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

13-05-2020 65.66 (+1.15)

10-05-2019 80.70

10-05-2018 94.35

New York Cotton Futures (Cents/lb) As on 14.05.2020 (Change from

previous day)

July 2020 57.52 (+0.06)

Oct 2020 57.29 (-0.59)

Dec 2020 57.17 (-0.45)

14th May

2020

Cotton and Yarn Futures

ZCE - Daily Data (Change from previous day)

MCX (Change from previous day)

May 2020 15850 (+150)

Cotton 11150 (-75) June 2020 16070 (+160)

Yarn 16995 (-80) July 2020 16150 (+160)

Day 1: FM Sitharaman unveils loan guarantees, liquidity

infusion

CITI hails PM’s 20-lakh-crore stimulus package to make

India Atmanirbhar

Labour law changes in India should adhere to global

standards, says ILO

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2 CITI-NEWS LETTER

-------------------------------------------------------------------------------------- Day 1: FM Sitharaman unveils loan guarantees, liquidity infusion

CITI hails PM’s 20-lakh-crore stimulus package to make India Atmanirbhar

Textile industry, MSMEs welcome FM announcement

Manpower shortage a challenge to ramp up textile production: Gokaldas MD

Government identifies sectors for tax sops

India’s largest MMF sector stuck in Surat’s red zone

Labour law changes in India should adhere to global standards, says ILO

Covid-19 impact: Poor nations back India’s call to defer WTO talks

UP gives industry status to warehousing and logistics sector

EPF relief package means higher salary, but tax implications stay

1st tranche of Rs 20 lakh crore package doesn't hit government exchequer; here's why

Textiles output contracted by 13.1%, a 97-month low, in Mar 2020

TEA hails stimulus measures

India pitches for Japanese companies as they move out of China

India Ratings puts April revenue loss for 21 states at 97,100 crores

Covid impact: Companies face input tax credit denial on goods destroyed

Priyanka Gandhi writes to UP CM Yogi Adityanath, seeks waiver of power bills of farmers

Atmanirbhar: 41 Punjab units get nod to manufacture PPE coveralls

MSCI index rejig: Who’s in and who’s out

Self-reliant India: Which are the sectors dependent on imports, which are not

India overview: Close quarters

----------------------------------------------------------------------------- UK government sets up COVID-19 Vulnerable Supply Chains

Bangladesh: Textile, financial sectors to feel the brunt of pandemic fallout

Bangkok: Workers unite against textile factory over SSF 'failure'

South Africa: Winter clothing, footwear may be sold during lockdown in terms of regulations

Pakistan: Textile exports plunge to 17-year low

Stretchable fabric is self-charging to power smart garments

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

NATIONAL

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

GLOBAL

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3 CITI-NEWS LETTER

NATIONAL:

Day 1: FM Sitharaman unveils loan guarantees, liquidity infusion

(Source: Economic Times, May 14, 2020)

Finance minister Nirmala Sitharaman rolled out the first instalment of the Rs 20 lakh

crore economic stimulus announced by Prime Minister Narendra Modi, offering loan

guarantees and funds to small businesses, non-bank lenders and power distribution

companies. The Rs 5.94 lakh crore package seeks to ensure credit and liquidity for the

sectors that are among the worst hit by the Covid-19 crisis. The bulk of the package is in

the form of guarantees that require no immediate allocation from the budget, implying

limited impact on the fiscal deficit and more room for support to other sectors. The direct

immediate support from the budget — guarantees are contingent liabilities payable only

on default — is less than Rs 50,000 crore.

“Essentially, this is to spur growth to build a very self-reliant India and that’s why this

initiative is called Atmanirbhar Bharat Abhiyan,” Sitharaman said on Wednesday, adding

that the stimulus programme has been prepared after “wide and deep” consultations.

Including the measures announced by the government and the Reserve Bank of India

earlier, the latest measures add up to Rs 12.88 lakh crore, leaving a balance of Rs 7.12 lakh

crore. Additional measures will be announced over the next few days and are likely to

focus on labourers, farmers, the middle class and industry.

“The policy bouquet unveiled by the government is well-structured, suitably targeted,

within reasonable fiscal limits but still having the maximum impact,” said SBI chairman

Rajnish Kumar. The package includes a government guarantee for Rs 3 lakh crore

collateralfree loans to small businesses, a Rs 20,000 crore debt fund for the stressed ones

and a Rs 50,000 crore fund to provide equity support. Nonbanking finance companies

(NBFCs) will get a Rs 30,000 crore special liquidity fund and Rs 45,000 crore partial

credit guarantee scheme that will apply to those rated AA and below and even unrated

paper, enabling them to borrow more from the market. Power distribution companies will

get Rs 90,000 crore liquidity against receivables from state-owned Power Finance Corp.

and Rural Electrification Corp. allowing them to pay dues to power producers. The

provident fund contribution has been cut to 10% for both employer and employees,

adding up to Rs 6,750 crore in freed-up liquidity, from 12%. The government has also

extended the 24% provident fund contribution scheme by another three months,

providing Rs 2,500 crore support to 367,000 establishments and covering 7.2 million

employees.

The Rs 3 lakh crore loan guarantee scheme is open until October 31 and will benefit 4.5

million units, the finance minister said. Industry said the stimulus was well targeted. It

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4 CITI-NEWS LETTER

will meet the immediate as well as longer-term requirements of sectors in distress, said

Confederation of Indian Industry director general Chandrajit Banerjee. “The measures

for NBFCs, HFCs (housing finance companies) and MFIs (microfinance institutions)

inject direct liquidity to where it is required most, and will enable them to support their

borrowers through a period of cash flow stress,” said N Venkatram, CEO Deloitte India.

NON-FUND MEASURES

The finance minister announced a change in the definition of MSMEs, raising the

investment threshold and adding turnover as a criterion, which will allow them to grow

in size without fear of losing incentives. To encourage the sourcing of local products, all

government tenders up to Rs 200 crore will only be floated locally. “Changing definition

of MSMEs will be a game changer and enable them to grow and expand. This should get

the credit cycle moving and, hopefully the risk aversion of banks eliminated,” said NITI

Aayog CEO Amitabh Kant. The “foundation has been laid for a new MSME sector at the

core of our future self-reliant economy. Directing huge capital inflows into MSME is the

first step”, minister for MSMEs Nitin Gadkari said in a tweet. The government has also

allowed contractors for the railways, highways and other ministries an additional six

months to complete projects or supply goods or services without any penalty. Bank

guarantees offered by them will also be released to the extent of project completion to

improve cash flow.

TAX RELIEF

In order to leave more cash in the hands of taxpayers, the rates of tax deduction at source

(TDS) for nonsalaried specified payments made to residents and tax collection at source

(TCS) for specified receipts will be reduced by 25%. Payments for contracts, professional

fees, interest, rent, dividend, commission, brokerage, etc. will be eligible for this reduced

rate of TDS, which will be applicable for the remaining part of FY21from May 14. TDS and

TCS already paid will be restored when tax for the full year is computed. Further, the due

date of all I-T returns for FY20 will be extended to November 30 from July 31and October

31. The tax audit deadline has also been extended by a month to October 31. Under the

Vivad se Vishwas scheme, the deadline for making payments without additional charges

will be extended to December 31.

Home

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5 CITI-NEWS LETTER

PRESS RELEASE

CITI hails PM’s 20-lakh-crore stimulus package to make India Atmanirbhar

Wednesday, May 13, 2020, New Delhi: The Hon’ble Prime Minister of India, Shri

Narendra Modi on Tuesday, unveiled a 20-lakh-crore stimulus package to not only revive

the Indian Economy badly wrecked by COVID-19 Pandemic but converting the crisis into

an opportunity to make India Atmanirbhar in all respects. Shri T. Rajkumar, Chairman,

CITI thanked the Hon’ble Prime Minister and said that the package is the result of the

continuous dialogue of the Industry and Trade Associations with the Government of India

for a strong revival package for the Indian economy. He also stated that the package

announced by the Hon’ble PM is well-timed and would help the Government to set many

things right across sectors like agriculture, labour, middle class, MSME and the industrial

segment at large encompassing reforms in land, labour, liquidity and legal systems amid

this extended lockdown situation.

Mr. Rajkumar stated that with an aim of making India self-reliant the package announced

by the Hon’ble Prime Minister primarily focuses on cottage, home, small-scale and MSME

Sector, which is a source of livelihood for millions of Indians. He further stated that the

textile and apparel sector which is the 2nd largest employment generator after agriculture

and forms major portion (80%) of MSMEs, will definitely get a morale boost through this

package.

Chairman-CITI thanked the Government for announcing Rs 3 lakh crore collateral free

automatic loan for businesses, including MSMEs which will benefit 45 lakh small

businesses. The loan will have 4 year tenure and will have 12 month moratorium on

Principal repayment. The Scheme can be availed till 31st Oct 2020.

Chairman also appreciated the decisions of the Government for providing Rs 20,000

crore subordinate debt for stressed MSMEs, which would benefit 2 lakh such businesses

and fund of funds for MSME which will infuse Rs 50,000 crore equity in MSMEs with

growth potentials. He further exclaimed by stating that MSME definition which was the

long pending demand of the industry has finally seen the light of the day. The Government

has finally changed the definition of MSME by allowing units with investment up to Rs 1

crore in place of Rs 25 lakh and units with turnover up to Rs 5 crore to be called micro

units. The investment and turnover limits for small and medium businesses have likewise

been raised to allow them to retain fiscal and other benefits. Now small weaving mills will

come under new MSME norms and because of this many garment manufacturers will be

benefited.

Other major decision of today’s announcement have been barring Global tenders for

government procurement up to Rs 200 crore. This would help MSMEs to compete and

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6 CITI-NEWS LETTER

supply in government tenders, extension of EPF payments for June, July and August and

reduction in PF contribution from 12% to 10% for the next three months.

