Cotlook A Index - Cents/lb (Change from previous day)
20-06-2019 77.90 (+0.40)
18-06-2018 96.95
21-06-2017 77.00
New York Cotton Futures (Cents/lb) As on 24.06.2019 (Change from
previous day)
July 2019 61.30 (-1.61)
Oct 2019 64.65 (-0.85)
Dec 2019 66.31 (+0.35)
24th June
2019
Expert panel suggests ways to achieve USD 5-trillion economy target: Niti Aayog
India's RBI Deputy Acharya Quits, Business Standard Says
Government’s transport assistance for farm produce exports under attack at
WTO
Government mulls various options for consolidation of PSU general insurers
Report on black money may be tabled in the House today
China's textile, garment exports up 2.8 pct in May
Cotton and Yarn Futures
ZCE - Daily Data (Change from previous day)
MCX (Change from previous day)
June 2019 22160 (+60)
Cotton 14280 (-160) July 2019 21680 (-10)
Yarn 21485 (-225) Aug 2019 21600 (-70)
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2 CITI-NEWS LETTER
-------------------------------------------------------------------------------------- Expert panel suggests ways to achieve USD 5-trillion economy target: Niti
Aayog
India's RBI Deputy Acharya Quits, Business Standard Says
Government’s transport assistance for farm produce exports under attack at
WTO
Government mulls various options for consolidation of PSU general insurers
Report on black money may be tabled in the House today
Simplified GST, timely credit can help small units go overseas, feel experts
Japanese textile designers collaborate with Indian artisans in Uttarakhand
Explained: Modi’s Bt cotton connection and why his govt needs to wake up
on GMO
Cabinet approval for wage code bill likely next week
CII calls for holistic national mission to drive job creation
States should have the power to determine minimum wages: CII
CAIT delegation to visit Singapore looking to boost trade ties
------------------------------------------------------------------------------- China's textile, garment exports up 2.8 pct in May
No solution to trade war? China to fight US till the end, says state media
Kenya: Corrupt individuals biggest losers as new currency out
The circular economy: How Rwanda tries to chart its course in hostile global
waters
Deakin University has low-cost method for cotton waste
----------------------------------------------------------------------
NATIONAL
---------------------
GLOBAL
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3 CITI-NEWS LETTER
NATIONAL:
Expert panel suggests ways to achieve USD 5-trillion economy target: Niti
Aayog
(Source: Economic Times, June 23, 2019)
Modi on Saturday had an interaction with economists and industry experts on India's
current economic situation.
Think tank Niti Aayog Sunday said that expert panel for macroeconomics and
employment came out with suggestions to achieve USD 5-trillion economy target during
an interaction with Prime Minister Narendra Modi. Modi on Saturday had an
interaction with economists and industry experts on India's current economic situation.
"Expert committee for Macroeconomics & Employment presented their suggestions to
PM @narendramodi for achieving the $5 Trillion economy target. Improvement of
governance in PSU banks, enhancing growth rate of exports & employment generation
were some of the key areas identified," the Aayog said in a tweet.
During the interactive session, ahead of the presentation of the Union Budget next
month, all participants made a case for "single minded pursuit" to achieve growth,
according to sources. A release issued by the Prime Minister's Office (PMO) had said
that the session organised by Niti Aayog on 'Economic Policy - The Road Ahead' was
attended by over 40 economists and sectoral experts.
Further opening of banking and insurance sectors for FDI, speeding up disinvestment
process and management of water resources were also among the focus areas of Modi's
interaction with economists and industry experts, they added. "During the session,
participants shared their views, in five distinct groups, on the economic themes of
macro economy and employment, agriculture and water resources, exports, education
and health," said the release.
N Chandrasekaran (Chairman, Tata Sons), T V Narendran (Global CEO and MD, Tata
Steel), Anil Agarwal (Chairman, Vedanta Resources), Sanjiv Puri (Chairman and MD,
ITC), and Vijay Shekhar Sharma (CEO, Paytm) were among the industry leaders who
had put forth their views in the meeting. Among the economists and experts who were
present at the meeting were Bimal Jalan (former RBI Governor), Shankar Acharya
(former Chief Economic Adviser), Surjit Bhalla (former PMEAC member), Vikram
Limay (CEO, NSE), Sonal Varma (Chief Economist, Nomura), Shekhar Shah (DG,
NCAER), and Bibek Debroy (Chairman, EAC-PM).
The PMO release had said the Prime Minister thanked all participants for their
suggestions and observations on various aspects of the economy. The Saturday meeting
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4 CITI-NEWS LETTER
was also attended by Commerce and Industry Minister Piyush Goyal and Minister of
State (independent charge) for Statistics and Programme Implementation Rao Inderjeet
Singh.
Niti Aayog Vice Chairman Rajiv Kumar, CEO Amitabh Kant and senior government
officials were also present. Finance Minister Nirmala Sitharaman will be presenting the
full Budget for 2019-20 on July 5 in the Lok Sabha. It will be the first full Budget of the
Modi 2.0 government.
Home
India's RBI Deputy Acharya Quits, Business Standard Says
(Source: Subhadip Sircar, Bloomberg, June 24, 2019)
Viral Acharya, deputy governor of the Reserve Bank of India, resigned six months before
his term ends, Business Standard reported, citing him.
Acharya, who was in charge of monetary policy, will return to New York University as an
economics professor in August instead of February 2020, according to the newspaper.
He took office at the RBI in January 2017 for a three-year term. His departure follows
Urjit Patel's sudden resignation in December last year amid rising tension between the
central bank and the government about the RBI’s independence. Shaktikanta Das was
appointed governor shortly after Patel quit, with the RBI reversing its tight monetary
policy stance since then.
A spokesman for the RBI said on Monday he was unaware of the development. Acharya
didn’t immediately reply to a message from Bloomberg seeking comment. The rupee fell
in offshore trading on the report. The dollar/rupee 1-month contract was up 0.1% to
69.98. Business Standard cited people it didn't identify as saying Acharya handed in his
resignation a few weeks before the RBI's June monetary policy committee meeting.
