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PM Modi announces Rs 20 trillion stimulus package to
jump-start economy
US, India and five other nations talk post-covid trade
Apparel exporters resume work to meet pending demand
Guidelines for phase-4 lockdown likely to be announced on
May 15
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2 CITI-NEWS LETTER
-------------------------------------------------------------------------------------- PM Modi announces Rs 20 trillion stimulus package to jump-start economy
PM Unmasks Mother of All Incentives to Light Up India
Shri Nitin Gadkari welcomes PM's economic package for MSME, village and cottage industry sector; says, it will take this
sector to new heights
Apparel exporters resume work to meet pending demand
Surat's textile industry struggling, incurring losses amid lockdown
Guidelines for phase-4 lockdown likely to be announced on May 15
Record fall in March as IIP crashes to 16.7%, FY20 growth squeezed to 0.7%
US, India and five other nations talk post-covid trade
US CDC commits $3.6 mn to assist India's fight against Covid-19
Covid opportunity sets stage to ring in mega reforms
Modi’s mission self-reliance: Make in India, lower import dependence
Deciphering economic stimulus: What will revive economy, what won't!
Financial package for India Inc.: Big industry may have to fend for itself
Only 15% commercial vehicles are plying
Welcome stimulus, promise of reform
Companies cautiously resume work as India begins reopening economy
COVID-19: SC declines plea for rent waiver, relief for lawyers
Govt plans to offer tax holiday to companies investing in India
‘Govt should come up with support package for warp-knitting industry’
Airflow inside aircraft only from top to bottom, not frontback or left-right: Airbus reassures wary flyers
Agrarian Punjab scripts industrial success story in fight against Covid-19
----------------------------------------------------------------------------- UK says it plans to start virtual trade talks with Japan shortly
Bangladesh, Uzbekistan to form JWG for trade, investment
Door opens for export of face masks
Gerber joins hands with PCIAW to increase PPE production
Kerry Logistics forms new joint venture in Sri Lanka
-------------------- --- ---------------------------------------------
NATIONAL
---------------------
GLOBAL
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3 CITI-NEWS LETTER
NATIONAL:
PM Modi announces Rs 20 trillion stimulus package to jump-start economy
(Source:Archis Mohan & Arup Roychoudhury, Business Standard, May 13, 2020)
Self-reliant India' package is around 10% of GDP; lockdown 4.0 is on with new guidelines
In his fifth address since the Covid-19 outbreak, Prime Minister Narendra Modi on
Tuesday evening announced a much-awaited Rs 20-trillion stimulus package while giving
away that the nationwide lockdown would be extended beyond May 17.
Lockdown 4.0, however, would be very different from what we have seen so far, the PM
said in a primetime telecast. The details of both — the package and the next phase of
the lockdown — would be unveiled during the week.
The PM said the Rs 20-trillion package, nearly 10 per cent of India’s gross domestic
product (GDP), would be with the objective of putting money into people’s pockets to spur
domestic consumption and demand. The package would cater to various sections,
including the cottage industry, micro, small and medium enterprises (MSMEs),
labourers, and middle class.
The package, expected to cheer the Street, combines the government’s recent
announcements on supporting key sectors, as also measures rolled out by the Reserve
Bank of India (RBI). In March, Finance Minister Nirmala Sitharaman had announced a
package of Rs 1.7 trillion to deal with the corona crisis.
The RBI has also made a number of announcements, including for mutual funds and
NBFCs. It lowered interest rates, opened a refinance window and other measures to
unclog the credit flow. The impact of these announcements is roughly Rs 4.5 trillion.
Officials involved in discussions on the mega-package said the announcements by the FM
starting Wednesday would be two pronged. There would be fiscal measures, which would
directly come out of the government’s expenditure and aimed at citizens and
beneficiaries.
These could include increasing the quantum and scope of cash handouts to the poorest
through direct benefit transfers. The fiscal measures could also include tax benefits for
some of the most affected sectors, and benefits for companies, especially MSMEs, to
retain employees and maintain workforce.
The second aspect could be on the liquidity side including a credit guarantee scheme for
working capital loans of MSMEs. There could be steps to provide additional credit for
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4 CITI-NEWS LETTER
sectors like aviation, services, tourism, logistics, hospitality and others, which have faced
the brunt of the lockdown rather hard.
The other significant message in the
PM’s latest address was that buying
local would be the bedrock of
“aatmanirbhar Bharat”, or self-
reliant India. He appealed to Indians
to not just purchase locally
manufactured products, but be
“vocal” about buying “local”,
reiterating the points he had first
made during the Independence Day
speech in 2019.
The PM said the stimulus
package would help the country
achieve the objective of self-reliance
through five pillars--an economy
geared for quantum jumps, not
incremental changes; modern infrastructure; technology driven systems and processes;
demography; and a strong demand and supply chain.
Stating that Covid-19 could be part of our lives for a long time, Modi asked people to
observe precautions but get on with their lives as he hinted at a more relaxed lockdown
from May 18 in a move to revive the battered economy.
The PM said ‘lockdown 4.0’ would be different from the earlier three versions, based on
suggestions of the states, and the new rules would be made public before May 18. Modi
on Monday had asked chief ministers to share their broad strategies on enforcing the next
lockdown by May 15.
The PM said Covid-19 was a crisis, but offered the country the opportunity to make 21st
century an Indian century by becoming self-reliant, by realizing the dream of ‘Make in
India’.
He said it was time to undertake “bold reforms” in “land, labour, liquidity and laws”,
reform the entire agriculture supply chain, rationalise tax systems and make the financial
systems stronger. Recently, Bharatiya Janata Party (BJP)-led state governments
proposed changes in labour laws. Faced with stiff opposition, the Modi government had
dropped its bill to reform land acquisition laws in the first year of its first term in 2015.
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5 CITI-NEWS LETTER
The cumulative size of the stimulus package, plus the announcements made earlier by
Sitharaman and the RBI, will be around Rs 20 trillion, or 10 per cent of GDP if one takes
the 2019-20 revised nominal gross domestic product estimate of Rs 204 trillion.
For context, the largest Covid-19 stimulus package, as a percentage of GDP, was
announced by the United States Federal Reserve. As per data portal Statista, it was pegged
at 11 per cent of GDP, that of Australia was at 9.7 per cent, Brazil was at 3.5 per cent.
The earlier thinking in the government was that instead of such mega-packages, the
Centre should go for smaller, targeted announcements. This changed because of three
factors. First, the increase in borrowing programme for FY21 to Rs 12 trillion, from Rs 7.8
trillion, has given the government more room to spend. Second, the Centre has a better
idea of how deep the economic slump is and will be. And third, with the economy
gradually being opened up, industries, especially small businesses, will need all the
support they can get.
Modi said going ahead an “aatmanirbhar Bharat” is now “the only way”.
To reinforce how India had both the will power as well as ability to accomplish this, Modi
said India produced negligible N95 masks and PPE kits when Covid-19 started spreading,
but now manufactures 200,000 such masks and kits daily.
He said local manufacturing, local markets and local supply chains proved to be the
saviors during the lockdown period, and we need to make “local” our life mantra. He said
all the current global brands were also “local” at one point, and Indians can learn from
how people abroad took pride pride in them and made them global.
Modi said the definition of ‘self-reliance’ has changed in the world, and people have
started discussing about “money-centric globalisation’ versus “human-centric
globalization”. He said the world is looking at India with hope since Indian civilizational
ethos has always espoused self-reliance, but with the spirit of vasudhaiva kutumbakam,
or the world is one family.
The PM stressed the importance of stronger demand-supply chains. He said the need of
the hour was to increase demand, and for this each stakeholder of the supply chain will
be strengthened. He promised reforms in agricultural supply chain, rational tax systems,
better financial systems to attract investments to pave the way for India to be a bigger
player in the global supply chain.
"We will wear masks, maintain do gaz doori, but we will not let our aims and aspirations
be forgotten," Modi said.
Home
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6 CITI-NEWS LETTER
PM Unmasks Mother of All Incentives to Light Up India
(Source: Economic Times, May 13, 2020)
Laws, capable human resources and a strong financial system,” he said. “These reforms
will promote business, attract investments, and further strengthen ‘Make in India’.”
