CITI-NEWS LETTER€¦ · ‘Atmanirbhar Rojgar Abhiyan’: PM Modi to launch mega jobs event in UP...

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‘Atmanirbhar Rojgar Abhiyan’: PM Modi to launch

mega jobs event in UP

Curbs on Expenditure to Continue in Q2: FinMin

DGFT to launch new digital platform for import-export

code related services on July 13

CBIC waives off late fee on late GST filing

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2 CITI-NEWS LETTER

-------------------------------------------------------------------------------------- ‘Atmanirbhar Rojgar Abhiyan’: PM Modi to launch mega jobs event in UP


DGFT to launch new digital platform for import-export code related services on July 13

India plans list of substitute nations for critical imports

Exporters raising concern over consignment hold-up by Hong Kong, Chinese customs: FIEO


India's exports likely to dip 10-12 per cent in 2020-21: FIEO

India plans to impose strict rules and tariffs on Chinese imports

India prepares for a change in Electricity sector through Proposed Electricity (Amendment) Bill 2020

Industries need not wait for statutory clearances for 3 yrs, can start work in Karnataka

Industries need not wait for statutory clearances for 3 yrs, can start work in Karnataka

MSMEs may need massive restructuring post moratorium, says industry

India is expected to grow at 1.3% in the current fiscal: NCAER Report

Indian Railways produce 1.91 lakh PPE gowns, 66.4 kl sanitizer, 7.33 lakh masks till 24/06/2020

Supply outstrips demand, PPE prices crash

IOCL sets up centre for development of polymer industry in Odisha

Boycotting Chinese goods may not be feasible: FIEO

Covid crisis: India will not be ready for growth unless it addresses MSMEs problems

New multilateralism will balance linkages between trade & development: CUTS International

View: India’s aspirations of becoming a global supply chain player need more work

Welspun India launches anti-viral home textile products

Siyaram''s launches anti-corona fabric

In Bhagalpur silk hub, looms tell a story: ‘95% collapse’

----------------------------------------------------------------------------- Razak Announces To Release Rs 6.2 B For Textiles Sector Under DLTL

S Korea-Cambodia FTA talks to start in July

Economic effects of COVID-19 on Japan: World’s 3rd largest economy

UAE submits 70 chemical, textiles standards to GSO

Second-hand clothing may be harder to find after coronavirus put textile recycling ‘at risk’

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NATIONAL

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GLOBAL

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3 CITI-NEWS LETTER

NATIONAL:

‘Atmanirbhar Rojgar Abhiyan’: PM Modi to launch mega jobs event in UP

(Source: Financial Express, June 26, 2020)

The scheme is focused on providing jobs, promoting local entrepreneurship and creating

partnerships with industrial associations and other organisations to create employment

opportunities.

Prime Minister Narendra Modi will launch the Uttar Pradesh government’s unique

initiative, ‘Atmanirbhar UP Rojgar Abhiyan’ on Friday. The initiative aims at providing

employment to one crore migrant workers and others who lost their jobs during the

Covid-19 pandemic and returned home. The Prime Minister will launch the scheme

virtually through video conference in the presence of Uttar Pradesh chief minister Yogi

Adityanath.

The scheme is focused on providing jobs, promoting local entrepreneurship and creating

partnerships with industrial associations and other organisations to create employment

opportunities. It is in addition to the Centre’s schemes being run under the Atmanirbhar

Bharat programme to stimulate various sectors.

By doing so, Uttar Pradesh will be setting a new record of sorts, to become the first state

in the country to give employment to one crore people in one go.

According to senior officials, more than 30 lakh migrant workers have returned to Uttar

Pradesh during the lockdown imposed after the outbreak of the coronavirus pandemic.

The state government has already completed the skill mapping of these workers.

While the Mahatma Gandhi National Rural Employment Guarantee Scheme

(MGNREGS) will be a major contributor to employment, the government has also tied up

with many organisations and industry bodies to provide these labourers with jobs.

“We have roped in all major departments to provide work in addition to jobs being

provided under the MGNREGS. The micro small and medium enterprises (MSME)

department, public works department, horticulture department and the agencies

constructing the expressways will also contribute in a big way in the creation of more

jobs,” chief secretary RK Tiwari said, adding that real estate body National Real Estate

Development Council (NAREDCO) and the government has already signed MoUs with

industry bodies such as CII, FICCI and IIA regarding this.

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https://www.financialexpress.com/tag/narendra-modi/

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4 CITI-NEWS LETTER


(Source: Economic Times, June 26, 2020)

The finance ministry has disallowed the automatic carry-forward of unspent money by

various ministries and departments over the next month or quarter as part of the

government's spending management aimed at curbing unnecessary expenditure.

Further, the ministry has said the April 8 order restricting overall quarterly expenditure

of certain ministries and departments to 1520% of their budgeted amounts in the first

quarter of this financial year, will continue through the second quarter.

“Considering the need to effectively manage the cash flows of the Government, it has been

decided to retain and continue with the same

Salaries, pension payments should be within limitNo bunching expenditures to avoid

parking of funds expenditure management measures in Q2, as was applicable for Q1 of

FY 2020-21,” said a directive issued by the ministry Thursday.

The government has unveiled a series of measures to curtail unnecessary spending as it

deals with lower revenues and enhanced expenditure in view of Covid-19.

Earlier this month, the finance ministry had barred all new Higher than expected shortfall

in tax collections in Q1 Govt should reallocate capex instead of cutting expenditure

Further borrowing likely with more stimulus measures to come scheme proposals for this

fiscal apart from those under the ambit of the stimulus package. Prior to that, the

government froze already announced hikes in the dearness allowance till March 2021.

While the extended lockdown will have a significant adverse impact on both direct and

indirect tax collections the government's expenditure is only increasing as it focuses

Increase borrowing and front loading to support schemes

Expenditure curbs could deepen FY21 GDP contraction on propping up the economy.

“There must have been a significant downside in the revenue mobilisation, especially on

indirect taxes side. Since that is a regular inflow, any shortfall there will have to be

compensated by a squeeze on expenditure,” said NR Bhanumurthy, vice chancellor,

Bengaluru Dr. B. R. Ambedkar School of Economics.

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5 CITI-NEWS LETTER

DGFT to launch new digital platform for import-export code related services

on July 13

(Source: Kirtika Suneja, Economic Times, June 25, 2020)

The Directorate General of Foreign Trade (DGFT) will launch a new digital platform on

July 13 the first phase of which will cater to the services related to the issuance of Import

Export Code (IEC), modification, amendment processes along with a Chatbot (a virtual

assistant). The IEC is mandatory for companies and businesses to start a business that

deals with import and export. The platform is aimed to help traders electronically file

their application related to IEC, various exports schemes such as advance authorisation

and Export Promotion Capital Goods (EPCG), monitoring the status of the application

and raising queries among other services related to the Foreign Trade policy.

“Other online modules relating to Advance Authorisation, EPCG, and Exports Obligation

Discharge which are part of next phase will be rolled out subsequently after the first phase

stabilizes,” DGFT said in a trade notice.

The users will be able to monitor the status of their applications and the pending

obligations thereof. These numerous features should significantly benefit the trade

community.

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India plans list of substitute nations for critical imports

(Source: Anandita Singh Mankotia & Dipanjan Roy Chaudhury, Economic Times, June 25, 2020)

The government is working on a list of alternative countries that could be suppliers of

critical components that cannot currently be manufactured domestically, officials said.

“DPIIT (Department for Promotion of Industry and Internal Trade) is working with the

industry to line up a list of low-quality imports from China. The next step is to substitute

them, internally or externally,” a government official told ET. “The engagement looks to

firm up tariff and non-tariff measures to curb imports of raw, intermediary and finished

products from China.” Once DPIIT is ready with the list, the government will reach out to

countries and work out ways to incentivise supply to the Indian market, even as it tries to

encourage domestic manufacturing of the goods, official.

The move is a part of a large exercise undertaken by the government to relook the Free

Trade Agreements to ensure cheap Chinese products do not flood the Indian market,

establish stringent quality controls that would disqualify a host of Chinese imports, and

incentivise producers to relocate production to India — boosting manufacturing and

exports under likes of the production-linked incentive scheme.

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6 CITI-NEWS LETTER

“The government is cognisant of the fact that dependence on China cannot go away

overnight…There is an overall focus on a calibrated effort to discourage imports from that

country, by sourcing them from other destinations, even as India tries to ramp up its

manufacturing abilities,” another official said. The official added that Southeast Asian

countries, along with Japan and South Korea, have emerged as possible destinations, but

the comparative price factor vis-à-vis India remains a concern.

“For non-critical sectors like textiles,

electronics, we should look for new sources

in Southeast Asia as there is not much

difference in respect to labour cost

arbitrage. At the same time, we should take

more and more sector-specific measures to

make our small and medium enterprises

produce them in a competitive manner,”

said Bipul Chatterjee, executive director,

CUTS International, a global public policy

think-tank promoting consumer welfare

through trade, regulations and governance.

Home

Exporters raising concern over consignment hold-up by Hong Kong, Chinese

customs: FIEO


Some exporters have raised concerns over consignments being held back by Hong Kong

and Chinese customs in response to a similar action allegedly being taken by Indian

authorities at Chennai port, FIEO said on Thursday. The matter assumes significance in

the wake of border tensions between India and China at Galwan Valley in eastern Ladakh.

"We have been given to understand that customs is physically examining all imports from

China which is delaying clearance, adding to the cost of imports," Federation of Indian

Export Organisations (FIEO) President S K Saraf said in a letter to Commerce Secretary

Anup Wadhawan.