When asked for further comments, he told the newspaper: ``A schoolteacher once told
me: ‘When your work speaks for itself, do not interrupt.'''
N.S. Vishwanathan, a deputy governor whose term is due to end in the first week of July,
is likely to stay on for another term, the report said.
Michael Patra, executive director at the RBI, and Sanjeev Sanyal, principal economic
adviser at the Ministry of Finance, are among possible successors to Acharya, the report
said.
Home
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5 CITI-NEWS LETTER
Government’s transport assistance for farm produce exports under attack
at WTO
(Source: Amiti Sen, The Hindu Businessline, June 23, 2019)
Australia implies that scheme flouts Nairobi Ministerial meet decision; US wants more
information
The new transport and marketing assistance scheme for farmers announced by the
Union government in March has raised the hackles of some developed countries which
are now questioning it at the World Trade Organization (WTO).
While Australia has said that the scheme may have flouted a decision on limiting such
subsidies taken at the WTO’s Nairobi Ministerial meet in December 2015, the US has
sought more details on the items being given such subsidies.
“The questions submitted by Australia and the US to India on its transport and
marketing assistance scheme will come up for discussion at the Committee on
Agriculture meeting on June 25-26. More countries may join the discussion at that
time,” a Geneva-based trade official told BusinessLine.
The scheme under scrutiny provides assistance for the international component of
freight and marketing of agricultural produce which is likely to mitigate the
disadvantage of higher cost of transportation of export of specified agriculture products
due to transshipment and also to promote brand recognition for Indian agricultural
products in specified overseas markets. These include North America, the EU, some
countries in South America, China, the ASEAN, New Zealand and Australia.
It is currently available for exports from March 1, 2019 to March 31, 2020. Its
applicability will be specified from time to time.
Pointing out that the assistance provided under the scheme qualified as an export
subsidy under the WTO agreement, Australia said that the move went against the
Nairobi Ministerial commitment of reducing such subsidies rather than increasing
them.
Australia’s submission acknowledged that the Nairobi decision was to allow developing
countries to continue to give transportation and marketing subsidies till 2023, but there
were also some caveats.
“India is also obliged by the subsequent paragraphs of the Nairobi Decision, which note
that members shall not apply export subsidies in a manner that circumvents the
requirement to reduce and eliminate all export subsidies; members shall seek not to
raise their export subsidies beyond the average level of the past five years on a product
basis; and members shall ensure that any export subsidies have at most minimal trade
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6 CITI-NEWS LETTER
distorting effects and do not displace or impede the exports of another member,” the
submission stated.
Australia has asked India to explain how the transport and marketing assistance scheme
is in tandem with the Nairobi Ministerial decision and what step the country has taken
to ensure that it will have minimal trade distorting effect on other members.
The US asked India to disclose how much the government had budgeted for the scheme
in the on-going year and also give details of other subsidies given to products getting
assistance under the new scheme.
Home
Government mulls various options for consolidation of PSU general
insurers
(Source: Economic Times, June 23, 2019)
The consolidation in the public sector general insurance companies is part of
disinvestment strategy.
The government is exploring various consolidation options including merger of state-
owned general insurance companies with New India Assurance NSE 1.04 % with a view
to create synergy and unlock value.
The Department of Investment and Public Asset Management (DIPAM) under the
Ministry of Finance is also looking at other options including stake sale in three
stateowned insurance firms like National Insurance Company, Oriental Insurance
Company and United India Insurance Company, sources said.
The idea is to fast track stake sale in the public sector general insurance companies,
which has been pending for the past two years, sources said. Various options including
issuance of fresh shares which could be subscribed by New India Assurance are also
being explored, they said, adding that direct sale of stake to New India is also in the
consideration. Another option being considered is to merge all the four companies,
instead of the proposed three, to create an LIC-type mega insurer in the general
insurance space and avoid undercutting each other. Once the merger is complete, the
government will go for a dilution of its stake in the broader entity.
The government had appointed E&Y as a consultant to see through the completion of
the merger process.
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7 CITI-NEWS LETTER
The consolidation in the public sector general insurance companies is part of
disinvestment strategy of the government. In 2017, state-owned New India Assurance
Company and General Insurance Corporation of India were listed on the bourses and
exchequer earned money out of stake sale.
The government has fixed disinvestment target of Rs 90,000 crore for the current fiscal
as against Rs 85,045 crore in the previous fiscal. It is to be noted that the government, in
the Budget 2018-19, had proposed to merge National Insurance Company, Oriental
Insurance Company and United India Insurance Company. The Centre in the Budget
had announced that the three companies would be merged into a single insurance
entity. The process of merger could not be completed due to various reasons, including
poor financial health of these companies. The two of these public sector companies are
struggling to maintain the solvency ratio. As against the insurance regulator Insurance
Regulatory and Development Authority's (IRDA) solvency ratio norm of 1.5, National
Insurance has an insolvency ratio of 1.5, while United India's level is comparatively
lower at 1.21.
Home
Report on black money may be tabled in the House today
(Source: Economic Times, June 23, 2019)
The government is likely to table the report on black money, prepared by the Standing
Committee on Finance NSE 0.42 % of the previous Lok Sabha, in Parliament on
Monday. The report, ‘status of unaccounted income/wealth both inside and outside the
country — a critical analysis (a preliminary report), was presented to former Lok Sabha
speaker Sumitra Mahajan on March 28. A copy of the report was also put up on the Lok
Sabha website on the directions of the committee. The report shall be presented by the
secretary generals in both the Houses.
The report doesn’t give a conclusive figure of black money stashed abroad or within the
country. Also, Veerappa Moily, chairman of the standing committee that presented the
report, has blamed the NDA regime for being non-serious on the issue. “In the past five
years, the NDA government gave only slogans and no solid action was taken against
black money,” Moily told ET. “We have mentioned in the report that direct tax reforms
are the need of the hour and, instead of making piecemeal amendment to the I-T Act, we
require a simplified code on direct taxes. Reforms in direct taxes are still pending. It has
not gone in tandem with reforms in indirect taxes such as the GST.”