The package will focus on land, labour, liquidity and laws, and will cater to various sectors
including the cottage industries, micro, small & medium enterprises (MSMEs), the
working class, middle class and industry, among others. He said the package will also
focus on empowering the poor, labourers and migrant workers, both in the organised and
unorganised sectors. It will seek to increase efficiency and ensure quality.
The government had announced a ₹. 1.7 lakh crore stimulus plan on March 26. The
Reserve Bank of India has also launched various programmes to help borrowers and boost
liquidity, besides cutting interest rates to a record low.
Details of package to be announced by finance minister beginning today.
Home
Shri Nitin Gadkari welcomes PM's economic package for MSME, village and
cottage industry sector; says, it will take this sector to new heights
(Source: Press Information Bureau, May 12, 2020)
Union Minister for MSMEs and Road Transport & Highways Shri Nitin Gadkari has
welcomed the Prime Minister's relief package worth Rs 20 lakh crore announced this
evening. He said, through this historical package, the Prime Minister has fulfilled the
expectations and aspirations of the MSME, village and cottage industry sector..
Shri Gadkari said, with abundant resources, superior technology and raw materials, India
can soon become self-reliant in all sectors. He said, the Prime Minister has also
envisioned India as a super economic power in global economy. The Minister said, taking
the economic slowdown due to COVID-19 pandemic as a blessing in disguise, we should
strive to maintain positivity and self confidence to take the country ahead.
The Minister said, the nation will remember this gesture of the Prime Minister for a very
long time. He said, PM's support to this sector which gives employment to over 11 crore
people and contributes by nearly 29 per cent of GDP, can never be forgotten by all the
stake holders of this sector. He expressed confidence that the MSME, village and cottage
industry sector will grow to new heights with the support of this package.
Home
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7 CITI-NEWS LETTER
Apparel exporters resume work to meet pending demand
(Source: Nehal Chaliawala, Economic Times, May 12, 2020)
Apparel makers are slowly resuming production of ready-made garments for export
markets even as they face hurdles like cancellation or deferment of orders, extended
payment schedules and lack of new orders. “About 15-20% of the over 8,000 apparel
exporters in the country have resumed operation with 25-30% of their workforce,” said
Narendra Goenka, managing director of Texport Industries and vice-chairman of Apparel
Export Promotion Council (AEPC). With limited workforce being allowed, pending
demand is more than the manufacturing capacity, manufacturers said. "Vietnam and
Indonesia never shut down and are at an advantage. A complete lifting of the lockdown
in low-risk areas is required, with mandated social distancing and sanitation norms, to
ensure that Indian suppliers do not lose out on their export commitments," said
Sivaramakrishnan Ganapathi, managing director of Gokaldas Exports. Many apparel
makers had opened some of their factories with a rudimentary workforce in April to make
personal protective equipment, but now more factories are being opened and production
of apparels is being resumed. These include leading exporters like Shahi Exports,
Gokaldas Exports, Texport Industries, Matrix Clothing and Orient Fashion Exports. With
lockdowns in place the world over to contain Covid-19, many companies had cancelled or
deferred their orders, said people in the know. Some of these orders were in the middle
of production and the salvage value of these was less than a quarter of the cost. According
to industry estimates, between 15% and 25% of orders placed before the pandemic have
been cancelled with companies invoking the ‘force majeure’ clause and not all have
reimbursed their suppliers for the material loss. The garment industry is seasonal and
most of the deferred orders were for the summer collection, which may have to be now
held till summer 2021, Ganapathi said. Meanwhile, companies have been negotiating for
longer payment schedules than the usual 30-day or 60-day cycles to 90 and 120 days,
leading to cashflow constraints for manufacturers. Some have even tried negotiating for
180 days, according to Goenka. New orders for fall and winter collections are also being
delayed as stores in the western hemisphere are only now slowly opening and the
companies are yet to assess the demand. Ganapathi said since many corporate offices in
Europe and the US remain closed, it will take longer for clarity to emerge whether these
orders will come at a later stage or not. Indian apparel makers supply to some of the
highest-selling fashion labels as well as retailers in the western world like PVH, H&M,
Kohl, Banana Republic, Marks and Spencer, Walmart, and Target to name few. During
FY20, Indian apparel makers exported ready-made garments worth almost Rs 1.1 lakh
crore, according to AEPC. Export business upwards of $3 billion (Rs 22,650 crore) has
been impacted due to the Covid-19 pandemic because key European markets like Italy
had gone into lockdown even before India in mid-March, Goenka said.
Home
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8 CITI-NEWS LETTER
Surat's textile industry struggling, incurring losses amid lockdown
(Source: Devdiscourse, May 12, 2020)
The textile industry in Surat is facing tough times and is looking at huge losses due to the
nationwide lockdown imposed in the wake of the coronavirus crisis.
The textile industry in Surat is facing tough times and is looking at huge losses due to the
nationwide lockdown imposed in the wake of the coronavirus crisis. Jitubhai Vakharia,
President, South Gujarat Textile Processors' Association said that an estimated loss of Rs.
1,000 crore may be incurred if the lockdown is extended.
"Close to Rs 800-1,000 crore loss could be incurred by the textile industry itself as the
lockdown is expected to be extended," said Vakharia while speaking to ANI. With regard
to the situation of the workers he said, "The craftsmen are anxious, so we decided to
provide ration after every fortnight to ensure that they do not go hungry."
He added: "If the workers wanted to go back to their native villages, we gave them Rs
1,000 to assist them as well. With help from the Pandesara Police, we have been able to
send back quite a few workers by train and bus." But he said that more needs to be done.
"The arrangements made to send workers back to their states are not enough. Even if we
keep going at this rate, it will take close to a month to do so," he said. Meanwhile, the
Railways have partially resumed passenger train services after over one and a half
months.
"We wholeheartedly welcome this decision taken by the central government," Vakharia
said. To help the resumption of economic activities, he said that the government must
provide the textile industry "soft loans".
"Whatever money the government gives us, it must be considered as a soft loan at an
interest of 2-3 per cent and we will pay the government back in a few years. Once we get
the money, we can resume our business," he added.
Home
Guidelines for phase-4 lockdown likely to be announced on May 15
(Source: Rahul Tripathi, Economic Times, May 13, 2020)
As Prime Minister Narendra Modi announced on Tuesday that the contours of the fourth
stage of lockdown from May 18 would be "completely different" from the previous three
phases, Union home ministry officials said the new guidelines would most likely be issued
on May 15. The new rules would provide relief to several sectors and rely on the feedback
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9 CITI-NEWS LETTER
received from the chief ministers, officials said. “Lockdown 4 will not be the same. It will
be different from before with new rules,” the prime minister said. The home ministry
officials said social distancing, hygiene and sanitation protocols would be the same. “It
will be ensured that individuals are made responsible for ensuring these measures. This
will lead to better surveillance and use of technology like Aarogya Setu app. With many
states well-prepared to deal with Covid-19 cases, we are in a position to ensure better
healthcare facilities,” a senior home ministry official said.
At the six-hour videoconference with chief ministers on Monday on the road ahead after
May 17, the prime minister hinted that the lockdown, extended twice, would continue but
with fewer restrictions. “Details will be shared after suggestion from states, before May
18,” he said during his address to the nation. “Corona will be with us for a long time but
our lives cannot revolve around it. We will wear masks, we will follow doh gaj doori (six-
foot distance) but we won’t let it derail our targets,” he said. Officials said fresh guidelines
are being finalised in consultation with states and are likely to be released by May 15.
“States can impose stricter rules to control the pandemic,” another official added.
Home
Record fall in March as IIP crashes to 16.7%, FY20 growth squeezed to 0.7%
(Source: Subhayan Chakraborty , Business Standard, May 13, 2020)
Experts warn much worse is yet to come with April seeing 20 days of lockdown versus
March's one-week
India witnessed its biggest drop in industrial production yet, in March, with output
crashing by 16.7 per cent as factories downed shutters towards the month-end owing to
the Covid-19-induced nationwide lockdown. Economists, however, said the worst was yet
to come after the weeks of suspension of industrial activity across sectors — many of
which still remain hamstrung by a lack of labour, logistics, and raw materials.