He said that some exporters have informed that, in response to such action, Hong Kong

and Chinese customs are also holding back export consignments from India. Saraf urged

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7 CITI-NEWS LETTER

the Commerce Ministry to take up the matter with Central Board of Indirect Taxes and

Customs (CBIC) to see whether any official communication has been sent to Indian

customs regarding scrutiny of Chinese consignments here. "Kindly take it up with CBIC

and, if no such instructions have been given, a denial may be issued by CBIC so that the

matter may be communicated to our importers in China and Hong Kong to suitably take

up with their customs explaining our stand," he added. There are reports that customs

authorities at Chennai port are conducting extra scrutiny of Chinese consignments.

China accounts for about 14 per cent of India's imports and is a major supplier for sectors

like mobiles, telecom, power, plastic toys and critical pharma ingredients. During April

2019-February 2020, India imported goods worth USD 62.4 billion, while exports to the

neighbouring country stood at USD 15.5 billion in the same period. India has time and

again raised concerns over widening trade deficit with China which stood at about USD

47 billion during AprilFebruary 2019-20.

Home


(Source: Gulveen, Economic Times, June 25, 2020)

The Central Board of Indirect Taxes and Customs (CBIC) has notified waiver of late free,

capping of late fee at Rs 500 in some cases, interest payable on late payments and

extension of due dates for businesses to file goods and service tax (GST) returns for the

Covid-19 impacted period, till October. The decisions were taken by the GST Council on

June 12. Taxpayers who do not have any tax liability but were yet to file returns for the

period from July 2017 to January 2020 - prior to the Covid period – no late fee will be

charged, the notification issued Wednesday said.

For taxpayers having liability but not having filed their returns, they can do so with a late

fee of maximum Rs 500, if returns are submitted by July 1, 2020. Small taxpayers whose

aggregate turnover is up to Rs 5 crore will be provided a waiver of late fees and interest if

they file the form GSTR-3B for the supplies affected in months of May, June, and July

2020, by September 30, 2020, the notification added. During Covid period of February,

March and April 2020, interest rate on late return filings by small taxpayers with turnover

up to Rs 5 crore, will be reduced to 9% from 18%, if returns of inward supplies are filed

till September 30.

Taxpayers having aggregate turnover of up to Rs 5 crore in the previous financial year,

whose principal place of business is in the states of Chhattisgarh, Madhya Pradesh,

Gujarat, Maharashtra, Karnataka, Goa, Kerala, Tamil Nadu, Telangana, Andhra Pradesh,

the Union territories of Daman and Diu and Dadra and Nagar Haveli, Puducherry,

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8 CITI-NEWS LETTER

Andaman, and the Nicobar Islands or Lakshadweep, the returns for August has to be filed

by October 1, 2020. For taxpayers with turnover more than Rs 5 crore, in Himachal

Pradesh, Punjab, Uttarakhand, Haryana, Rajasthan, Uttar Pradesh, Bihar, Sikkim,

Arunachal Pradesh, Nagaland, Manipur, Mizoram, Tripura, Meghalaya, Assam, West

Bengal, Jharkhand or Odisha, the Union territories of Jammu and Kashmir, Ladakh,

Chandigarh or Delhi, the return for August has to be filed by October 3, 2020.

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India's exports likely to dip 10-12 per cent in 2020-21: FIEO


The country's exports are likely to witness a 10-12 per cent year-on-year decline during

the ongoing fiscal, if the current trend persists, due to the contraction in global demand

on account of the COVID-19 pandemic, FIEO said on Thursday. Federation of Indian

Export Organisations (FIEO) President S K Saraf said although exporters are receiving a

lot of enquiries from countries where anti-China sentiments are high, demand in

employment intensive sectors like gems and jewellery, apparels, footwear, handicrafts,

and carpets is still a challenge.

"Initially, looking into the lockdown challenges and projected decline in global trade, we

expected 20 per cent decline in our exports. However, two days back, the WTO (World

Trade Organisation) trade estimates for the second quarter puts the contraction only at

13 per cent," Saraf told reporters during a video conference briefing. "...We do not expect

much improvement in demand. Therefore, we expect around 10 per cent-12 per cent

decline in India's exports in the current fiscal," he added. However, in case of a second

wave of the pandemic, the contraction in exports may reach 20 per cent, Saraf said. India's

exports contracted by a record 60 per cent in April and 36.47 per cent in May.

Saraf also suggested the government to focus on concluding free trade agreements with

countries like the European Union, Australia and New Zealand. "The government should

also look at ways to re-start talks on mega trade deal RCEP (Regional Comprehensive

Partnership Agreement). It is a good time to involve in RCEP with fully protecting the

national interests," Saraf said.

India had decided not to join RCEP as negotiations failed to address several of the

country's concerns. To push exports further, he suggested the export community to focus

on countries which are providing demand stimulus like the US and the UK, and explore

opportunities in countries having anti-China sentiments like the EU, Japan, South Korea,

Australia, New Zealand, and Canada. "We can definitely benefit from anti-China

sentiments. We are getting good inquiries from countries like Japan. While an increase in

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9 CITI-NEWS LETTER

tariff can be one way to achieve import substitution, the more effective strategy would be

to provide an ecosystem which addresses the cost disability of Indian manufacturing

leading to such imports," he said. On India's import dependence on China, Saraf said it

can be reduced with short to long-term plans. "India has been able to reduce its import

dependence in the mobile sector, and the same can be replicated in other sectors of

electronics, telecommunication and formulation of specialty in chemicals etc. We need to

encourage Indian investments as well as FDI through fiscal incentive in such sectors," he

added. FIEO has suggested the government to increase incentive rates under the

Merchandise Exports from India Scheme (MEIS) till the time Remission of Duties or

Taxes on Export Product (RoTDEP) scheme kicks in. FIEO Director General Ajay Sahai

said the export body has asked the commerce ministry to fix RoTDEP rates at four-digit

HSN code, wherein only 1,100 items are there as against eight-digit code, under which

14,000 items are there. In trade parlance, every product is categorised under an HSN code

(Harmonised System of Nomenclature). It helps in systematic classification of goods

across the globe. When asked whether India can ban imports from China under the global

trade rules, he said the government can do so to protect national interest. India's exports

in 2019-20 dipped 4.78 per cent to USD 314.31 billion.

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India plans to impose strict rules and tariffs on Chinese imports

(Source: Shruti Srivastava, Bloomberg, June 25, 2020)

India plans to impose stringent quality control measures and higher tariffs on imports

from China, people with the knowledge of the matter said, as a military standoff between

the neighbors threaten economic ties. The state-run Bureau of Indian Standards is

finalizing tougher norms for at least 370 products to ensure items that can be locally

produced aren’t imported, the people said, asking not to be identified citing rules. The

products include chemicals, steel, electronics, heavy machinery, furniture, paper,

industrial machinery, rubber articles, glass, metal articles, pharma, fertilizer and plastic

toys.

Discussions are also on to raise import duty on products including furniture, compressors

for air conditioners and auto components, they said. The proposal is being evaluated by

the Finance Ministry amid the government’s push for local manufacturing. The Trade

Ministry is separately evaluating non-tariff measures to check Chinese imports to avoid

falling foul of World Trade Organization rules. Such measures would include more

inspections, product testing and enhnanced quality certification requirement, the people

said. A spokesperson for the Trade Ministry refused to comment, while a Finance Ministry

spokesman didn’t respond to a call made on his mobile during office hours. China is

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India’s biggest source of imports, with purchases including electronic goods, industrial

machinery and organic chemicals running into almost $70 billion last year. Beijing enjoys

a trade surplus of about $50 billion with New Delhi.

The need for import substitution started after disruptions to raw material supplies from

China in the wake of the coronavirus pandemic. A deadly clash between soldiers from

both countries along a contested Himalayan border this month added to calls for that

process to be expedited.

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India prepares for a change in Electricity sector through Proposed Electricity

(Amendment) Bill 2020

(Source: Press Information Bureau, June 25, 2020)

Shri R. K Singh, the Minister of State (i/c) for Power & MNRE , today, held a Press Meet

through Video Conferencing and underlined the importance of proposed reforms in the

power sector, dispelling doubts and misinformation. He stated that the reforms are steps

in the direction of making the sector consumer centric as we are all here to serve them.

Shri Singh said, “ We are not taking away any powers of States in appointment of

members and chairpersons of State Electricity Regulatory Commissions (SERCs), and the

proposed reforms are aimed at promoting more transparency."

While giving clarity on electricity tariff fixation, the Union Power Minister stated that the

powers of tariff fixation remains with SERCs. He emphasised that proposed power

reforms are aimed at introducing transparency and accountability to protect the interest

of consumers and ensuring healthy growth of the power sector. He also mentioned that

there is no restrictions on States for providing subsidy as States can give as much subsidy

as they want but they must pay it upfront through Direct Benefit Transfer(DBT) so that

Discoms remain healthy and are able to maintain and improve distribution infrastructure

like transformers and distribution lines, pay for power purchased and are able to provide

quality electricity to the people.

It may be stated that Electricity is one of the most critical components of infrastructure

which is essential for sustained growth of the economy of the country. While we have

made significant improvements in the electricity generation and transmission segments,

the distribution segment, having achieved 100% village electrification and near-universal

access to electricity, is beset with problems of operational inefficiencies, liquidity, and

financial solvency. In this regard Ministry of Power had prepared a draft proposal for

Amendments in Electricity Act 2003 in the form of draft Electricity (Amendment) Bill

2020 with the following broad objectives –

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11 CITI-NEWS LETTER

Ensure consumer centricity

• Promote Ease of Doing Business

• Enhance sustainability of the power sector

• Promote green power

However, some canards and misconceptions are being spread regarding some of the

proposed amendments to the Electricity Act. It is important to place the correct position

pertaining to them.