In 2011, the then UPA government had asked three institutes — Delhibased National
Institute of Public Finance and Policy (NIPFP), the National Council of Applied
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8 CITI-NEWS LETTER
Economic Research (NCAER) and the National Institute of Financial Management
(NIFM) in Faridabad — to make an estimate on black money. The standing committee
had also gone through their reports and ‘found a wide variation’ in their estimate. “The
variations in estimate is more than 100% in some cases,” said Moily. As per the NIPFP
study, unaccounted financial flows out of the country have been in the range of 0.2% to
7.4% of GDP during 1997 to 2009.
NCAER estimated that the wealth accumulated outside India was in the range of $384
billion to $490 billion during 1980 to 2010. NIFM said it was Rs 9,41,837 crore during
1990 to 2008. “The unaccounted income and wealth inside and outside the country do
not appear amenable to credible estimation in the context of India,” says the standing
committee report. Moily clarified that it was only a preliminary report.
Home
Simplified GST, timely credit can help small units go overseas, feel experts
(Source: The Hindu BusinessLine, June 23, 2019)
With the emerging global trade war expected to throw up tremendous opportunities for
Indian companies, representatives of trade bodies, small industry associations, banks
and corporates felt a right ecosystem with a simplified Goods and Services Tax regime,
lower taxes and greater lending support will help Indian SMEs tap the export potential.
Speaking at a panel discussion, ‘Tapping into Global Trade — Challenges and
Opportunities,’ at the SME Growth Summit presented by ICICI Bank and BusinessLine,
the panellists urged the government to provide financial assistance to SMEs, assured
orders for a minimum period of 3-5 years, availability of bank credit, tax rebates for
Research and Development (R&D) and enhanced export incentives.
“Tamil Nadu is a forerunner in the small-scale industries model and it has the capability
to produce goods of any international standards,” said CK Mohan, former General
Secretary, Tamil Nadu Small & Tiny Industries Association (TANSTIA). “But small
industries must be allowed to establish themselves in the domestic environment before
they think of exports,” he added.
Time-consuming
R Sundaram, MD & CEO, Aerospace Engineers Pvt Ltd, Salem, said that in some cases
companies have to wait for more than 60 months to get their a return on investment,
but banks do not wait for such a long period.
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9 CITI-NEWS LETTER
“But small companies can do wonders with the available government support and if they
are ready to innovate,” Sundaram added.
X Arokianathan, Convenor, MSME Panel, Confederation of Indian Industry (CII) –
Chennai Zone, said that timely availability of packing credit, delay in GST refunds, and
non-usage of government mandated TReDS platform by large corporates are some of
the fiscal issues that hamper small businesses.
He also said that if the government is interested to promote SMEs to export then it
needs to work at the ground level in improving logistics since shipments from India take
much longer time than countries like China.
However, he lauded the government’s efforts in activating Indian Embassies, Consulates
and High Commissions to help businessmen build relationships with their counterparts
in various countries.
Open trade model
Viral Rupani, Retail Business Head-South, ICICI Bank, said that from ‘Make in India’
the country is now progressing towards ‘Making for the world in India’.
He also added that India should emulate the open trade model of Singapore, which has
maintained a trade surplus for the last 25 years, and Germany — the third largest
exporter after the US and China.
“Technology is now available at throwaway prices. So, SMEs have to come out of the
mindset that the technologies are only for large corporates,” said Prince Sudersanam,
Head-ERP Product Development & Delivery, Ramco Systems.
The panel discussion was moderated by Lokeshwarri SK, Chief of Research
Bureau, BusinessLine.
Home
Japanese textile designers collaborate with Indian artisans in Uttarakhand
(Source: Business Standard, June 23, 2019)
Japanese textile designers Chiaki Maki and Parva Tanaka have laid deep roots of
Japanese tradition in India by collaborating with the Indian artisans and manufacturing
traditional hand-woven Japanese outfits in Dehradun, Uttarakhand.
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10 CITI-NEWS LETTER
Chiaki and Parva started working with the Indian artisans and opened their own work
station in 2017, Ganga Maki Textile Studio in Bhogpur, Uttarakhand.Rakesh Singh is
the Indian director for their textile studio.
Beautiful and distinctive Japanese outfits are manufactured in their studio with the help
of hardworking weavers and artisans, putting in their efforts to produce authentic
outfits."We have been working with weavers in Delhi for 27 years, in co-operation with
Ms Neeru Kumar, one of the most prominent textile designers in India. We distribute
our products through Maki Textile Studio Ltd in Tokyo, Japan" Chiaki told ANI.
Chiaki met Rakesh, a chef in Delhi and hired him for the Indian Cafe in their textile
shop situated in Tokyo. While working there, Rakesh was impressed seeing Chiaki and
Parva's Japanese customers admiring their handmade prints and unique designs.
Soon he proposed an idea to Chiaki and Parva to build a bridge
between India and Japan by teaching Indian artisans the art of handmade
Japanese textile printing and designing and manufacturing the authentic outfits in
India. Parva and Chiaki started organizing workshops in Athurwala, Uttarakhand in
2010, where they trained local villagers in weaving, hand spinning and naturally dying
the fabric.
"Our wish is to become a model for villagers to keep their living out of hand work in
their village. Currently, there are around 20 families in the villages of Uttarakashi, 10
families in Uttar Pradesh, 10 families in Jharkhand, 20 families in West Bengal, 20
families Chattisgarh and 10 families in Assam, who make handmade yarns for us. "
Chiaki said.
They started exporting hand-woven fabrics from India to Maki Textile Studio
Ltd in Japan.Gradually they constructed a more comfortable workplace for the Indian
artisans in Bhogpur, Uttarakhand. The workplace in Bhogpur is constructed using
limestones, bricks, mud, bamboo, wood, etc.
Gradually they started cultivating their fields to grow materials for natural dyes and
fibres. They cultivate natural dye plants such as Indigo, Henna, Marigold, Harshingar,
Anar, etc in their own fields.