Industrial output for fiscal 2019-20 contracted by 0.7 per cent compared with a growth
rate of 3.8 per cent in 2018-19, official data released on Tuesday said. Industrial
production had been tapering off since end-2019, but a rebound in February had pushed
up the overall growth to a seven-month high of 4.6 per cent.
“For the year, metal products registered impressive growth with positive growth in
apparel and food products. Otherwise it was quite lacklustre,” said Madan Sabnavis, chief
economist, CARE Ratings.
The picture for April will be worse, with virtual nil growth in most sectors, he said, adding
that only some segments like food and pharmaceuticals could possibly show positive
growth.
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10 CITI-NEWS LETTER
Manufacturing hit badly
The month of March saw a broad-based slowdown across sectors. Manufacturing, which
accounts for 78 per cent of the IIP, bore the biggest brunt, contracting by 20.6 per cent,
after 3.06 per cent growth in the previous month. All the 23 sub-sectors within
manufacturing posted year-on-year contraction.
The capital goods segment, which denotes investment in industry, contracted 35.6 per
cent in March, following February's 9.7 per cent growth. Production in the category has
remained in the red for a fourteenth straight month, despite the government’s efforts to
open up even more sectors to easier foreign direct investment flows last year.
In line with their performance over the past few months, the automobiles and computer
and hardware manufacturing segments saw the biggest levels of contraction. Motor
vehicle production fell 49.5 per cent in March, after February's 15.6 per cent drop.
Similarly, production of electronics also reduced by more than 41 per cent, as compared
with a 15 per cent decline in the previous month. Elsewhere, electrical equipment and
machinery production shrank the fastest. The month saw electricity generation fall by 6.8
per cent after an 11.5 per cent rise in February. Mining output remained relatively
unscathed in March after 9.6 per cent growth in February.
Consumer demand fizzles
Consumer durables was the biggest casualty of the lockdown among user-based
industries, recording a 33 per cent fall in production. Even before the latest Covid-19
crisis, the data from the beginning of the year shows that production of consumer
durables had continued to drop with March being the latest in a 10-month contraction
spree.
"Unsurprisingly, the extent of contraction is the most severe in March 2020 in the case of
capital goods and consumer durables, highlighting the pause in investment intentions
and deferral of non-essential consumption. Even consumer non-durables, which include
several essential items, witnessed a 16.2 per cent contraction in output in March 2020, as
the lockdown interrupted production in several factories," said Aditi Nayar, principal
economist at ICRA. Consumer non-durables had recorded zero growth in February after
two consecutive months of contraction.
Nayar stressed that GDP growth was expected to slide to 2 per cent in the fourth quarter
of FY20 from 4.7 per cent in the third quarter despite the anticipated improvement in
agricultural GVA growth in that quarter. Overall, ICRA expects GDP growth to moderate
to 4.3 per cent in 2019-20. Economists remain pessimistic about growth prospects for
April.
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11 CITI-NEWS LETTER
"Any recovery in industrial production will only be gradual as the sector in the short to
medium term will continue to struggle with sluggish demand, supply chain bottlenecks,
raw material availability, labour issues and credit squeeze," said Rajani Sinha, Chief
Economist & Head Research at Knight Frank India.
Home
US, India and five other nations talk post-covid trade
(Source: Economic Times, May 13, 2020)
The United States reached out to India and five other countries on Monday to kickstart a
discussion on how to move the global economy forward in the wake of Covid-19 and to
find ways to cut dependence on China. Israel, Brazil, Australia, Japan and South Korea
were part of the videoconference and certain other like-minded countries may join the
discussion at a later stage, according to people aware of the matter. Many of these
countries share close trade and commercial links with China. The US state department
said the foreign ministers of the seven countries discussed the importance of international
cooperation, transparency and accountability in “combating the pandemic and in
addressing its causes”. The US has maintained that China suppressed early information
about the outbreak of coronavirus when it was first detected in Wuhan and has
consistently downplayed its risks.
But the videoconference was not a single-agenda initiative as India has maintained a
cautious diplomatic approach by not targeting China publicly. External affairs minister S
Jaishankar tweeted that the videoconference covered pandemic response, global health
management, medical cooperation, economic recovery and travel norms. “Look forward
to continuing this engagement,” he said. US secretary of state Mike Pompeo had earlier
referred to Monday’s videoconference on April 29 when he said the US government was
working with Australia, India, Japan, South Korea, New Zealand and Vietnam to “move
the global economy forward” and explore restructuring “supply chains to prevent
something like this from ever happening again”.
The participants in the videoconference included Australia’s Marise Payne, Israel’s Yisrael
Katz, Japan’s Taro Kono, Brazil’s Ernesto Araújo and South Korea’s Kang Kyung-wha.
Each country shared its experience in handling the outbreak and how different countries
could help each other.
Home
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12 CITI-NEWS LETTER
US CDC commits $3.6 mn to assist India's fight against Covid-19
(Source: Atmadip Ray, Economic Times, May 12, 2020)
The US Centers for Disease Control and Prevention (CDC) has committed $3.6 million to
assist Indian government’s fight against COVID-19, the US Embassy said in a statement.
The fund is to support prevention, preparedness and response activities in India. "This
initial tranche of funding will seek to further strengthen and support the Government of
India’s efforts to increase laboratory capacity for SARS-COV-2 testing, including
molecular diagnostics and serology," the US Embassy said in a press statement. The funds
will also be used to support the development of Infection Prevention and Control (IPC)
centers of excellence that can improve the ability of hospital networks to detect COVID-
19 and strengthen local health systems through enhanced surveillance and monitoring
systems.
The CDC would also work with local partners to help India strengthen its public health
workforce, not only to this pandemic but to future threats as well. The scope of support
will include planning for health emergency operations centers to further strengthen
public health emergency management capacities. In addition, the CDC India program will
provide technical assistance for the government of India’s ongoing crisis emergency and
risk communication efforts.
US government agencies including the US Agency for International Development
(USAID), CDC and other Department of Health and Human Services agencies, have
provided more than $1.4 billion in health assistance to India and nearly $2.8 billion in
total assistance over the last 20 years. the embassy said.
Home
Covid opportunity sets stage to ring in mega reforms
(Source: Aman Sharma, Economic Times, May 13, 2020)
PM Narendra Modi’s address on Tuesday was aimed at setting the stage for his
government to undertake big-ticket systemic reforms which, if not for the Covid-19 crisis,
may have been politically difficult to navigate. Those familiar with the government’s
thinking at the highest levels told ET that major reforms can be expected in agriculture
marketing, enhancing competitiveness of PSUs and simplifying laws to help the private
sector make their businesses globally competitive. With labour reforms already being
rolled out by most BJP-ruled states, official sources said the emphasis will be to ensure
nationwide compliance and replicate this in other areas such as easier land availability
for industry.
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13 CITI-NEWS LETTER
Unlike other countries, the PM was keen not to just announce a financial package but
dovetail it with a road map for reforms, which, in his own words, could result in a
“quantum leap” for the economy, as per official sources. The idea, officials said, was to
take steps towards “future-proofing India”, through emphasis on self-reliance. “The PM
was clear the package should have a direction and take India forward while fighting Covid.
Days of brainstorming has gone into this. Other nations have been reactive to Covid, but
India is being proactive. This is not just a financial package but a reforms stimulus, and
governance and mindset overhaul,” said an official.
Opting for Economic Empowerment
Rather than just depend on a trickle-down approach through cashbased incentives like
many developed countries, officials said India has opted for economic empowerment
alongside funds infusion. This is to be achieved by broad-basing the interventions in a
way that they impact livelihoods of all sections of the society — from street vendors and
labourers to the middle class and industrialists.
Officials said that instead of tariffs, the package will aim for systemic transformation.
They stressed that Modi’s call for a selfreliant India is different from the isolationist and
protectionist impulses seen in other parts of the world. “Modi’s vision for India is neither
exclusionary nor isolationist. There is a specific talk of improving efficiency, competing
globally as well as helping the world,” explained an official familiar with the deliberations.
