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

04-05-2020 65.25 (-1.50)

02-05-2019 86.20

03-05-2018 93.50

New York Cotton Futures (Cents/lb) As on 06.05.2020 (Change from

previous day)

May 2020 52.15 (-2.85)

July 2020 53.48 (-0.10)

Oct 2020 56.60 (+0.36)

06th May

2020

CCI ready to purchase cotton at MSP: Textiles Ministry assures Maharashtra

farmers

Export sops likely to continue till March 2021

Indian cotton prices under pressure due to lockdown and fears of drop in

consumption: CAI

Cotton cultivation taking centrestage in North

India should put in large enough stimulus package to revive demand: Abhijit

Banerjee

Cotton and Yarn Futures

ZCE - Daily Data (Change from previous day)

MCX (Change from previous day)

May 2020 15700 (-650)

Cotton 11220 (+90) June 2020 16930 (-660)

Yarn 17505 (+120) July 2020 16000 (-360)

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2 CITI-NEWS LETTER

-------------------------------------------------------------------------------------- CCI ready to purchase cotton at MSP: Textiles Ministry assures Maharashtra farmers

Export sops likely to continue till March 2021

Indian cotton prices under pressure due to lockdown and fears of drop in consumption: CAI

Yarn makers in deep trouble as demand dips

No takers for Covid-special credit lines, banks park record Rs 8.4 lakh crore with RBI

Govt to go digital for hearing acrylic fibre dumping cases

Govt gives relaxations to taxpayers for GST compliance for filing annual returns and audits

GSTN allows inter-head cash transfer for taxpayers; resolves cash flow issues

Pre-GST CENVAT credit available till June-end revised

Tirupur textile cluster to get back into business after May 6

Cotton cultivation taking centrestage in North

Collector holds talks with trade representatives

No business and industrial activities in textile town

India should put in large enough stimulus package to revive demand: Abhijit Banerjee

Coronavirus: There’s no free lunch, says CEA on demand for big-bang stimulus

COVID-19 crisis: Certain economists, academicians for incentive to exporters, delayed GST payment

Bring petrol, diesel under GST; any hike in taxes to depress demand: ASSOCHAM

Make a fashion statement

----------------------------------------------------------------------------- Covid-19 crisis has highlighted e-commerce importance,cooperation in cross-border goods, services

movement: WTO

Bangladesh’s RMG export in April declines nearly 85 per cent

Global cotton consumption to fall 12% in 2019/20: ICAC

Vietnam: Textile and garment exports down

Exports plummet 54pc in April as pandemic curtails global demand for goods

South Africa: Patel Meets With Clothing Industry

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

NATIONAL

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

GLOBAL

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3 CITI-NEWS LETTER

NATIONAL:

CCI ready to purchase cotton at MSP: Textiles Ministry assures Maharashtra

farmers

(Source: All India Radio, May 05, 2020)

The Textiles Ministry has assured farmers in Maharashtra that the Cotton Corporation of

India (CCI) is fully prepared to purchase cotton at minimum support price in the state

during the ongoing lockdown.

The MSP operations are continuing and Cotton Corporation of India's (CCI) procurement

is currently on at 34 centres in the state. The ministry’s move comes amid concerns that

traders may not offer a better price in view of the pandemic situation forcing farmers to

avail the MSP rates.

AIR correspondent reports, the Textile ministry has said the procurement is regulated by

state’s agricultural produce market committees (APMCs) and 27 centres are coming

under red zones wherein procurement is expected to pick up this week.

In the remaining 22 centres the state government has been approached by the CCI for

issue of passes/tokens to farmers to bring cotton and the matter is being constantly

monitored by the Ministry of Textiles through daily status reports on arrival of farmers

and procurements at the APMCs.

Around 77.40 per cent of total cotton produced in sate has already arrived in the markets

so far and sold till March 25.

After the government granted permission to open liquor shops yesterday, people were

seen forming long queues outside wine shops flouting all social distancing norms.

Consequently, the district collector of Latur ordered closure of all liquor shops in district

till further orders, to prevent spread of corona virus and action would be taken against

liquor shop owners and citizens disobeying orders.

Meanwhile in a positive story, Dr. Rajendra Chandorkar from Alibagh, a beach town near

Mumbai, himself drove an ambulance one and half kilometres away and ferried the baby

to be admitted to the ICU of the hospital, thus saving his life. His gesture in the time of

lockdown is being widely appreciated.

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4 CITI-NEWS LETTER

Export sops likely to continue till March 2021

(Source: Kirtika Suneja, Economic Times, May 05, 2020)

India is likely to continue export incentives worth Rs 40,000 crore till next year as the

government looks to cushion the impact of Covid-19 on the country’s outward shipments.

The commerce and industry ministry is considering a plan to extend the Merchandise

Exports from India Scheme (MEIS) till March 31, 2021. The proposal was mentioned in a

letter to development commissioners of special economic zones from the Department of

Commerce. ET has reviewed the letter. India’s exports shrank almost 35% to $21.41

billion in March from a year earlier. They declined 4.8%

to $314.31 billion in FY20 from $330.08 billion in FY19.

MEIS extension will bring predictability to exports pricing

and on the policy front. Exporters’ confidence will get a

boost,” said Ajay Sahai, director general of the Federation

of Indian Export Organisations. The scheme was

extended to December 31, 2020, the government said last

month when it announced the extension of the extant foreign trade policy by a full

financial year till March 31, 2021. Under MEIS, the government provides duty benefits,

depending on the product and the destination country. Rewards under the scheme are

payable as a percentage of the realised free-on-board value (of 2%, 3% and 5%) and the

MEIS duty credit scrips can be transferred or used to pay duties including basic customs

duty. Exporters are estimated to have received benefits worth Rs 35,000-40,000 crore

under MEIS in FY19. “Exporters would need financial support from the government to

stand on their feet again… The government has to decide whether extending or increasing

the MEIS rates is an option they would like to exercise,” said Pratik Jain, national leader,

indirect tax, PwC. He said one specific recommendation of the industry was restora-tion

of the 2% additional benefit of MEIS, which was withdrawn from January 1, 2020.

However, the reward rates under the scheme won’t be revised nor would they be expanded

to cover more products such as gems and jewellery, a government official said. This is

because the scheme is transitioning to the Remission of Duties and Taxes on Exported

Products. The government has also rejected a demand to provide an additional 5% benefit

to all exports, saying it is “not feasible at this stage.” The government has also vetoed a

suggestion that MEIS be granted based on shipping bills, stating that the benefit is

provided only after payment is realised and also said free trade and warehousing zone

exports are not eligible for MEIS. The scheme is being disputed at the World Trade

Organization, with the US claiming India’s export subsidy programmes had hurt

American workers.

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5 CITI-NEWS LETTER

Indian cotton prices under pressure due to lockdown and fears of drop in

consumption: CAI

(Source: Nanda Kasabe, Financial Express, May 06, 2020)

Indian cotton prices have come down by 12-15% due to the ongoing lockdown and fears

that the country’s cotton consumption will reduce, resulting in more carry-forward stocks

by September 2020, officials of the Cotton Association of India (CAI) said on Tuesday.

Indian cotton prices have come down by 12-15% due to the ongoing lockdown and fears

that the country’s cotton consumption will reduce, resulting in more carry-forward stocks

by September 2020, officials of the Cotton Association of India (CAI) said on Tuesday.

Indian cotton prices are currently the lowest in the world at Rs 33,000-36,000 per candy,

according to industry sources.

To overcome this issue and reduce stocks, CAI has written to Prime Minister Narendra

Modi to reduce the duty drawback of 5-8% for export of cotton and cotton yarn, Atul

Ganatra, president, CAI told FE. “If this relief is given, the country can do huge export of

cotton so our carry-forward stocks for September will reduce and not pile up. Our cotton

market will also stabilise and the benefit will go to India’s cotton-growing farmers and

entire trade will get work. The government will earn foreign exchange if the export of

cotton and cotton fibre picks up,” he observed.