Mr. Rajkumar also appreciated the decision of the Government for launching a Rs 30,000

crore Special Liquidity Scheme. Under this scheme investment will be made in both

primary and secondary market transactions in investment grade debt paper of

NBFCs/HFCs/MFIs. It will supplement RBI/ Government measures to augment

liquidity. This will provide liquidity support for NBFCs/HFC/MFIs and mutual funds and

create confidence in the market.

Mr Rajkumar felt that the Government would consider industry’s urgent demand of

extending the moratorium for repayment of loans and interest already extended for three

months from 1st March 2020 for another 10 months, i.e., upto 31st March 2021. He has

also hoped that the Government would also consider and extend 25% additional working

capital without any collateral or margin money for all the categories of accounts other

than MSMEs also in the next financial relief package to be announced shortly. He also felt

that the Government would soon announce a special package for boosting exports for all

the textiles & clothing products including cotton yarn and fabric to grab the emerging

opportunities and also consuming the surplus cotton that might significantly affect the

cotton farmers in the country.

Mr. Rajkumar appealed to the Government that though the above change in the definition

of MSME would help certain sections of the industry, the modified MSME criteria of

increasing investment or annual turnover would not much encourage technology

upgradation in the MSMEs sector nor help the capital intensive sectors like spinning,

independent weaving, processing, etc. They need greater support of the Government at

this critical juncture.

Home

Textile industry, MSMEs welcome FM announcement

(Source: The Hindu, May 13, 2020)

Textile industry and micro, small and medium-scale enterprises (MSMEs) in Coimbatore

and Tiruppur districts have welcomed the announcements by Union Finance Minister

Nirmala Sitharaman on Wednesday.

Coimbatore District Small Industries’ Association president R. Ramamurthy said most of

the demands of the associations in Coimbatore are met, especially related to definition

for MSMEs. The industries can start buying raw materials and can commence operations

with confidence.

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7 CITI-NEWS LETTER

According to V. Krishna Kumar, president of Southern India Engineering Manufacturers’

Association, the decision to give priority to products made in the country and opening

some tenders only to domestic industries are welcome measures. But, the loans

announced by the government should be available at lower interest rates.

President of Coimbatore and Tirupur District Tiny and Micro Enterprises’ Association C.

Sivakumar welcomed the announcements and said the micro units can start operations

and depending on need seek further support from the government. The government

should look at waiver of loans for micro units, he said.

J. James, president of Tamil Nadu Association of Cottage and Tiny Enterprises, added

that the micro sector, which is peculiar to Coimbatore region, needs more focus. There

should also be clarity on how the announcements will be implemented.

In the textile sector, Confederation of Indian Textile Industry chairman T. Rajkumar said

the move to redefine MSMEs will benefit the sector. The ₹ 30,000-crore special liquidity

scheme will supplement the measures announced by the RBI Governor to augment

liquidity.

Chairman of Apparel Export Promotion Council A. Sakthivel said the measures

announced will give more money in hands of people and factories and spur economic

growth. Disallowing global tenders will give opportunities to local industries.

According to Ashwin Chandran, Chairman of Southern India Mills’ Association, 60 % of

the textile industry in the country are MSMEs and these will benefit. There should be a

special package for exports. Tiruppur Exporters’ Association president Raja M.

Shanmugham welcomed continuance of Pradhan Mantri Garib Kalyan package and

payment of 12 % of employer and 12 % employee contributions into EPF accounts of

eligible establishments for another three months to salary months of June, July and

August 2020 also.

S. Nagarajan, president of Dyers’ Association of Tiruppur, while welcoming the

announcements said industries abroad get loans at lower interest rates. The units in India

should get loans at the international rates.

Home

Manpower shortage a challenge to ramp up textile production: Gokaldas MD

(Source: T E Narasimhan, Business Standard, May 14, 2020)

More than 50 per cent of the first quarter is lost from a production standpoint, but the

company is hoping that it would be able to resume 100 per cent operations by June

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8 CITI-NEWS LETTER

Getting adequate manpower to ramp up production to meet the demand is one of the

major challenges the textile industry is facing, said Sivaramakrishnan Ganapathi,

managing director of India’s largest apparel exporter, Gokaldas.

More than 50 per cent of the first quarter is lost from a production standpoint, but the

company is hoping that it would be able to resume 100 per cent operations by June. "The

challenge started even before the nation-wide lockdown, as the textiles and apparels got

impacted when coronavirus affected China, and the availability of a lot of raw ...

Home

Government identifies sectors for tax sops

(Source: Economic Times, May 13, 2020)

The government has identified close to a dozen sectors, ranging from capital goods,

defence, pharma and electronics to labour-intensive ones such as textiles and food where

it is considering proposals for tax concessions. It is also pushing for land and procedural

reforms to attract investment as part of a goal to be self-sufficient. Although the

department for promotion of industry and internal trade (DPIIT) has proposed a tax

holiday for sectors such as telecom, chemicals and capital goods, the finance ministry is

not in a mood to waive taxes after it slashed corporation tax to 15% for new manufacturing

entities as it is keen to avoid the “SEZ experiment”. This saw industries shift to the taxfree

enclaves without generating fresh investment or jobs. The department has also proposed

tax benefits for labour intensive sectors such as food processing and leather.

Its other suggestions regarding creation of

manufacturing clusters and new models for land leasing

and “plug-and-play” facilities to enable businesses to

simply invest and begin operations quickly have found

favour with Prime Minister Narendra Modi. The efforts

are part of the Make in India 2.0 initiative being piloted

by the government after the first phase did not result in a

significant jump in investments.

With land cited as one of the key roadblocks by investors,

the government is toying with multiple options, including channelising large tracts

available with state agencies such as railways and ports. Besides land amortisation, which

allows a fixed annual payback once operations commence, easy payment and leasing

options are being discussed. The other thrust is on creating manufacturing clusters in

states and reforming SEZs. The Centre is hoping that a series of steps to reform the

clearance process such as simplified procedures and a single-window mechanism — a

buzzword with all governments — will help speed up investment decisions and reduce

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9 CITI-NEWS LETTER

uncertainty, something that investors have always complained about. The government is

keen to tap parts of the global supply chain that may want to relocate from China,

following the ongoing coronavirus pandemic and also due to rising wage costs. A part of

the push also flows from the realisation to reduce dependence on China, as Covid-19

production disruptions across the border hit the supply chain for medicines and mobiles

phones in India. The broad contours of the plan have been thrashed out with Modi himself

holding consultations with key ministerial colleagues last month.

Home

India’s largest MMF sector stuck in Surat’s red zone

(Source: Times of India, May 14, 2020)

The surging cases in Limbayat, a major coronavirus hotspot, has put a big question mark

on the reopening of the country’s largest man-made fabric (MMF) sector worth Rs 50,000

crore. The reason being, nearly 90% of the textile markets, housing more than 55,000

shops, are located in Limbayat zone. Not only the markets, even 35% of the powerloom

weaving units and 40% of the embroidery units too are located there. With 361 active

Covid-19 cases, out of the total 927 cases in Surat city —Limbayat accounts for about 45%

of the total. Also, with the area classified under red zone, re-opening of the textile markets

looks a distant dream as of now. Surat’s MMF sector contributes to about 45% of the

demand in the country.

Secretary of Federation of Surat Textile Traders Association (FOSTTA), Champalal

Bothra said, “Had the textile markets not been in Limbayat, the MMF sector would have

commenced operation. About 90% markets are in Limbayat and we are not allowed to

reopen the shops as the Covid-19 cases are on the rise.” FOSTTA has urged the Ministry

of Home Affairs (MHA) and the district administration to allow the traders to open their

shops for three hours a day starting from May 18 by issuing fresh lockdown guidelines.

Dhiraj Shah, vice-chairman of Synthetic and Rayon Textile Export Promotion Council

(SRTEPC) told TOI, “In other states including UP and Delhi, the textile business has

commenced, but they are waiting for the supply of fabrics from Surat. Reopening of textile

markets is very crucial in ensuring the normal working of the entire textile chain.”

Jitendra Vakharia, president of South Gujarat Textile Processors Association told TOI,

“The textile chain can’t operate without textile markets as processors get job work from

the traders. With majority of the textile markets are in red zone, chances of commencing

textile processing also looks bleak.”

Home

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10 CITI-NEWS LETTER

Labour law changes in India should adhere to global standards, says ILO

(Source: Somesh Jha, Business Standard, May 14, 2020)

'Such amendments should emanate from tripartite consultation involving the government,

workers and employers'

The International Labour Organization (ILO), responding to the sweeping changes in

labour laws proposed by state governments, has asked the authorities to ensure that all

such relaxations adhere to global standards and are effected after proper consultation.

“Certain states in India are moving towards relaxing labour laws with a view to revitalise

the economy from the impact of Covid-19. Such amendments should emanate from

tripartite consultation involving the government, the workers’ and the employers’

organisations and be compliant with the international labour standards, including the

Fundamental Principles and Rights at Work (FPRW),” the ILO said in statement released

on Wednesday, in response to a set of questions sent by Business Standard.

The ILO added that labour laws protect the well-being of both employers and workers and

called for “collective efforts and solidarity between the government, employers and

workers”. “They (labour laws) are an important means to advance social justice and

promote decent work for all,” it said.

The ILO had in April estimated that around 400 million workers were at a risk of slipping

into poverty because of a “stringent” nationwide lockdown implemented to control the

spread of coronavirus.

Subsequently, some states announced relaxing or doing away with major labour laws to

attract investment. The Uttar Pradesh government has proposed an Ordinance exempting

firms from almost all labour laws for the next three years. The Gujarat government has

announced that it will follow in UP’s footsteps and allow new companies setting up shops

over the next 1,200 days to be exempt from major labour laws.

The Madhya Pradesh government has notified changes in labour laws to do away with the

need to avail multiple licences for hiring contract workers and setting up factories. It has

exempted firms from various welfare provisions under the Factories Act, 1948, along with

replacing inspections with third-party certification and giving exemptions from industrial

relations laws.