Government insiders also sought to make a distinction between the self-reliance model
that the PM enunciated from what the Congress once followed, saying India was then
reluctant to open up to the world. “That led to disastrous results for our economy,” said
an official, pointing out that India was now looking within with confidence, not diffidence
of the past.
Home
Modi’s mission self-reliance: Make in India, lower import dependence
(Source: Kirtika Suneja & Deepshikha Sikarwar, Economic Times, May 13, 2020)
India will fire on all cylinders to achieve atmanirbharta (self-reliance) and could offer tax
sops, procurement preference in government contracts for domestically produced goods
while imposing stringent non-tariff barriers to discourage imports. Measures for sectors
such as pharmaceuticals, furniture and leather are in focus and states could be asked to
revamp their procurement processes to prefer local manufacturing. Prime Minister
Narendra Modi said on Tuesday that the Covid-19 crisis has taught us the importance of
local manufacturing, local market and local supply chains. “All our demands during the
crisis were met locally. Now, it is time to be vocal about local products and help these local
products become global,” he said.
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14 CITI-NEWS LETTER
ET reported last month that the country has begun
work on a continuity plan that includes cutting
down import dependence, especially from China,
by focussing aggressively on substitution while
improving safety compliance and quality goods to
gain global market share. “The idea is to cut down
dependence on reliance of imports from one
country while encouraging local manufacturing...
Why should we be importing furniture and leather
in which we have competence?” a senior
government official asked while speaking with ET.
The government will look at areas where it has
capability but continues to import, officials said. The commerce and industry ministry has
identified medical textiles, electronics, plastics and toys as some sectors where local
manufacturing and exports can be promoted in the next three months, or phase one, while
phase two products include gems and jewellery, pharma and steel, in the next six months.
According to the official, the upcoming measures could include tax incentives and other
support measures to make local manufacturing more competitive globally. “Support
measures are also likely to aid local manufacturers build brands globally,” the official said.
“Swadeshi focus was not just an ideological concept presented. It is a serious thought that
would be followed up with concrete steps,” said another government official.
Sharad Kumar Saraf, president of the Federation of Indian Export Organisations, noted
that increasing localisation is a fallout of Covid19 across the globe, but this will make
market access for exports more difficult.
Home
Deciphering economic stimulus: What will revive economy, what won't!
(Source: Rajeev Dubey, Business Today, May 13, 2020)
What ails the economy is lack of demand. There's only one factor that can revive the
economy instantly - consumption. Post-lockdown, it's critical to stimulate demand and
drive consumption in the economy. Can the stimulus do that?
At Rs 20 lakh crore, the fiscal stimulus package is 67 per cent of government of India's Rs
30.42 lakh crore projected spending for FY21. Hence, it's extremely unlikely that the
entire package applies to fiscal 2020-21 alone. It will probably spread over a couple of
years, perhaps until FY22. May be longer.
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15 CITI-NEWS LETTER
But just as Finance Minister Nirmala Sitharaman is expected to
spell out the exact details of the stimulus, it's critical to watch out
for signs of what will stimulate the economy right away, what will
take longer, and what will take way longer.
Of the four 'L's Prime Minister Narendra Modi specifically
mentioned in his speech, at least 3 - land, labour and law - are
long-term measures, where the impact of the reform measures
will reflect over a long period of time. Perhaps, 3 to 5 years. The
fourth, liquidity in the economy is the only measure that will have a direct bearing on
reviving the economy, but the country's banking regulator Reserve Bank of India (RBI)
has already taken significant steps adding up to over Rs 4.73 lakh crore (about 2.4 per
cent of GDP).
But there's only one factor that can revive the economy instantly - consumption. What
ails the economy right now is lack of demand. Post-lockdown, it's critical to stimulate
demand and drive consumption in the economy. Here's what to look for in the package:
Government's commitment to infrastructure spending
At a time when public expenditure is the only engine of the economy that is functioning,
the government has to ensure that it is the flagbearer of any revival plan in the works. Far
from a status quo on the fiscal public expenditure programme, Centre needs to accelerate
it from whatever additional resources it intends to raise. Since infrastructure drives
hundreds of allied industries, including major ones like steel and cement, the additional
expenditure planned in the stimulus will define the true intent. Accelerating investment
in healthcare and other infrastructure, accelerating execution of existing infrastructure
projects identified under the National Infrastructure Pipeline, and enabling NIIF to raise
private and foreign capital could be on the cards.
Tax and GST cuts
Nothing drives demand more than tax cuts. However, barring the corporate tax cuts, the
government has so far shied away from tax cuts. Instead, most taxes have seen a spike. If
the Centre can take the bold step to slash personal, corporate or GST rates and make up
for such revenue shortfall from either printing more money or additional borrowings, it
would have given the biggest booster to consumer confidence to spend more. Not just on
essentials but, perhaps, also on discretionary products such as phones, durables and even
automobiles.
Real Estate push
Concession to home buyers, for example, in GST rebates, rebates on stamp duty for a
specified period of time could help raise demand for the real estate sector.
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16 CITI-NEWS LETTER
Direct Benefit Transfer
Since the per capita amounts of direct benefit transfer (DBT) are generally small and
aimed at the poorest of the poor, they largely go towards subsistence spending rather than
pumping demand. However, Prime Minister Modi's commitment to take care of the
workers and labourers have provided hope of bigger amount than DBT has seen till date.
The bigger the DBT, the more directly it will aid consumption.
Payroll support to workers
More than 135 million informal workers and contractors expect payroll support from the
government during the lockdown period. An ideal payroll support as witnessed in most
affected countries in the West has been about the Government paying employer's
contribution of wages, even employees's. The least impactful would be the other option of
waiving the mandatory employers' PF contribution or reduce PF contribution for both
employers and employees. Payroll support will not just provide security but will leave
thousands of crores in the hands of individuals to drive consumption.
Saving MSMEs
Employing over 110 million people and contributing to nearly one-third of India's
economy, survival of MSMEs is not a choice - it's the need of the hour. How the Prime
Minister's declared intent to support MSMEs plays out will be most keenly watched.
Besides payroll support, what is expected though is: Credit guarantee fund with 75:25 risk
sharing between Centre and banks; an additional line of liquidity from RBI to banks and
non-banks of up to Rs 1.2 lakh crore to extend working capital lines structured through
corporates and to reach their supply chains; loan to first-time MSME borrowers of Rs 1
lakh crore with 75:25 risk sharing between Centre and banks.
Home
Financial package for India Inc.: Big industry may have to fend for itself
(Source: Joe C Mathew, Business Today, May 13, 2020)
Details of the package will be revealed in phases by FM Nirmala Sitharaman, but the PM's
speech gives a clear indication of its immediate beneficiaries - farmers, cottage industry,
MSMEs, labourers and migrants
Not much of big industry's wishlist may find place in Prime Minister Narendra
Modi government's Rs 20 lakh crore economic stimulus. True, details of the package will
be revealed in phases by Finance Minister Nirmala Sitharaman beginning May 13, but the
PM's speech gives a clear indication of who all will be the immediate beneficiaries of the
package. It includes farmers, cottage industry, Micro Small and Medium Enterprises,
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17 CITI-NEWS LETTER
labourers and migrants, and for the right reasons, while others will benefit from indirect
measures meant to jump-start the economy as a whole.
"The thrust on labour, MSME and farmers is welcome. It will be a great help to labour
reeling in misery, especially in the informal sector", says Saji Narayanan, national
president, Bharatiya Mazdoor Sangh (BMS). Union Minister for MSMEs Nitin
Gadkari was also among the first to congratulate the PM for the sector specific package
that is about to be unveiled.
The Prime Minister's mention of industries, employees from organised and unorganised
sectors and the middle class offers some hope, but these measures are likely to be more
general in nature, than to address any specific problems.
The PM has also blended the government's immediate response to the economic
emergency caused by the COVID-19 with medium term measures it intends to take to
promote local manufacturing, and self-reliance. The thrust on local markets, local supply
chains and local manufacturing will be more of a policy stimulus than an economic
stimulus.