According to Ganatra, the market has come down since spinning mills were shut during

the lockdown resulting in a drop of 30-35 lakh bales in consumption and at the same time,

CAI’s pressing figure estimates may also come down since ginning units were shut for 45-

60 days and labourers have gone home. “There is a drop in consumption as well as

pressing. Moreover, in the last couple of days, merchants and traders have been going in

for forward sales and taking short positions on MCX on fears of a US-China trade war,”

he explained.

Ganatra said Indian cotton prices at this moment are 10-12% lower than world market.

“Today if we go in for imports of cotton, the US market is priced around 67 cents, i.e.,

around Rs 39,000 per candy and our cotton is priced between Rs 33,000 and Rs 36,000

per candy. The rate is already discounted by 10-12%. Once the lockdown is lifted, demand

will improve from the Indian spinning mills and there is a huge demand for Indian cotton

from Bangladesh, Vietnam and China,” the CAI president said, adding that China has

already purchased 4-5 lakh bales from the US at Rs 39,000 per candy in last one week

time and Indian cotton is available at a more attractive price.

Currently, some queries have been coming in from Bangladesh, Vietnam and China, and

once the lockdown is over, more queries will pour in, he added.

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6 CITI-NEWS LETTER

Ganatra felt that imports are currently not feasible because Indian prices are currently

the lowest in the world while the prices across the world market at Rs 33,000-36,000 per

candy. CAI had estimated import targets at 25 lakh bales of which only 12 lakh bales has

happened so far, he said.

On the export front, he said their target of exports was 42 lakh bales up to September

2020. So far, around 32 lakh bales have been shipped which leaves another 10 lakh bales

to be shipped in the next five months from May to September. “If the prices remain at this

level, we can easily achieve the target of exports. There is more pressure on the rupee,

which has depreciated to Rs 76 a dollar from Rs 69 a dollar at the start of the lockdown

making export more attractive and imports expensive.”

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Yarn makers in deep trouble as demand dips

(Source: The Hindu Business Line, May 05, 2020)

Shutdown of manufacturing units, weak demand expected to take a heavy toll

The cotton spinning industry, which had already been facing multiple challenges — low

demand, unfavourable duty structure and volatile cotton fibre prices — is confronting

another trouble in the form of the Covid-19 pandemic.

The shutdown of manufacturing units and weak demand are expected to take a heavy toll

on the cotton yarn industry in the next two quarters. This will lead to a drop in revenue

and a fall in profit margins, said CARE Ratings.

Smaller companies with high debt levels, less access to bank funding and limited liquidity

buffer are expected to be impacted the most, the rating agency said.

Challenges ahead

For the past few years, cotton yarn exports have taken a hit, mainly on account of subdued

demand from China (the largest importer of Indian cotton yarn).

In the first 10 months of FY20, the average monthly exports of cotton yarn stood

at ₹1,616 crore, significantly lower than the monthly average of ₹2,278 crore logged in

the same period last year.

China’s major cotton yarn demand is now being catered to by Vietnam, which enjoys duty-

free access to China. In the last few years, Chinese companies have invested heavily in

Vietnam to expand their spinning capacities, leveraging low labour cost in that country

and favourable trade agreements.

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7 CITI-NEWS LETTER

In 2019, China also allowed Pakistan to supply 3,50,000 tonnes of yarn at nil rate of duty,

while Indian cotton yarn attracts a duty of 3.5 per cent in China, making Indian cotton

yarn less competitive in the Chinese market.

Gloomy future

The Cotton Association of India has projected a 14 per cent increase of cotton crop in the

cotton season 2019-20, to 354.5 lakh bales, against the 312 lakh bales logged in the

previous year.

Cotton prices (Shankar-6 variety) fell 9 per cent between last July and February 2020

compared with the same period last year.

Owing to subdued demand, yarn prices also started to crash, squeezing the spreads. The

last quarter of the financial year is usually the best quarter for the Indian cotton spinners,

signalling a recovery in the industry.

However, domestic spinners are staring at a long recovery road ahead, with the Covid-19

pandemic leading to shutdown of manufacturing facilities and retail outlets, along with

supply-chain disruptions at various places.

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No takers for Covid-special credit lines, banks park record Rs 8.4 lakh crore

with RBI

(Source: Shritama Bose, Financial Express, May 06, 2020)

Having come up with emergency credit lines to help businesses weather the Covid storm,

banks are seeing little demand for fresh credit at this stage.

Having come up with emergency credit lines to help businesses weather the Covid storm,

banks are seeing little demand for fresh credit at this stage. With large parts of the country

still under lockdown and sales of non-essential goods non-existent, companies have no

appetite for fresh loans.

To push credit growth under pressure from the government, banks are now unilaterally

sanctioning enhancements to borrowers’ credit limits, even as they lie unused. The lack

of demand for credit has been leading banks to park huge amounts under the Reserve

Bank of India’s (RBI) reverse repo window, going up to as much as Rs 8.42 lakh crore on

Monday, the largest single-day amount ever.

Public-sector banks (PSBs) such as State Bank of India (SBI), Punjab National

Bank (PNB), Bank of Baroda (BoB), Canara Bank, Union Bank of India and Bank of India

(BoI) launched these special credit facilities in late March soon after the nationwide

lockdown began.

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8 CITI-NEWS LETTER

Bankers FE spoke to said since there is no certainty about when economic activity will

resume fully, businesses are in no mood to borrow. A senior executive with a large PSB

said, “Even though emergency lines are available, borrowers are not willing to take money

because they want to wait for things to start. So, there are not many takers for emergency

credit lines as of now. Once everything opens, there may be a pick-up in demand.”

Manufacturing firms have been telling banks that they are currently sitting on stock for a

couple of months and their vendors are unable to make any commitments about the stock

they want to take up. Barring essential goods and services, there is no consumer demand

for anything at present and that is holding back credit growth.

Meanwhile, zonal managers and branch-level executives at banks have been directed to

suo motu enhance borrowers’ working-capital limits or term loans by 10% and defer

repayment. “Even without sending the application, borrowers are getting this

enhancement over email with a copy to head office. The head office then collates the

figures and informs the government that such and such amount of credit has been

disbursed. But at the ground level nothing is happening,” a banker with a mid-sized PSB

said.

Credit offtake remained on a downward slope throughout FY20 and the spread of Covid-

19 has ensured the trend continues into FY21. On Tuesday, rating agency Icra said the

incremental credit flow from bank credit, bonds outstanding and commercial paper

during FY20 declined by 64% to Rs 6 lakh crore from Rs 16.79 lakh crore during FY19.

Karthik Srinivasan, Icra group head (financial sector ratings) said the sharp decline in

incremental credit during FY20 was driven by slowing economic growth as well as

heightened risk aversion among lenders. “Nonetheless, the expectations of increase in

incremental credit flow during FY21 is driven by increased credit demand amid

weakening cash flows of borrowers because of Covid-19 induced stress; as well as

capitalisation of interest for the period of moratorium offered by lenders,” Srinivasan

said, adding, “Lower external commercial borrowings (ECB) coupled with TLTROs

(targeted long-term repo operations) could also drive up the domestic credit growth.”

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Govt to go digital for hearing acrylic fibre dumping cases

(Source: Amiti Sen, The Hindu Business Line, May 05, 2020)

Two cases to be heard on May 8

To make participation easier in anti-dumping probes during the Covid-19 pandemic by

domestic and foreign businesses, the government has scheduled oral hearings of two

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9 CITI-NEWS LETTER

important cases, both related to dumping of acrylic fibre into India, later this week

through web-room mode and video conferencing.

Both hearings, one related to anti-dumping investigations on import of acrylic fibre from

the European Union, Belarus, Peru and Ukraine and the other, a sunset review for

continued imposition of anti-dumping duties on imports of acrylic fibre from Thailand,

are scheduled on May 8.