India is one of the founding members of the ILO, which came into existence in 1919. The

Indian Parliament has ratified 47 conventions of the ILO, some of which relate to working

hours, labour inspections, equal remuneration, and compensation in case of injuries,

among others.

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11 CITI-NEWS LETTER

Central trade unions in India had termed states’ changes an “inhuman crime”, which they

said was in “gross violation” of the ILO’s conventions, including that on holding tripartite

dialogues. The unions said that they were “seriously” considering lodging a complaint

with the ILO. Trade union leaders have said the ILO has the power to impose sanctions

on a country for violation of its conventions.

“Covid-19 has jeopardised the health and safety of millions of people across India, and

put immense pressure on businesses, jobs, and livelihoods. The country is making efforts

to flatten the upward curve of infection. National and state-level measures to provide

income and social security support to workers, and to revitalise businesses and the

economy have been advanced on priority,” the ILO’s statement said.

The ILO’s declaration on the Fundamental Principles and Rights at Work was adopted by

India in 1998. All members of the ILO have to “respect and promote” the “freedom of

association and the effective recognition of the right to collective bargaining, the

elimination of forced or compulsory labour, the abolition of child labour and the

elimination of discrimination in respect of employment and occupation”.

The ILO advised that any policy response should ensure recovery through fiscal and

monetary stimulus measures, support to enterprises, jobs and income through social

protection, retention and financial relief to companies along with ensuring that workers’

needs be protected by strengthening occupational safety and health measures. It further

said the most important element was “to strengthen the social dialogue, collective

bargaining, labour relation institutions and process for implementing solutions”.

In UP, provisions related to minimum wages, timely payment of wages and safety

provisions under the Factories Act, 1948 and Building (and Other Construction Workers)

Act, 1996 will continue to apply to all firms, according to the draft ordinance, which is

pending approval from the president.

Home

Covid-19 impact: Poor nations back India’s call to defer WTO talks

(Source: Amiti Sen, The Hindu Business Line, May 13, 2020)

‘Formal decisions cannot be taken at virtual meetings’

India has taken a formal stand at the World Trade Organisation in favour of postponing

all negotiations, including the talks on curbing fisheries subsidies, till the Covid-19

pandemic is under control. This has found support from many developing countries and

Least Developed Countries (LDCs), an official has said.

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12 CITI-NEWS LETTER

New Delhi has argued that while several poorer countries did not have the resources to

participate in digital meetings during the crisis, there are others facing livelihood

challenges who may change their negotiating positions that would get reflected only when

the crisis has run its course.

“India got the support from almost all developing countries, including the African Group

and the ACP and the LDCs following its proposal at the informal virtual meeting of the

Heads of Delegation that the negotiations need to be suspended. No negotiations are now

being held virtually. Some members may raise the issue again at the virtual General

Council meeting on May 15, but we are prepared with our arguments,” an official

told BusinessLine.

Following the Heads of Delegation meeting, the WTO is now looking at a year-end

deadline for completion of the negotiations on curbing harmful fisheries subsidies that

was supposed to be concluded at the meeting of WTO Trade Minister’s in June 2020. The

WTO Ministerial meet has also been deferred because of the on-going pandemic. India

said that it can agree to the conduct of informal meetings and exchange of views without

formal decision-making, through virtual means, so that it remains engaged on important

issues. “However, let us be very clear that informal virtual meetings cannot translate into

discussions on substantive negotiating issues that have implications on members’ policy,”

according to India’s statement at the meeting.

The country is also open to considering regular committees seeking online written

submissions, but only on non-negotiating agenda items. The timelines for submitting

written responses need to be pragmatic and flexible, it added. It is not feasible to conduct

negotiations on substantive issues through virtual meetings or written procedures as the

lockdowns and social distancing norms imposed across most capitals make it challenging

to receive substantive inputs from all relevant stakeholders, the statement noted. Also

with WTO negotiations low on priority for many countries battling the current crisis, the

ability to negotiate is further constrained.

Since the economic hardship and threat to food and livelihood security due to the Covid-

19 pandemic may lead several WTO members to re-assess their negotiating positions

across different areas of the WTO’s work, to carry on with negotiations in a business as

usual format does not make sense, it said.

Home

UP gives industry status to warehousing and logistics sector

(Source: Financial Express, May 14, 2020)

Infrastructure and industrial development commissioner Alok Tandon said that this will

drastically lower the cost of setting up units in Uttar Pradesh.

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13 CITI-NEWS LETTER

Close on the heels of suspending labour reforms and providing ample legroom to existing

and new industrial units in the state to help alleviate post Covid-19 distress, the Uttar

Pradesh government has decided to accord industry status to warehousing and logistics

sector, thereby, reducing the cost of setting up of such units.

Stating that chief minister Yogi Adityanath has given his consent for the new incentive for

warehousing and logistics sector, industrial development minister Satish Mahana said

that this sector had immense potential to create enormous job opportunities that are

required to address the unemployment crisis faced by migrants who are forced to return

to their home states.

“By granting industry status to the sector, the state is on its way to establish itself as a

favourable destination for investments in the sector in northern India,” the minister said,

adding that operations of warehousing & logistics sector will now be considered as

industrial activities by all state development authorities in the context of land-use.

Infrastructure and industrial development commissioner Alok Tandon said that this will

drastically lower the cost of setting up units in Uttar Pradesh.

“From now on, industrial land-use charges will be applicable to warehousing & logistics

sector units and parks in the state. Presently, change of land use is charged at 150% of

circle rate from agriculture to commercial land use, which will be only 35% of circle rate

as agriculture to industrial land-use change will be applicable,” he said.

Elaborating on the new initiative, principal secretary, Infrastructure and Industrial

Development, Alok Kumar, informed that henceforth, activities of warehousing and

logistics parks and units will be allowed for land-use of ‘industrial land’ in all industrial

development authorities of the state in accordance with the provision of ‘UP Warehousing

& Logistics Policy-2018’.

“Now warehousing and logistics units will pay 1.5 times of the industrial rate to industrial

development authorities for allotment and land use of areas reserved for industrial

activity, which will enable substantial cost saving compared to existing costs of

establishing units in the sector as land costs will be reduced to almost one-third; for

instance, at present the land available to warehousing and logistics sector costs an average

of Rs 40-60,000 per sqm, which will be reduced to around Rs 15-20,000 per sqm only

after this provision ”, he added.

Orders have been issued to all industrial development authorities, including Noida,

Greater Noida, UP State Industrial Development Authority (UPSIDA), Lucknow

Industrial Development Authority (LIDA), Satharia Industrial Development Authority

(SIDA), Yamuna Expressway Industrial Development Authority (YEIDA), Gorakhpur

Industrial Development Authority (GIDA) and upcoming Integrated Industrial Township

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14 CITI-NEWS LETTER

Greater Noida on Delhi-Mumbai Industrial Corridor (DMIC-IITGNL) to adopt this

provision by amending their master plans and building by-laws immediately.

Home

EPF relief package means higher salary, but tax implications stay

(Source: Aprajita Sharma, Business Today, May 13, 2020)

The move will provide relief to about 6.5 lakh establishments covered under EPFO and

about 4.3 crore such employees, releasing liquidity of Rs 6,750 crore to employers and

employees over next three months

In relief to employers and employees, Finance Minister Nirmala Sitharaman made two

key announcements on Wednesday regarding contribution towards Employees' Provident

Fund (EPF).

First, the government has extended EPF benefit for another three months for companies

employing up to 100 workers of which 90 per cent earn less than Rs 15,000 each per

month. In March the FM had announced that under Pradhan Mantri Garib Kalyan

Package (PMGKP), the government will pay EPF contribution for employers and

employees for such establishments for three months from March to May. It has now been

extended for another three months-June to August.

Further, it reduced EPF contribution limit for employers and employees both from 12%

to 10% for companies not eligible for 24 per cent EPF support under PM Garib Kalyan

Package and its extension. CPSEs and state PSUs will however continue to contribute 12

per cent as employer contribution.

"Under PMGKP, payment of 12 per cent of employer and employee contributions was

made into EPF accounts of eligible establishments. This was provided for March, April

and May 2020. This support will be extended by for June, July and August. This will

provide liquidity relief of Rs 2,500 crore to 3.67 lakh establishments and 72.22 lakh

employees," says FM Sitharaman said in the press release.

It will provide relief to about 6.5 lakh establishments covered under EPFO and about 4.3

crore such employees, releasing liquidity of Rs 6,750 crore to employers and employees

over next three months.

While the move to reduce the EPF contribution from 12 per cent to 10 per cent will

increase your take-home salary, it will reduce your investments under section 80(C) for

the financial year 2020-21 since EPF contribution qualifies for tax deductions under

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15 CITI-NEWS LETTER

Section 80-C. You may consider hiking the investment amount under any other section

80-C investments such as PPF or VPF.

"With the reduction in EPF rates, some taxpayers may have to relook at deductions they

want to claim under Section 80C, especially with the new regime kicking in," says Archit

Gupta, Founder, and CEO, ClearTax.

Besides, if you are financially stable and do not need your EPF contribution to get

reduced, you can invest the balance in VPF that attracts the similar rate of return as EPF

and also qualifies for tax break under section 80-C. "EPF contribution is being cut but

those with stable incomes can balance their contributions by increasing VPF

contributions and continuing to make use of this best-in-class investment scheme which

still offers an assured rate of return higher than other debt investments," says BankBazaar

CEO Adhil Shetty. The interest rate on VPF and EPF is 8.5 per cent at present compared

to 7.1 per cent on PPF. You can open your VPF account by approaching your HR.

Anshul Prakash, Partner, Khaitan & Co says this is a welcome step at least from social

security perspective as against the previous approach of covering smaller establishments.

"While the contribution rate reduction is laudable, it could have been the case where

EPFO could have subsidised for all establishments the overall contribution for employees

within Rs 15,000 monthly wage bracket," he says.