Misconception 1: Transfer the power of appointment to SERCs from State to

Central Government

There is no proposal to take away the power of appointment of Members/Chairpersons

of State Electricity Regulatory Commissions from the State Governments. As per the draft

circulated the appointments of Members/Chairpersons of the State Electricity Regulatory

Commissions will continue to be made by the State Governments. The Selection

Committee currently has equal number of members from the Central and State

Government – one member from Central Government and one from State Government.

The proposed Selection Committee in the draft Bill also has equal number of members

from the Central and State Governments as earlier. The only difference is that instead of

the of the Selection Committee being presided over by a retired Judge of the High Court,

it is proposed that the committee be headed by a sitting Judge of the Supreme

Court. Instead of multiplicity of Selection Committees, there be one Selection Committee

for drawing up of panels for the vacancies in the Central Electricity Regulatory

Commission and State Electricity Regulatory Commissions. The appointments will

continue to be made by Central Government for the Central Electricity Regulatory

Commission and by the State Governments for the State Electricity Regulatory

Commissions as before. The reason for this proposed amendment was that currently

every State had to constitute a separate Selection Committee for each fresh vacancy and

this took time. In some cases the time taken for appointment was up to 2 years leading

to disruption of work of the Regulatory Commission. Regulatory Commissions are the

fulcrum around which the Power sector revolves. Delay were deleterious for the various

stake holders such as consumers, Discoms, and generators etc. However, based on the

suggestions received, the Central Government is now considering to continue with the

existing separate Selection Committees for each state – but make them Standing Selection

Committees so that there is no need for constituting them afresh every time a vacancy

occurs. The Selection Committee will continue to have equal number of members from

the State and Central Governments, as earlier with the only difference that it will now

proposed to be presided by the Chief Justice of the High Court of the state.

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Misconception 2: DBT is against the interests of consumers

Another misconception is that the proposed provisions for introducing the system of

Direct Benefit Transfer (DBT) of subsidies is inimical to the interest of the consumers

especially the farmers. It has been argued that if the State Government is not able to pay

the subsidies on time, the electricity supply to the consumers may get disconnected. This

is baseless. As per Section 65, of the Electricity Act, 2003, the State Government is

required to pay the amount of subsidy in advance to the distribution companies. The

subsidy is now being proposed to be given into the account of the consumers maintained

by the Distribution Companies through DBT. It is being provided in the new Tariff Policy

that the electricity supply shall not be discontinued even if the State Government is unable

to pay the subsidy in time or even if the State Government fails to pay the subsidy for 3 to

4 months. Therefore, the consumer's interest will be duly protected. It is, of course,

expected that the State Government pay the subsidy in advance to the

DISCOM/consumers as provided for in the law. It may be noted that the Direct Benefit

Transfer will be beneficial for both the State Governments and as well as Distribution

Companies. It will be beneficial for the State Government because it will ensure that the

subsidy reaches the people who are actually entitled and the State Government gets clear

accounts of the amount given as subsidy. It will benefit the distribution company by

making sure that the subsidies due are received as per the number of beneficiaries. It may

be noted that Government of India have implemented Direct Benefit Transfer for 419

Schemes pertaining to 56 Ministries with cumulative savings of Rs. 1.70 lac crore.

Misconception 3: Power to set retail power tariff is being transferred from

State to Central Government

Another misconception is that currently the State Governments fix tariff for retail supply

of electricity to consumers and this is proposed to be taken over by the Central

Government. This is again absolutely baseless. Presently, the tariff is determined by the

State Electricity Regulatory Commission and no change has been proposed in the present

arrangement.

The other major amendments proposed in the Electricity Act are as follows.

Sustainability

(i) Cost reflective Tariff: To eliminate the tendency of some Commissions to provide

for regulatory assets, it is being provided that the Commissions shall determine tariffs

that are reflective of cost so as to enable Discoms to recover their costs. It is estimated

that the total regulatory asset, ie revenue due to a Discom but not collected because

appropriate tariff increase was not given, in the country is about Rs. 1.4 lakh crore.

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13 CITI-NEWS LETTER

(ii) Establishment of adequate Payment Security Mechanism for scheduling of electricity

- It is proposed to empower Load Dispatch Centres to oversee the establishment of

adequate payment security mechanism before dispatch of electricity, as per contracts.

Late payment of dues of generating and transmission companies have reached

unsustainable levels. As of 31.03.2019, the payables to the Gencos and Transcos were Rs.

2.26 lakh crore. This not only impairs the finances of the Gencos and Transcos making it

difficult for them to pay for fuel and other expenses but also has a debilitating impact on

the Banks. If liquidity is not maintained, the power sector can collapse. Thus, it is in our

collective interest to put in place systems for ensuring timely payments. That is why it is

being provided that electricity shall not be scheduled or despatched unless security of

payment has been established.

Ease of Doing Business

(iii) Cross Subsidy: At present, the Act provides for the State Commissions to

progressively reduce cross subsidies. Despite the requirement of the Tariff Policy to

reduce cross-subsidies to within 20% of average cost of supply, they are in excess of 50%

in some States making industries uncompetitive. The Bill provides for the SERCs to

reduce cross subsidies as per the provisions of the Tariff Policy. The Tariff Policy is

prepared after consultation with the all stakeholders and the views of the State

Governments are taken into consideration before finalising its provisions. It is

noteworthy that there is no proposal to eliminate cross subsidy.

(iv) Establishment of Electricity Contract Enforcement Authority: CERC and SERCs

do not have powers to executetheir orders as decree of a civil court. An Authority headed

by a retired Judge of the High Court is proposed to be set with such powers including but

not limited to powers of attachment and sale of property, arrest and detention in prison

and appointment of a receiver to enforce performance of contracts related to purchase or

sale or transmission of power between a generating company, distribution licensee or

transmission licensee. This will enhance sanctity of contracts and spur much needed

investment in the power sector.

Renewable and Hydro Energy

(v) National Renewable Energy Policy: For environmental reasons, it is in our long

term interest to promote green power. India is a signatory to the Paris Climate

Agreement.It is therefore proposed to have a separate policy for the development and

promotion of generation of electricity from renewable sources of energy.

(vi) It is also proposed that a minimum percentage of purchase of electricity from hydro

sources of energy is to be specified by the Commissions.

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14 CITI-NEWS LETTER

(vii) Penalties: It is being further proposed to levy penalties for non-fulfilment of

obligation to buy electricity from renewable and/or hydro sources of energy.

Miscellaneous

(viii) Strengthening of the Appellate Tribunal (APTEL): It is proposed to increase the

strength of APTEL its strength of Members, apart from the Chairperson, to at least seven

to facilitate quick disposal of cases. It may be noted that there are a large number of cases

pending in APTEL at present. To be able to effectively enforce its orders, it is also

proposed to give it the powers of High Court under the provisions of the Contempt of

Courts Act.

(ix) Penalties: In order to ensure compliance of the provisions of the Electricity Act

and orders of the Commission, section 142 and section 146 of the Electricity Act are

proposed to be amended to provide for higher penalties.

(x) Cross border trade in Electricity: Provisions have been added to facilitate and

develop trade in electricity with other countries.

(xi) Distribution sub-licensees: To improve quality of supply, an option is proposed to

be provided to Discoms to authorise another person as a sub-license to supply electricity

in any particular part of its area, with the permission of the State Electricity Regulatory

Commission.

It may be noted that provisions relating to Distribution Franchisee already exist in the Act

and are being successfully used by Distribution Companies to improve performance and

enhance efficiencies. These are enabling provisions for use by DISCOMs / States which

want to give out some areas to Franchisees / Sub-licensees. It has been ensured that

Distribution Sub Licensee remains under regulatory control and jurisdiction to protect

interest of consumers.

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Industries need not wait for statutory clearances for 3 yrs, can start work in

Karnataka


The Karnataka cabinet on Thursday gave its approval for amending the Karnataka

Industries (Facilitation) Act, 2002 aimed at allowing industries to commence work

without having to wait for any statutory clearances for the first three years. The

government expects the proposed amendment to boost investment across sectors and to

aid the ease of doing business in the state. The objective of the amendment is to simplify

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15 CITI-NEWS LETTER

regulations and reduce procedural requirements and create a conducive investment

environment, it said.

"It is a historic decision to bring in a change in the industrial system, because this is in

line with Prime Minister Narendra Modi and the state government's vision of ease of

doing business," state Industries Minister Jagadish Shettar told reporters after the

cabinet meeting. He said, with the amendment, any industrialist once obtaining clearance

from the land audit committee, after due approval for a project from the State High Level

Clearance Committee or district committees, can begin civil construction work or

installation of machinery at the land identified. "The industry will have three years to get

all approvals in place like- NOC, conversion, building plan- but need not wait to start work

for setting up industries," he added.

Under the amended Act, an industry would not need any statutory permissions for the

first three years, or whichever is earlier to set up operations in the state, officials said.

These permissions include approvals from under multiple state laws, including trade

licence and building-plan approval, measures that would save a lot of time and cost for

industries. Karnataka claims to be the the first state to amend its Industries (Facilitation)

Act for small, medium and large- scale industries. "In the entire country only two states-

Gujarat and Rajasthan have such measures in place to facilitate the industries and they

have it only for small scale industries, but in Karnataka it will be applicable for large,

medium and small scale industries," Shettar said. The government will be bringing in an

ordinance introducing amendments to the Act. "They (the ones starting the industry) are

bound to get required clearances from gram panchayat or revenue department or

pollution control board within 3 years or before the product comes out of the industry

after manufacturing," Law and Parliamentary Affairs Minister J C Madhuswamy said.