‘Sensitive for industry’

“Anti-dumping and other trade remedies cases are sensitive and important for the

domestic industry. If remedial duties are not imposed on time, it could cause losses to the

national economy. It is, therefore, not desirable for oral hearings to be deferred. That’s

why the Directorate General of Trade Remedies is taking all steps to ensure that proper

hearings are enabled in the digital mode where all can take part,” an official

told BusinessLine.

In the initiation notification of probe against import of acrylic fibre from the European

Union, Belarus, Peru and Ukraine, following complaints of alleged dumping by the

domestic industry, the Designated Authority stated that it prima facie found evidence of

dumping of the goods, originating in or exported from the given countries. Injury to the

domestic industry and causal link between the alleged dumping and injury also existed to

justify initiation of an anti-dumping investigation, it added.

In the second case, the Designated Authority, based on the facts and evidence presented

by the domestic industry, found prima facie that there was a need to review for continued

imposition of the duties in force from 2015 (for a period of five years) in respect of acrylic

fibre.

In a circular, the DGTR observed that it may be difficult for many participants to share

their IP addresses in advance because the Covid-19 situation had placed severe restraints

on technical capacities. Therefore, the DGTR decided to provide a web link which would

enable participation in the web room by just clicking on the link. “The idea is to make it

as simple and easy for participants to take part as possible. Both sides should get a fair

chance to present their case,” the official said.

The circular has been sent to Embassies of the countries involved asking them to ensure

participation.

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Govt gives relaxations to taxpayers for GST compliance for filing annual

returns and audits

(Source: Gulveen, Economic Times, May 06, 2020)

The government gave further relaxations to taxpayers for goods and services tax (GST)

compliance for filing annual returns and audits, increasing the time duration for some,

meanwhile extending the validity of e-way bills till the month end. In a notification dated

May 5, the Central Board of Indirect Taxes and Customs (CBIC) has allowed registered

persons to furnish GSTR-3B verified through electronic verification code between April

21 and June 30.

This was not permitted earlier. Further, a registered person can furnish a nil GSTR-3B

through text messages, using their registered mobile number, which will be verified

through a one-time password facility. The Board has also extended by a quarter the time

limited for furnishing of the annual return and GST audit for the financial year 2018-

2019, till 30 September, 2020. Date of filing GSTR 3B has been extended from November

2019 to March 2020, for the state of Jammu & Kashmir.

The Board also made changes to the Insolvency and Bankruptcy Code (IBC), clarifying

that the resolution professional shall be liable to take a new registration in each of the

states or Union territories where the corporate debtor was registered earlier, within thirty

days of its appointment or by June 30, 2020, whichever is later. Extension of the

lockdown till May 17, has pushed the government to give a second extension - till May 31

- for all the e-way bills generated on or before the March 24, where the period of validity

expires between March 20 and April 15. The earlier deadline of April 30 had resulted in

non-movement of goods when the lockdown rules eased from May 4, ET had reported on

Tuesday.

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GSTN allows inter-head cash transfer for taxpayers; resolves cash flow issues

(Source: Financial Express, May 06, 2020)

GSTN added that a taxpayer can now transfer the amount available in an electronic cash

ledger from one major head to another major head, keeping the minor head the same.

The Good and Services Tax Network (GSTN) on Tuesday said it has activated a new

functionality in its system that will allow taxpayers to transfer cash available under one

major head to another in the electronic cash ledger.

This has been a long-standing demand of taxpayers, who have said that errors while filing

the return would often lead to cash being deposited in the wrong head, which could then

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11 CITI-NEWS LETTER

be retrieved only through a cumbersome refund process. The situation created a cash flow

problem for many small businesses.

“It helps with the intra-head or inter-head transfer of amount available in electronic cash

ledger only. The major heads defined are CGST, SGST/UTGST, IGST and cess, whereas

the minor heads defined in the law are tax, interest, late fee, penalty and others,” GSTN

said in a statement.

GSTN added that a taxpayer can now transfer the amount available in an electronic cash

ledger from one major head to another major head, keeping the minor head the same.

Alternatively, one can move the amount from one minor head to another minor head,

keeping the major head unchanged, it added.

“It has come as a major relief to taxpayers. For instance, if a taxpayers deposited some

amount under the ‘cess’ head by mistake even though the assessed didn’t deal with any

product involving cess, it would take months to get the money back,” Rajat Mohan, senior

partner, AMRG & Associates said.

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Pre-GST CENVAT credit available till June-end revised

(Source: Financial Express, May 06, 2020)

The Delhi High Court on Tuesday allowed taxpayers registered under Goods and Services

Tax (GST) to claim accumulated CENVAT credit from pre-GST regime till June 30, 2020,

and noted that the benefit of transitional credit will be applicable for three years (since

launch of GST on July 1, 2017) which is the period mentioned in the limitation Act.

The Delhi High Court on Tuesday allowed taxpayers registered under Goods and Services

Tax (GST) to claim accumulated CENVAT credit from pre-GST regime till June 30, 2020,

and noted that the benefit of transitional credit will be applicable for three years (since

launch of GST on July 1, 2017) which is the period mentioned in the limitation Act.

Under the GST Act, taxpayers were allowed to carry forward input tax credits from excise

and service tax regime by filing TRAN-1 form. Although the original deadline expired in

September,2017, the government granted several extensions till December 27, 2017.

Further, taxpayers who couldn’t file the claim due to technical glitch in the system were

allowed to do so till March 31, 2020.

While the rule 117 under the GST Act mandated a deadline for claiming the credit,

taxpayers have argued in court that input tax credit was a right and not a taxpayer

concession, which made a deadline ultra vires.

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12 CITI-NEWS LETTER

“The time limit prescribed under Rule 117 was challenged before the Delhi High Court.

The Delhi High Court in the virtual hearing held today clearly held that the prescribed

time limit will not be applicable as it is directory and not mandatory. The court also

ordered that extended time limit of three years should be applicable not only qua the

petitioners but to all other petitioners who are facing the hardship of transitional credits”,

said Abhishek A Rastogi, partner at Khaitan & Co, who argued for the petitioner Brand

Equity Treaties.

Since the early days of GST, the government has suspected that large amount of

transitional credit was being availed illegally. The indirect tax department had also

conducted an analysis on nearly Rs 2 lakh crore of transitional credit claimed till the

original deadline.

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Tirupur textile cluster to get back into business after May 6

(Source: The New Indian Express, May 06, 2020)

The exporters are happy as the relaxation will help them to get the much-needed export

orders for autumn and winter collections.

Come May 6, and sewing machines will swing back into action in the Tirupur garment

cluster in Tamil Nadu, one of the biggest textile manufacturing hubs in the country. The

garment manufacturers and exporters in Tirupur have heaved a sigh of relief as the

district administration allowed the export units to resume operations, though by strictly

adhering to the safety guidelines at their units.

The exporters are happy as the relaxation will help them to get the much-needed export

orders for autumn and winter collections. “We missed the spring- summer collection

season, but by resuming operations now, we can still catch orders for autumn and winter

collections. The relaxation will give some boost to the sector, but the revival from losses

will take a long time,” said A Sakthivel, chairman of Apparel Export Promotion Council.

The garment manufacturers need to send samples to different brands overseas, and if

approved, they get export orders. Sakthivel said AEPC has issued strict orders to the firms

to follow safety norms.

Earlier, Tirupur Exporters’ Association had written to Central and state governments

seeking reopening of the textile hub, so that they can send samples to clients in the US

and Europe and retain export orders for spring-summer collection. Else, they could have

lost the orders to countries like China, Bangladesh and Pakistan, where factories were

functional. The relaxation has brought relief to the sector.

TEA president Raja M Shanmugam said that in first phase, at least 600-700 export units

will resume operations with at least 25 per cent of the workforce. “We will follow all

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13 CITI-NEWS LETTER

sanitation measures... Social distancing will be maintained in the units. Slowly, looking at

the situation, we will ramp up production,” Shanmugam said.