Home

1st tranche of Rs 20 lakh crore package doesn't hit government exchequer;

here's why

(Source: Anand Adhikari, Business Today, May 13, 2020)

The Rs 3 lakh crore collateral free loans to MSMEs would be disbursed by banks with a 100

per cent government gurantee. Since there would be a moratorium for 12 months, there

will be no default in 2020-21

The Rs 3 lakh crore collateral free loans to MSMEs would be disbursed by banks with a

100 per cent government gurantee. Since there would be a moratorium for 12 months,

there will be no default in 2020-21. This Rs 3 lakh crore guarantee will crystalise only

when there is a default, which cannot happen before next financial year. So there will be

nil outgo from exchequer in current financial year.

Similarly, the Rs 20,000 crore subordinate debt provision for MSMEs is by way of a

contribution of only Rs 4,000 crore to the fund. This guarantee will come from Credit

Guarantee Fund Trust for micro and small enterprises (CGTMSE). This Rs 4,000 crore

contribution by government would lead to banks offering credit upto Rs 20,000 crore.The

outgo from exchequer would be only Rs 4,000 crore.

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16 CITI-NEWS LETTER

In addition, the Rs 90,000 crore infusion by Rural Electrification Corporation (REC) and

Power Finance Corporation (PFC) will come on the head of these insitutions. The

guarantee is not by central government but by the state governments. Again the hit on

exchequer will be nothing.

The Rs 30,000 crore special liquidity schemes for NBFCs, HFCs and MFIs are also fully

guranteed by the government. Under this also, there is no outgo from the government

exchequer.

Similarly, the Rs 45,000 crore liquidity under the partial gurantee scheme for NBFCs has

guarantee element of only 20 per cent , which would be borne by the government. Here

again gurantee would crystalise only later or next year.

Home

Textiles output contracted by 13.1%, a 97-month low, in Mar 2020

(Source: Live Mint, May 13, 2020)

Among the 23 industries tracked by the Central Statistics Office's Index of Industrial

Production, the textiles industry had the fifth highest growth rate.

Factory output in the textiles industry contracted 13.1% in Mar 2020 compared to the

same month last year, according to new data released by the Central Statistics Office. In

comparison, it had expanded at 2.8% in the previous month of Feb 2020.

Growth in the textiles industry was more than that in overall industrial output, which

shrunk 16.7%. Textiles made up 3.29% of the overall index of industrial production (IIP),

and contributed -0.43% to overall IIP growth.

Among the 23 industries tracked by the Central Statistics Office's Index of Industrial

Production, the textiles industry had the fifth highest growth rate. Across all industry

sectors, the growth rate was highest in manufacture of coke and refined petroleum

products, and lowest in manufacture of motor vehicles, trailers and semi-trailers.

Factory output is measured by the Index of Industrial Production (IIP), a composite index

that measures changes in the volume of production of selected industrial goods.

Home

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17 CITI-NEWS LETTER

TEA hails stimulus measures

(Source: Fibre2Fashion, May 13, 2020)

Tiruppur Exporters Association (TEA) has welcomed the announcement of 15

different measures by Union finance minister Nirmala Sitharaman today. TEA president

Raja M Shanmugam specifically thanked the minister for revising the definition

of micro, small and medium enterprises (MSMEs) linking with additional criteria

of annual sales turnover.

Of the 15 measures announced today at a press conference, six measures are for the

benefit of MSMEs, 2 are related to Employee Provident Fund, and 3 are direct tax related.

TEA president thanked Prime Minister Narendra Modi, Union finance minister and

Union minister of state for finance for laying out comprehensive vision to spur growth

and make Self-reliant India (Aatma Nirbhar Bharat).

Shanmugam appreciated collateral free automatic loan for standard MSMEs,

Subordinate Debt for stressed MSMEs, and Equity infusion for MSMEs through Fund of

Funds.

The continuance of Pradhan Mantri Garib Kalyan Package (PMGKP), payment of 12% of

employer and 12% employee contributions into EPF accounts of eligible establishments

for another 3 months to salary months of June, July and August 2020 is also a welcome

step, Shanmugam said in a press release.

He lauded reduction of employer as well as employee EPF contribution for business &

workers for 3 months from 12% to 10%. He also appreciated other direct tax measures

and extension of date for income tax return filing.

Home

India pitches for Japanese companies as they move out of China

(Source: Outlook India, May 13, 2020)

India is making a pitch for attracting Japanese companies in the post Covid-19 scenario

after the Japanese government announced incentives for its companies to move out of

China.

Invest India has prepared a paper on "Why is India the best place for Japanese

investments in the post Covid-19 world" authored by Devika Chawla, Strategic

Investment Research Unit, and Seerat Kohli, Japan Plus, Invest India.

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18 CITI-NEWS LETTER

The paper has also been put up on the Twitter handle and Facebook page of the Indian

embassy in Japan.

Invest India is a non-profit venture under the Department for Promotion of Industry and

Internal Trade, Ministry of Commerce and Industry. It is the National Investment

Promotion and Facilitation Agency of India and acts as the first point of reference for

investors in India.

The paper argues that there is widespread uncertainty about China''s future global role

and trade practices.

It examines the recent announcements by the Japanese government offering massive

incentives to their companies to move out of China and argues why Japan should look

towards India as the foremost destination for diversifying its supply chains away from

China.

The implications of this package will be wide and far-reaching, both in terms of geopolitics

as well as economics. Specifically, the decision to promote relocation of Japanese

companies away from China, its largest trading partner, indicates a growing consensus in

Japan to move its supply chains back to the country, or to other preferable countries such

as Vietnam, Thailand and India.

It points out that China has been rapidly losing its attractiveness among Japanese

countries for a while now, an example of which can be seen from the fact that about 159

Japanese companies operating in China have relocated to comparable countries like

Vietnam and Thailand.

"Such diversification and shifting of Japanese firms away from China is estimated to

create a $730 billion economic opportunity for developing geographies like ASEAN and

India.

"The ongoing COVID-19 crisis presents a golden opportunity for India and Japan to

further boost their already successful relationship,", the paper argues.

There is little doubt in anyone''s mind that the post-Covid world will be starkly different

from the one preceding it in many significant ways as the world looks towards an

economic and social reset, it said.

"Among other things, this pandemic has highlighted the world''s over-dependence on

China, particularly in areas such as medical equipment and medical textiles, as a result of

which, there has been a growing consensus between and within countries such as India

and Japan about not only promoting their domestic industries but also diversifying their

reliance on China for manufacturing activities," it said.

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19 CITI-NEWS LETTER

The paper points out that these convergences bring Indian and Japanese interests closer

and the opportunity presented by Japan''s announcement of funding its multinationals to

relocate away from China, must be fully leveraged by India as the most preferable

destination to secure such investments from Japan.

India has a variety of factors and reasons to be the favourite destination for Japanese

investments, including its global role and position as a key international player capable

of replacing China, its large market size offering immense opportunities for trade, its

consistently strong growth rates, its vast pool of cheap yet skilled labour and last but not

the least, its open and democratic values, a major feature that differentiates India from

China.

"A deepening of the Indo-Japanese relationship proves a win-win for both; promoting

India as the prime place for Japanese companies to invest in, goes a long way in that

direction," it said.

Home

India Ratings puts April revenue loss for 21 states at 97,100 crores

(Source: Economic Times, May 14, 2020)

Twenty one major states could be staring at a collective revenue loss of 97,100 crore in

April alone, according to a report by India Ratings (Ind-Ra) released on Wednesday. The

disruption to the economy was so swift and severe that even if the lockdown was lifted in

mid-May, economic normalcy would be unlikely until the second quarter of the fiscal, the

report added

“Under the current circumstances there is a fair amount of uncertainty regarding the

quantum and timings of the state governments’ receivables from the union government.

Moreover, their own sources of revenue have fallen to abysmally low levels,” the report by

Anuradha Basumatari, associate director at Ind-Ra, said. According to the paper, states’

own revenue mainly comes from seven heads – state goods and services tax (SGST), state

VAT (mainly petroleum products), state excise (mainly liquor), stamps and registration

fees, tax on vehicle, tax and duty on electricity and own non-tax revenue. States which

have a high share of own revenue in their total revenue, such as Goa, Gujarat, Haryana,

TN, Telangana, Karnataka, Maharashtra and Kerala with 65%-76% would be the worst

affected, according to Ind-Ra.

Home

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20 CITI-NEWS LETTER

Covid impact: Companies face input tax credit denial on goods destroyed

(Source: Vinod Mahanta & Sachin Dave, Economic Times, May 14, 2020)

Companies that have suffered damage to raw material and finished products during the

Covid-19 lockdown now face a double whammy of sort — on top of the loss of the goods,

they cannot claim input tax credit. Input tax credit under the goods and services tax

framework allows businesses to set off tax paid on raw materials or input services against

future tax liabilities. But this benefit is not available on goods that are stolen, lost,

destroyed or distributed as free samples. Manufacturers have reported loss of perishable

raw materials during transit and at warehouses since the country went into a lockdown.

They now must reverse the input tax credit under the current rules, adding further

distress to the businesses which are already struggling due to stalled activities.

According to tax experts, the tax on raw materials

was as high as 18% and the cumulative input tax

credit on goods destroyed, lost or stolen during the

pandemic could run into hundreds of crores. Many

of those impacted are small and medium

enterprises. Businesses — especially in sectors such as food processing, leather, textiles,

grocery and farm items where the goods are highly perishable — are facing a situation

where the inventory loss is now compounded with reversal of input tax credit that will

lead to a higher tax outgo, say tax experts.

"The provision obligating input tax credit reversal in cases of writing off/destruction of

goods becomes all-important in the current Covid-19 scenario for limited shelf-life

products,” EY India tax partner Abhishek Jain said. “Most businesses have already

pleaded to the government for a relief on this additional financial burden and are looking

forth to a fiscal relief on this soon.” The section that denies the input tax credit has been

litigated against in the past and the cases are still pending in courts. Tax experts expect

more companies to challenge it now. “The restriction with respect to the destroyed goods

is in section 17(5)(h) of the CGST Act and this provision of blocked credit has already been

challenged by us in the writ court. Blocked credits will have to be seen harmoniously with

the objectives of GST and whether the procurements are intended to be used in the course

or furtherance of business,” said Abhishek A Rastogi, partner, Khaitan & Co.