Noting that this has been a long-pending demand of the investors and will usher in

investments to the state in coming days, an official release said, in the past, numerous

procedures and clearances have resulted in delay of setting up industries and escalated

the project cost for the investors. In order to kick-start the economic activity post-COVID-

19, the Karnataka government in the last few weeks has stressed on 'ease of doing

business', it said adding that the state has also simplified land and labour laws to promote

Karnataka as an investment destination. Shettar also said the government has decided to

give 100 per cent stamp duty exemption for agreements, sale deeds and other

requirements for production of electric vehicles (EV) as a followup to the Karnataka

Electric Vehicle and Energy Storage Policy 2017.

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16 CITI-NEWS LETTER

India-China standoff a wake-up call for industry to become more

competitive: CII


The India-China standoff in Galwan Valley is a 'wake-up call' for the Indian companies to

introspect and take actions to become more competitive globally, top industry body CII

said on Thursday. The Indian and Chinese armies are locked in a bitter standoff in

multiple locations in eastern Ladakh for the last six weeks, and the tension escalated

manifold after 20 Indian soldiers were killed in a violent clash in Galwan Valley on June

15.

On this issue, the industry stands by the government as it ensures sovereignty and

territorial integrity of India, CII said in a statement. "Even while trying to keep the

borders of the country safe, the government is also battling the pandemic within. These

are challenging times indeed. However, in every challenge there is also an opportunity,

and as a nation we should look at that side of the coin also," the Confederation of Indian

Industry (CII) said. It said this is the right time to take some strategic and tactical

decisions to ensure that India becomes economically more self-reliant, more competitive

and more globally engaged.

"The world sees India in a very positive light and every effort should be made to ensure

that industry in India secures a larger share of international trade through greater

integration into global value chains. CII has set a target of 5 per cent and 7 per cent shares

respectively of international merchandise and services trade by 2025," it said.

CII observed this was also time for the Indian industry to introspect and look at actions

that are required to be taken to become more competitive. "At every company level, we

must invest in learning and in building technical capability to be internationally

competitive," CII said. With central and state governments working in tandem for the best

possible investment environment, India can emerge as a hub of high value addition and

source for all countries. "The current situation is a wake-up call and as CII, we are

committed to respond with full determination," it said.

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MSMEs may need massive restructuring post moratorium, says industry

(Source: Namrata Acharya, Business Standard, June 26, 2020)

Most small businesses have started opening up with Unlock 1.0 but continue to remain

under stress due to lack of demand

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17 CITI-NEWS LETTER

Micro, small, and medium enterprises (MSMEs) might need large-scale restructuring in

August once the moratorium on loan repayment is lifted, people in the industry have said.

Most small businesses have started opening up with Unlock 1.0 but they continue to

remain under stress due to lack of demand.

In March, the Reserve Bank of India (RBI) had launched three-month moratorium on

loans, which was extended by another three months. Customers can now avail of

moratorium till August, albeit at a higher cost on account of accrued interests.

“About 40-50 per cent of borrowers are availing of the moratorium and the stress is likely

to continue. Across the banking sector, small businesses have been seriously impacted

and banks might have to make high provisions for them if restructuring is not done. This

will seriously impact balance sheets of all banks,” said Samit Ghosh, founder of Ujjivan

Financial Services, adding that MSMEs might need further restructuring after the

moratorium period is over.

S Harisankar, managing director and chief executive officer of Punjab & Sind

Bank, said they were adopting a wait and watch approach. “If cash flow

improves, MSMEs will be self-sustainable. If it doesn’t, we will have to be open

for further restructuring and forbearance,” he said.

Small industries have proposed to extend the moratorium till March 31, 2021.

“For most MSMEs, the supply chain is largely disrupted, there is an acute

labour shortage, and the export market is very weak. Most importantly, there is not much

demand in the market,” said Chandrakant Salunkhe, founder and president of SME

Chamber of India and SME Importers Association of India.

According to estimates by Small Industries Development Bank of India (Sidbi), recoveries

have been around 40-65 per cent in June for most non-banking financial companies,

including microfinance operators.

Microfinance lenders that lend to small businesses have been witnessing better recoveries

as their lending has been mostly concentrated in rural areas. Most of the loans sanctioned

by Sidbi have been for emergency purposes, such as paying staff salaries, according to

sources. Sidbi had received Rs 15,000 crore from the RBI to provide financial help

to MSMEs.

“Although 75 per cent of our customers are in rural areas, if we look at pure urban

customers, we find small businesses have been very badly affected. It is quite possible that

they might need some restructuring once the moratorium is lifted,” said H P Singh,

chairman and managing director, Satin Creditcare Network.

https://www.business-standard.com/topic/reserve-bank-of-india

https://www.business-standard.com/topic/msmes



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18 CITI-NEWS LETTER

In rural areas, income from harvesting season, along with the essential nature of rural

occupations, helped rural borrowers to be more resilient to the economic slowdown due

to Covid.

Recently, Finance Minister Nirmala Sitharaman had said that banks had sanctioned

working capital loans of Rs 75,426 crore under the Rs 3-trillion Emergency Credit Line

Guarantee Scheme for MSMEs. Of the sanctioned amount, Rs 32,895 crore has been

disbursed. Under the scheme, the government offers full guarantee on up to 20 per cent

additional and collateral-free working capital loans.

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India is expected to grow at 1.3% in the current fiscal: NCAER Report

(Source: Gaurav Noronha, Economic Times, June 25, 2020)

India is expected to grow at 1.3% in the current fiscal in the absence of supply constraints

dampening stimulus measures, said a report released by the National Council of Applied

Economic Research (NCAER) on Thursday. According to the NCAER’s Quarterly Review

of the Economy (QRE), the first quarter is likely to have witnessed a 26% contraction. The

estimate was based on the detailed sectoral analysis since the lockdown has restricted

data availability.

Taking a more pessimistic view, Pronab Sen, former chief statistician of India and

Shankar Acharya, former chief economic adviser, both agreed that FY21 GDP would be

closer to a 12.5% contraction. Sen and Shankar were part of a panel discussion on the

release of the QRE. Contrary to the view that the fiscal impact of Covid-19 related

measures has been conservative, the report found the total fiscal stimulus at 11.7% of gross

domestic product (GDP). This included a 6.3% combined budgeted deficit along with a

2.1% of additional post- budget central borrowing to offset the expected revenue shortfall,

coupled with the 1.3% additional fiscal spending under the Atmanirbhar Bharat package

and the conditional 2% incremental state borrowing.

Acharya felt the combined fiscal stimulus of the Centre and states could even be too much,

implying a situation where demand would grow due to the stimulus while supply was

constrained resulting in higher inflation levels while growth remained depressed.

The liquidity infusion by the Reserve Bank of India of another 8% of GDP should result

in a very significant recovery of aggregate demand, the report said. The report estimated

the total borrowing programme of the general government at Rs 17-21 lakh crore

considering the Centre’s Rs 12 lakh crore requirement along with the increased borrowing

limits for the states up to 4.8% of GDP. Managing borrowings on such a scale would be a

significant policy challenge, said Sudipto Mundle, member of the 14th finance

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19 CITI-NEWS LETTER

commission and co-author of the QRE. He suggested spreading the programme over the

next two fiscals to avoid financial instability.

In its sectoral analysis, the QRE found that agriculture was the only bright spot with an

expected gross value added (GVA) growth of 3% in the first quarter and for this fiscal as

well. Industry is likely to have seen a massive 54.2% contraction in GVA in Q1 and -27.1%

for FY21. Similarly, services is estimated to have witnessed a 16% contraction in GVA for

the first quarter, and is likely to be negative for the fiscal as well. On the whole, the report

expected positive GVA only in the fourth quarter of this fiscal, as per its base case scenario.

Home

Indian Railways produce 1.91 lakh PPE gowns, 66.4 kl sanitizer, 7.33 lakh

masks till 24/06/2020

(Source: Press Information Bureau, June 25, 2020)

Indian Railways, in coordination with other Ministries and State Governments, is totally

geared up to meet the challenge of providing protection to it's front line medical workers

and other operational staff persons, from the COVID 19 pandemic. It is using all its

resources in coordinated manner to create/upgrade its facilities.

Railway workshops took up the challenge and manufactured PPE coveralls, sanitizer,

masks, cots in-house. Raw material for manufacturing of these items was also procured

by the field units. 1.91 lakh PPE gowns, 66.4 kl sanitizer, 7.33 lakh masks etc have been

manufactured by Indian Railways till 24/06/2020. PPE coverall target for the month of

June and July are fixed as 1.5 lakhs each which is likely to be revised upwards. During the

lock down period, centralized procurement and distribution of the raw material and

manufactured products throughout the Railway network was a herculean task

accomplished under testing circumstances. Northern Railway was nominated for

centralized procurement of raw material required for manufacture of PPE coverall gowns

which was a critical component with respect to quality. All in-house manufactured

products satisfy all applicable quality standards.

To further strengthen the preparedness of Railway, an order for PPE coverall (22 lakhs),

N95 Masks (22.5 lakh), Hand sanitizer 500 ml (2.25 lakh) and other items was centrally

placed by northern Railway on M/s HLL Life Care (PSU under MoHFW), for

requirements of all Railway Units.

Ministry of Railways has designated 50 Railway Hospitals as COVID Dedicated Hospitals

and COVID Dedicated Health Centers. Facilities at these hospitals were upgraded through

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20 CITI-NEWS LETTER

procurement of medical equipments and other items to meet the challenge of COVID

Pandemic.

