India’s fiscal deficit target in the near-term is higher than expected and medium-term consolidation is at a more gradual pace than anticipated, said Fitch Ratings in its comments on the just unveiled Union Budget for the financial year beginning April 1.
India, which has often complained its sovereign credit ratings by agencies such as Fitch not reflecting the economy’s fundamentals, put the fiscal deficit – the excess of government expenditure over its revenues – at 9.5 per cent of the gross domestic product (GDP) in the current fiscal ending March 31, against a planned 3.5 per cent. For the next 2021-22 fiscal, the deficit was put at 6.8 per cent of the GDP.
“Deficit targets presented in India’s central government budget on February 1 are higher, and medium-term consolidation more gradual, than we expected,” said Jeremy Zook, Director in Fitch Ratings’ Asia-Pacific Sovereigns team.
Zook further noted that : “We placed India’s ‘BBB-‘ rating on negative outlook in June 2020, in recognition of the pandemic’s impact on growth prospects and the challenges of the high public debt burden.”
In the Budget for 2021-22, Finance Minister Nirmala Sitharaman unveiled a massive spending plan, which would be met partly from enhanced borrowings, to pull the economy out of the trough.
“The government’s prioritization of fiscal support for the population’s health and well-being, and ongoing economic recovery are understandable. At the same time, however, there is little fiscal space given India’s high public debt ratio prior to the virus shock (around 90 per cent of GDP compared to the 53 per cent 2020 ‘BBB’ median),” he said.
The budget, it said, forecasts wider near-term deficits and a more gradual pace of consolidation than anticipated, reaching 4.5 per cent only by FY26. “We view the economic and revenue assumptions underpinning the budget to be largely credible, although the disinvestment revenue target appears optimistic at over three times higher than the level achieved in FY20,” he said.
The government is targeting Rs 1.75 lakh crore revenue mop-up from the sale of stakes in state-owned firms. “This budget also takes further positive steps toward improving fiscal transparency, particularly by bringing the loans from the Food Corporation of India (FCI) onto the budget,” Fitch said adding the wider deficits and more gradual pace of consolidation will lift India’s government debt and put more onus on the nominal GDP growth outlook of the medium-term debt trajectory – the core to the sovereign rating.
Signs of a weaker-than-anticipated economic recovery or a reassessment of medium-term growth potential would make it more challenging to achieve a downward trend in the debt ratio under our forecasts and add to pressure on the rating, he added.
Fitch forecasts real GDP to rebound by 11 per cent in FY22 (2021-22) and grow around 6.6 per cent per annum through FY26. The government’s Economic Survey last week projected the economy to contract by a record 7.7 per cent in the current fiscal.
“Higher expenditure, particularly the increase in infrastructure spending in FY22, will likely be supportive of the near-term recovery – which we expect to gather pace due to declining coronavirus cases and vaccine rollout – and possibly reduce longer-term economic scarring,” Fitch said.
The previously legislated labour market and agricultural reforms are “potentially positive” for the medium-term growth outlook, though they clearly face implementation risks, it said.
The proposed establishment of an asset reconstruction company and asset management company to deal with bad assets in the banking sector is a potential positive, but “more details on the structure and implementation are needed before we can fully assess the impact,” it added.
Source: The Financial Express
The economic survey gave us key numbers for GDP growth: 6,4,-7.7and 11 for 21-22! Highest growth in the world for India seemed on the cards.
The V shaped recovery is fed by an initial severe lockdown, in kind relief, financial and legal forbearance and some cash in the hands of the poorest. This was followed by calibrated opening up. These actions extended the fisc, caused a current account surplus, led to FDI and FPI flows and an unprecedented Foreign currency reserve of US$ 586billion. Clearly, astute reforms and simultaneous supply and demand side actions are in place. Investment in Health, Education, Innovation, infrastructure, and Digitisation and a recapitalisation of the Banks were all signalled.
In what we consider to be the best Budget in over 25 years, the Budget creates the space for India to be:
Fastest growing nation in the world.
Top most leader in implementing the 17 SDGS set out by the UN in 2015.
A leader in implementing the ESG framework.
A leader in reporting on the six capitals of Integrated reporting and thinking. ( it is amazing that there were six pillars on which this Budget was constructed and they follow the framework which is receiving Global acceptance).
The most attractive destination for FDI. ( the Rs 5.15 lakh Crore GOI contribution to capex for infrastructure will be echoed 5X times as completed infrastructure assets get into listed INVITS. An infinite source for future disinvestment has been created as all surplus assets will get monetised at all central and State levels, in departmental undertakings, in PSUs and everywhere else they are held. These will be listed on bourses all over the world and give retail and Institutional investors an opportunity to invest. Ownership of Infra assets will be democratised and a virtuous cycle of public followed by PPP followed by private ownership will be established) We predict at least a $ 100 billion FDI year.
The most advanced nation in disinvestment.
Disinvestment is the centre piece of this wonderful Budget. The LIC IPO, the ready to go PSUs(BPCL,Air india, Shipping Corporation, CCI, IDBI, BEL, Pawanhans, NISL) the 75% permission for Insurance investment and the general liberalisation under incentive frameworks at State level are all breaking new ground,never before attempted at this scale. Strategic sales will enjoy an unprecedented interest. The target of Rs 1.75 lakh crore will be easily achieved as the massive preparatory work has already been done.
The attractor of massive flows into and out of Debt markets. As we access global low cost funds and use our current account surplus as a natural hedge and we develop openly a robust market for debt from anywhere in the world.
A liberal and attractive nation to trade with and to have Global chains passing through.