Home

Cotton cultivation taking centrestage in North

(Source: Rutam Vora/Vishwanath Kulkarni, The Hindu Business Line, May 04, 2020)

Cotton cultivation is taking the centrestage in North India. On the back of last year’s

higher prices and purchases by the Cotton Corporation of India (CCI), farmers in Punjab,

Haryana and Rajasthan are seen moving away from paddy and guar seed to the fibre crop

this year.

Farmers in Haryana, Punjab and Rajasthan have taken to cotton cultivation primarily on

two grounds – higher income over relatively less remunerative crops such as paddy and

guar seed, and the labour shortage for paddy transplantation.

Labour shortage

For paddy growers, labour shortage is a major problem in the sowing season. Farmer

leader Ajay Vir Jakhar says farmers are following their experience with cotton last year.

“Last year, cotton prices were good, yields were good, so they bet big on cotton this year

too. Cotton does not require migrant labour even during harvest,” Jakhar

told Businessline.

Migrant labourers are needed mainly for transplantation of paddy, while cotton picking

is usually done by labourers from Rajasthan.

Paddy growers, on the other hand, are seeking to advance the transplantation date by

about 10 days, which is believed to ease the pressure on farmers. This would mean

extending the transplantation time by about 25 per cent. So, the pressure on requirement

of labour for paddy would reduce substantially.

Indicating a rise in cotton acreage across the region, Sushil Phutela, Vice-President of

Indian Cotton Association Ltd informed that global factors such as China running out of

cotton stocks, US and Australia likely to witness lower crop, may support cotton prices

going forward. “We are seeing positive outlook for cotton despite the short term impact

following this trade disruptions due to coronavirus. Demand is going to be there and we

believe even at MSP rates, cotton is still a better bet for farmers over paddy,” said Phutela

adding that initial indication point at about 10-15 per cent of the paddy area may switch

towards cotton in the regions of Punjab, Haryana and Rajasthan.

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14 CITI-NEWS LETTER

Cotton was planted in 4 lakh hectares in Punjab, 7 lakh ha in Haryana and 6.44 lakh ha

in Rajasthan during the 2019-20 season. Total North Indian acreage stood at 17.45 lakh

ha while the all India cotton area was 127.67 lakh ha during 2019-20.

The rise in cotton acreage is also reflected in the cotton seed sales. “The demand for cotton

seeds has been good so far. About 60-65 per cent of the seed sale has taken place and we

expect it to may go up to May 15,” said M Ramasami, Chairman of Rasi Seeds Pvt Ltd, the

largest vendor of Bt cotton seeds in the country.

Based on the trends, the cotton acreage could go up by about a tenth in North India,

mainly in Punjab and Haryana, Ramasamy added. The Attur, Salem-based Rasi Seeds

dominates the North Indian cottonseed market with a share of over 50 per cent. The

North Indian cottonseed market is estimated at 90 lakh packets a year, while the total

Indian market is about 4.5 crore packets. To overcome the challenges posed by the

countrywide lockdown, the company used four railway rakes and twenty trucks to

transport the cottonseeds from Salem to North India this year.

Home

Collector holds talks with trade representatives

(Source: The Hindu, May 05, 2020)

Collector Shilpa Prabhakar Satish on Tuesday held comprehensive discussions with

officials and representatives of traders and entrepreneurs on the issue of reopening

businesses in the district.

Chairing the meeting at the Collectorate here, the Collector said large commercial

complexes, supermarkets, teashops, salons, beauty parlours, massage centres,

automobile and jewellery showrooms, air-conditioned textile stores, domestic appliances

outlets, cabs and autorickshaws would not be allowed to function as per norms. The larger

industries should apply separately for permission to resume operations.

Shops in urban areas would be allowed to function from 10 a.m. to 5 p.m., while those in

rural areas could start their operations an hour earlier. Restaurants and eateries could

allow only ‘take-aways’ as serving food on the premises was strictly prohibited.

Construction workers should be allowed to stay at their workplace instead of being ferried

to the site everyday.

At the same time, there would be no bar on hospitals, pharmacies, agriculture and related

businesses, Ms. Shilpa said.

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15 CITI-NEWS LETTER

Gunasingh Chelladurai, president, Chamber of Commerce and Industries, Tirunelveli,

suggested that cement and hardware dealers might be allowed to work twice a week so

that aspiring buyers could stock construction material for the next couple of weeks. “It

will be a win-win situation for all concerned. While this arrangement will fulfil consumer

needs, it will also ensure decent business to the stockist. At the same time, shops

functioning for only two days a week will not affect vehicular traffic within the city,” he

said.

The Collector agreed to the suggestion.

On the possibility of opening centrally air-conditioned supermarkets, jewellery and textile

showrooms, Ms. Shilpa made it clear that multi-storeyed buildings could not be allowed

to reopen as per norms laid down by the government during lockdown. “Though shops

with ‘ground plus one’ structure can open and transact business, there should be proper

ventilation on the first floor as per the norms,” she pointed out, indicating that prospects

for resumption of business were not bright.

Deputy Commissioner of Police (Law and Order), Tirunelveli City, S. Saravanan said

supervisors of liquor shops, which would be opened on May 7, should erect casuarina

poles and draw 100 circles to make the crowd line up within them. “The supervisor should

ensure that there is no crowding at any point of time.”

Although retail vegetable sale went on at Schaffter Higher Secondary School, the

wholesale market continued to function from Nainarkulam Market for transporting

produce to various destinations including neighbouring Kerala. Fearing that the

gathering of a large number of traders at the spot would lead to viral contraction,

Corporation officials sealed the market on Tuesday.

When the wholesale traders appealed to the Collector to allow them to continue their

business from the same place, Ms. Shilpa told them that they should cooperate with the

district administration and shift their shops temporarily to the now deserted new bus-

stand at Vaeinthankulam.

But traders, who were not ready to shift, indefinitely closed the market, which was

subsequently sealed by Corporation officials.

Home

No business and industrial activities in textile town

(Source: Times of India, May 06, 2020)

Business and industrial activities in the textile town of Ichalkaranji have remained shut

even though it has been included in the orange zone. The densely populated town, with

population of around 2.88 lakh, on Sunday reported its fourth Covid-19 positive patient.

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16 CITI-NEWS LETTER

The areas where positive patients have been found have been sealed and declared

containment zones. District collector Daulat Desai said, "After one person was found

positive for Covid-19, we have asked the local administration to be alert. Some restrictions

have been relaxed in the district from May 4 as per the government rules but we expect

that the lockdown in Ichalkaranji will continue as it is. We may have to tighten the

restriction if people do not follow the rules and advisory issued by the local

administration."

Vikas Kharat, sub-divisional officer (Ichalkaranji), said, "Orders have been issued to the

health department officials to conduct door-to-door survey and prepare the list of the

people that came in contact with the new positive patient." An industrialist from the

textile town said, "The government has relaxed norms for industries that fall in the MIDC

area and not in the areas falling under the municipal council or municipal corporation.

Almost all the processing units and power looms in Ichalkaranji are concentrated in

Ichalkaranji town. With the chances of spread of coronavirus pandemic the industrialists

are not keen on starting operations. But some want to start operations so that the migrant

workers that are in mood of leaving to their hometowns in Uttar Pradesh and Madhya

Pradesh will stay back."