Currently, about 50 workers, including, 10 weavers, five tailors, women workers for
various hand-woven tasks, caretakers, and farmers are working at Ganga Maki Textile
Studio. Their products range from woollen coats, jackets, silk scarves, silk shawls, silk
dresses, bed covers, table clothes, fabrics to rugs and much more. They conduct
exhibitions twice a year, displaying their hand-woven outfits for the visitors.
Home
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11 CITI-NEWS LETTER
Explained: Modi’s Bt cotton connection and why his govt needs to wake up
on GMO
(Source: Ashok Gulati, Financial Express, June 24, 2019)
With Bt cotton, India gained about $67 bn in forex from
extra exports of cotton & cotton yarn, and savings in
imports, over FY03-FY17, compared to business as usual.
The word Satyagraha, meaning polite insistence for truth,
is associated with political movements of Mahatma
Gandhi for civil rights, first in South Africa and later in
India. The famous 24-day Dandi March (also known as
Salt March), a nonviolent civil disobedience against the
British monopoly on salt in 1930, became a symbol of
Satyagraha.
But today, it is much in news because of the civil
disobedience movement launched by supporters of
Shetkari Sanghatana (SS), a farmers’ organisation, to defy the controls by Government
of India (GoI) on the planting of Herbicide Tolerant (HT) Bt cotton and Bt brinjal. SS
was founded by the late Sharad Joshi, one of the most prominent farmers’ leader in
independent India. He gave up his cushy position in the United Nations to fight for the
cause of farmers’ freedom to choose the best farm technologies and to sell their produce
to the most lucrative markets at home or abroad. Unfortunately, governments since
independence, no matter how much they swear by the name of farmers, have
constrained our farmers’ access to best farm technologies as well as best markets. That’s
a painful fact which has imposed massive implicit taxation on Indian peasantry to the
tune of about $700 billion (cumulative) from 2000-01 to 2016-17, as per a 2018 OECD-
ICRIER study.
HT Bt cotton is not legally allowed by GoI. But, the government’s own committee has
estimated that it is being planted on about 15-17% of cotton area. Growing any GMO
crop illegally attracts a five year imprisonment and a fine of Rs 100,000. But so far, no
one had been arrested and the illegal trade has been thriving for quite some years. It
speaks of not just a massive governance failure but also its connivance with
unscrupulous seed companies where thieves are thriving. Farmers want that technology
and are buying those seeds in black markets, at prices much above those declared by the
government for non-HT Bt seeds. Now, when SS supporters are openly defying
government regulation, GoI has suddenly woken up and asked for action from
Maharashtra government. Newspaper reports suggest that one farmer with HT Bt seeds
has also been arrested. If the government is really serious not to allow this, let it show its
might by arresting hundreds of thousands of farmers who have already planted HT Bt
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12 CITI-NEWS LETTER
cotton. And why not first arrest the fraudulent seed companies that have been selling
these seeds illegally and without any patent. Most people in this trade know who these
local companies are and whose shelter they have politically. The big multinational
companies, who are the original innovators of HT Bt cotton, have stayed away from this
messy business and, in fact, have decided to withdraw most of their high biotech farm
technology from India.
Let us peep into this brave new world of GMOs for better understanding. GMO’s have
been present on the global platform since 1996 and by 2017, for which I have the latest
data, were being planted on almost 190 million hectares around the world. A total of
about 67 countries have accepted GM crops, of which 24 are planting and others
importing and consuming. GMO crops range from soya bean, corn and cotton, to
papaya, brinjal, and even apples and potatoes! And the landscape ranges from
developed nations like the US and Canada to developing ones like Brazil, Argentina,
India, Pakistan and China (see graph). There have been no cases of human deaths,
disease, or injury from their production or consumption.
It may be noted that Bangladesh, not shown in the graph, has also adopted Bt brinjal
and area under that is fast catching up. Bt brinjal is an interesting case study as it was
cleared by India’s GEAC way back in 2009, but our environment ministry, under
pressure from NGOs, could not gather the courage to release it. Now that Bangladesh
has taken the same technology from an Indian firm, and is fast scaling it up, will it not
be stupid on our part to presume that it will not enter West Bengal, if it has not already
done so? GoI needs to wake up!
Almost a similar situation had arisen in March 2002, when it was found that some
Indian farmers had planted Bt cotton. The Vajpayee government examined the whole
issue considering both bio-safety and farmers’ needs. Then, it took a bold decision on
March 26, 2002 to legally allow planting of Bt cotton, the first GM crop of India and the
only one so far. He extended the original slogan of ‘Jai Jawan, Jai Kisan’ given by
Shastri to include ‘Jai Vigyan’. He was very clear that our agriculture should be science-
based. Look at the results of this one bold decision by late PM Vajpayee.
Today, about 90-95% cotton area is under Bt cotton, and India has emerged as the
largest producer and second largest exporter of cotton in the world. In a much more
detailed study that I did with Kavery Ganguly, we estimated that due to this ‘gene
revolution’ India gained about $67 billion in foreign exchange from extra exports of
cotton and cotton yarn, and savings in imports, over the period 2002-03 to 2016-17,
compared to business as usual. But more important are the gains to cotton farmers,
whose incomes doubled. And the maximum gain was to Gujarati farmers. In fact, we
found that Gujarat’s ‘agrarian miracle’ of 8% average annual growth rate in agri-GDP
during Narendra Modi’s regime as CM from 2002-03 to 2013-14 was triggered and lead
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13 CITI-NEWS LETTER
by Bt cotton. And this was the famous Gujarat development model that also helped him
become the PM of India.
It won’t be an exaggeration to say that Bt cotton has been the secret force behind Modi’s
political successes! Given this, can India under Modi 2.0 emerge as a leader in bio-farm
technologies, including GMO? Only time will tell.
(Infosys chair professor for agriculture, Icrier.)
Home
Cabinet approval for wage code bill likely next week
(Source: Economic Times, June 23, 2019)
The bill on wage code — one of the four codes — had lapsed after the 16th Lok Sabha
dissolved last month.
Looking to bring in a fresh wave of labour reforms, the Labour Ministry is likely to seek
Cabinet approval for the Code on Wages Bill next week as it pushes for its passage in the
ongoing Parliament session, a source said. The bill lapsed after the 16th Lok Sabha
dissolved last month. Now the ministry would have to seek the Union Cabinet's approval
for introducing it in either House of Parliament.