Big industry, however, can be happy for the PM's assertion that the package will also focus
on land, labour, liquidity and laws. Not much of that would also mean direct funding
support from the government, but law amendments - like the relaxation in labour law and
the land acquisition norms by some states - will be extremely industry friendly. "We
appreciate the Prime Minister spoke about land, labour, liquidity and simplification of
laws which are key challenges of the economy", says Chandrajit Banerjee, Director
General, CII.
Supply chain reforms for agriculture, a rational tax system, simple and clear laws, capable
human resource and a strong financial system - all of which find mention in the PM's
speech - are long pending and recurring demands from Indian businesses. The argument
always has been that reforms will promote business, attract investment, and further
strengthen Make in India. Implementation has remained patchy, and one has to see how
the COVID package will change the narrative.
As the PM said, the Finance Minister will start sharing details of the contours of the
package starting tomorrow, but economic resurgence will depend on how fast, to what
extent and in how large a geography, the lockdown gets lifted.
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18 CITI-NEWS LETTER
Only 15% commercial vehicles are plying
(Source: Lijee Philip, Economic Times, May 13, 2020)
Images of thousands of trucks, some full of goods, stuck on state and national highways
have flashed through daily news bulletins on television that have become commonplace
nationwide offering a window to another industry unmoored by the Covid-19 lockdown.
Only 15% of the 25 lakh commercial vehicles are plying across India. The worst affected
are automobile carriers; out of 18,000 car carriers, 1,500 have been repossessed as have
been a tenth of 20,000 two-wheeler carriers. Not only is there no freight demand, idle
fleet and high operating costs have made the business unviable. “Vehicles are stranded on
highways for lack of drivers due to no demand for cement, steel, car carriers,” said Mukesh
Chetak, a Delhi-based operator having a fleet size of 2,400 large trucks. Except those
ferrying pharmaceutical, FMCG and essential goods, all other goods carriers have been
affected. Several large fleet operators are unable to pay vehicle EMIs and face the threat
of banks and financial institutions repossessing their vehicles.
Already, the commercial vehicle loan delinquency is currently the highest in the retail loan
portfolio. “The core is how fast can economic activity resume, which will lead to
movement of goods,” said TT Srinivasaraghavan, MD, Sundaram Finance — largest CV
financing NBFC.
Typically, a truck loan ranges from Rs 3 lakh at the lower end to Rs 30 lakh for the
premium segment. These are five-year loans and financiers fund 95-100% of the cost.
Players like Tata Motors Finance have started exploring options such as bill discounting,
rescheduling of term loans, private equity funding, working capital solutions and lease
options to such fleet operators.
Industry players feel that while financiers are left with no other option but to take back
the vehicle, it will lead a large section of the drivers to changing their current occupation.
“It is difficult to get drivers, even if we are willing to pay more,” said Sushil Rathi, COO,
Mahindra Logistics. “At this point in time repossession of truck may lead to inventory
pile-up at stock yards and add to paralysis at government entities like RTOs, which may
lead to delay in transaction closure inspite of our preparedness to fund such trucks,” said
Anil Menon, head of CV financing at Yes Bank. “The toll collection figures are showing an
upward trend. Currently, the major issues faced by transporters are non-availability of
drivers, elongation of payment cycle and uncertainty of return load,” said Amit Mohan,
joint president, Kotak Mahindra Bank. With the RBI likely to extend the loan moratorium
for another three months till September, it gives consumers a breather, financiers said.
Approximately 90% of the CV customers who have taken loan from NBFCs and 70% of
borrowers of private banks have opted for moratoriums.
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19 CITI-NEWS LETTER
Welcome stimulus, promise of reform
(Source: Economic Times, May 12, 2020)
It is welcome that the prime minister has announced a stimulus package amounting to Rs
20 lakh crore, equivalent to 10% of GDP. While he has not announced the end of the
lockdown after March 17, the PM has said that the nature of the lockdown would be such
as to allow India to move ahead, even as Indians observe all safety protocols necessitated
by the pandemic. While the details of the stimulus package are to be unveiled over the
coming days, the PM has indicated that it would be a mix of fiscal support and liquidity
measures from RBI. Even more significant is the promise to make the stimulus not just
an injection of funds but a transformative process that is an all-embracing, covering all
sections of the people and the economy, to shift India to a new path of self-reliance.
Self-reliance resonates with a history of autarky and protectionism in this country. The
PM’s reference to local products and being vocal about local products hinted at the
possibility of a throwback to this misguided past of tariff protections and import
restrictions to boost local production. Recent shifts in policy towards greater
protectionism are not a positive augury either. However, PM Modi spoke of self-reliance
of a different kind, one that sees the world as its framework of operation, as the intended
beneficiary.
It is not possible to be self-reliant in a globalising world without drawing talent,
technology and capital from the world and it is not possible to benefit the world, without
seeing the world at large as the ultimate market for India’s produce. That would suggest
globalisation continuing, with greater confidence and greater commitment to quality and
productivity, with renewed confidence in India’s ability to produce goods it had not
produced before and overcome new challenges, as manifested in the battle against Covid-
19. It is to be hoped that a sizeable chunk of the stimulus to be announced over the next
few days would take the form of support for state finances, as the states are at the forefront
of providing healthcare, support to people and economic relief.
Home
Companies cautiously resume work as India begins reopening economy
(Source: Live Mint, May 12, 2020)
Top companies across sectors - automobile maker Maruti Suzuki, consumer electronics
giant Samsung to IT giant Infosys - have reopened factories and offices as India took its
first steps towards resuming economic activity after weeks under a near-total coronavirus
lockdown.
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20 CITI-NEWS LETTER
While the government has allowed businesses to resume under strict guidelines,
companies are not rushing to achieve pre-COVID-19 run-rates and instead are calibrating
staff strength as they are aware that any incident of infection can prove costly.
Companies said employee safety and workplace hygiene is the prime focus.
While Maruti resumed operations at its Manesar plant in Haryana on Tuesday, Infosys
opened offices in some cities with up to 5 per cent staff and plans to gradually raise
employee strength to 40 per cent.
Tata Consultancy Services (TCS) has less than 1 per cent of its employees currently in
India offices. Mahindra & Mahindra too started operations at its factories with a limited
number of workers.
Flipkart, Panasonic India, Whirlpool and Dabur are among a host of companies that have
put in place plans to restart operations with a small section of staff.
Tata group-owned jewellery brand Tanishq has announced its plans to reopen its 328
stores across the country in a phased manner.
The government imposed a nationwide lockdown on March 25, and it has already been
extended twice -- first until May 3 and then again until May 17. However, some curbs have
been eased beginning April 20 with permission being given to industries in rural areas to
restart.
Later, production, sale and transport of goods in areas where virus cases are less severe
have also been allowed.
However, the process of restarting factories and businesses is likely to be protracted, with
production only gradually ramping up towards operational capacity levels.
IHS Markit said although the limited restart of some industries has been permitted since
April 20, India will still suffer severe disruptions to its industrial output due to the
protracted lockdown.
"The Indian economy is facing a recession in the 2020-21 financial year for the first time
since 1979-80, during the second OPEC oil crisis shock," IHS Markit said.
"Consequently, IHS Markit expects the lockdown measures to result in a contraction of
Indian industrial production in the 2020-21 financial year."
But several companies across sectors ranging from textiles to consumer electronics and
liquor to pharma have partially resumed operations after getting permission from local
authorities.
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21 CITI-NEWS LETTER
While Panasonic India and South Asia President & CEO Manish Sharma said the
company plans to start operations at its factory with 30 per cent capacity and slowly take
it up to 50 per cent in a month's time, Samsung Electronics India said its Noida factory
has started limited operations.
The Noida factory of Dixon Technologies too has resumed operations. The firm's Tirupati
and Dehradun plants too have started operations at about one-third capacity, which will
be scaled up to 75-80 per cent in the next one week, said Sunil Vachani, Chairman, Dixon
Technologies.