Home

India should put in large enough stimulus package to revive demand: Abhijit

Banerjee

(Source: Economic Times, May 06, 2020)

Nobel laureate Abhijit Banerjee on Tuesday urged the Centre to provide a larger stimulus

package to help India tide over the economic fallout of the Covid-19 crisis. The economist

also pitched for direct cash transfer to 60% of the population, issuing temporary ration

cards and using ‘national’ Aadhaar cards to help the poor. While welcoming moratorium

on debt payment, Banerjee suggested that government could cancel it for this quarter. “A

lot of us have been saying that we (India) need a stimulus package. That’s what the US is

doing, Japan is doing and Europe is doing. We really haven’t decided on a large enough

stimulus package. We are still talking about 1% of GDP. United States has gone for 10%

of GDP,” said Banerjee in a nearly 30-minute virtual interview with Congress leader Rahul

Gandhi. In AICC’s transcript of the ‘Conversation between Rahul Gandhi and Abhijit

Banerjee’, the Congress leader asked 24 questions, of which, 19 were in a format of 1-3

sentences, and Banerjee answered by giving his detailed perspective.

On debt payment, Banerjee said, “We have done one thing that I think is wise, which is to

kind of put a moratorium on debt payment....We could even say that the debt payment

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17 CITI-NEWS LETTER

for this quarter will be cancelled... It’s not just a matter of rescheduling it, just

permanently cancel it.” He felt enhancing the purchasing power of people could actually

help MSMEs more. “It is more about reviving demand.” On helping the poor, including

migrant workers, Banerjee, who had helped the Congress conceive the ‘Nyay’ scheme,

said: “I would say bottom 60% of the population, we give them some money… If they

spend it, it would have a stimulus effect.” While some Congress leaders think such

interviews will project Gandhi as a person capable of conducting “serious conversations

with intellectuals”, some others feel given his stature “as future PM face”, he should have

been the one outlining his vision by being interviewed by his guests.

Home

Coronavirus: There’s no free lunch, says CEA on demand for big-bang

stimulus

(Source: Gaurav Noronha & Deepshikha Sikarwar, Economic Times, May 06, 2020)

Chief economic adviser KV Subramanian said India’s gross domestic product (GDP) will

contract in the first quarter, but is likely to grow 2% for the full financial year and that a

stimulus is expected “soon”. But he cautioned against demands for government support

similar to that provided by other nations as the cost would be too high. “One of the first

things that anybody learns in economics is that there is no free lunch,” he told ET in an

interview. “If you are going to monetise (the deficit), that will have some impact on macro

fundamentals… We cannot pretend to do policy as if there are no costs.

Comparisons with stimulus packages in other countries were invalid, he said. He drew

parallels with the Spanish flu pandemic of 1918, suggesting a sharp revival. “From an

epidemiological perspective and from the magnitude of the pandemic, the Spanish flu is

a reasonable proxy to use... and because there was a V-shaped recovery, I think it is

reasonable to say that we can expect the same,” Subramanian said.

Most independent experts expect the economy to shrink in the current fiscal year after

the second extension of the lockdown to May 17. Ratings agency ICRA said the economy

could contract 1- 2% in FY21. Subramanian agreed there would be a decline in the first

quarter, but expects a strong bounce-back in the second half of the fiscal.

Global Financial Crisis was Different’

“Q1 there will be a decline, Q2 I think should be better than Q1, given that we are opening

up the lockdown gradually. Q3 and Q4 there should be acceleration,” Subramanian said.

“So overall, I think we may end up with about 2% in real terms. But this is all with the real

caveats that an uncertain episode like this demands.” Given the nature of the Covid-19

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18 CITI-NEWS LETTER

pandemic, there’s very little knowledge about the disease and therefore about its impact.

“The global financial crisis was a period of uncertainty, but that was all a completely

economic phenomenon, so one could make estimations,” he said. “There is a lot of

uncertainty, unknowns that we are dealing with.” He warned against calls for stimulus

measures as large as 10% of GDP, or ?20 lakh crore, and funding of that through

monetisation or printing money.

‘CAN’T GET CARRIED AWAY’

India cannot get carried away by the kind of numbers being floated and industry should

be realistic, he said. “If you look at the stimulus packages that have been given within the

sovereign rating category that India belongs, the actual numbers are far lower,” he said,

warning against creating improbable expectations. He pointed to the UK package, which

included £350 billion of loans guaranteed by the government. “The actual cost of that loan

guarantee is certainly not going to be £350 billion. It is going to be a fraction,” he said.

“It’s going to be at most £35 billion. So now, if you add that £35 billion instead of £350

billion, the actual package is 3.7%.” Similarly, for the US, the package is about 6.7% of

GDP, he said. “This is a time when we have to get the actual stimulus package right,” he

said. “We cannot get carried away by incorrect numbers.” He said the US has the ability

to provide massive stimulus measures because the dollar is the global reserve currency.

“So bottom line, I think there has to be some stimulus and at the same time also some

liquidity measures to ensure that firms can tide over their short-term troubles,” he said.

COVID BONDS

Asked about the possibility of Covid bonds, he said there are many proposals that the

government has received. “There are ideas and each of these ideas has their pros and cons,

and we are evaluating them,” he said. He wasn’t worried about the recent spike in Covid-

19 numbers, saying the percentage increase was slowing. There was a trade-off between

the economic cost and the need to battle the disease in the short run, but the medium to

long run effects have to be kept in mind. “I would rather go by carefully done research

which shows, for the US during the Spanish flu, that those geographical regions that were

quick to implement lockdowns and continued it for a little longer to ensure the pandemic

effect was minimised, so focus on the health side, were the ones that recovered far more,”

he said. “The long-run effect in those counties that only focused on the short run, for them

the mortality rate was much higher and at the same time, the economic recovery was far

more tepid,” he said, explaining how India has managed the issue. “We were very quick

to impose those measures… It’s also reflected in the numbers. Compared to other

countries, it’s far lower and especially the mortality rate is lower.”

Home

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19 CITI-NEWS LETTER

COVID-19 crisis: Certain economists, academicians for incentive to

exporters, delayed GST payment

(Source: Economic Times, May 05, 2020)

Certain sections of economists and academicians have suggested various measures such

as an incentive package for exporters and relaxation to businesses for delayed GST

payment, with a view to help the economy tide over the impact of the COVID-19

pandemic. The recommendations are part of a report titled 'COVID-19: Challenges for the

Indian Economy - Trade and Foreign Policy Effects'.

The Engineering Export Promotion Council of India (EEPC India) in a statement said it

is an initiative where 40 economists and academics of Indian and international

institutions have written their assessment of the economic, social and political impact of

COVID-19. The Council said it would brainstorm various ideas and assessments. Nitya

Nanda, director of Council for Social Development, suggested that the government could

allow delayed depositing of GST, "say, one more month to deposit GST dues without any

penalty".

Businesses may be allowed to deposit only a part of the GST dues and retain the balance

that can be adjusted against the input credit, Nanda said.

Sanjib Pohit, professor, National Council of Applied Economic Research (NCAER), said

that a cut in intermediate tax during this time would definitely help the economy. It is

essential that the Union government transfers the states' share of GST amount due

immediately, Pohit said adding that the Centre should be proactive in releasing the GST

due amount of firms immediately.

Another academician has stated that the government should invest heavily on

infrastructure like power, roads, ports, and water possibly in a public-private partnership

(PPP) mode to motivate the private sector to have some ownership of the infrastructure

for long-term sustainability. Sacchidananda Mukherjee, associate professor, National

Institute of Public Finance and Policy (NIPFP), has stated that on revenue mobilisation,

the government may consider acceleration of disinvestment programmes, auction of

licences of natural resources extraction and utilisation (such as 5G spectrum and coal

blocks) and reduction of unproductive subsidies. Another writer has recommended that

the exporter community will need to be given "big incentives and stimulus" to overcome

the challenges in tough times. The ASEAN-India Centre (AIC) at Research and

Information System for Developing Countries (RIS) in collaboration with the EEPC has

produced this report. It has also mentioned that views expressed by the authors in the

report are their own and do not represent the views of the AIC, RIS or EEPC India.