"Cabinet can approve the wage code bill next month. The Labour Ministry wants to push
the draft law for passage in the current Parliament session," the source said. The bill was
introduced in the Lok Sabha on August 10, 2017. It was referred to the Parliamentary
Standing Committee on August 21, 2017. The panel had submitted its report on
December 18, 2018.
The wage code bill is one of four codes envisaged by the government which would
subsume 44 labour laws with certain amendments to improve the ease of doing business
and attract investment for spurring growth. The four codes will deal with wages, social
security, industrial safety and welfare, and industrial relations.
The Code on Wages will replace the Payment of Wages Act, 1936, Minimum Wages Act,
1948, Payment of Bonus Act, 1965, and the Equal Remuneration Act, 1976. The bill
provides that the central government will fix minimum wages for certain sectors,
including railways and mines, while the states would be free to set minimum wages for
other category of employments.
The code also provides for setting of a national minimum wage. The central government
can set separate minimum wages for different regions or states. The draft law also says
that the minimum wages would be revised every five years. Earlier this month, following
an inter-ministerial meeting chaired by Home Minister Amit Shah, Labour Minister
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14 CITI-NEWS LETTER
Santosh Gangwar had said his ministry would push for the passage of the bill in the
current session of Parliament. The meeting was also attended by Finance Minister
Nirmala Sitharaman and Commerce and Railway Minister Piyush Goyal.
Home
CII calls for holistic national mission to drive job creation
(Source: The Hindu BusinessLine, June 23, 2019)
The Confederation of Indian Industry (CII) has called for a comprehensive National
Employment Mission and setting up of an inter-ministerial and all-State National
Employment Board to drive job creation.
“Employment generation extends to multiple dimensions, and a national mission is
required to address all aspects holistically. The government’s National Employment
Mission should include flexibility in hiring, tax incentives, education and skill
development and promotion of labour-intensive sectors,” said Chandrajit Banerjee,
Director General, CII.
The industry body suggested that the government set up a National Employment Board
that would include representatives of key ministries, State governments and other
stakeholders, to examine employment creation hurdles and address them on real-time
basis.
The CII also outlined a five-point agenda for the upcoming Budget which noted that the
States that introduce fixed-term employment and other labour law reforms should be
given priority in any new Central government infrastructure project funding.
Secondly, the reduction in the number of days of employment to 150 for workers in
textiles, garments, footwear and leather sectors can be extended to all manufacturing
sectors.
The industry body also recommended that under Prime Minister’s Rozgar Protsahan
Yojana, the wage threshold should be increased to ₹25,000 from the current ₹15,000.
The other suggestions included consideration of corporate income tax rebates for
enterprises employing over a certain number of formal workers, and providing skill
voucher/wallets to boost skilling.
Home
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15 CITI-NEWS LETTER
States should have the power to determine minimum wages: CII
(Source: Business Standard, June 23, 2019)
Says national minimum wage will hit job creation
The Confederation of Indian Industry (CII) has called upon the government, outlining
the need for Inter-ministerial and All-State National Employment Boards to deal with
the jobs crisis in the country.
According to the Chamber, these boards can include representatives of key ministries,
state governments, industry experts, and trade unions who will look into employment
creation hurdles and address them on a real-time basis.
It has also called for a national employment mission. "This should include flexibility in
hiring, tax incentives, education and skill development, and promotion of labour-
intensive sectors,” Chandrajit Banerjee, Director General at CII, said.
Budget push
CII has outlined a five-point agenda for the upcoming Budget. First among these is the
suggestion that states that introduce Fixed Term Employment and other Labour law
reforms should receive priority in new Central infrastructure project funding. They also
said that transport and power projects along with industrial parks can be fast-tracked
for these states to enable them to leverage such employment policies.
Secondly, benefits under Section 80JJAA of the Income Tax Act should be extended for
all workers earning up to Rs 50,000 in any sector. The number of working days has been
reduced to 150 for workers in the textile, garment, footwear and leather sectors, and this
can be extended to all manufacturing sectors.
The business chamber has also batted for
the wage threshold under the Pradhan
Mantri Rojgar Protsahan Yojana (PMRPY),
to be increased to Rs 25,000 from Rs
15,000. Under this scheme, the Government
of India will provide the full contribution to
EPF and EPS for employees earning less
than Rs 15, 000, for three years.
“With wages increasing, the threshold for
applicability should also be raised," CII.
Corporate income tax rebates should be
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16 CITI-NEWS LETTER
considered for enterprises employing over a certain number of formal workers,
a CII functionary said.
Lastly, skill vouchers and skill wallets may be provided to hone their skills. This is in
accordance with the Skill India Mission of incentive-based support rather than subsidy-
based support.
Wage issues
Commenting on the suggested national minimum wage, CII said that states should have
the power to determine minimum wages based on three criteria - geographic location,
skill and occupation. However, it cannot be lower than the minimum wage fixed by the
Centre. The concept of a national minimum wage will affect job creation, so it is
necessary to give States power to fix their minimum wages.
The government should fix minimum wages of unskilled workers; however, wages of
skilled and semi-skilled labour force should be determined by market forces, CII added.
The CII also recommended providing Child Care & Maternity Benefit subsidies under
the Maternity Benefit Amendment Act to encourage more women to participate in the
workforce. “While industry is not asking for a hire-and-fire policy, a more flexible labour
regime would enable India to align with multiple global trade challenges at a time when
other nations are attracting new investments,” said CII.
Home
CAIT delegation to visit Singapore looking to boost trade ties
(Source: Business Standard, June 23, 2019)
A delegation of the Confederation of All India Traders (CAIT) will depart
for Singapore on Tuesday on a three-day visit with a view to create a pilot for a
trade corridor.
The delegation is making this visit on the invitation of Monetary Authority
of Singapore (MAS) and Infocom Media Development Authority of Singapore (IMDA).
