sector.9 In addition to a loss of investments, we can expect many investors to halt their
plans for expansion. Attracting investors is only the first step towards a successful FDI
strategy. Convincing investors to stay and expand their operations is a key factor for
achieving economic development goals.
The competition among developing countries to attract FDI from high-income countries
has become fiercer than ever, particularly in manufacturing.
The nature of competition in the global economy of the 21st century is also an issue of
concern in relation to the contraction in FDI to developing countries. The competition
among developing countries to attract FDI from high-income countries and/or serve as
suppliers for consumer markets in high-income countries has become fiercer than ever,
particularly in manufacturing. The developing-country share of low-tech manufacturing
exports has almost tripled since 1980, and the global pool of unskilled labour has doubled
since 1990.10 This means that reopening production quickly after the pandemic has been
contained, perhaps even prematurely, can provide a competitive edge. For example,
garment manufacturers in Bangladesh have been pressured to restart production despite
the associated health risk. Factory owners fear that overseas retailers will simply source
production from other countries like China, Viet Nam or Cambodia if they do not resume
production quickly.11 In other words, there seems to be a trade-off between keeping
employees safe from the health-risks associated with COVID-19 and retaining a
competitive edge.
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38 CITI-NEWS LETTER
Policy efforts to mitigate the negative effects of FDI contraction
To recover post-COVID-19, the world—and developing countries in particular—will
require a significant influx of resources. FDI inflows can bring in some of those resources,
but governments will need to put conditions in place to help attract and retain productive
investments and, more importantly, to maximize their development benefits. This crisis
may offer a window of opportunity for governments to re-examine their approaches to
investment attraction and retention, with a view towards increasing the embeddedness of
FDI within their local economies. To this end, we highlight three focal areas that may
require novel policy approaches and thus deserve increased attention from policymakers:
First, measures and supportive mechanisms to help local firms overcome supply-side
constraints must be introduced and further strengthened. Two types of measures
specifically can be fruitful in the longer term in this respect, both for developing stronger
linkages between local and foreign firms, as well as to improve competitiveness of local
industrial structures: the development of a system of quality certification that is often
required to enter into the supply chains of foreign firms, and improvements in digital
infrastructure that allow firms to operate remotely both along global value chains and in
reaching out to foreign markets.
Second, export processing zones (EPZs), which have been an important tool for attracting
FDI in many developing countries, should be designed in a way to link up to the domestic
economy. This calls for EPZ regulations that support the establishment of local supplier
relationships, including the design of supplier development programmes to support
match-making processes between foreign firms and local suppliers.
Third, international actions to support countries during and after the pandemic need to
pay particular attention to least developed countries. Those countries are facing
particularly hard budget constraints and are often limited to implementing policies that
focus primarily on investment facilitation measures, simply because they do not have the
resources to offer more substantive support to their private sector firms.12 This is why it
is crucial for international organizations and country groupings, like the United Nations
and the G20, to respond to their calls for support by advocating and facilitating
cooperation in the area of international investment and trade policy.
Home
Eastman Staples supplies PPE manufacturing equipment
(Source: Fibre2Fashion, June 02, 2020)
Eastman Staples, a garment and textiles supplier, has provided vital equipment to
manufacture Personal Protective Equipment (PPE) for the healthcare industry after
receiving a £300,000 loan from HSBC UK through Coronavirus Business Interruption
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39 CITI-NEWS LETTER
Loan Scheme (CBILS). Company traditionally supplies sewing machines, fabric and
textile tools to garment industry.
However, with demand for PPE across the UK surging, the company was inundated with
requests from the NHS, its suppliers and factories searching for machinery and materials.
The six-figure funding package from HSBC UK has enabled Eastman Staples to quickly
source and supply a range of equipment and machinery to their clients.
Most recently, the company has supported volunteers of the “Scrubs Glorious Scrubs”
campaign, who are creating colourful patterned scrubs for doctors and nurses working on
the front line; and Northumbria NHS Trust, which has opened a PPE factory to help beat
the supply crisis. To date, Eastman Staples has provided equipment including sewing
machines, chairs, garment rails and mannequins to these clients at a time of
unprecedented need.
“As with many businesses, Eastman Staples has faced uncertain times during Covid-19,
which has required us to quickly adapt our business model to clients’ needs. We were
inundated with requests from PPE suppliers who were desperately trying to meet demand
and we were determined to help them, but this would not have been possible without the
HSBC UK team, including Navin Sharma and Joanne Evenden. The funding has enabled
us to meet these urgent orders and helped to keep the business trading throughout this
challenging time,” Peter Kyprianou, director at Eastman Staples, said in a press release.
“It’s vital that every solid business has the chance to survive during this challenging
situation. The team at Eastman Staples has been incredibly flexible and dedicated during
an uncertain time and we are humbled to support them as they strive to supply vital
machinery. We look forward to seeing further demonstrations of how the business is
helping their healthcare clients over the coming months,” Navin Sharma, relationship
director for Corporate Banking, HSBC UK, said.
Home
A promising approach in the development of antibacterial textiles
(Source: European Coatings, June 02, 2020)
A present research reports on the synthesis and characterisation of copper oxide
nanoparticles (CuONPs) and their application on cotton fabric to increase the bactericidal
and hydrophobic properties.
The synthesised materials have been subjected to spectroscopic and microscopic
characterisations to help in understanding their structure, morphology, size, and
composition. Further, upon dispersion of the nanoparticles onto the fabric, its
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40 CITI-NEWS LETTER
hydrophobicity and mechanical properties were evaluated using electron microscopy and
universal testing machine.
Treated cotton fabric exhibits higher tensile strength (32 MPa) than the untreated one (27
MPa), whereas copper nanoparticle-coated cotton fabric shows a fair hydrophobicity.
Greater antibacterial activity
Moreover, CuONPs-treated and untreated cotton fabrics have been analysed for
bactericidal activity against various gram-negative and gram-positive strains. Finally, the
CuONPs-coated cotton fabric displays greater antibacterial activity against E. coli and
exhibits superior antimicrobial activity even after 30 cycles of washing, indicating that the
CuONPs-coated cotton fabric has a higher potential to be employed as a medical textile
to avoid cross-infection within a clinical environment.
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