Home

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20 CITI-NEWS LETTER

Bring petrol, diesel under GST; any hike in taxes to depress demand:

ASSOCHAM

(Source: Sutanuka Ghosal, Economic Times, May 05, 2020)

Sooner petrol and diesel are brought under the GST , better it would be for the Indian

economy , because changes in the Goods and Services Tax are brought only after wider

deliberations by the GST Council , said ASSOCHAM Secretary General Mr Deepak Sood.

Governments, both at the Centre and States have been over-dependent on petrol and

diesel for revenue. While this over-dependence needs to be brought down, there is a

strong case for a national parity for prices of the automobile fuel. "Otherwise, the broader

objective of a single market under the GST remains unfulfilled," Mr Sood said.

He said the industry has been seeking a bold stimulus package for providing immediate

relief as it is reeling under the 42-day lockdown, due to Covid-19 crisis. One of the main

reasons for the stimulus is to revive the demand by way of tax reductions. "But, on the

contrary, if taxes are raised , demand would be further depressed, giving a jolt to the

economy". In any case, the crude oil prices have crashed to unprecedented lows , without

the pump prices being reduced, against the spirit of the market-driven pricing policy, the

ASSOCHAM said.

Home

Make a fashion statement

(Source: Ritu Kumar, Economic Times, May 05, 2020)

Take the textile-craft sector out of bureaucratic-NGO hands, and treat it as a startup

industry

In the wake of the Covid-19 pandemic, we, as Indians, have been plunged into many

uncertainties. One of them is the fate of India’s 16 million craftspeople and the survival of

its indigenous crafts. Practitioners of refined skills, these artisans have moulded the

Indian fashion industry into what it is today. The Covid-19 pandemic will, undoubtedly,

lead to the unemployment of a vast number of these creators.

As the world gears up for a reboot, post the incremental lifting of lockdowns, India could

formulate ways of truly encouraging ‘Make in India’ for one of the biggest sections of the

market — fashion apparel. It is at this juncture where we could think of, and act on,

providing viable alternatives to a western perspective on fashion that has been prevalent

for a century or so.

Craft That’s Not Handy

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21 CITI-NEWS LETTER

Thailand, for instance, has built an identity around one craft — Thai silk production. India

is a country with embarrassing riches of such products. And with millions of

manufacturers and craftspeople actively involved in the production of handmade textiles,

we have a highly skilled and gifted population the size of a small country.

The handicrafts sector, however, can never compete in the market. Its products need to

be pitched as high-end, for they simply cannot afford the overheads that couture products

have to bear. While working with ikat weavers of Nuapatna village in Odisha, we received

a very positive reaction to the fabrics. But the minute we tried to put them into a

commercial space with overheads and taxes, they became uncompetitive. In Varanasi,

too, saris were produced by masters of the craft, and falls into any definition of couture.

But they were not saleable on their own, and unable to take rent overheads.

The genius of a craftsperson, like that of any creator of precision objects, does not get any

impetus from working out of ghettoes in big cities. Experience tells me that textile-making

is best practised from the artist-craftsperson’s homes, usually located in a field accessed

with difficulty, but nonetheless surrounded by nature. They may not have state-of-the-art

interiors that the ateliers of Europe are used to. But they are organic and more human

than an overtaxed industry base.

The products of this labour are of some sophistication. But marketing them remains a

hurdle. So, a new plan, triggered by opportunities provided by the current mega

disruption, needs to be laid out keeping these products and creating their demand, in

mind. This can no longer be done by NGOs. Their scale is simply too small. This project

demands to professionalise the sector on a scale that only the government can finance and

invest in.

GoI should become a patron, and use the Weavers’ Service Centres (WSC) that were

created in the 1970s to infuse fresh design and facilitate the modernising of these

products. Without direction, these centres are a wasted resource. In no way is anyone

suggesting that the government should run these WSCs. Its job should be confined to

financing them.

Handloom boards and other government enterprises have been unsuccessful in

marketing Indian couture.

Giving subsidies and discounts do not create aspirational buying. Instead, the handicraft

and textile sector must be looked at as a startup. It needs to employ the best in the fields

of design, product management and marketing, much like the modern, appealing and

effective ‘Incredible India’ campaign managed for the tourism industry. There should be

no space for amateurism, as the sector is of great complexity and needs the experience of

a professional, not the bureaucratic, kind.

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22 CITI-NEWS LETTER

Crisis Looms

Handmade textiles could well become the USP of India. However, if the handicrafts sector

is to survive the present Covid-19 crisis, it simply cannot compete, take overheads or the

thin slice of profits from middlemen.

It will need to be funded by the government, whose role should solely be that of an

investor. We need to find a way to enable a direct sale from producer to consumer. Retail

infrastructure for this section of the manufacturing economy needs to be located across

India. Products must reach not only the well-heeled elite but also a wide range of the

market, ensuring employment opportunities. If nothing is done, we will not only lose a

treasure of human resources, but will also be looking at a large part of India’s population

reduced to penury, or worse.

I leave readers with this thought: the son of a weaver from Patan in Gujarat who

intimately knows how to weave an ikat sari — which requires a sharp understanding of

mathematics, chemical and vegetable dye knowledge — gets a job in a Surat mill to carry

loads of fabrics. A zardozi craftsman from Farrukhabad in Uttar Pradesh, who excels in

creating insignias — a near-extinct craft today — ends up as an autorickshaw driver. If

nothing else, what a waste of expertise and human resource, especially for India’s post-

COVID-battered economy.

The writer is a Padma Shri-awarded fashion designer

Home

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23 CITI-NEWS LETTER

GLOBAL

Covid-19 crisis has highlighted e-commerce importance,cooperation in

cross-border goods, services movement: WTO

(Source: Economic Times, May 05, 2020)

The World Trade Organization (WTO) has asked its members if there is a need to consider

new and practical e-commerce solutions to enable fast and secure cross border movement

of goods and services to help economic recovery and job creation after the Covid-19

pandemic. The organisation has also raised questions related to the assistance it can offer

developing countries and LDCs to reduce the digital divide, aid MSMEs and promote

economies that are more resilient to possible future crises or shocks. Highlighting that

network capacity and higher bandwidth services have proved to be crucial, not only

during the pandemic itself, but also for e-commerce and economic inclusion in general, it

said in an information note: “What can WTO members do to improve communications

networks and services?”

The WTO Work Programme defines "electronic commerce" as the production,

distribution, marketing, sale or delivery of goods and services by electronic means. The

organisation said that the information note has been prepared by its secretariat on its own

responsibility and is without prejudice to the positions of members or to their rights or

obligations under the WTO. “The measures/examples/issues mentioned are illustrative

only and not exhaustive,” it said as it highlighted a “glaring” need to bridge the digital

divide, both within and across countries, as the digital economy has played a key role

during the current Covid-19 crisis. Emphasising that online consumer protection and

compliance with health and safety regulations are the other challenges, the organisation

also said that the experiences and lessons emerging from the crisis could be a further

incentive for global cooperation in the area of e-commerce, which could help to facilitate

cross-border movement of goods and services, narrow the digital divide, and level the

playing field for small businesses.

“The pandemic has highlighted the glaring need to bridge the digital divide, both within

and across countries, given the central role the digital economy has played during the

crisis,” it said, and added that the pandemic has made it clear that e-commerce can be an

important tool or solution for consumers. It added that the global nature of Covid-19 and

its impact on e-commerce may encourage strengthened international cooperation and the

further development of policies for online purchases and supply. "E-commerce can also

support small businesses and, by making economies more competitive, be an economic

driver for both domestic growth and international trade,” it said. As per the report, certain

traditional obstacles have been accentuated and have continued to hamper greater

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24 CITI-NEWS LETTER

participation in ecommerce activities by small producers, sellers and consumers in

developing countries, particularly LDCs. It also said that e-commerce for goods and

services trade has been adversely impacted by the factors that have caused disruption in

supply and demand overall and such disruptions have resulted in delivery delays or

outright cancellation of orders. Several other e-commerce-related challenges have arisen

or been further amplified during this pandemic such as increasing prices to unreasonably

high levels, product safety concerns, deceptive practices, and cybersecurity concerns. It,

however, said the enforcement of social distancing, lockdowns and other measures in

response to the pandemic has led consumers to ramp up online shopping, social media

use, internet telephony and teleconferencing, and streaming of videos and films. “This

has resulted in spikes in business-to-consumers (B2C) sales and an increase in business-

to-business (B2B) e-commerce. The increase in B2C sales is particularly evident in online

sales of medical supplies, household essentials and food products,” it said, adding that

demand has also increased for internet and mobile data services. Many WTO members

have formed a plurilateral to negotiate guidelines for e-commerce.