"As a part of the visit and with a view to create a pilot for an India Singapore Trade
Corridor, MAS and IMDA have invited CAIT, accompanied by GlobalLinker to a three
day visit to Singapore as a part of a 'Study Tour'," CAIT stated.
The primary objective of the Study Tour is to immerse CAIT officials in the concept of
Business Sans Border (BSB) an initiative of MAS and IMDA by leveraging Global
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17 CITI-NEWS LETTER
Linkers participation and to get the views of the CAIT representatives on the BSB
program construct and to secure their participation in the pilot programme.
A few other related meetings are also being organised including a meeting with
the Singapore India Chamber of Commerce to explore the Singapore India
Trade corridor opportunity and with the Singapore Business Federation, the traders'
body said. The delegation will be led by CAIT Secretary General Praveen Khandelwal.
Home
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18 CITI-NEWS LETTER
GLOBAL:
China's textile, garment exports up 2.8 pct in May
(Source: Xinhua, June 23, 2019)
China's export of textiles and garments rose 2.8 percent year-on-year to 23.8 billion U.S.
dollars in May, according to China's Ministry of Industry and Information Technology
(MIIT).
In breakdown, the country's export of textiles stood at 11.6 billion U.S. dollars, up 3.9
percent from the same period last year, while garments rose 1.7 percent to 12.2 billion
U.S. dollars, the ministry said, citing data from the General Administration of Customs.
In the first five months of the year, textiles and garments export dropped by 2.2 percent
year-on-year to 99.6 billion U.S. dollars, the MIIT said.
China's export of textiles was 48.3 billion U.S. dollars during the January-May period,
up 1.5 percent compared to a year ago, while that of garments saw a 5.5-percent decline
to 51.3 billion U.S. dollars.
Home
No solution to trade war? China to fight US till the end, says state media
(Source: Bloomberg, June 23, 2019)
The US must drop all tariffs imposed on China if it wants to negotiate on trade, and only
an equal dialogue can resolve the issue and lead to a win-win, the newspaper said
China has the strength and patience to withstand the trade war, and will fight to the end
if the US administration persists with it, China’s state-run People’s Daily said in an
editorial Saturday.
The US must drop all tariffs imposed on China if it wants to negotiate on trade, and only
an equal dialogue can resolve the issue and lead to a win-win, the newspaper said.
The paper, a mouthpiece for China’s ruling Communist Party, said the US had failed to
take into account the interests of its own people, and they are paying higher costs due to
the trade dispute. “Wielding a big stick of tariffs” also disregards the condition of the
US economy and the international economic order, according to the editorial.
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19 CITI-NEWS LETTER
US President Donald Trump and Chinese President Xi Jinping will meet on the sidelines
of the G20 summit in Japan next week to discuss the trade war between their two
countries. Trump has repeatedly asserted that tariffs on Chinese imports are paid by
China, not US consumers -- in defiance of the consensus of economists.
If the US chooses to talk, “then it must show some good faith, take account of key
concerns from both sides and cancel all tariffs,” the paper said.
Home
Kenya: Corrupt individuals biggest losers as new currency out
(Source: The Standard Media, Kenya, June 23, 2019)
Individuals hoarding proceeds of corruptions are some of the biggest losers as Central
Bank rolls out new currency.
From October 1, the old Sh1,000 notes will cease being legal tender, effectively
rendering them worthless pieces of paper.
While the Central Bank governor Patrick Njoroge announced that the new Sh50, Sh100,
Sh200, Sh500 notes would circulate alongside the old notes, he said the Sh1000 notes
would cease being legal tender in the next four months.
The coming period expected to be frantic as individuals trade in the old currency before
the period lapses.
But as the clocks starts counting down to October 1, sleuths, empowered by a firm anti
money laundering law, will be closely scrutinising bank transactions.
The government’s announcement of the new notes comes in the wake of proliferation of
counterfeit currency with detectives having seized about Sh40 billion in fake currency
since January.
“We have assessed the grave concern that our large banknotes – particularly the older
one thousand shilling series – are being used for illicit financial flows in Kenya and also
other countries in the region.
“More recently we have seen the emergence of some counterfeits. These are grave
concerns that would jeopardise proper transactions and the conduct of commerce in our
currency,” Central Bank of Kenya governor Patrick Njoroge said.
Besides move also targets money laundering and tax evasion since those suspected to be
hoarding money in houses now forced to exchange the currency for the new notes.
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20 CITI-NEWS LETTER
In May 2017, detectives found a hoard of Sh18million stashed in the house of a National
Land Commission official who was under investigation for corruption.
In October last year, police in Nairobi have recovered fake money valued at Sh3 billion
at a house in Westlands.
Four months later, a hoard of Sh32billion in fake currency was also disoivered in a
residential house in Ruiru.
A month later, detectives found Sh2billion in fake currency found at a safe in Barclays
Bank Queensway branch, Nairobi.
According to Central Bank of Kenya’s 2018 analysis of currency circulation, the Sh1,000
notes in circulation were valued at Sh210.37billion by June 2018. Comparatively, those
of Sh500 were only Sh16.31 billion.
The withdrawal of the currency also comes as CBK enforcing closer scrutiny of financial
transactions.
Transactions exceeding Sh1 million require the approval of the branch manager while
cash transactions of Sh10 million to Sh20 million or the equivalent will require the
approval of the regional branch manager or the senior manager.
Bank customers are required to give a three-day notice to make over the counter
transactions of more than Sh10 million, and provide supporting documents such as the
source of the money, the purpose for withdrawing the funds.
Home
The circular economy: How Rwanda tries to chart its course in hostile
global waters
(Source: Down to Earth, June 23, 2019)
Wanting to move away from being a dumpyard of used clotings has meant angering
Donald Trump's USA. The small east African country is trying to find a way out
An uneasy silence has enveloped over the once-vibrant Kimironko market in Rwanda’s
capital town, Kigali. Sitting in a dim corner, Emmanuel Harindintwari listens intently as
the other stallholders discuss an incident on the border that now threatens political and
social stability in East Africa.