Neeraj Bahl, the CEO of BSH Home Appliances -- German company which manufactures
and sells under Bosch and Siemens brands in India -- said the firm is in process of starting
production in its Tamil Nadu factory with limited staff. Mahendra Singhi, President,
Cement Manufacturers Association (CMA), said 25-30 per cent of cement production
capacity in the country has resumed.
JK Lakshmi Cement director Shailendra Chouksey said the firm has clearances to operate
all its seven plants in five states with reduced staff strength and following government's
covid-19 guidelines for factories. "However, these measures alone shall not suffice. Unless
construction is allowed rather encouraged to resume operations", the sector outlook
would not be very good, he said.
Consumer Electronics and Appliances Manufacturers Association (CEAMA) president
Kamal Nandi said slowly retail operations are opening up in green and orange zones.
"Roughly industry's 30-35 per cent outlets are open throughout the country though
geographically not equally distributed."
"We have also got permission to open factories in green and orange zones. Most of the
brands are preparing to resume operations. Some brands started last week and some
would start from this week. Even more important, the supplier's plant is opening up and
we are all preparing to resume operations and slowly production would start," he said.
There is still no pressing need for the brands to go ahead and start mass production from
day one as there is a lot of inventory in warehouses and with dealers, he added.
Society of Indian Automobile Manufacturers (SIAM) director-general Rajesh Menon said
the auto sector lost over ₹90,000 crore in revenue due to the lockdown. Ashok Leyland
MD & CEO Vipin Sondhi said these are truly unprecedented times, and the government
and industry need to work closely to bring the industry back on its feet.
The government is said to be working on a second fiscal package to support businesses,
particularly small and mid-sized companies that account for about a third of India's gross
domestic product (GDP) and employ more than 11 crore people.
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22 CITI-NEWS LETTER
COVID-19: SC declines plea for rent waiver, relief for lawyers
(Source: Deccan Herald, May 13, 2020)
The Supreme Court on Thursday declined to consider a PIL for granting relief in payment
of chambers rent by advocates suering financial losses due to lockdown.
The top court also refused to issue any direction on a separate plea for creating a financial
emergency fund for lawyers. "Tomorrow engineers will come, architects will come. How
can we give special dispensation to lawyers? This is unreasonable for us to do. There may
be old ladies, aged persons as landlords. How can we say this," a bench presided over by
Chief Justice S A Bobde told a senior advocate making such a request.
Senior advocate Kailash Vasdev for Supreme Court Bar Association, contended we are not
saying that rent for lawyers chambers should not be charged. It should not be made a
ground for eviction during the lockdown. "We are not going to enter into this issue. You
are not entitled to any special consideration," the bench said.
A PIL by Pawan Prakash Pathak sought a direction to the Bar Council of India for the
creation of a financial emergency fund for practicing advocates. He said the Allahabad,
Jharkhand, and Calcutta High Courts have taken up the issue. With courts having been
shut down, advocates practicing independently have been le with no source of income, he
submitted. "We can't create a special category for lawyers when unfortunately the whole
country is facing a diicult situation. Let the BCI decide," a bench presided over by Justice
N V Ramana said. The bench said all persons were without work. Architects are without
work, others are also without work. This is something for the BCI to consider. "We don't
have funds to give to you. It's for the Bar Councils to take action. We cannot tell the Bar
Council to do so," the bench added.
Home
Govt plans to offer tax holiday to companies investing in India
(Source: Shruti Srivastava, Live Mint, May 12, 2020)
India’s trade ministry is proposing a tax holiday for companies bringing new investments
as the government explores measures to support the economy amid
the coronavirus pandemic, according to people familiar with the matter.
The proposal to give a 10-year full tax exemption to companies making new investment
upwards of $500 million is being evaluated by the finance ministry, said the people, who
asked not to be identified citing rules. The plan requires companies to start operations
within three years from June 1, and will cover sectors including medical devices,
electronics, telecom equipment and capital goods, they said.
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23 CITI-NEWS LETTER
Another variant of the program will be to provide a four-year tax holiday to companies
that invest $100 million or more in labor-intensive sectors such as textiles, food
processing, leather, and footwear. A lower corporate tax rate of 10% is proposed for the
next six years, the people said. The proposal has to be approved by the finance ministry
and, so far, it hasn’t taken a decision.
From offering easy access to land for factories leaving China to tax breaks for new
plants, Prime Minister Narendra Modi’s administration is trying to lure investors and
stop the coronavirus pandemic from wrecking the economy. Asia’s third-largest economy
is hurtling toward its first full-year contraction in four decades as India has so far failed
to provide a big stimulus, given the government’s limited fiscal room, even as an
estimated 122 million people lost jobs in April and consumer demand evaporated.
A call made to trade ministry spokesman was not answered while a finance ministry
spokesperson declined to comment.
The benefits provided would be in addition to the existing incentives provided by the
government, the people said.
The trade ministry has also identified top 50 industry clusters to upgrade their existing
infrastructure, testing labs and research and development facilities. While the thrust is on
developing sectors such as textiles, pharma, food processing and gems and jewelery, the
ministry is also working on expanding the list to include services sectors such as tourism,
the people said.
Home
‘Govt should come up with support package for warp-knitting industry’
(Source: The Tribune, May 13, 2020)
Loan instalments to be paid by MSMEs should be deferred for 3 months, says Ajay Mehra
Industry and Lockdown
Ajay Mehra, managing director of Varinda Knitters Private Ltd, established about 20
years ago, has been manufacturing net and lace fabrics, which are used in fashion fabric
garments, dupattas and lehengas. It is multi-use fabric, which is used in a range of
products, including upholstery of cars, home, textiles, travelling accessories, men and
women wears. He has been supplying the fabrics to various places, including Kolkata,
Delhi, Mumbai and Surat and garment exporting units. Ajay, who is also the president of
the Amritsar Warp Knitting Association, discusses the impact of the lockdown on the
warp-knitting industry in an interview with Neeraj Bagga. Excerpts:
How has the lockdown impacted your warp-knitting business?
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24 CITI-NEWS LETTER
The demand has vanished with markets being closed due to the lockdown imposed to
contain the spread of Covid-19. The state government has allowed the functioning of the
unit with a rider to maintain social distancing and making lodging arrangements for
labourers on the premises. In a labour-intensive industry, it is not possible to abide by
such regulations. So, I decided not to resume the manufacturing work as it may jeopardise
the health of workers. All payments are struck and under the given circumstances, we are
apprehensive of getting back. The entire sale rests on credit and raw material comes from
Maharashtra and Gujarat where companies sell yarn on cash or ask 18 per cent above its
rate. Stocks of raw and finished material are lying in factory godowns.
Do you expect resumption of your business in near future?
It will take a long time to revive the business. It is not possible by lifting the curfew in a
district or some packets. Since manufacturing and trading depend on inter-state
movement, the nationwide lockdown must be lifted. There were many expansion and
technology upgrade plans, but they have been put on hold for now. Our first priority will
be to collect the funds scattered in the market and request the Ministry of Textile to
reimburse the 10 per cent subsidy. Around five years ago, knitting machines were
imported from Germany under the ministry’s Technology Upgradation Fund (TUF).
How are you dealing with the issue of paying salaries to workers?
All employees have been paid their March salary. But, they are yet to be paid for April. We
are figuring out how to pay the salaries. A large number of semi-skilled and unskilled
labourers are involved in the manufacturing work. They include both migrants and locals.
What is the share of online trading in your profession?
There is no share of online trading. In fabric, a buyer wishes to have a look at the product
before purchasing it. So, samples are dispatched to the prospective customers and final
orders come subsequently.
Do you consider the current crisis as a challenge or an opportunity?
It is more a challenge. Survival has become important as the lockdown offers a tough time
to the business. Some people think that investors may pull out of China and India may be
lucky to host them. However, it seems be a remote possibility as the Chinese government
provides vast support to its industry and over the years, massive infrastructure has been
built, which is hard to beat.
What are your expectations from the government?
We pay taxes, but there is no support from the government. It can collect higher taxes,
but it should at least ensure pension after retirement. The government should pay salaries
out of the ESI and EPF funds. It should come up with a package for the MSME units in
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25 CITI-NEWS LETTER
general and the warp knitters in particular. Loan installments to be paid by the MSME
units should be deferred for the next three months without any interest. At present, the
government is only prolonging the pay-back time of loans and cash credit limits extended
to industries.