Home

Bangladesh’s RMG export in April declines nearly 85 per cent

(Source: Global Times, May 06, 2020)

Ready-made garment (RMG) export in April 2020 declined by 84.86 per cent, which is

$366.58 million over the corresponding month in the last calendar year.

Export earnings from the apparel sector were $2.42 billion in April 2019.

Also, export receipts from RMG products last April registered over 81 per cent fall from

that of $1.97 billion in March, says the Bangladesh Garment Manufacturers and Exporters

Association (BGMEA).

The BGMEA made the disclosures citing the National Board of Revenue (NBR).Experts

and exporters attributed slow demands due to lockdown in major destinations, including

the United States, the European Union and Canada.

The fall in export performance was also due to closure of most of the garment factories in

line with public holidays in Bangladesh until April 25. Exporters said global apparel

buyers have either cancelled or put on hold existing orders as they are not placing new

orders amid the coronavirus pandemic.

According to the BGMEA, more than $3.0 billion work orders were cancelled or withheld

to date since March. It, however, projected that export receipts from garments might

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25 CITI-NEWS LETTER

decline by an estimated $5.0 billion between March and May due to the impact of COVID-

19.

Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) senior vice-

president Mohammad Hatem said the drastic fall in export was expected as most units

remained shut for nearly one month since March.

The performance was the result of late March and few days of April production, he told

the FE. Factories resumed production to do the previous orders, Mr Hatem said, adding

that the performance would be the same in May. There are no new orders and demand

side in future is still uncertain, observed the business leader. According to industry

insiders, multiple global buyers like H&M, Inditex, Marks and Spencer, PVH, Kiabi and

Target have committed to receiving the previous orders and make full payment.

Meanwhile, Industrial Police said a total of 2,805 industrial units remained open on

Sunday. Of them, 975 are non-RMG units and 289 are under the Bangladesh Export

Processing Zones Authority (BEPZA). Of the units in operation, 1,074 are BGMEA

members, 314 registered with the BKMEA and 153 listed with the Bangladesh Textile

Mills Association. A total of 517 factories did not pay wages for March and other

allowances until Sunday.

Of them, 335 are non-RMG, seven BEPZA members and the remaining 175 textile and

garment factories listed with the three trade bodies.

Workers from eight garment factories located at Ashulia and Gazipur demonstrated on

Sunday on different issues, including payment of wages, according to the police.

Home

Global cotton consumption to fall 12% in 2019/20: ICAC

(Source: Fibre2Fashion, May 05, 2020)

With global economy paralysed and supply chains shattered, current projections

by Cotton Advisory Committee (ICAC) show a 11.8 per cent decline in cotton

consumption, reducing global trade to 8.26 million tonnes in 2019/20. The report also

mentions that there is 4 per cent decrease in planted land in 2020/21 and 4 per cent

decrease in production in 2020/21.

“While there is hope for a vaccine or cure, or that warmer weather in the Northern

Hemisphere will minimise Covid’s impact, there can be no real economic recovery

unless there is a health recovery first. Whether or not we sink into a worldwide

depression — a long recession with unemployment reaching as high as 33 per cent

— will be determined by the effectiveness of government policies,” said ICAC in a press

release.

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26 CITI-NEWS LETTER

In 2020/21, global area is projected to decrease by 4 per cent to 33 million hectares, with

India remaining the world leader despite plantings dropping to 12 million hectares.

Production will decline by a comparable amount to 25 million tonnes. The Secretariat’s

current price projection for the year-end 2019/20 average of the A Index has been revised

to 71.4 cents per pound this month. The price projection for the year-end 2020/21 average

of the A Index is 56.9 cents per pound this month.

Cotton This Month is published at the beginning of the month with the Cotton Update

published mid-month. The Cotton Update, which is included in the Cotton This Month

subscription, is a mid-month report with updated information on supply/demand

estimates and prices. The next Cotton Update will be released on May 15, 2020. The next

Cotton This Month will be released on June 1, 2020.

Formed in 1939, the ICAC is an association of cotton producing, consuming and trading

countries. It acts as a catalyst for change by helping member countries maintain a healthy

world cotton economy; provides transparency to the world cotton market by serving as a

clearinghouse for technical information on cotton production and serves as a forum for

discussing cotton issues of international significance. The ICAC does not have a role in

setting market prices or in intervening in market mechanisms.

Home

Vietnam: Textile and garment exports down

(Source: Vietnam News, May 06, 2020)

The domestic textile and garment industry faced an export value reduction in the first

four months of this year due to difficulties in production due to the COVID-19 pandemic.

Statistics showed Việt Nam's textile and garment exports in April decreased by 20 per

cent compared to March, Trương Văn Cẩm, vice chairman of the Việt Nam Textile and

Apparel Association (Vitas), said at an online seminar held by the association on Monday.

The total textile and garment export value in the first four months of this year dropped by

6.6 per cent to US$10.64 billion year-on-year. Meanwhile, the total import value was

$6.39 billion, down 8.76 per cent compared to the same period last year.

"Việt Nam's textile and apparel industry has never faced negative growth in both imports

and exports like that," Cẩm said.

Export value reduced by about 6 per cent to $8.27 billion for garment products, 0.3 per

cent to $664 million for fabric products, 11.5 per cent to $1.19 billion yarn products and 6

per cent to $354 billion for textile materials.

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27 CITI-NEWS LETTER

Meanwhile, import value also declined by about 8 per cent to $893 million for cotton, 2.5

per cent to $758 million for yarn products, 11 per cent to $3.63 billion for fabric products

and 5.8 per cent to $1.11 billion for textile materials.

The reduction reflected the industry's lack of export orders, said Cẩm, adding that those

figures are forecast to drop further in May and June because most export orders for those

months have been cancelled.

Many enterprises in the industry have bad debts, he said. Many export garment

enterprises are operating at reduced capacity because they do not have new orders.

The association reported the cancellation of contracts and lack of new contracts was due

to the reduction of demand for textile and garment in the US and EU during the

pandemic. Meanwhile, China also has less demand for importing yarn from Việt Nam due

to the suspension of production during the outbreak.

With a lack of new export orders leading to fewer jobs and pressure in wage payment, the

association has proposed many solutions to support enterprises. However, those

solutions could not help them maintain production until the end of this year.

Trần Thanh Hải, Deputy Director of Ministry of Industry and Trade’s Import-Export

Department, said the COVID-19 pandemic had affected exports of many products,

including textiles and garments. Many enterprises had shifted to producing cloth face

masks to meet domestic demand and exports.

However, the export value at $63 million from face masks from January 1 to April 19 was

too small compared to the total export value of textile and garment at $10 billion in the

first four months of the year, according to Vitas.

The textile and garment industry is predicted to have a strong reduction in total export

value for this year. In the most positive scenario, its export value will reach about $35

billion this year, down 10 per cent year-on-year.

In a realistic scenario, the industry's export value is estimated to reach about $33.5 billion.

In a bad case, the export value will only reach $30-31 billion in 2020.

Home

Exports plummet 54pc in April as pandemic curtails global demand for goods

(Source: Mubarak Zeb Khan, The Dawn, May 06, 2020)

Exports during the month of April plunged by 54 per cent to $957 million from $2.08

billion a year ago following the order deferrals and cancellations due to the impact of

coronavirus on the global economy.