On May 24, the Rwandan security force gunned down two people, including a Ugandan
national, for trying to smuggle used clothes into the country. Those were hand-me-
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21 CITI-NEWS LETTER
downs from people living some tens of thousands of kilometres away across the North
Atlantic Ocean, or beyond the Mediterranean Sea, which get sold across Africa as cheap
garments and are the primary source of clothing across the continent.
But the Rwandan government does not want its citizens to sift through piles of cast-offs
from wealthier nations. In its attempt to shed the “third world” label and “restore”
people’s dignity, the government has been aggressively regulating the entry of used
clothes and footwear into the country.
Since 2016-17, it has progressively increased taxes on these merchandise, first from
$0.20 to $2.50 per kg and then to $4 in the next financial year. Tariff on used footwear
has also jumped from $0.20 to $5. Simultaneously, the government has heightened
surveillance along the country’s porous borders with Uganda and the Democratic
Republic of Congo, which are among the top importers of used clothing in Africa.
This has unnerved many of the 22,000 Rwandans engaged in the trade—right from
wholesalers, retailers and vendors to those involved in washing, repairing and restyling
products to fit the body shapes and sizes of Africans.
When asked about his business, Harindintwari points at a less-than-a-metre-wide stall,
crowded with neatly folded used trousers, shirts and colourful bedcovers, and says:
“These are all legally imported goods. But the raised tariff has made them so pricey that
a bale of used clothes now costs $422 compared to $56 two years ago. If we pass this
cost on to customers, we risk losing sales. If not, we incur heavy losses.”
Earlier, he recalls, these narrow corridors of Kimironko market used to overflow with
discarded garments. Customers used to jostle to pull out a fine T-shirt with a famous
logo or a high-fashion western dress. “I made a fortune selling those in the past 20
years. Today, I struggle to arrange money for my child’s school fees.”
Away from the market, on the outskirts of Kigali, Claudette Nyiraneza, a roadside
vendor, explains how the tariff has made decent clothes unaffordable for an average
Rwandan. “Earlier, one could buy a second-hand garment for 100 Rwandan franc
($0.11). Now, one has to shell out at least Rwf4,000 ($5) for a piece. This is almost a
week’s salary for a farm worker or 10 days’ salary for a domestic help,” says Nyiraneza.
According to the World Bank, over 55.5 per cent people in this tiny landlocked country
live below the international poverty line of $1.90 a day.
OUTSIDE THE COUNTRY, the raised tariff on used clothes has rattled the world’s
largest economy — the United States. In early 2017, just weeks after Donald Trump was
sworn in as the president and the “America first” foreign policy was brought in, a little-
known trade association, the Secondary Materials and Recycled Textiles Association
(Smart) appealed to the government against the efforts in East Africa to phase out
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22 CITI-NEWS LETTER
imports of second-hand clothing. It claims the region accounts for one-fifth of the total
US exports of used clothes. A ban would cost the US 40,000 jobs and an annual export
earning of $147 million.
In response, Trump first issued threats to Rwanda and then suspended its duty-free
privileges on domestically made apparel under the African Growth and Opportunity Act
(AGOA). The preferential trade agreement between the US and 44 African countries
allows the latter to sell 6,400 goods in the US market without paying import tariffs that
most countries must pay and without being subject to import quota restrictions.
Following Trump’s order, the Rwandan government is now losing an estimated $1.5
million a year in export earnings. This is a huge sum for a country that has few natural
resources and heavily depends on trade.
But President Kagame has labelled the trade war losses only as “short-term” and his
government is adamant on its decision. Leaving behind the shadow of the 1994
genocide, which claimed the lives of 50,000 to 1 million people in just 100 days, the
country’s GDP has been steadily growing at an impressive 7 per cent in the past two
decades. Today, it is one of Africa’s fastest-growing economies.
The government now aims to transform Rwanda into an upper-middle income country
by 2035. The government believes removing cheap used clothing and footwear from the
domestic market is the only way to protect its local textile and leather manufacturers
from unfair competition, and thereby bolster the country’s economy.
A shared plan
This vision was also at the heart of Rwanda’s neighbouring countries, Kenya, Uganda,
Tanzania, Burundi and South Sudan, which have in recent years formed the East African
Community (EAC) and are emerging as a single market. According to a 2017 report by
international non-profit USAID, EAC accounted for 12.5 per cent of the global imports
of used clothing, worth $274 million in 2015.
In 2016, led by Kagame who is also the chairperson of EAC, these countries prepared a
long-term development strategy, Vision 2050, that required them to strengthen their
domestic manufacturing sector. Along with Rwanda, rest of the EAC countries pledged
to phase out second-hand clothing by 2019, which they believe has dealt a severe blow to
their once-thriving textile and leather industries.
Consider Kenya. Between 1960s and early 1980s, import of used clothes was banned in
the country and the government promoted domestic production of textile and apparel to
meet local consumption as well as to protect its cotton industry from foreign
competition. In the 1980s, the country allowed second-hand clothes as donations for
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23 CITI-NEWS LETTER
refugees from neighbouring countries. This gradually led to trade in the merchandise,
shows a research done in 2017 by non-profit CUTS International.
From the early 1990s, the government lifted the ban on used clothes as it focused on
liberalisation and export promotion. By 2000, most of its domestic textile companies in
Kenya had collapsed due to, among other factors, increased competition from used
clothes.
According to Nairobi-based Kenya Association of Manufacturers, before 1990 the
country had 52 textile mills and hundreds of garment companies, making its textile
sector the second largest employer after public service. The country, at present, has only
17 players in spinning, weaving, knitting and fabric finishing. Only four of them are fully
integrated textile mills.
Similarly in the late 1960s, Uganda was the largest producer of cotton lint in Sub-
Saharan Africa. Most of its produce was consumed locally for producing perfect clothing
for the warm, sunny climate. But the market collapsed first due to domestic turmoil in
the 1970s and the 1980s and then following economic liberalisation in the 1990s. Today,
Uganda produces just a fourth of what it used to produce in the 1970s, shows a 2017
document by the UN Conference on Trade and Development.