Home
Airflow inside aircraft only from top to bottom, not frontback or left-right:
Airbus reassures wary flyers
(Source: Times of India, May 11, 2020)
When flights resume and you take to the skies again, do not panic when someone on the
rows ahead or behind you sneezes or coughs. There is minimal risk of the dreaded
coronavirus — assuming the person sneezing or coughing is an undiagnosed infected and
is wearing a mask — finding its way to you by transmission through air inside the cabin,
according to European aerospace major Airbus. The aircraft manufacturer says its cabin
airflow and filtration systems virtually rule out airborne transmission of contaminants
like coronavirus on flights.
To be sure while airborne transmission has been ruled out, Airbus reiterates everyone
onboard must follow heightened norms of hygiene like disinfecting hands and wearing
masks, decontamination of surfaces and controlled boarding to ensure that the virus does
not spread through surfaces of common touchpoints like lavatory doorknobs. The
mandate for facial covering should keep you safe even if the person next to you sneezes or
coughs. “The air inside an aircraft is extremely clean due to three reasons and air travel
therefore remains the safest mode of transport. There is no airflow between front and
back or left and right,” Anand Stanley, Airbus (India and South Asia) president and
managing director, told TOI.
Firstly, “every seat gets a powerful downward wash of air at the rate of one metre per
second. Airflow movement happens only from top to bottom and air is sucked out at the
bottom of the floor. This does not happen on any mode of surface transport. There is no
cross contamination through airflow,” Stanley said. Secondly, “air is fully recycled every
2 to 3 minutes. The air sucked in at 10,000 metre altitude is cold (at -50 degrees Celsius),
dry and uncontaminated. The inside air is at ambient temperature and is constantly and
fully recycled every 2-3 minutes,” he said. And finally, the air sucked in passes through
very power hepa filters that can keep even PM 2.5 particles out. “Coronavirus is a
relatively big in size. Hepa filters keep almost all spectrum of particles, almost 99.95% to
99.99% particles, out. This kind of filtration does not happen on any mode of transport
or even on ground in homes or offices. These three factors make air inside the cabin
extremely clean and safe,” Stanley said.
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26 CITI-NEWS LETTER
These factors coupled with the everyone practising heightened post-corona sanitation and
hygiene norms like mask use and disinfection and sanitising surfaces of common
touchpoints will ensure air travel remains safest mode of transport, the Airbus south Asia
chief says. “If I have to choose any form of travel for myself or my family, it will be air
travel. As we are on the cusp of restarting (schedule) flights, we should follow all
heightened post-pandemic precautions recommendations by regulators for passengers,
crew and airlines and air travel will be safe. Even when an aircraft is on ground, the heap
filters are working,” Stanley said.
Home
Agrarian Punjab scripts industrial success story in fight against Covid-19
(Source: Navjeevan Gopal, Indian Express, May 13, 2020)
Of the 41 manufacturers cleared for production of PPEs, 18 have orders of more than 25
lakh PPE coveralls worth Rs 256 crore from Hindustan Latex Limited.
The agrarian state of Punjab, often referred to as the ‘food bowl’ of India, has emerged as
a frontrunner in the nation’s fight against Covid-19, with 41 manufacturers of Personal
Protective Equipment (PPE) coveralls based in the state getting clearance from the South
India Textiles Research Association (SITRA).
Of the 41 manufacturers cleared for production of PPEs, 18 have orders of more than 25
lakh PPE coveralls worth Rs 256 crore from Hindustan Latex Limited. The orders are at
different stages. Some manufacturers have already delivered a major chunk of the orders,
others are in the process of manufacture, while the ones given orders recently are setting
up manufacturing lines to start production.
The state’s textiles industry, majorly based in Ludhiana, is in the league of big
manufacturers from Bangalore, Coimbatore, Tirupur, Mumbai, Surat, Noida and
Gurgaon. But it was not a cakewalk manufacturing a new product.
“Punjab is an inspiring story. The industry has done very well and I am sure it will
continue in a similar fashion in the future,” Additional Secretary in textiles ministry V K
Singh told The Indian Express.
Towards the end of March, the textiles ministry was perplexed to discover that there were
only two manufacturers, both Bangalore-based, which had come forward to offer PPE
coveralls.
“There were no other manufacturers. Majority samples from Punjab were failing tests. It
was a very frustrating experience. But the Punjab manufacturers kept on improving.
There were manufacturers whose samples got clearance in the third attempt since the
tests are very technical. But now Punjab alone manufactures a sizeable share of PPEs in
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27 CITI-NEWS LETTER
the country,” said Singh, who used to coordinate to take samples to the SITRA laboratory
in Coimbatore for testing.
“Stitching and taping is a very crucial factor in the tests. Punjab manufacturers who
improved fabric quality also went on to fulfil high quality stitching and taping
requirements…One may consider it a baby step but it is a first step of a very long journey
for the Punjab industry,” he added.
Punjab Additional Chief Secretary (Industries and Commerce) Vini Mahajan said, “I see
it as a very strong sign of the entrepreneural spirit of the people of Punjab. They were able
to understand very quickly what is the requirement of the times for the country and the
state. They pulled out all stops to understand how to deliver and did it successfully.”
Textiles industry upbeat
Ludhiana-based Shingora Textiles Limited’s Managing Director Amit Jain, “It is a seat
belt moment for personal protection. Like people wear seat belts in the car, PPEs will also
become an integral part.”
He further said, “There is going to be a worldwide need for PPEs. China was world leader.
India I can say is now at no. 2, only in a month’s time. The government has done a
tremendous job.”
Ludhiana-based Garg Acrylics General Manager Anish Bansal said that prior to
manufacturing PPEs, they were primarily into manufacturing T-shirts and sweaters. An
initial order of 50,000 pieces has already been delivered. “It took us 10 days to deliver
that order and we have another order of 1.75 lakh pieces,” he added.
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GLOBAL
UK says it plans to start virtual trade talks with Japan shortly
(Source: Reuters, May 13, 2020)
Britain plans to begin negotiating a free trade agreement with Japan via video conference
shortly, the government said, setting out its negotiating objectives for a deal it hopes will
save British exporters millions of pounds a year in tariffs.
After decades outsourcing its trade policy to the European Union, Britain is embarking
on negotiating free trade agreements with countries around the world, and earlier this
month launched formal negotiations with the United States.
“Japan is one of our largest trading partners and a new trade deal will help to increase
trade, boost investment and create more jobs following the economic challenges caused
by coronavirus,” trade minister Liz Truss said in a statement.
“Both sides are committed to an ambitious timeline to secure a deal that goes even further
than the existing agreement especially in digital and data.”
Britain said its negotiating objectives for the deal, to be published on Wednesday, include
providing new opportunities for UK businesses and investors, and increasing the
resilience of British supply chains by diversifying beyond the EU and China.
The government said it expected manufacturers of textiles and clothing, as well as
professional and financial services providers would be among the UK industries to benefit
most from lowering trade barriers with Japan. The agreement would be based on the
existing EU-Japan free trade deal, it said, and would also aim to secure provisions on
digital trade and copyright which could benefit the e-commerce sector and the creative
industries. Britain said it estimated a trade deal with Japan could increase trade flows
between the two countries by 15.2 billion pounds, and that lower or zero tariffs could save
UK exporters 33 million pounds a year.
Japan was Britain’s fourth biggest non-EU trading partner in 2018, with total trade
between the two countries of 29.1 billion pounds, according to government statistics.
Britain hopes ultimately to join the 11-member Comprehensive and Progressive
Agreement for Trans-Pacific Partnership (CPTPP), and sees trade talks with Japan as a
step towards that end.
(Reporting by Kylie MacLellan; editing by Stephen Addison)
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29 CITI-NEWS LETTER
Bangladesh, Uzbekistan to form JWG for trade, investment
(Source: The Financial Express, May 12, 2020)
Bangladesh and Uzbekistan have agreed to form Joint Working Group (JWG) to boost
bilateral trade and investment through removing different barriers.