Protective gears like PPE coverall, masks, sanitizers and equipments like ventilators were

in extreme short supply globally, during the initial phase of COVID-19.

5231 Railway coaches have already been converted to isolation coaches to serve as the

Covid Care Centers to augment the capacity of health infrastructure in the country.

960 coaches have so far been placed in service at several locations based on the requests

received from the States. Ministry of Health and Family Welfare has already issued

guidance document on appropriate management of suspect/ confirmed cases on Railway

coaches- COVID Care Centres.

Railways supply chain, though affected due to the pandemic, but it did not affect Railways’

operations and maintenance due to operations being on the lower scale and stocks being

available in our depots. Out vendors are also being supported to maintain their supply

chain. Necessary instructions have also been issued to field units in this respect. Railway

could also continue its required procurement due to its digital supply chain and all

material required for pandemic management could be arranged.

Home

Supply outstrips demand, PPE prices crash

(Source: Rajesh Chandramouli & Pushpa Narayan, Times of India, June 25, 2020)

A spurt in production has resulted in a near 70% crash in prices of personal protection

equipment (PPE) kits and RTPCR or Covid test kits. PPE kit prices of 100 GSM (gross

square metre) have crashed in select markets to Rs 168 apiece from Rs 600 a few weeks

ago, and those of RT-PCR testing kits have dropped to Rs 600 from nearly Rs 1,700

earlier.

“We are in a situation where supply is significantly more than the demand. There are

multiple standards of PPE depending on their use. Kits are now being supplied to the

government at around Rs 300 per piece while it was nearly Rs 850 to Rs 900 a couple of

months ago. The price of high-quality products are down to Rs 800 a kit from Rs 1,200,”

said Satyaki Banerjee, CEO, Kiran Medical Systems, Trivitron group. Some large

manufacturers, including Arvind group, are hoping that the government will open up

exports. “This is a very good addition to the technical textiles segment and high quality

PPE kits have a global market,” said Kulin Lalbhai, executive director of Arvind Ltd. “So

far the procurement is mainly done by the government and the capacity is more.” The

Tamil Nadu Medical Services Corporation, an agency that purchases PPE kits for the state

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21 CITI-NEWS LETTER

government, buys them for Rs 365-380. TNMSC managing director P Umanath said,

“Many other suppliers came with a lesser quote but their kits did not include gloves and

goggles.”

Starting at zero a couple of months ago, India has now become the world’s second-largest

supplier of PPE kits. Nearly half-amillion pieces are made a day by more than 600

companies. But some smaller manufacturers have shut down their units. “It’s not viable

at these prices. Prices today are Rs 168 a kit from Rs 600 a few weeks ago for a non-woven

wax coated 90 GSM kit,” said R Annandurai of Knitfab in Tirupur. Ditto is the case with

Covid test kits, which were imported for around Rs 1,600-Rs 1,700. These are now

available for Rs 600 after local manufacturers started making them.

Tamil Nadu Medical Services Corporation, one of the largest customers, paid Rs 1,200 for

the testing kits. The state government body purchased viral transport medium from

another agency for Rs 200. In early May, the state paid Rs 1,550 for all the three

components of the kit. In the latest purchase, the cost of the imported kit dropped to Rs

850. “Most Indian test kits are now priced at Rs 400. The extractor and the viral medium

will cost another Rs 200,” said Dr GSK Velu, Trivitron CMD.

Home

IOCL sets up centre for development of polymer industry in Odisha

(Source: Outlook India, June 25, 2020)

In a bid to facilitate the growth of polymer industry in Odisha and eastern India, Indian

Oil Corporation Ltd has set up a Product Application and Development Centre (PADC) in

Paradip.

Odisha Chief Minister Naveen Patnaik and Union Petroleum and Steel minister

Dharmendra Pradhan on Thursday jointly inaugurated the PADC, set up at a cost of Rs

43 crore on 5 acres of land adjacent to IOCLs refinery and pharmaceutical complex.

"This centre will not only perform a pivotal role in developing new materials and

innovative applications but will also provide support to investors in setting up

manufacturing units in the plastic and polymer sectors," Patnaik said during the

inauguration programme held via video conference.

IOCL is the anchor for the plastic and petrochemical- based industries in Odisha, and it

should play a proactive role in providing infrastructure, raw material and technology

support to entrepreneurs who wish to set up units in the region, he said.

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22 CITI-NEWS LETTER

The company''s proposed project in the Bhadrak Textiles Park is also an important step

towards developing an ecosystem for technical textiles in Odisha, the chief minister said.

The implementation of Bhadrak project of IOCL also needs to be expedited, he said.

The PADC at Paradip can play the role of a catalyst in developing polymer-based industry

in Odisha and it should emerge as one of the centres of excellence in the field of polymer

applications, Patnaik said.

Union minister Dharmendra Pradhan said that the PADC would act as a supporting

technical centre for polyester yarns and fabrics for the upcoming textile downstream units

in Bhadrak and Dhamra.

Besides providing considerable employment opportunities to a large number of people in

the state, the PADC and the downstream units will meet the requirements within the

country as well as abroad, he said.

The project will not only help in the economic growth of Odisha but also that of the whole

country, he said adding that it will make significant contributions to the Make-in- India

initiative.

The technical centre - the sixth of its kind in the country and second in the east - is a

recognised laboratory of the Department of Scientific and Industrial Research (DSIR)

under the Ministry of Science and Technology.

In line with the "Atmanirbhar Bharat" programme of the Union government, the PADC

will help curtail polymer imports through substitution, a senior official said.

Innovative application development is also a prime focus of the centre to replace imports

of finished goods in niche fabrics and technical textiles, the official said.

It will identify areas for development of applications of polymeric material to become self-

reliant by promoting indigenous manufacturing, he said.

The PADC would be working closely in application and development of polymers in

collaboration with research institutes such as the Institute of Chemical Technology,

Bhubaneswar, Central Institute of Plastics Engineering and Technology, Chennai, and the

National Chemical Laboratory, Pune.

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23 CITI-NEWS LETTER

Boycotting Chinese goods may not be feasible: FIEO


As chorus grows for the boycott of Chinese products, the Federation of Indian Export

Organisations (FIEO) has said that immediate restriction on imports from the country

may not be feasible as India needs to get its supply chain in place.

In a video conference with the media here, FIEO President S.K. Saraf said that India has

to be cautious while banning or restricting import of Chinese goods.

FIEO Director General Ajay Sahai was of the view that that a knee-jerk reaction would not

be good and the country needs to improve its supply chain infrastructure to lower its

dependence on imports.

He also noted that there is a major requirement for ease of starting businesses in the

country in order to strengthen the manufacturing scenario.

On the exports outlook, FIEO said there may be a 10 per cent decline in exports from

India this fiscal.

In a statement, it said that Indian exporters are receiving lots of enquiries from countries

where anti-China sentiments are high. Many of these enquiries have been converted into

orders, as well, said a FIEO statement.

"However, the demand in employment intensive sectors like gems and jewellery,

apparels, footwear, handicrafts, carpets is still a challenge. We do not expect much

improvement in demand.

"Therefore, we expect around 10 per cent decline in India''s exports in the current fiscal.

In case of a second wave, the contraction may reach 20 per cent," it said.

The export recovery is likely to be led by pharmaceuticals, medical and diagnostic

equipment, technical textiles, agri and processed foods, plastics, chemicals and

electronics. Since the domestic demand for petroleum products is extremely low, there

may be increasing exports of petroleum as well for such companies to sustain in business,

it said.

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24 CITI-NEWS LETTER

Covid crisis: India will not be ready for growth unless it addresses

MSMEs problems

(Source: Nirvikar Singh, Financial Express, June 26, 2020)

Without addressing the problems of MSMEs, India will not be ready for growth. The

pandemic is the fourth negative shock that small businesses in India have faced in recent

times

As I discussed in my last column, the true extent of central government support for the

Indian economy in the face of the lockdown is crucial for understanding the economy’s

prospects. One can complement the big picture perspective by trying to see what is

happening on the ground. Small businesses in India are extraordinarily important since

the “formal” sector is small. Micro, small and medium enterprises (MSMEs) in India

account for a third of GDP and employs over 100 million workers. These numbers are

taken from earlier government definitions of MSMEs and do not reflect recent changes in

those definitions, but the importance they convey is what matters.

Recently, Udayan Rathore and Shantanu Khanna provided preliminary findings from a

survey of MSMEs that aims to understand and quantify the impacts of the lockdown on

these firms. In May, they surveyed about 360 such firms, some before and some after the

May stimulus package announced by the central government. Most of the firms surveyed

were in North India, especially Uttar Pradesh, but industry association leaders were also

interviewed for broader perspectives. These latter interviews strongly reinforced earlier

findings, that government policies and external events had already been harming MSMEs

before the pandemic and lockdown.

In particular, demonetisation disrupted MSMEs’ use of off-the-books financing, and that

may be beneficial in the long-run, but had severe negative implications for these firms in

the short-run. Second, the manner in which the GST was formulated and implemented

disrupted the cash flow cycle of MSMEs, since they were required to make estimated

payments well before they would typically collect their receivables. Third, the crisis in the

non-bank financial sector, which was triggered by large firm malfeasance, led to a severe

curtailment of financial access for MSMEs, which anyway have had problems getting

formal finance.