Home

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21 CITI-NEWS LETTER

Priyanka Gandhi writes to UP CM Yogi Adityanath, seeks waiver of power

bills of farmers

(Source: Times Now, May 13, 2020)

In her letter, Congress general secretary Priyanka Gandhi Vadra called for relief to

weavers and workers in various small and cottage industries in the state including carpet,

textiles and 'chikan' work.

Congress general secretary Priyanka Gandhi Vadra on Wednesday wrote to UP Chief

Minister Yogi Adityanath, seeking zero interest on home loans availed by the poor and

middle class and also waiver of power bills of farmers for four months.

In a letter to the UP chief minister, she also sought a slew of relief measures including

waivers on bank loans and power bills of small and medium industries in the state, which

are considered the backbone of the economy. In her letter, she called for relief to weavers

and workers in various small and cottage industries in the state including carpet, textiles

and 'chikan' work.

Vadra also condoled the demise of Adityanath's father. This was the first time she was

writing to him after his father's death. Adityanath's father passed away on April 20.

Home

Atmanirbhar: 41 Punjab units get nod to manufacture PPE coveralls

(Source: Navjeevan Gopal, Indian Express, May 13, 2020)

Of the 41 manufacturers cleared for production of PPEs, 18 have orders of more than 25

lakh PPE coveralls worth Rs 256 crore from Hindustan Latex Limited.

THE AGRARIAN state of Punjab, often referred to as the ‘food bowl’ of India, has emerged

as a frontrunner in the nation’s fight against Covid-19, with 41 manufacturers of Personal

Protective Equipment (PPE) coveralls based in the state getting clearance from the South

India Textiles Research Association (SITRA).

Of the 41 manufacturers cleared for production of PPEs, 18 have orders of more than 25

lakh PPE coveralls worth Rs 256 crore from Hindustan Latex Limited. The orders are at

different stages. Some manufacturers have already delivered a major chunk of the orders,

others are in the process of manufacture, while the ones given orders recently are setting

up manufacturing lines to start production.

The state’s textiles industry, majorly based in Ludhiana, is in the league of big

manufacturers from Bangalore, Coimbatore, Tirupur, Mumbai, Surat, Noida and

Gurgaon. But it was not a cakewalk manufacturing a new product.

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22 CITI-NEWS LETTER

“Punjab is an inspiring story. The industry has done very well and I am sure it will

continue in a similar fashion in the future,” Additional Secretary in textiles ministry V K

Singh told The Indian Express.

Towards the end of March, the textiles ministry was perplexed to discover that there were

only two manufacturers, both Bangalore-based, which had come forward to offer PPE

coveralls.

“There were no other manufacturers. Majority samples from Punjab were failing tests. It

was a very frustrating experience. But the Punjab manufacturers kept on improving.

There were manufacturers whose samples got clearance in the third attempt since the

tests are very technical. But now Punjab alone manufactures a sizeable share of PPEs in

the country,” said Singh, who used to coordinate to take samples to the SITRA laboratory

in Coimbatore for testing.

“Stitching and taping is a very crucial factor in the tests. Punjab manufacturers who

improved fabric quality also went on to fulfil high quality stitching and taping

requirements…One may consider it a baby step but it is a first step of a very long journey

for the Punjab industry,” he added. Punjab Additional Chief Secretary (Industries and

Commerce) Vini Mahajan said, “I see it as a very strong sign of the entrepreneural spirit

of the people of Punjab. They were able to understand very quickly what is the

requirement of the times for the country and the state. They pulled out all stops to

understand how to deliver and did it successfully.”

Textiles industry upbeat

Ludhiana-based Shingora Textiles Limited’s Managing Director Amit Jain, “It is a seat

belt moment for personal protection. Like people wear seat belts in the car, PPEs will also

become an integral part.”

He further said, “There is going to be a worldwide need for PPEs. China was world leader.

India I can say is now at no. 2, only in a month’s time. The government has done a

tremendous job.” Ludhiana-based Garg Acrylics General Manager Anish Bansal said that

prior to manufacturing PPEs, they were primarily into manufacturing T-shirts and

sweaters. An initial order of 50,000 pieces has already been delivered. “It took us 10 days

to deliver that order and we have another order of 1.75 lakh pieces,” he added.

JCT Limited Strategic Business Development Director Priya Thapar said, “We are very

grateful to the Central government, Ministry of Textiles, Union Ministry of Health and

the Punjab government because they have given us a great opportunity. They have helped

create such a big industry for PPEs. The manufacturers in India can produce better PPEs

than international players and definitely better than China.”

Home

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23 CITI-NEWS LETTER

MSCI index rejig: Who’s in and who’s out

(Source: The Hindu Business Line, May 13, 2020)

Revamps Global Standard, India Domestic and SmallCap indices

The half-yearly review for the MSCI India index, carried out on Wednesday, has seen the

inclusion of six stocks — Abbott India, IPCA Laboratories, Jubilant FoodWorks, Power

Finance Corp, Tata Consumer and Torrent Pharma.

Ashok Leyland, Bank of Baroda, Cummins India, M&M Financial and Tata Power have

been excluded. The changes will take effect from the close of May 29, MSCI said in a

release.

According to market sources, MSCI, in its Semi Annual Index Review, included five stocks

and excluded four in the MSCI India Standard index. The inclusions are: Biocon Ltd,

Indraprastha Gas, Jubilant Foodworks, Tata Consumer Products (formerly Tata Global

Beverages) and Torrent Pharmaceuticals. Ashok Leyland, Mahindra & Mahindra Fin

Services Ltd, Shriram Transport Finance and Tata Power have been excluded.

MSCI has also rejigged its India SmallCap Index, which saw the entry of 13 stocks —

Amber Enterprises, Ashok Leyland, Cummins India, Emami, Future Retail, GMM

Pfaudler, IndiaMart Intermesh, M&M Financial, Mishra Dhatu Nigam, Nippon Life India,

NLC India, Relaxo Footwear and Tata Power.

On the other hand, 52 stocks — including Abbott India, Adani Green Energy, Allcargo

Logistics, Arvind Fashions, Ashoka Buildcon, Birla Soft, BSE, Caplin Point, CPCL, Dish

TV, Dishman Carbogen, eClerx, Equitas Holdings, Future Consumer, GE T&D, Gujarat

Alkalies, GSFC, HFCL, Himadri Speciality, IFB Industries, Intellect Design, IPCA Lab,

Jagaran Prakashan, J&K Bank, Jamna Auto, JIndal Saw, JK Tyre & Ind, Jubilant

FoodWorks, Karnataka Bank, KPIT Technologies, La Opala, Lemon Tree Hotels,

Mahindra Holidays, Nagarjuna Construction, Nilkamal, Nocil, Phillips Carbon, PFC,

Prism Johnson, PTC India, Raymond, Repco Home Finance, Sadbhav Engineering,

Shoppers Stop, South Indian Bank, Sterling & Wilson, Tata Consumer Products,

Vardhman Textiles, VRL Logistics. Welspun Corp and Zensar Technologies — have been

excluded from the SmallCap index.

Home

Self-reliant India: Which are the sectors dependent on imports, which are

not

(Source: Indian Express, May 12, 2020)

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24 CITI-NEWS LETTER

Electrical equipment such as smartphones and computers are a key part of India’s import

bill. Medical devices like ventilators also rely on imports of several crucial components

like solenoid valves and pressure sensors.

Prime Minister Narendra Modi Tuesday brought up the importance of local

manufacturing and consumption of locally produced goods, stating that Indians

needed to become “vocal for local”. He hinted that the government would need to

undertake major reforms in order for the Indian industry to play a major role in the global

supply chain. Yet, how self reliant are India’s industries currently and how soon can they

step up?

What sectors heavily depend on imports right now and cannot immediately

scale up production domestically?

Electrical equipment such as smartphones and computers are a key part of India’s import

bill. The value addition in India’s electronics industry is limited to mostly assembly, while

the country depends on imports to access most of the primary and critical components

used to make them, including printed circuit boards (PCBs). For instance, around 88 per

cent of the components used by the mobile handsets industry are imported from countries

like China, according to the Confederation of Indian Industry.

Over 60 per cent of the country’s medical devices are imported as well. Other products

heavily imported into the country are cells and modules used by the country’s solar power

industry.

What sectors partially depend on imports to make their finished products?

India’s pharmaceutical industry is capable of making finished formulations, and also has

domestic manufacturers of several key ingredients used to make them. However, the

industry also imports some key ingredients for antibiotics and vitamins currently not

manufactured in India. The country is currently trying to encourage domestic firms to

make these key ingredients, known as fermentation-based APIs. However, this may take

a few years.

India imported around Rs 249 billion worth of key ingredients, including fermentation-

based ingredients, in FY19, and this accounted for approximately 40 per cent of the

overall domestic consumption, according to CII.

Medical devices like ventilators also rely on imports of several crucial components like

solenoid valves and pressure sensors.

Some auto manufacturers depend on imports for various components, while the country’s

electric vehicles industry is dependent, “to a large extent” on Chinese imports for

chemicals used to make cathodes and battery cells, it said.

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25 CITI-NEWS LETTER

Local dyestuff units in India are also heavily dependent on imports of several raw

materials, while specialty chemicals for textiles like denim are also imported, according

to CII. For instance, when China initiated its lockdown of Wuhan earlier this year during

the COVID-19 pandemic, nearly 20 per cent of India’s dyes and dyestuff industry

production was hit due to a disruption in raw material.

Are there any sectors that are already self-reliant, have minimal dependence

on imports or have the capacity to immediately scale up production here?

According to trade experts like JNU professor Biswajit Dhar, India is not as dependent on

imports for some textile components like yarn. “Although the domestic industry argues

that China is a major threat, if you look at the global scenario, India’s share in textiles has

been going up,” he said.