Commerce Minister Tipu Munshi gave the information on Tuesday at a view exchange
meeting with Uzbekistan’s Deputy Prime Minister and Investment and Foreign Trade
Minister Sardor Umurzakov through a videoconference from the secretariat in the city,
reports BSS.
“Bangladesh is keen to increase trade and cooperation between the two countries.
However, there are some complications in trade. It is possible to resolve the complexities
by forming a joint working group comprising the experts from both the countries,” he
said.
Among others, Prime Minister’s Private Industry and Investment Adviser Salman Fazlur
Rahman and Textiles and Jute Minister Golam Dastagir Gazi also joined the
videoconference.
During the meeting, they discussed various issues to enhance the trade and economic
relations between the two countries.
Based on the discussion, they took decision to form a joint working group to increase trade
and economic relations between the two countries.
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Door opens for export of face masks
(Source: Nhan Dhan Online, May 12, 2020)
Hundreds of millions of made-in-Vietnam face masks have been exported abroad, showing
an upsurge in the operation and production capacity of Vietnamese garment and textile
sector at a time when the country’s economy is struggling to overcome the impacts of the
COVID-19 outbreak. However, there are still many things to do to facilitate the sustainable
export of face masks.
As a major garment and textile business with export revenue reaching hundreds of
millions of US dollars, the Garment 10 Corporation Joint Stock Company has also
suffered from the COVID-19 economic storm. The corporation has faced difficulties not
only in the interruption in the supply of raw clothing materials from China but also in
seeking demand for their products.
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After recognising the increasing demand for face masks amidst the epidemic outbreak,
the company found a way to transform the challenges into opportunities by switching to
cloth face masks.
The company’s director Than Duc Viet said that Garment 10 had received an export order
for 400 million medical face masks worth US$52 million, which is planned to be exported
this July. The company has also received orders for more than 20 million cloth masks
from US and German partners.
Face masks made by other Vietnamese garment and textile businesses have also achieved
a strong position in export markets. As of April 19, Vietnam has exported over 415 million
face masks.
Vietnamese businesses’ face mask production capacity is huge. The Ministry of Industry
and Trade has stated that domestic producers have a total production capacity of 40
million face masks per day, or about 1.2 billion a month. By working at full capacity, the
entire garment and textile sector can even produce 100 million face masks per day, or
about 3 billion a month.
As estimated by the Vietnam Textile and Apparel Association (VITAS), domestic garment
and textile businesses are able to produce around 150 million - 200 million face masks a
month, which can absolutely meet domestic demand for epidemic prevention and control
besides maintaining exports.
The Ministry of Industry and Trade has worked to help Vietnamese businesses connect
with foreign partners. Vietnamese trade offices abroad have also shared a helping hand
in seeking business partners to export these items to their host countries.
Recently, the Government promulgated Resolution No 60/NQ-CP on licences for export
of medical face masks, which regulates that medical face masks can be exported without
caps on export volume.
Deputy head of the Ministry of Industry and Trade's Export-Import Agency Tran Thanh
Hai said that the resolution has opened up the door for garment and textile businesses to
seize opportunity amidst this difficult period of time.
Attention needed to meet quality standards
However, Vietnamese businesses have faced certain difficulties in meeting mask quality
standards from the importing countries. Accordingly, to export masks to the EU and the
US, Vietnamese firms must obtain a CE marking and FDA certification, respectively,
which indicate that a product meets the appropriate safety and environmental protection
standards.
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31 CITI-NEWS LETTER
In the wake of the pandemic ravaging the globe, and a large demand for face masks, the
EU and US may allow the import of these products without CE marking and FDA
certification. However, when the epidemic slows down, they will be mandatory for
Vietnamese firms to get access into these markets, said Deputy Director Tran Thanh Hai.
Dinh Ngoc Long, an expert from the Vietnam Certification Centre (Quarcert), noted that
to obtain a CE marking Vietnamese firm must thoroughly understand all relevant EU-
wide requirements and make sure that their products meet all these essential
requirements.
For FDA certification, Tran Anh Tuan, an expert from Quarcert, noted that products must
undergo a review of safety and effectiveness by FDA experts and achieve agency approval
before they can be marketed. Businesses must prepare adequate documents for FDA to
perform a review anytime without prior notice.
Experts also noted that mask producers must be well-prepared right from the start of the
production process in order to raise their competitiveness and promote their exports in
the long term, particularly to demanding markets like the US and EU.
Vietnamese businesses will also face competitiveness issues when other countries with
success in developing their textile and garment sectors, including China, India and
Pakistan, have recovered after the epidemics.
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Gerber joins hands with PCIAW to increase PPE production
(Source: Fibre2Fashion, May 12, 2020)
In order to combat the shortage of PPE, the Professional Clothing Industry Association
Worldwide (PCIAW) has joined hands with Gerber Technology to make PPE more widely
available. With their PPE Task Force, Gerber Technology has already helped over 1,200
manufacturers across the globe successfully convert their manufacturing capabilities to
PPE production.
The Gerber PPE Task Force is helping their global network of manufacturers switch to
production of protective masks, gowns, face shields, and other PPE by providing free
resources such as production-ready patterns, sharing best practices, and connecting
manufacturers and suppliers through the PPE manufacturer matchmaking programme,
Gerber Technology said in a media statement.
Nobody should have to go without the proper protection and risk being infected by
COVID-19. Here at Gerber Technology, the health and safety of people all around the
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32 CITI-NEWS LETTER
world is a top priority. We are working tirelessly with our partners and customers to help
and rapidly increase the production of PPE to ensure nobody is without,” Richard Jessup,
sales director, EMEA of Gerber Technology said.
“We are absolutely thrilled to partner with Gerber Technology as their expertise in PPE is
unmatched. Their advanced knowledge, innovative solutions, and helpful resources are
going to help vastly increase the availability of PPE in the UK and all of Europe,” Yvette
Ashby, founder and CEO of PCIAW said.
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Kerry Logistics forms new joint venture in Sri Lanka
(Source: Fibre2Fashion, May 12, 2020)
Kerry Logistics Network Ltd has announced a new joint venture, Kerry Logistics Lanka
(Pvt) Ltd, formed with IAS Holdings (Pvt) Ltd in Sri Lanka to strengthen its international
freight forwarding (IFF) capabilities in South Asia. Kerry Logistics’ expansion to Sri
Lanka will enable it to tap into opportunities thereby offering a suite of services.
Kerry Lanka will be offering a suite of services consisting of air and ocean freight, customs
brokerage, inland trucking, multi-country consolidation, project cargo, warehousing and
value-added services such as pick/pack, purchase order management, quality control,
packaging and labelling, garment-on-hangers and entrepot services
Headquartered in Colombo, Sri Lanka, Kerry Lanka sits at the strategic crossroads of East
Asia, South and South East Asia, Africa and Europe. As part of Kerry Logistics’ South Asia
operation, Kerry Lanka operates an office in Colombo, as well as a bonded facility and
office for export purposes at the Bandaranaike International Airport.
In 2019, 46 per cent of the total export of Sri Lanka was derived from the textiles and
garments industry, amounting to $5.6 billion, according to the Central Bank of Sri Lanka’s
external sector performance review. There are more than 300 apparel manufacturers in
Sri Lanka, which are well connected to the super brands in Europe and the US.
“Located in Sri Lanka, the intersection of freight routes in South Asia, Kerry Lanka will
become a significant hub for Kerry Logistics and give a strong boost to our global
connectivity. Plans are also in place to aggressively focus on the upstream of the supply
chain to support the fashion industry vertical. The forming of the joint venture also marks
the deepening of our presence in the South Asian subcontinent, rounding out our full suite
of services in the region,” said Patrick Cheah, executive director – global air of Kerry
Logistics.
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In addition to Kerry Indev Logistics in India, Kerry Logistics has also established a
subsidiary in Pakistan in 2018 to extend its footprint in the Indian subcontinent.
IAS Holdings is an investment company in Sri Lanka with diversified businesses
including airline GSA business and international transportation. One of its shareholders
has over 25 years of experience in the logistics industry and supply chains.
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