These three shocks to MSMEs were symptomatic of overall weakness in economic

policymaking and implementation-a long-running failure to understand industrial

structure and dynamics in India. Rathore and Khanna’s work suggests that the problem

is continuing in response to the lockdown. In their sample, the median enterprise had an

annual sales of Rs 20 million, had 19 employees and had been in business for 16 years-the

majority of the firms sold to businesses, rather than consumers or government. Without

going into too much detail, I would describe the message of the survey to be that MSMEs,

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25 CITI-NEWS LETTER

especially the smallest, have taken an enormous hit from the lockdown, and not enough

has been done to enable them to recover.

Without addressing the problems of MSMEs, India will not be ready for growth. Indeed,

the pandemic and lockdown are merely the fourth negative shock that small businesses

in India have faced, and the economy’s poor performance over recent years has reflected

this situation. The survey indicated that many MSMEs are facing insolvency in a short

period of time, with worsening consequences for job losses. Because they rely on informal

finance or internal funds, most have not been able to tap emergency resources. The

majority of the respondents did not see any benefit for them in the mid-May rescue

package. Less than two-fifths of the firms had approached a bank for financing, and of

those, less than a third (effectively, 10-12%) succeeded. Meanwhile, savings were getting

depleted, and there was increased recourse to expensive informal finance. More than half

the firms expected the collection of their receivables to be delayed, even when contracts

were not cancelled. Indeed, the failure of large firm and governments to pay smaller

suppliers on time has been a long-standing problem. Firms also noted the burden of fixed

charges for services such as electricity, which had to be met despite lockdown.

The problems of small business when there are large negative shocks to the economy are

not unique to India. The United States has also been facing similar issues. The similarities

also extend to the political economy of the two countries. In its response to the pandemic-

induced economic crunch, the current US government has favoured large businesses,

providing much more support for them than for small, especially local, businesses. Its

policies have also favoured shareholders over workers. This is not surprising in the US

political context of Republican party control of the executive branch, but it is less clear

why this also seems to be the case in India. Indeed, the rhetoric in India is more in favour

of the poor and disadvantaged.

Perhaps in the case of India, the driving force is less of a big-business bias and more

simply a lack of comprehension among policymakers of what it is like to run a small

business in India, beyond the various classifications into MSMEs and their subcategories.

These broader observations go beyond the work of Rathore and Khanna, but they do

conclude that “Alarmingly, over 70% of the [firms] report that they would not survive for

another quarter while almost a third will not survive beyond a month. … There is an

immediate requirement for the government to engage with the MSME sector and consider

their concerns and suggestions. The revival of this sector …will be critical for the

livelihoods of millions and for India’s economic recovery.”

The author is Professor of Economics, University of California, Santa Cruz

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26 CITI-NEWS LETTER

New multilateralism will balance linkages between trade & development:

CUTS International

(Source: Dipanjan Roy Chaudhury, Economic Times, June 25, 2020)

International trade should not be looked in isolation and not just in terms of their volume

and value but in respect to its linkages with developmental concerns, particularly in

regard to access to basic needs, according to Pradeep Mehta, Secretary General, CUTS

International. He was moderating a webinar on Wednesday titled “What would happen

to a world without the WTO?” with speakers representing various regions of Africa. “It is

time to take a closer and a more holistic look at the linkages between trade and sustainable

development by putting equal emphasis on their economy, equity and environmental

dimensions. It should not be a sanctions-based approach but should emphasise on

arriving at a positive, forward-looking agenda with social safety nets as its central theme,”

Mehta underlined.

According to Erastus Mwencha, Chairman, TradeMark East Africa and former Deputy

Chairman of the African Union Commission, “We really need to interrogate the whole

process of the functioning of the WTO. That will help us having a better understanding of

why there are so much of systemic challenges.” “We need to reinvent the WTO through

structural transformation so as to derive better values out of it through a more balanced

but faster decision-making process. This is an imperative in the post-Covid world. We

need a better global leadership,” he added. Magda Shahin, Professor and Director of the

School of Global Affairs and Public Policy at the American University in Cairo underlined

the irreplaceability of the WTO as it is a rules-making and enforcing body. She reminded

the audience that the rule-setting and adjucating functions of the WTO are inter-linked.

There are no other multilateral bodies of this nature. “Following the conclusion of the

Uruguay Round, a fundamental dis-balance emerged. While developed countries wanted

to move too much and fast on new issues, developing countries placed excessive emphasis

on deriving developmental benefits out of the multilateral trading system. The WTO as a

whole system could not take forward new issues in a manner that they should have been.

The result is an increasing dichotomy between real and financial sectors of our economies,

particularly in respect to trade in financial services” she added.

Talking about the importance of the multilateral trading system in fostering certainty and

stability to international trade, Faizel Ismail, Director of the Nelson Mandela School of

Public Governance at the University of Cape Town and former Ambassador of South

Africa, he posed what type of multilateralism that we need today in a Covid-induced

world. According to him, “This crisis of globalisation is a result of inequalities as hyper-

globalisation ignored the need of the marginalised and the poor. This led to populism in

various avatars with shifting power dynamics within and across countries.” “The Covid

crisis exposed the inherent contradictions in the WTO-led trading system, which was

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27 CITI-NEWS LETTER

already asymmetrical in nature. As a result, we are seeing increasing instances of export

restrictions and also re-shoring. The impact of this in Africa is and will be severe,” he

added. Therefore, for a more balanced trading system, we have to bite the bullet of

managing the present form of globalisation by balancing trade rules and it should not

become a convergence club. We have to also create the necessary space for a more

inclusive development within and between countries. Countries need to re-industrialise

through embedded liberalisation. Regionalisation or localisation should be looked at

more from the angles of addressing non-traditional aspects of security, particularly health

and food security.

According to Cheikh Tidiane Dieye, Executive Director of Dakar-based African Center for

Trade, Integration and Development, “We should recognise that the challenges faced by

the multilateral trading system are not new. While they may not be in the same form from

the beginning, they have evolved over time with changing geo-economic and geo-strategic

developments.” “In order to find solutions to present challenges, we have to manage

various perceptions and see how close or far they are from realities. The cotton subsidy

issue, which is yet to be resolved is a manifestation of this difference. Going forward, it is

important to recognise the needs of the least developed countries by focusing on their

capacity to utilise the available policy space,” he added. Chenai Mukumba, Director of the

Southern Africa Regional Centre of CUTS argued that what the Covid pandemic has

shown is a kind of a glimpse of a world without a rules-based system. As a result of

stoppage of trade, commodity-dependent countries are facing huge difficulties and that is

started getting reflected in other important areas such as food security. This was the third

of a series of webinars on this subject being organised by CUTS International, a global

public policy think- and actiontank promoting consumer welfare through trade,

regulations and governance.

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View: India’s aspirations of becoming a global supply chain player need more

work

(Source: Abheek Barua, Economic Times, June 26, 2020)

India must take into account the altered global economic landscape that may emerge in

the post-Covid-19 era.

India’s de facto industrial policy wants to chase three objectives — self-reliance, the need

to grab a larger share of the global value chain (GVC), and a reduction in the economy’s

dependence on China. To be successful, it must take into account the altered global

economic landscape that is likely to emerge in the post-Covid-19……..

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28 CITI-NEWS LETTER

Welspun India launches anti-viral home textile products


Home textiles major Welspun India Ltd on Thursday said it has launched an exclusive

range of anti-viral home textile products for the Indian market in partnership with

HealthGuard Corporation, which specialises in tailored non-invasive healthcare

products. HealthGuard Corporation is headquartered in Australia.

The anti-viral products include terry towels, bed linens, rugs and carpet along with

reusable cloth mask, and will be made available to customers under the company''s

brands - SPACES and Welspun Health, Welspun India said in a statement.

The company said it has created a home textile range that is treated with HealthGuard

AMIC technology, "which has shown outstanding preliminary results against the Human

Strain SARS-CoV-2 virus (COVID-19)".

HealthGuard AMIC has already proven 99.94% per cent effectiveness against

coronavirus, combating the spread of harmful viruses through textiles. This technology

not only has anti-viral, but also anti-fungal and anti-microbial properties. It has been

tested as per international test standards such as AATCC:100 (MS2) and ISO 18184

(H1N1), Welspun India said.

Commenting on the launch, Welspun India Ltd CEO and Joint Managing Director Dipali

Goenka said: “In response to the challenges posed by the COVID-19 pandemic, Welspun

India has consistently innovated to address evolving consumer requirements. Having

recently ventured into the health and hygiene category with Welspun Health, we are now

launching a range of high quality anti-viral home textiles."

She said the partnership with HealthGuard Corporation, Australia to integrate cutting-

edge technology "will minimise the spread of harmful viruses".

HealthGuard Corporation, Australia Chairman Christopher Harvey said: "While doing

our novel work to cater to the global demand, we developed a suitable particle, which

destroys the envelope virus cell wall. Enveloped viruses are fatal to human life in some

cases and our anti-viral product HEALTHGUARD AMIC exhibits excellent performance

in destroying deadly viruses."

He further said,"Welspun will be the exclusive partner in India for offering this anti-viral

home textiles solutions.

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29 CITI-NEWS LETTER

Siyaram''s launches anti-corona fabric


Siyaram''s, a textile brand in men''s fashion, on Thursday launched its anti-corona range

of fabric, tested by WHO (World Health Organisation) approved labs, to fight against the

spread of pandemic.

The new anti-corona fabric provides a protection from the virus and is developed in

association with HeatlhGuard, a global leader in non-invasive healthcare for 25 years

dedicated to research and development of safe and innovative biotech solutions, the

company said in a statement.

The new fabric guarantees 99.94 per cent effectiveness against coronavirus and has non-

leaching properties compared to other metal based chemistry products, making the

treated layer of fabric to not dissolve in water, it added.