While technology transfer is required for more advanced and critical medical devices, the

country does have the capacity to domestically make products like hot water bottles,

mercury thermometers, hypodermic needles, wheelchairs and patient monitoring display

units, according to some industry executives. “Many items, even what was made here in

the past, are not made now by manufacturers as they prefer to import and market,” said

Rajiv Nath, Forum Coordinator, Association of Indian Medical Devices Industry

(AIMED).

What are the issues with scaling up production in import dependent sectors?

The manufacture of some of the key products that India imports such as semiconductors,

displays and other very capital intensive electrical equipment may not be possible soon as

manufacturing these requires large, stable sources of clean water and electricity. They also

need a high degree of policy certainty as these require high upfront investments. Indian

firms can however begin producing less sophisticated components if certain policy

measures are taken

The Indian industry faces much higher costs in inputs such as electricity and much higher

logistics costs than Chinese firms. Vinod Sharma, MD of Deki Electronics, said it costs Rs

4/kg for a shipment of cable to arrive at Mumbai from a city 300 km away from Shanghai

but it costs around Rs 14/kg for that shipment to be transported from Mumbai to a factory

in Noida. This is also true for fermentation based APIs, which Indian pharma executives

claimed the country became less competitive in when China began receiving

infrastructure and logistic support to produce and sell them at cheaper rates.

What policy measure does industry need for greater local production?

A key issue holding back manufacturing in the country and a lack of flexibility in labour

laws, high costs and low availability of land and high cost of electricity. Some states

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26 CITI-NEWS LETTER

including UP and Madhya Pradesh have relaxed some labour laws with Karnataka likely

to follow suit.

“You have to work on making the industry efficient first. For this you have to have policies

to ensure (these industries) actually grow. You need an industrial policy, you need an

innovation policy and you need to look at what the industries need in terms of making

their infrastructure more efficient,” added JNU’s Dhar.

Home

India overview: Close quarters

(Source: B Prakash , Swati Jain, Fibre2Fashion, May 2020)

The covid-19 crisis has hit the Indian economy at a time when growth is at its lowest in a

decade, investments are shrinking, and a consumption recovery is sputtering.

The covid-19 pandemic has rewritten the way the world operates in a matter of weeks.

The rapid spread of the virus has brought the world to a standstill: streets are empty,

offices have shut down and people are locked inside their homes. The health crisis is

taking its toll on the global economy and has triggered an unprecedented crisis in the

textiles and apparel industry. From global store closures to fashion show

cancellations, covid-19 is disrupting the industry. The virus is having dire repercussions

for Indian manufacturers—supply chain disruptions, declining exports and

uncertainty in orders.

Textiles Industry Faces Hurdles

# Retail doors closing globally instilling uncertainty in future demand

With the increasing coronavirus scare across the globe, retail stores are shutting down to

contain the spread. Brands are facing a slowdown in their sales and preparing themselves

for potential revenue losses. The virus has spread rapidly in the EU and US, the two major

markets for apparel, and led to a significant reduction in demand. The EU textiles and

apparel industry is expecting more than a 50 per cent drop in sales and production this

year. In the US, apparel stores have already seen a decline of 10 per cent in sales in

February–March since the onset of the outbreak.

With uncertainty on the duration of the pandemic, a prolonged impact on global apparel

demand is expected. A large number of buyers have cancelled running orders and frozen

future buying as well. Buyers typically start shipping in goods for the holiday season from

Asia as early as in June. However, with the emerging health crisis and a period of

uncertainty ahead, the covid-19-induced economic slowdown could end up hitting holiday

sales, when many retailers make the bulk of their profits.

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27 CITI-NEWS LETTER

# Indian manufacturers stare at losses with the country’s lockdown

Production in the Indian textiles and apparel factories came to a halt following

the nationwide lockdown. However, for Indian factories, trouble began in February

with supply shortages from virus-hit China’s textiles sector. Nevertheless, just as China

restarted production—raising hopes of garment manufacturers of getting operations back

on track—demand collapsed as lockdowns around the globe forced retailers to shut their

doors. The textiles industry has been hit hard with brands holding payments and

cancelling all orders.

The domestic market was probably the last oasis, but with the shutdown of all stores,

manufacturers are left with no option. It is expected that this disruption will reduce

market demand by around 15–20 per cent, resulting in largescale losses in production

and jobs.

# Lockdown hits livelihood of workers

Temporary closure of factories amidst the lockdown in India has forced manufacturers to

hold back wages to balance out their losses. In India, the textiles and apparel industry

predominantly employs migrant workers from different states and a large workforce

comes from nearby villages by availing of public transport. The lockdown has forced

migrant workers to return to their native places and bringing these workers back to the

factories when production commences will be a challenge.

# Raw material prices decline

India’s cotton yarn exports, especially to China, have declined significantly in the

past two months. This has led to the surplus cotton yarn being diverted to the domestic

market. As a result, cotton yarn prices have witnessed a decline of 3–5 per cent during the

past month. With reduced demand and falling oil prices, there has been an impact on

polyester prices as well. Polyester prices have reduced by more than 20 per cent due to

reduced demand and has resulted in significant losses for fibre players.

China slowly getting back to business

After a two-month long production shutdown, Chinese textiles and apparel

manufacturers are kickstarting operations. However, with the majority of the world still

stuck on the virus curve leading to a damage in the global demand, manufacturers might

find it difficult to fill their capacities due to unavailability of orders. Fashion brands

sourcing from China for the autumn season usually place their orders during April with a

delivery in May or June. With an uncertainty in the situation and the lockdown still ahead,

buyers are hesitating to place any new orders and are in fact either cancelling or putting

their existing orders on hold. Meanwhile, China has increased the production of medical

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28 CITI-NEWS LETTER

textiles like masks and other personal protective equipment (PPE) to export to

virus-hit countries.

# Fashion events stalled

The coronavirus pandemic has put a halt to international travel, and this has immediately

affected the annual fashion events including fashion shows, trade shows and conferences.

These events draw huge crowds and allow buyers to see the latest fashion trends. Most of

the lined-up fashion events of 2020 have been either postponed or cancelled. The

postponing of these events may slow down new investments and affect the businesses of

existing stakeholders.

Industry Seeks Relief to Mitigate Crisis

Amidst this pandemic, the textiles and apparel industry is in dire requirement of a

relief package to survive the crisis. Exports as well as domestic sales have come to a

grinding halt. At the current rate, markets are unlikely to return to their normal buoyancy

for at least 10–12 months and payments are likely to be delayed by retailers, who are

fighting their own battles for survival. Several measures can be taken up immediately with

some modifications in existing schemes and can be implemented soon. Some of the relief

measures that are expected by the industry include:

Clearing pending subsidies:

Release of dues under TUFS, export subsidies (RoSCTL/MEIS), and GST refunds,

on immediate basis;

Extension of soft loan equivalent to these government dues that could be adjusted

as soon as the government clears the dues.

Financing related:

Deferment of interest charge for six months on all loans;

Moratorium for repayment of principal and interest for oneyear;

Reduction in bank interest rate by 3%;

Provide at least 30% additional working capital at lowerrates without any

collateral;

Collateral-free lending for loans up to ₹2 crore and maximumcollateral of 35–

40% for lending beyond ₹2 crore;

Relax RBI norms for declaring the defaulting unit as NPA for one year.

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29 CITI-NEWS LETTER

Fiscal support:

Cover all textile, garments and madeup products underRoSCTL, IES & MEIS

benefits;

Increase Interest Equalization Scheme from present level to5% for all garments

and made-ups for FY 2020–21 and extend this benefit furtherto all other textile

items not covered in the scheme;

Provide 3% additional ad hoc export incentive for one year.

Others:

Exemption for all raw materials, dyes & chemicals,intermediaries, spares,

accessories, etc from basic customs duty andanti-dumping duty, if any;

Defer payment of EPF and ESI contributions for 6 months;

Extend support to industry for payment of salaries and wagesto workers during

lockdown;

Textiles being a continuous process and a predominantly export-oriented industry,

advise state governments to permit units run with in-house workers with

prescribed pre-conditions.

What Should the Industry Expect?

Since the pandemic is still in an expanding phase, the ultimate severity remains unknown.

However, some foreseen changes will shape the industry once the coronavirus dust

settles.

Bruised demand in domestic market and exports

The black swan event has affected the Indian textiles and apparel industry, in terms of

both trade and domestic consumption. There is a steep reduction in demand owing to a

sudden halt of global trade and domestic sales due to the closure of retail stores. The virus

originated in China and later spread to the EU and US. These are huge markets for Indian

textiles and apparel products and hence, the Indian textiles value chain is bound to face

adverse repercussions of the pandemic. Buyers are expected to postpone orders in the

coming six months and will initially demand smaller order quantities at very tight

margins to recover from the reduced sales in the previous weeks.

With malls and shopping centres closed and movement restricted, domestic sales have

withered. Brands are looking at very low consumer sentiment and a steep decline in

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30 CITI-NEWS LETTER

consumption in the coming year. Sales have taken a downturn by as much as 70 per cent

since fears over the virus intensified. Even online purchases—otherwise growing prior to

the outbreak—have declined by 15 per cent as consumers cut back on discretionary

spending. Retailers and brands have already started halting production lines, delayed

season releases and cut buying budgets to prepare for these eventualities.

Opportunity for India as brands look to reduce dependency on China

China manufactures more than a third of textiles and apparel globally. China was the

initial epicenter of the coronavirus outbreak and the production lockdown enforced in the

country vastly disrupted the global textiles and apparel supply chain. Brands that sourced

goods solely from China were in a fix and were forced to arrange for substitute vendors in

other countries within a short timeframe. Some brands will adapt the strategy of

diversification and reduce their dependency on China to prevent such a situation in the

future. The move of shifting out of China was heightened due to an increase in

manufacturing costs and tariff issues with the US. The supply chain gap developed due to

this pandemic has added more weightage to this strategy. Brands will explore alternative

options such as Bangladesh, India, Vietnam, Cambodia or any other Southeast Asian

supplier. India can play its cards of competitive manufacturing costs and presence of

complete supply chain to present itself as a credible alternative.