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28 CITI-NEWS LETTER

The data released by the Pakistan Bureau of Statistics (PBS) on Tuesday showed the

impact of global economic slowdown mainly in the north American and European

countries — top export destination for Pakistani goods — brought down the country’s total

export proceeds during the month.

Exports were expected to fall during the month of April as only a few buyers were

honouring their import commitments with local manufacturers following the demand

contraction in the wake of pandemic.

In comparison, the impact of the coronavirus

during March was significantly less as exports

during the month declined by 8.46pc year-on-

year to $1.807bn.

The steep fall in exports during April, however,

is also due to the closure of shipping lines as

arrival of exports containers at ports also

declined by 27pc during the month. Exporters

withheld their consignments after receiving cancellation or deferment messages from

their international buyers.

In addition to this, as many as 7,000 export cargo containers are currently parked at

Karachi ports with nowhere to go as global shipping has also come to a halt.

Moreover, exports through the land routes were almost non-existent during the month as

Iran, Afghanistan and Pakistan shutdown their respective borders to contain the

pandemic.

Cumulatively, exports during July-April fell to $18.408bn compared to $19.16bn over the

corresponding months of last year, indicating a decline of 3.92pc.

In order to offset some of the impact of falling exports, the government has recently

allowed exports of textile masks.

On the flipside, exporters have said that they are now receiving export orders regarding

anti-bacterial and anti-fungus cloth, pillows cover, medical gowns, towel, bedsheets, and

masks. Provincial governments of Sindh and Punjab have also allowed industries to

resume operations which spur economic activity and help increase exports.

In the pre-covid-19, the government projected exports during the ongoing fiscal year to

reach $26.187bn, from $24.656bn in FY19.

Meanwhile, the imports continued their downward trend, providing some breathing

space to the country despite a plunge in exports.

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29 CITI-NEWS LETTER

The data showed imports falling to $37.905bn during the first 10 months of current fiscal

year, down 16.50pc, from $45.393bn in the same period last year.

The decline in the value of imported goods in April was 34.49pc to $3.088bn against

$4.714bn during the same month last year.

As a result, the trade deficit narrowed by 25.68pc in the first 10 months of current fiscal

year mainly on the back of a double-digit fall in imports.

In absolute terms, the trade gap narrowed to $19.497bn during 10MFY20, from

$26.233bn over the corresponding months last year. In April, the deficit plunged 18.82pc

to $2.131bn, from $2.625bn in the same month last year.

The government has recently released refunds as well as cash subsidies to export-oriented

sectors to help them overcome liquidity crunch.

The Federal Board of Revenue released refunds and rebates to the tune of Rs116.961bn in

July-April as against Rs65.150bn over the corresponding period of last year.

In addition to this, the commerce ministry has so far in the last three quarters released

over Rs47bn to the textile and non-textile sectors as cash subsidies under the PM’s Export

Enhancement Package. Of these, an amount of Rs45bn was released to textile and

clothing sectors between July-April under the drawback of local taxes and levies (DLTL).

On April 6, the last tranche of Rs6bn was released for the textile and clothing sector.

In a statement, Adviser to Prime Minister on Commerce Razak Dawood said the

oronavirus has changed the world as we knew it and business processes will be completely

different. He said such difficult times always bring out new opportunities, new products,

new ways of thinking.

“This is a golden opportunity for Pakistan to pursue the ‘Make in Pakistan Policy’”, adviser

said.

He also pointed out that many businesses are on the verge of closure and labourers are

facing job losses.

“Under the circumstances, the need of the hour is a policy whereby we do not import, but

make products in Pakistan”, the advisor suggested for indigenisation of Pakistan’s needs.

Dawood said the commerce ministry is aggressively pursuing changes in tariff structure

for the upcoming budget. “The focus of these measures is to facilitate local production

thereby moving towards local manufacturing, pursuing our Make in Pakistan Policy,” he

said.

Home

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30 CITI-NEWS LETTER

South Africa: Patel Meets With Clothing Industry

(Source: All Africa, May 06, 2020)

As 1.5 milion workers in the South African economy returned to work this week, Trade,

Industry and Competition Minister Ebrahim Patel has met with representatives of the

clothing textile, footwear and leather sector. Monday's virtual meeting with the sector was

held to review the readiness of shops and factories for the new Level 4 lockdown which

kicked in on 1 May.

"The meeting agreed to develop a common framework on implementation of COVID-

ready workplaces that can serve as a guide for the industry," said the Department of

Trade, Industry, and Competition ( Dtic) on Tuesday. The recent move from the hard

lockdown to Level 4 has seen greater parts of the retail and manufacturing value chain

open up. Starting 1 May, clothing and footwear retailers started opening for customers to

buy winter and children's apparel and footwear.

This was the first time that dedicated clothing and footwear retailers have opened since

the initial lockdown started on 26 March 2020. Level 4 of the lockdown also enables

manufacturers to begin manufacturing with at least 30% normal employment for all

clothing, textile, footwear and leather goods; up to 50% for winter goods; and up to 100%

for children's and baby clothes, and personal protective equipment like face masks.

Retail CEOs provided the meeting with feedback on the reopening of stores and measures

they have taken to manage the return to work.

Anthony Thunström, the Foschini Group's Chief Executive Officer (CEO) and chair of the

National Clothing Retail Federation (NCRF) welcomed the move to reopen clothing retail

stores and noted the value of close collaboration between government and industry.

During the meeting, the Minister, retail CEOs, manufacturers and labour representatives

engaged on matters that could be covered in the framework agreement for the industry to

protect employees in manufacturing and retail. The framework also aims to protect

customers in retail stores well. CEO of Woolworths SA Zyda Rylands said the NCRF aims

to support government's initiatives.

"The spirit of collaboration within the NCRF is to support government's initiatives. The

terms of all back-to-work protocols starts with us. We [retailers] are a big employer of

people, so if we take care of our workforce in support of government's initiatives then we

should also identify how to communicate to our customers the same health and safety

protocols. We have capabilities to also support our customer to implement government's

initiatives, " she said. Meanwhile, the Apparel and Textile Association of SA's (ATASA)

chairperson Herman Pillay, said the industry should look into supporting more of

government's response efforts in workplaces. The industry now has more than 350

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31 CITI-NEWS LETTER

manufacturers who have said they are ready to produce cloth face-masks, ranging from

micro-enterprises employing a few people, to SMEs and larger firms.

Ensuring workplace safety

Proposals were heard on the phasing in of shift workers, social distancing for employees

and customers and other necessary health protocols, to avoid a sudden increase in the

spread of COVID-19 now that more parts of the retail and manufacturing are opening up.

Government provided details of the risk factors taken into account in the different alert

levels and what could be done to reduce risks, enabling the economy to move more rapidly

to Level 3 and below. "As we navigate the uncharted terrain of the COVID-19 reality, it

will take our collective efforts to ensure we reduce risks of infection while we reopen our

economy and adjust to our new normal," said the Minister. Meanwhile, the Apparel and

Textile Association of SA's (ATASA) chairperson Herman Pillay, said the industry should

look into supporting more of government's response efforts in workplaces. The industry

now has more than 350 manufacturers who have said they are ready to produce cloth

face-masks, ranging from micro-enterprises employing a few people, to SMEs and larger

firms.

Ensuring workplace safety

Proposals were heard on the phasing in of shift workers, social distancing for employees

and customers and other necessary health protocols, to avoid a sudden increase in the

spread of COVID-19 now that more parts of the retail and manufacturing are opening up.

Government provided details of the risk factors taken into account in the different alert

levels and what could be done to reduce risks, enabling the economy to move more rapidly

to Level 3 and below. "As we navigate the uncharted terrain of the COVID-19 reality, it

will take our collective efforts to ensure we reduce risks of infection while we reopen our

economy and adjust to our new normal," said the Minister.

Home

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