Home

In Bhagalpur silk hub, looms tell a story: ‘95% collapse’

(Source: Dipankar Ghose, Indian Express, June 26, 2020)

Bhagalpur is a microcosm of Bihar these days, with returning migrants, a rising Covid

graph, and an economy showing signs of deep distress.

THE LARGE first-floor room has never been so full: silk cloth everywhere, some of it

without wrapping paper, others in cardboard boxes ready for transport. For Zia Ur

Rahman, the promise that the room would be emptied evaporated long ago. Instead, what

has been emptying quickly over the last five months in Nathnagar, home to Bhagalpur’s

famous silk industry, are bank balances, savings accounts — and hope.

Bhagalpur is a microcosm of Bihar these days, with returning migrants, a rising Covid

graph, and an economy showing signs of deep distress. The district is also the focus of a

month-long assignment by The Indian Express to track how lives and livelihoods in

smalltown India are coping with the unlockdown.

Bhagalpur’s story is inextricably linked to its silk industry, spanning generations. Traffic

signals have “Silk City” written on them, the district administrations website says “Silk

City of Bihar”. The past 30 years has seen considerable decline, due to political apathy,

mismanagement and the communal tension of 1989. But today, after the lockdown, it’s

teetering on the edge.

Zia Ur Rahman runs one of the largest weaving units in Nathnagar, 6 km from town and

home to 6,000 weaver families. He estimates that the industry was once worth Rs 500

https://indianexpress.com/elections/bhagalpur-lok-sabha-election-results/

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30 CITI-NEWS LETTER

crore, before sliding to around Rs 100 crore. “My unit produced 10,000 sq m of silk a day,

earned Rs 30 lakh a month and employed 3,000 people. Now, since February,

nothing…more than 95 per cent of business has collapsed,” he says.

“Silk is an expensive cloth product, and in today’s market, nobody wants to spend that

money. Our demand came mostly from companies based in Europe or America. But now,

with logistics a problem, and the companies struggling, there are no orders,” Rahman

says.

It isn’t just that new orders aren’t coming in, he says, the old ones are being cancelled. For

instance, the cloth stacked in boxes was for an order from England worth Rs 40 lakh.

“There is no word from them. Orders worth Rs 80 lakh from Europe and America have

been cancelled since February,” says Rahman, signalling the pandemic’s global trajectory.

“On top of that, embroidery and printing happen in Delhi, Bengaluru, Surat or Varanasi,

and they are all shut.”

In the lanes of Nathnagar, barely wide enough for one vehicle to pass, every window and

door opens to a loom that still sits proudly in the front room. Those looms are now quiet.

They made a particular sound, locals say, “Khat Kho”. Over time, that sound gave way to

a word. “Khat” meant “hard work that singed the hand”. “Kho” meant “food earned from

honest labour”. That social contract has been broken.

Here, Mohammad Shoaib Ansari’s small storeroom for cloth is now a grocery shop.

“Earlier, I earned Rs 500-600 a day. There was no work so I opened this small shop. I sit

here from 6 am to 8 pm, and earn about Rs 100 a day…nowhere near fulfilling our needs,”

he says.

Yet, despite the deep distress, the romance of Bhagalpuri silk means it is always part of

conversation. On May 25, Bihar Chief Minister Nitish Kumar argued for industries to set

up shop in the state and assured help for returning migrants. His example of an avenue

filled with opportunity? Bhagalpur silk.

Asked if the administration had any plans for revival and rescue, District Magistrate

Pranav Kumar says they are “definitely looking at this sector”. “In the long term, we are

looking at identifying two-three places where we will plant trees for cocoons so that there

is raw material. In the short term, we have requested those who have small factories to

increase work, but there are limitations. Even those that produce, they only make the

cloth, stitching and branding happen outside. We will create a brand, do some stitching

and then see. We will develop a cluster for those who want to work, and then create

forward and backward linkages,” he says.

https://indianexpress.com/article/world/uk-coronavirus-tracker-region-wise-cases-and-deaths-6373786/

https://indianexpress.com/article/explained/pandemic-explained-who-novel-coronavirus-covid19-what-is-a-pandemic-6309727/

https://indianexpress.com/about/nitish-kumar

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31 CITI-NEWS LETTER

Rahman acknowledges that the administration has reached out. “But they want us to put

money in. The question is who will buy the product? The solution, if any, is that they help

us monetarily and buy the silk we produce,” he says.

About 10 km away in Bahadarpur, there is an iconic building, where the promise of

reinvestment in silk, invokes skepticism. The gate of the Bihar Spun Silk Mill, a

government undertaking, is ravaged by rust. The grass is wild, the building has deep

cracks. Inside the gates are mangled remains of cars. A police station nearby uses its

compound as a dumping yard. The mill began in 1972 before turning sick and stopping

production in 1993.

And yet, Ram Narayan Bhanu turns up every day. He joined the mill in the 1970s, and

was part of a workforce that grew to 370 by 1993. Since the shutdown, he says, none of

them were paid their dues. Bhanu, who heads the workers’ union, says they went to court.

“We had to go up to the Supreme Court, where the government admitted we were their

workers, and said they would give us our dues. But we have still not been paid,” he says.

It is here, in this compound, that Bihar Industries Minister Shyam Rajak said that a new

“Silk City” will be developed to provide employment. Inside the building, the walls are

dark, there are no doors, only large holes in the ground where the “Japanese machines”

once stood. “Before they build this new city, they must pay us our dues. They left us to live

in penury. Maybe, our grandchildren will lead better lives,” says Bhanu, without any hope

in his voice. The mill, like Bhagalpur’s silk, is a graveyard of broken promises

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32 CITI-NEWS LETTER

GLOBAL

Razak Announces To Release Rs 6.2 B For Textiles Sector Under DLTL

(Source: Fahad Shabbir, Urdu Point, June 25, 2020)

Adviser to the Prime Minister on Commerce and Investment Razak Dawood Thursday

announced to release an additional grant Rs6.2 billion for the textiles sector under the

Drawback of Local Taxes and Levy (DLTL) scheme.

He said the cumulative amount Rs51.2 billion had been released under this head in the

current fiscal year, said a press release.

The adviser said, "I hope this will resolve the liquidity issues of our exporters and enable

them to further their exports through investment."He said for the non textiles sector, the

DLTL was in progress.

He further said local manufacturing and engineering firms had the privilege to import raw

material, components and parts free of duty and taxes for the manufacturing of such

goods under Duty and Tax Remission for Exporters (DTRE) schemes.

Home

S Korea-Cambodia FTA talks to start in July

(Source: Fibre2Fashion, June 26, 2020)

South Korea will launch negotiations for a free trade agreement (FTA) with Cambodia

next month, aiming to increase its economic influence in Southeast Asia. Since the FTA

proposal was raised in March last year as part of the government’s New Southern Policy,

a joint feasibility study and related public hearing were completed recently, deputy prime

minister and finance minister Hong Nam-ki said.

“...The government plans to complete the process, including submission of reports to the

National Assembly and launch FTA negotiations in July,” he said.

Cambodia has been rising as a key trading partner for South Korea in recent years. Its

exports to Cambodia surged by 5.5 per cent year on year to $696 million last year, while

imports from the country increased by 6.8 per cent. Textiles and apparel comprise the

main trading items.

https://www.urdupoint.com/en/latest-news/prime-minister.html

https://www.urdupoint.com/en/latest-news/commerce.html

https://www.urdupoint.com/business/prize-bonds.html

https://www.urdupoint.com/en/latest-news/textile.html

https://www.urdupoint.com/en/latest-news/billion.html

https://www.urdupoint.com/en/latest-news/exports.html

https://www.urdupoint.com/en/latest-news/textile.html

https://www.urdupoint.com/en/latest-news/progress.html

https://www.urdupoint.com/en/latest-news/import.html

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33 CITI-NEWS LETTER

Hong also vowed to make detailed announcements on government measures for global

cooperation in the post-coronavirus era next month, which includes providing

humanitarian aid worth $100 million, more than $400 million for the Economic

Development Cooperation Fund and expanding financial support for multilateral

development banks, according to South Korea media reports.

While South Korea has an existing FTA with the Association of Southeast Asian nations

(ASEAN), it has been discussing agreements with individual member nations.

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Economic effects of COVID-19 on Japan: World’s 3rd largest economy

(Source: Fibre2Fashion, June 25, 2020)

Japan, the world’s third largest economy, is reeling under the effects of Covid-19 pandemic.

While the country is still debating the idea of shifting its production out of China to other

ASEAN countries, import of masks from China has remained an all-time high.

The data from Japan’s ministry of finance shows that Japan’s exports fell by 11.70 per cent

in the current year till March compared with a 10.10 per cent decrease expected by

economists in a Reuters poll. According to Takeshi Minami, chief economist at

Norinchukin Research Institute, the impact of COVID-19 is going to continue through this

year which would hinder the economic activity from normalising. Japan’s exports to

China, its largest trading partner, have declined by 8.70 per cent in the year till March,

reflecting a slump in items including textiles and apparels.

Japanese shipments to Asia, contributing to more than half of Japanese exports, declined

by 9.40 per cent, and exports to the EU fell by 11.10 per cent due to the global spread of

COVID-19. Imports fell 5 per cent in March, versus the median estimate for a 9.80 per

cent decline.

Japan's total exports have moved down by 23 per cent in April and imports have fallen by

7 per cent from the same period a year earlier, according to data released by the finance

ministry. Exports to the US plummeted by 38 per cent, while imports rose by 1.60 per

cent. Japan's exports to the EU tumbled by 28 per cent in April, while imports from the

region declined by 7 per cent.