The dwindling capacity and defunct mills of these countries further increased their
dependency on cheap second-hand clothing, creating a vicious cycle. Today, over half
the population in Kenya depends on imported cast-offs for affordable clothing. In 2013,
the government collected $54 million in tariff revenue on 0.1 million tonnes of imported
clothing and the industry employed 65,000 people.
Abel Kamau, head of the Kenya Association of Manufacturers, says his country is a
major beneficiary of AGOA. Among EAC nations, it is the largest apparel exporter to the
US. In 2017, it exported $410 million worth of goods to the US as compared to $43
million by Rwanda. Small wonder, Kenya was the first EAC country to roll back tariffs
on used clothes when Trump threatened it with suspension from AGOA benefits.
Tanzania and Uganda, which are among the world’s top 15 importers of used clothes,
and Burundi followed suit.
What’s worse, these countries have been leaders in raw materials required for the textile
industry. Rwanda, for instance, is known for its fine silk. Tanzania is still one of Africa’s
top cotton producers. But industry experts say most of the cotton produced in EAC goes
to Asia where it is spun, converted into apparel and shipped to the US and EU to be
worn for two to three years and then shipped back to EAC as used clothing.
The EAC region is also endowed with raw materials for footwear. Tanzania has a total of
22.8 million cattle, Kenya 17.5 million, Uganda 12.8 million, Rwanda 0.99 million and
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24 CITI-NEWS LETTER
Burundi 0.74 million. But these countries can process leather only up to the preliminary
wet blue stage, notes the research paper by CUTS International. Some 80 to 90 per cent
of the wet blue leather is exported and only 10 per cent is left for processing to finished
leather which is then used by artisanal shoemakers. Though there is a significant
demand for footwear in the region, 80 per cent of the demand is met through imports
out of which 60 per cent are second-hand shoes.
Today, Rwanda Stands alone in implementing import restrictions and in its fight against
the US. As part of its drive towards establishing self-reliance in clothing, Rwanda
launched the Made in Rwanda campaign in 2016 to mobilise support for local
entrepreneurs and artisans as well as to encourage companies to improve garment
production quality.
It is also urging traders to shift from used clothing to Made-in-Rwanda clothing. At
present, the Rwandan textile industry relies on imported raw materials such as polyester
and cotton, making locally produced clothes expensive. Polyester and cotton make up
40 per cent of the raw materials used in textile manufacturing, according to Ritesh
Patel, the managing director of Utexrwa, a Kigali-based textile industry functioning
since 1985. “This reliance makes local garments uncomp etitive in the market. A shirt
made by Utexrwa sells for $5 in the market, which is still expensive compared to
second-hand shirts,” Patel admits.
In a bid to reduce the cost of production, the Private Sector Federation (PSF) of
Rwanda, dedicated to promote the interests of the business community, is encouraging
collective investments in the textile industry. “We have put the manufacturers together
when it comes to importing raw materials. When they order collectively, the rate is
cheaper than individual imports,” says Eric Kabera, head of communications and
marketing at PSF.
To benefit from advanced technologies available elsewhere in the world, the Rwandan
government in May this year signed an agreement with Chinese firm Pink Mango C&D
to establish a modern garment factory in the Kigali Special Economic Zone. Emmanuel
Hategeka, deputy chief executive officer of the Rwanda Development Board, responsible
for implementing Vision 2035, has said the move would help the country revive its mills
by creating 7,500 jobs and reduce the import of used garments. The government is also
encouraging civil servants to wear Rwandan designer clothes on the last Friday of every
month.
But the government must not drop its guard. Rwanda’s market is already stacked with
another variety of low-cost clothing — the ones made by China. All the efforts to become
an upper-middle income country would go waste if Rwandans find those as suitable
alternatives for imported second-hand clothes.
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25 CITI-NEWS LETTER
These are desperate times. Countries are trying to protect their own companies. AGOA,
which initially offered development assistance to the low-income countries, has changed
direction under the Trump administration. Writes Garth Frazer, a professor of economic
analysis and public policy at the University of Toronto, Canada, who is also a member of
the International Growth Centre Trade Research Group, “What is deeply concerning is
when the members of EAC decided to increase the restrictions on used-clothes imports,
the current US administration responded by threatening to remove AGOA benefits for
them.”
Home
Deakin University has low-cost method for cotton waste
(Source: Fibre2Fashion, June 23, 2019)
Scientists at the Institute for Frontier Materials, Deakin University, have developed an
efficient, low-cost method to convert waste denim into viscose-type fibres that are either
white or the original colour of the garment. With rising clothing waste, the study is
significant since the current processes for textile recycling are inefficient and expensive.
The research, published in ACS Sustainable Chemistry & Engineering, was funded by
the Australian Research Council Research Hub for Future Fibres.
Cotton-based clothing, such as denim, makes up a large proportion of textile waste.
Farming cotton consumes land and resources. Efficiently converting waste denim into
reusable cotton fibres could help address both of these problems.
Previously, researchers have used ionic liquids –– salts that are liquid, not solid –– to
dissolve cotton textiles into their cellulose building blocks. The cellulose was then spun
into new viscose-type fibres that could be woven into textiles. However, ionic liquids are
expensive and difficult to work with because of their high viscosity. Nolene Byrne and
colleagues wanted to find a way to reduce the amount of ionic liquid solvent required to
recycle denim into regenerated cellulose fibres.
The researchers ground three textile samples (blue denim fabric, red denim pants and a
mixed-colour T-shirt) into powders. Then, they dissolved the powders in a 1:4 mixture
of the ionic liquid 1-butyl-3-methylimidazolium acetate and dimethyl sulfoxide (DMSO).
Using a high concentration of DMSO as a co-solvent allowed the researchers to use
much less ionic liquid than other methods. In addition, DMSO reduced the viscosity of
the ionic liquid solution, making it easier to spin the cellulose into new fibres.
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26 CITI-NEWS LETTER
Because DMSO is much cheaper than the ionic liquid, the new process reduced the cost
of solvent by 77 per cent. When they pre-treated the textile powders with a sodium
hydroxide solution, the researchers could produce white viscose-like fibres. Without this
step, the fibres retained the colour of the original item, which conserves water and
energy that would otherwise be required for textile dyeing.
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