Increased focus on ecommerce sales and digitalisation of supply chain

Malls and retailers took the step to close their stores to contain the spread of covid-19.

But the ecommerce channels of these stores are still operational in certain countries.

Social distancing has highlighted the importance of online purchasing as a safe alternative

to visiting physical stores. This shift could lead to a changed buying behaviour after the

pandemic and has the potential to build longtime ecommerce customers.

Brands and retailers are further driven to incorporate a digital strategy in their buying

process. Online marketplaces like Joor are expected to become more popular as brands

and retailers look to maximise digital options of showcasing their products and

facilitating the buying and selling process. Even fashion shows are going digital to keep

the industry connected.

The Shanghai Fashion Week was streamed over Alibaba to refrain from making losses

and many other designers are displaying their new collections through social channels

and websites.

Emerging demand for medical textiles

Sales of medical textiles including surgical masks and protective clothing has jumped

phenomenally. Countries across the globe are importing large quantities of such products

to battle the infectious disease. The supply of these products is not able to keep up with

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31 CITI-NEWS LETTER

the rising demand. The rapid spread of covid-19 has sensitised people towards hygiene

and healthcare. The demand for medical protective gear such as masks, disposable gloves

and hygiene products such as wipes is expected to surge and sustain even after the end of

the coronavirus pandemic. This is a lucrative opportunity for the textiles industry in the

near future.

How Can Indian Industry Recover?

The Indian textiles and apparel industry will need to gear itself to fight the economic

consequences of covid-19. Manufacturers need to maximise their internal capabilities and

focus on building their efficiencies. This will enable them to work with the anticipated

shorter lead times and tight margins.

India has the capacity and competence to gain share in its core cotton-based categories

and women’s fashionwear categories with value addition (embroidery, schiffli, etc). It will

be crucial to focus on manufacturing excellence and improve cost-competitiveness to

ward off business risk from other manufacturing nations. Product diversification beyond

cotton is also imperative for the industry. In medium to long-term, Indian apparel

exporters need to invest and develop expertise in MMF garments including winterwear,

outerwear and performance wear. Companies may also focus on planning for the winter

or next spring summer season and target the channels of value retailing and ecommerce,

which are expected to grow in the near future. Indian companies should also look out for

new markets beyond the US and EU like Japan and South Korea and adopt digital

methods of connecting with buyers.

Companies could also explore emerging medical textiles (surgical gloves, masks, gowns,

wipes, etc) and other textile items required for healthcare facilities like hospital

bedsheets, mattresses, etc. With countries’ increased focus on healthcare, medical textiles

is likely to see a surge in demand. This unforeseeable humanitarian and financial crisis

has hit the Indian economy at a time when growth has slowed to its lowest in a decade,

investments are shrinking and a consumption recovery is sputtering. While there is no

denying that the virus needs to be contained, including a complete lockdown, the need to

manage its economic aftermath is just as urgent. However, textiles and apparel companies

need not lose hope and need to develop strategies to prepare themselves for when the

markets open again, hopefully well in time before the festive season.

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32 CITI-NEWS LETTER

GLOBAL

UK government sets up COVID-19 Vulnerable Supply Chains

(Source: Fibre2Fashion, May 13, 2020)

In response to Coronavirus, COVID-19, the UK government has set up COVID-19

Vulnerable Supply Chains Facility (VSCF). The initiative offers grants and/or technical

assistance of the value between £200,000 and £600,000. It has been established by

the Department for International Development (DFID) in partnership with the

Department for International Trade.

The support is intended to ensure vulnerable workers and suppliers are prepared for the

economic and social shocks of COVID-19. VSCF will support proposals that focus on the

garment and agriculture sectors in at least one of the following countries; Afghanistan,

Bangladesh, Burkina Faso, Chad, DRC, Ethiopia, Ghana, Iran, Iraq, Jamaica, Jordan,

Kenya, Lebanon, Libya, Malawi, Mali, Mozambique, Myanmar, Niger, Nigeria, OPTs,

Pakistan, Rwanda, Sierra Leone, Somalia, South Sudan, Sudan, Syria, Tanzania, Uganda,

Yemen, Zambia, and Zimbabwe, according to a press release by UKFT.

Applications of support from VSCF are welcome from businesses facing industry

challenges and looking for advisory/ facilitation support; businesses looking to support

the livelihoods of poor and vulnerable workers and suppliers in their supply chains; not-

for-profit organisations supporting MNCs/SMEs and their suppliers in specific sectors/

geographies; not-for-profit organisations supporting transparency and accountability

mechanisms within/across specific supply chains; not-for-profit organisations

supporting informal workers and smallholder farmers that are part of global supply

chains.

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Bangladesh: Textile, financial sectors to feel the brunt of pandemic fallout

(Source: New Age Business, May 13, 2020)

The textile, construction and financial sectors are at high risk and the pharmaceutical and

power sectors at low risk of the coronavirus pandemic fallout, according to a research

conducted by EBL Securities, a brokerage firm.

EBL Securities on Wednesday released the report of the research on the impact of

coronavirus on major sectors in the country.

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33 CITI-NEWS LETTER

According to the report, banks would struggle to manage their profits due to lower net

interest margin.

Besides, banks’ operating income may show a remarkable downfall amid its increased

safety measures and incentives for the employees in the wake of coronavirus.

The amount of non-performing loans may rise across almost all sectors, including

corporate, retail, and small and medium enterprise.

The BB’s recent measures including slashing cash reserve requirement by 150 basis points

and lowering repo rate by 75 basis points would increase liquidity and lending capacities

of banks.

But both deposit withdrawal pressure and fund requirements for facilitating credit under

various schemes may offset the benefits received under these measures.

Like banks, financial market existence of non-bank financial institutions would also be

affected by issues including deposit withdrawal, squeezed interest margin, hike in NPL,

and lower operating income.

Besides, a halt in economic activities runs the risk of customers defaulting on their leases,

which may require provisioning, the report said.

The NBFIs with brokerage operations incur losses from commission earnings.

The ongoing lockdown dragged down the sales of houses, plots and apartments thus the

demand for housing schemes have also decreased.

The textile sector had already shown negative growth of 5.71 per cent in the first half of

this fiscal year.

To make the situation worse, around 1,150 factories reported that they had lost $3.18

billion in cancelled or postponed orders due to the global pandemic, affecting a staggering

2.28 million workers.

According to the research report, many textile factories might be closed and many

employees would face layoffs in the aftermath of the pandemic.

The textile sector feared around Tk 17,000 crore in losses during Pahela Baishakh and

Eid-ul-Fitr.

The circumstances likely to deteriorate further as the lockdowns in developed countries

continue, and economic contraction and job losses accelerate.

The non-life insurance sector is likely to be affected severely because of having direct

correlation to import that is expected to decline.

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34 CITI-NEWS LETTER

The number of voice calls dropped by around 20 per cent during the lockdown period and

as 70 per cent of the sector’s revenue comes from voice traffic, telecom companies may

suffer if the lockdown period further elongates, the report said.

The construction sector is expected to bear a heavy toll because of the pandemic.

The daily sales of cement, for instance, have dropped by nearly 80 per cent during the

nationwide shutdown.

Import of raw materials has also come to a complete halt.

As the GDP growth, ADP implementation and remittance inflow are expected to fall

considerably in the coming days, construction activity would remain considerably low for

at least 6-12 months.

Power generation falls under the emergency services during the pandemic period. So, the

operation of power generation companies remained as usual.

The sector will be affected by reduced demand from the industrial sector due to shutdown

of business activities.

However, increased power demand from household might have offset reduced demand

from the industrial sector.

Meanwhile, private power generation companies get capacity payment.

So, earnings of the listed power generation companies are not likely to be affected

significantly.

Increased health care expenditures, consumption and health awareness among mass

people during COVID-19 kept pharmaceutical companies in the comparatively safe

corner.

But import dependence for raw materials may disrupt pharmaceutical production if the

crisis lingers, and the industry will plunge into a crisis, the research paper said.

Sales of household products like toilet cleaners and hand wash and demand for mosquito

pesticides would increase.

With existing growth in animal rearing activities demand for animal drug products too

remain unaffected, the report said.

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35 CITI-NEWS LETTER

Bangkok: Workers unite against textile factory over SSF 'failure'

(Source: Penchan Charoensuthipan, Bangkok Post, May 13, 2020)

Textile workers in Nakhon Pathom have petitioned the Labour Ministry to take action

against their factory for allegedly failing to pay contributions to the Social Security Fund

(SSF), making them ineligible for state financial help.

Nakhon Luang Thungthao Nylon Co, aka Capital Rayon co, has allegedly not paid money

into the SSF for seven months, from August last year to February this year, company’s

worker union president Surin Pimpa claimed as she led group members to the Labour

Protection and Welfare Department on Wednesday.

At least 10 retired workers have seen their pension rights under the SSF suspended as the

Social Security Office told them to “wait” for talks between officials and the company to

settle the issue, retired worker Taengon Em-ot, 61, said.

The company was also accused of delaying payment of mandatory compensation to the

retirees and "did not pay wages on time or paid only half of the salaries".

“Now both Thai and migrant workers are in trouble. We still have to pay rent and daily

expenses,” Ms Surin, a retired worker, said.

She said that besides the retirement compensation, the retiree group hoped to receive

about 30,000 baht from their SSF contributions to the pension fund, which they need to

survive. They have been unable to claim the money because the company apparently

failed to make payments to the SSF.

One migrant worker complained she was forced to borrow money to cover her expenses.

Orders for some workers to take leave without pay and others to be furloughed in some

factory sections during the Covid-19 pandemic have been also “orally issued without a

written statement”, Ms Surin claimed.

Labour Protection and Welfare Department chief Apinya Sujarittanan said an

investigation into the SSF contributions and other financial issues was underway.