Exports to China slipped by 4 per cent in April 2020 and imports from China jumped by

12 year-on-year. The overall exports totalled $48 billion, down from nearly $62.56 billion

in the same month in 2019. Imports dropped to $57 billion from $61.63 billion, with

major fall in exports of vehicles, machinery, chemicals and textiles.

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34 CITI-NEWS LETTER

From the perspective of market share, the proportion of China’s share in Japanese textile

and apparel import market has gradually declined in recent years, with the proportion of

quantity falling to 47.20 per cent. The market shares of Vietnam, Indonesia, Thailand and

Bangladesh have gradually increased.

Japan’s Textiles and Apparel Trade

According to the latest data by CCF Group Tracker, the country’s textile and apparel

imports in March declined by 2 per cent year-on-year to 216,500 tonnes. Of these, imports

from China declined by 4 per cent to 105,300 tonnes. In the first quarter, Japanese textile

and apparel imports totalled 605,000 tonnes, down by 7.50 per cent year-on-year. In case

of volume, the imports from China totalled 286,000 tonnes, declining by 13.10 per cent

year-on-year.

Notable Rise in Demand of Textiles and Apparels of Japan in April 2020

As per the data from CCF group, Japan imported about 243,000 tons of textiles and

apparel in April 2020, up by 8.80 per cent y-o-y and 12.30 per cent m-o-m. In case of

China, import volume was 140,000 tonnes, up by 21.50 per cent y-o-y and 32.90 per cent

m-o-m.

During January to April 2020, Japan's cumulative textile and apparel imports reached

848,000 tonnes, down by 3.40 per cent y-o-y, and that from China was 426,000 tonnes,

down by 4.10 per cent y-o-y.

Japan’s Textiles and Apparel Import Volume and Value

In terms of value, import of Japan’s textile

and apparel in April 2020 showed an

increase of 29.30 per cent m-o-m and that

from China dropped by 72.90 per cent m-

o-m. Japan’s textile and apparel import

demand in April was strong, and that from

China has grown rapidly.

China is the largest supplier of Japan for textile and apparels, followed by Vietnam,

Indonesia, Thailand, etc. In April 2020, China contributed 57.50 per cent of the Japan's

textile and apparel import market, up by 6.10 per cent from the same period last year and

8.90 per cent m-o-m.

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35 CITI-NEWS LETTER

Japan's Textiles and Apparels Imports

Source: Japan’s Customs Office, CCF GROUP

An extreme rise has been observed in Japan’s import of textiles and apparels from China

in April 2020. According to the midstream and downstream of the Chinese market, the

number of masks exported from China to Japan increased evidently in April 2020.

According to statistics, the product group with HS 6307900 accounted for the largest.

Changes of Japan’s Textile and Apparel Imports by Countries and Regions

Source: CCF GROUP

Japan’s Support to Shift the Production Outside China, preferably ASEAN

On April 19, Japan’s PM had declared a state of emergency for the coronavirus pandemic

and unveiled a massive stimulus package to help the economy and overcome the crisis

caused by the spread of COVID-19.

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36 CITI-NEWS LETTER

Japan has allotted a massive rescue package of $992 billion to promote business which is

approximately 2.7 times Malaysia’s GDP (gross domestic product) and 20 per cent of

Japan’s GDP, biggest in the country’s history. This package was aimed at mitigating the

economic and social impact of the pandemic and target individuals, multinational

corporations and small and medium-sized enterprises (SMEs).

The package includes an economic support fund worth about $2.4 billion to help finance

local businesses bringing manufacturing back to Japan from China, or to move it to other

countries in Southeast Asia and South Asia. The move is aimed at reducing future risks of

supply chain disruption in case of another black swan. Approximately $2.05 billion have

been allotted for companies shifting production back to Japan and $219.52 million for

those planning to move to other countries.

According to a February survey by Tokyo Shoko Research Ltd, approximately 37 per cent

of the 2,600 respondents were diversifying procurement outside of China during the

pandemic. The trend to relocate manufacturing both of low and high-added value

products outside of China is mainly a move to manage risk and prevent supply chain

disruptions in case of major natural disasters, infectious disease outbreaks and trade wars

among major economies.

Investor sentiment was bolstered in the country in May by hopes that the Japanese

government may move ahead with lifting some coronavirus-linked restrictions in some

parts of the country. Among the sectors, textiles & apparels remain as notable gainers in

stock market.

Japan’s Imports of Products with HS Code 6307900 from China

Source: CCF Group

Japan’s import volume for the products of HS code 6307900 (including masks) was 25.20

kilo tonnes in April 2020, up by 165.26 per cent y-o-y, 236 per cent m-o-m, accounting

for 18.01 per cent of the total textiles and apparels. Imports from China moved up by 6.70

per cent compared with the same period of last year, indicating that the variety was a

hotspot imported by Japan in April 2020. Approximately more than 90 per cent came

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37 CITI-NEWS LETTER

from China. According to some downstream exporters, cotton gauze masks contributed

for the maximum share in the total.

Thus, Japan’s textile and apparel imports increased significantly in April 2020 mostly

from China. The products of HS code 6307900 contributed greatly in Japan’s imports.

Imports of products of HS code 6307900 accounted for 10.40 per cent of the total textile

and apparel imports, and the value reached 26.30 per cent.

Fast Retailing, a big domestic player for textiles and apparels, has planned to sell face

masks made from highly breathable and fast-drying materials to deal with the spread of

Covid-19 at their Uniqlo casualwear store chain and on its online shopping platform.

FTA with the UK under Negotiation

Japan is in negotiation with Britain for FTA (Free Trade Agreement), based on the

existing EU-Japan Economic Partnership Agreement (EPA). This would increase the

trade flows between the two countries by approximately $18.60 billion, according to

Department of International Trade (DIT), UK. The manufacturers of textiles and clothing

are expected to be among the biggest winners of lowering trade barriers.

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UAE submits 70 chemical, textiles standards to GSO

(Source: Trade Arabia, June 25, 2020)

The UAE Technical Committee for Chemical and Textile Products has submitted 70 Gulf

Cooperation Council (GCC) standards' drafts to the Secretariat-General of the GCC

Standardisation Organisation (GSO) during its 25th meeting held remotely.

The standards include personal protection equipment and clothes for fire-fighting

personnel and workers in the areas of safety, paint industry technology, detergents and

environmental standards. It also covers the standard specifications of some plastic

products, shoes, leather products and school bags, a WAM release said.

Abdullah Al Maeeni, Director-General of the Emirates Authority for Standardisation and

Metrology, ESMA, said the new standards will help improve the level of quality and safety

of the products, facilitate commercial exchange between GCC countries and other

countries, increase the competitiveness of GCC products in global markets, and protect

GCC citizens.

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38 CITI-NEWS LETTER

Al Maeeni noted that the plans and programmes to develop GCC standard specifications

aimed at fulfilling the aspirations and national strategic plans of the UAE and other GCC

countries.

The UAE chaired the meeting, which was attended by members of GSO and held via video

conferencing.

ESMA, represented the country at the meeting and Khalaf Khalaf, Director of the

Specifications Administration of ESMA, said that the GCC’s technical plan is being

implemented, especially during the current conditions, adding that they are monitoring

the progress of the implementation of the drafts and technical regulations according to

the 2019-2020 plan, to continue the work of the committee.

The bi-annual meeting focused on monitoring the current work of the committee, and

discussed the implementation of the Globally Harmonised System (GHS) in GCC

countries, he added.

The committee approved the final draft of the GHS after considering its members’

recommendations, given its importance to the transportation and handling of hazardous

chemical materials between GCC countries and other countries, he further added.

The GHS will help track the use of these products in specific locations, through

monitoring import documents and documents issued by customs departments and

relevant authorities in the GCC, he said in conclusion

Home

Second-hand clothing may be harder to find after coronavirus put textile

recycling ‘at risk’

(Source: Tom Bawden, Inews, UK, June 25, 2020)

International Bureau of Recycling warns stocks of used textiles could fall in the longer

term

Second-hand clothing may be harder to find in the future after Covid-19 put many

clothing and textile bank collection systems at risk.

The International Bureau of Recycling has warned that the textile salvaging industry has

entered a “critical stage” which threatens the existence of many collection, sorting and

recycling operations.

Their problems stem from the closure of retail outlets around the world which has led to

a glut of raw materials and finished products.

https://inews.co.uk/news/environment/charity-shops-open-donations-lockdown-clutter-454403

https://www.bir.org/

https://inews.co.uk/news/coronavirus-in-the-uk-boris-johnson-total-lockdown-shop-closures-411455

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39 CITI-NEWS LETTER

This has pushed the price of raw materials so low that it’s often not economically viable

for textile recyclers to collect them.

Supply reduction

This could reduce the supply of second-hand clothing further down the line, once the

backlog has cleared and if collection services are forced out of business, analysts say.

“We are currently in a situation that, in some markets and areas, the prices of unsorted,

post-consumer textiles are lower than the costs for collection,” said Martin Böschen, head

of the bureau’s textiles division.

“This situation has put collection, sorting and recycling at risk and, if it were to continue,

it could be the end of many current collection systems,” he said.

UK warning

His warning follows a report in May by the UK’s Textile Recycling Association the average

price of materials left in textile banks had plunged from £130 a tonne in March to £30 in

April, with further declines expected.

“Since the lockdown started the value of goods collected through textile banks has

plummeted,” the head of the association, Alan Wheeler, said at the time.

Meanwhile, Mr Böschen warned that stocks at collection and processing companies were

estimated to be “three to four times higher than usual for this time of year”, he said.

Even in the more positive scenarios, it would take 18 to 24 months until the current stocks

have been reduced to normal levels and we can speak of business as usual, he said.

Home

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