The probe will also examine whether current workers are eligible to receive 62% of their

daily wages from the SSF if they are furloughed as a result of Covid-19. If a firm adopts a

work-without-pay policy, it is required to pay at least 75% of salaries, he said.

According to Ms Surin, the company claimed it has no money to buy raw materials and

has sold a lot of machines. However, the firm has not clearly announced whether it would

shut down the business, she said.

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36 CITI-NEWS LETTER

South Africa: Winter clothing, footwear may be sold during lockdown in

terms of regulations

(Source: Devdiscourse, May 13, 2020)

The directions clarify the related winter clothing, footwear and home textiles which may

be sold during Alert Level 4 in terms of the regulations published by the Minister of

Cooperative Governance and Traditional Affairs (COGTA) on 29 April.

Trade, Industry and Competition Minister Ebrahim Patel has gazetted directions on the

sale of winter clothing, footwear and bedding in Level 4 of the national COVID-

19 lockdown.

The directions clarify the related winter clothing, footwear and home textiles which may

be sold during Alert Level 4 in terms of the regulations published by the Minister of

Cooperative Governance and Traditional Affairs (COGTA) on 29 April.

"The publication of these directions results from Minister Patel's consultative meeting

with industry leaders in the Clothing, Textile, Footwear and Leather sector held last

Tuesday, 5 May 2020," said the Department of Trade, Industry, and Competition (DTIC)

on Tuesday.

Industry stakeholders had requested that Patel gazettes a list of clothing and related

products that could be made available for sale in retail stores.

A task team of industry representatives and the department worked together to construct

a list of essential winter clothing, footwear and home textiles that would be permissible

for sale in retail stores across the country during Level 4 of the lockdown.

The list of winter clothing, footwear and home textiles includes:

all baby and toddler clothing and footwear; children's wear, including schoolwear and

school shoes; maternity wear; adult sleepwear and gowns; adult underwear; a range of

adult footwear categories, including boots, slippers, sneakers and trainers; adult

outerwear categories, including activewear, knitwear, jackets and coats; adult accessories;

and bedding categories, including baby bedding and blankets, duvets, blankets, and

electric blankets.

The Minister expressed his appreciation for the positive tone of the engagement

with industry stakeholders.

"Restarting more parts of our economy is important and we are working hard to ensure

that industry follows best practice to protect the health and safety of all our citizens. The

discussions with industry builds on the greater cooperation that arose from the Industry

Masterplan for the retail-clothing, textile and footwear industry," said Patel.

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37 CITI-NEWS LETTER

The Minister also called on consumers to purchase locally made products.

"I call on consumers to look for South African-made products, made proudly by local

workers so that we can rebuild the economy. The manufacturing and retail sector has been

through a very difficult time and the resumption of clothing sales under Level 4 of the new

risk-adjusted approach, will assist to provide greater levels of production and commerce

in the sector," he said.

Meanwhile, Chief Executive Officer of The Foschini Group (TFG), and chair of the

National Clothing Retail Federation (NCRF), Anthony Thunstrom welcomed the new

directions.

"The federation has participated in a robust engagement with government and

stakeholders to construct the list of essential consumer items for winter clothing and

textile items. The leadership of Minister Patel has been appreciated throughout the

consultations," said Thunstrom.

This as the NCRF called on the clothing retail sector to offer retail environments that

adhere to strict health protocols to help mitigate the transmission risks of COVID-19.

Customers have also been encouraged to limit their trips to retail stores and to always

wear protective facemasks and maintain social distancing of at least 1.5 metres when

around other people.

(With Inputs from South African Government Press Release)

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Pakistan: Textile exports plunge to 17-year low

(Source: The Dawn, May 14, 2020)

Pakistan’s textile and clothing exports declined by 64.5 per cent in April to $403.834

million year-on-year — the lowest level in almost 17 years — due to order cancellations and

shipment delays amid pandemic-led global lockdowns, showed data released by the

Pakistan Bureau of Statistics (PBS) on Wednesday.

A significant decline was seen in trade shipments since Mar 15 — the date since

coronavirus cases spiked in major export destinations especially in Europe and North

America.

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

Iran, Afghanistan and Pakistan shut down their respective borders to contain the

pandemic.

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38 CITI-NEWS LETTER

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

honouring their import commitments with local manufacturers.

It was only in February when the textile and clothing exports jumped nearly 17pc on a

year-on-year basis. This growth was reported after a long time as the past few years had

been marred by single-digit increases.

Details showed exports of ready-made garments dipped by 73.44pc in value and drifted

much lower in quantity by 78.94pc during April while those of knitwear dipped 61.75pc

in value and 48.31pc in quantity, bed wear posted negative growth of 57.54pc in value and

57.37pc in quantity.

Towel exports fell 74.07pc in value and 72.78pc in quantity, whereas those of cotton cloth

dipped by 69.73pc in value and 78.06pc in quantity.

Exporters are resuming production and seeking permission from provincial and federal

governments to allow workers to reach factories. With these developments, exports are

likely to revive partially in May. Among primary commodities, cotton yarn exports dipped

by 63.29pc while yarn other than cotton by 70.19pc, made-up articles — excluding towels

— by 63.56pc, and raw cotton 100pc. Exports of tents, canvas and tarpaulin increased by

a massive 32.39pc during the month under review.

Between July-April FY20, textile and clothing exports declined 2.79pc to $10.816 billion,

from $11.127bn over the corresponding period last year. In rupee terms, the proceeds of

the sector jumped 14.17pc. Non-Textile sector: Exports of non-textile products shrank

more than 41pc year-on-year to $553.443m in April. In the pre-Covid-19 period, an

upward trend was seen in the exports of non-textile products, largely driven by rupee

depreciation.

The data released by the PBS showed the food basket contracted 26pc in April from a year

ago. Under this category, however, exports of rice witnessed an increase of 3.18pc, thanks

to an increase in basmati exports which jumped 21.35pc in value and 33pc in quantity.

Export of fish and fish products declined by 49.27pc while that of vegetables dipped by

51.80pc and fruits 19.62pc, respectively. No exports were recorded of wheat, sugar, and

pulses following the imposition of a ban from the country in the month of April. The

export of tobacco, spices, and meat products during the month under review declined by

36.06pc, 9.72pc and 11.29pc respectively.

The leather exports also dipped by 70.53pc, driven mainly by declines in sales of leather

garments, gloves, followed by other products. Contrary to these, exports of carpets and

rugs decreased in value by 92.72pc and in quantity by 92.04pc during April from a year

ago.

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39 CITI-NEWS LETTER

Stretchable fabric is self-charging to power smart garments

(Source: Julien Happich, eenews Europe, May 13, 2020)

Researchers from the Chinese Academy of Sciences and from the Georgia Institute of

Technology have designed a stretchable fabric that incorporates not only

microsupercapacitors (MSCs) but also triboelectric nanogenerators (TENGs) so it can

charge itself before powering smart garments.

Both the TENGs and MSCs were fabricated through a resist-dyeing method in a planar

configuration, with their Ni-coated electrodes shown to maintain excellent conductivity

at 600% and 200% tensile strain along course and wale directions, respectively.

Described in more detail in a paper titled “Stretchable Coplanar Self-Charging Power

Textile with Resist-Dyeing Triboelectric Nanogenerators and Microsupercapacitors”

published in the AC Nano journal, the self-charging fabric consists of a knitted fabric

(90% polyester, 10% Spandex) onto which conductive nickel electrodes are selectively

patterned through electroless Ni deposition.

Subsequently, to create the MSCs, reduced graphene oxide (rGO) films are deposited onto

the conductive textiles by a hydrothermal reduction of graphene oxide with Ni. A gel-type

electrolyte (PVALiCl) was applied to achieve the solid-state textile MSCs which the

researchers demonstrated, could be designed into arbitrary-shaped logos or patterns for

good aesthetics.

Such microsupercapacitors were reported to reach a voltage up to 3.2V and discharge

capacitances of 5.0, 4.9, 4.2mF at a galvanostatic discharging current of 0.5, 1.0, 2.0mA,

respectively. These textile-based planar MSCs were able to power a watch at a strain of

50% after being charged. As for the TENGs, they were formed as dual in-plane Ni-coated

electrodes, with an elastomeric PDMS thin layer coated on top of only one of the

electrodes. The stretchable fabric TENG then operates when a polyester textile comes in

contact with the TENG textile.

Researchers from the Chinese Academy of Sciences and from the Georgia Institute of

Technology have designed a stretchable fabric that incorporates not only

microsupercapacitors (MSCs) but also triboelectric nanogenerators (TENGs) so it can

charge itself before powering smart garments. electrification occurs at the

PDMS−polyester interfaces, generating net negative charges in the PDMS and positive

charges in the polyester; similarly, the polyester fabrics will be negatively charged and the

Ni-coated fabrics will be positively charged at the polyester−Ni interfaces. When the

polyester fabric is gradually separating away from the TENG textile, under movement or

stretching, the unbalanced positive charges in the Ni fabric flow through the external

circuit to reach the other Ni-textile electrodes, so as to screen the static charges in the

PDMS (see fig. 2 (ii)). The current flow stops when all of the static charges are screened

and equilibrium is achieved (fig. 2 (iii)). If the counter polyester textile is approaching

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40 CITI-NEWS LETTER

back to contact the TENG textile, a reversed current flow in the external circuit is

generated until local charge equilibrium is achieved again (fig. 2 (iv)). The repeated

touching separating motions are then converted into pulsed alternative current (AC).

The fabric in-plane MSC with reduced graphene oxides as active materials reached a

maximum areal capacitance of 50.6mF cm−2 at 0.01V s−1 and showed no significant

degradation at 50% of tensile strain. The stretchable fabric-based TENG was able to

output a 49V open-circuit voltage and 94.5mW m−2 peak power density. Because both the

MSCs and the TENGs in the stretchable self-charging power textile can be designed

coplanar with a one-batch resist-dyeing fabrication process, this approach is compatible

with conventional textile processing. The authors anticipate that such self-charging power

textiles could be used to power small electronics intermittently, without extra recharging

steps.

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