Direct taxes have been left untouched. Only simplification, tax determination and reduction in litigation have been planned for. Time limits on all regulatory processes, faceless ITAT proceedings and a threat to go after defaulters and evaders which is real are the crux of the changes. This will result in tax compliance as many will have return filing which is unnecessary or done by the tax department from the rich data from the financial footprint. Digital payments, a far superior securities regulation, a liberalised decriminalisation of laws, a scrapping of unnecessary exemptions and a general approach of simplification a genuine tax payer friendliness will enhance the tax effort considerably.
In indirect taxes, the GST will be streamlined to avoid inversion. Indications are clear that more inclusions of items, a rationalisation of rates and other measures to simplify will be taken as the GST council meets. Customs duties have been strategically raised to protect Indian manufacturing and where required reduced to benefit the Indian consumer. This is the first signal of astute Global approach to interacting with the world on fair terms!
The six pillars of resource allocation are indeed praiseworthy.
In health care, the focus on Prevention, Detection and correction in a decentralised manner will work in a country as large as ours. The focus on Nutrition, clean water, construction waste limitation and clean air are so appropriately selected. India will certainly become one among the early large nations with herd immunity. As we take up digitisation of detection and prescription of immunity enhancing supplements, we will become truly a nation that believes in health care and not sick care. The 137% increase in allocation is fully justified.
Allocations for 13 sectors chosen for PLI, monetisation of ready infrastructure assets, implementation of the national infrastructure Plan, complete opening up to REITS and INVITS [will attract flows of FDI and FPI that we have never seen before], thrust on airport, electricity transmission and roads are all necessary. There is no country on earth that can take in over Trillion$s in Infrastructure investments. Kudos to the FM for opening up all the taps to investment in infrastructure. This will create a large number of permanent, Gig and contracted workers. SDG 8 will be fulfilled. The Rs 20000 cr capital DFI is a crowning glory. PPPs will come alive like never before.
As we clean up our NPAS through an ARC and the PSU. Banks will be privatised, better governed, recapitalised and put to work, the era of PCA will end soon! As ship breaking gets elevated to a new level, ports are more efficiently managed and Hydrogen energy gets created, India will truly become a CLEAN ENERGY CAPITAL of the world. We will be fastest to a 50% renewables major economy. NBFCs with a rural and infrastructure thrust empowered to recover more aggressively using SAREFASI and free to cater to last mile financing, will pivot back to attractive investable entities.
City gas distribution, a gas pipeline in J&K , better security regulation, vibrant debt market and liberal investment in Insurance will usher in a new vibrancy of growth with a clean environment.
The startups, global innovators, MSMEs , NRIs and almost anybody interested in entrepreneurship and innovation will get a fillip through this budget. No FM has mentioned ML, AI, and BDA and other data led ideas as often as Nirmalaji has before this. A great era of data led lending, recovery and regulation is breaking out. As legal and regulatory processes get time bound and conciliation driven, ease of business will improve.
Education has been given the due respect for the first time as a human capital builder. 15,000 schools, a central University in Leh and many other physical interventions will put every child into school.
Agriculture and labour will emerge as much reformed, market driven, well supported with integrity and institutional thrusts, with a certainty that the growth and productivity will double from here.
A digital budget, digital courts, a digital census, a faceless tribunal, professional health workers and nurses being recognized and cared for, all signal more governance!
While the FRBM is getting reset, digitalisation is being embraced and innovation is being installed deep into our DNAs, it is important to realise that the onus is also on us to rise and become true , honest citizens of India. To this promised land, my countrymen, this Budget will lead us.
Source: The Economic Times
Nirmala Sitharaman, Minister of Finance presented Budget for the year 2021-2022. Right from the announcement of 7 textile parks to be established over 3 years, other important decisions regarding customs duties and support for starts-ups were also announced. Here is a deep dive into what textile and apparel industry has been allocated in the current Budget.
Budget Announcement for Textile and Apparel Industry
1. 7 textile parks will be established over 3 years
To enable the textile industry to become globally competitive, attract large investments and boost employment generation, a scheme of Mega Investment Textiles Parks (MITRA) will be launched in addition to the PLI scheme.
This will create world-class infrastructure with plug and play facilities to help build global champions in exports.
2. Reduction in Basic Customs Duty
As the Government strongly feels that there is a need to rationalise duties on raw material inputs to man-made textiles, the Finance Minister announced to bring nylon chain at par with polyester and other man-made fibres.
The Government uniformly reduced the Basic Customs Duty (BCD) rates on caprolactam, nylon chips and nylon fibre and yarn to 5 per cent. So far, the rate of duty was 7.5 per cent.
3. Increase in customs duty
The Budget announced raising customs duty on cotton from nil to 5 per cent, besides attracting agriculture infrastructure and development cess at the rate of 5 per cent.
Similarly, the customs duty on cotton waste, which was earlier nil, is now 10 per cent. The same on raw silk (not thrown) and silk yarn/yarn spun from silk waste has been increased from 10 per cent to 15 per cent. The step will benefit the farmers.
The Government is also rationalising exemption on import of duty-free items as an incentive to exporters of garments, leather and handicraft items. Almost all these items are made domestically by Indian MSMEs. The Government is also withdrawing exemption on imports of certain kind of leathers as they are domestically produced in good quantity and quality, mostly by MSMEs.
4. Changed definition of companies
The Budget proposes to revise the definition for small companies under the Companies Act, 2013 by increasing their thresholds for paid-up capital from ‘not exceeding Rs. 50 lakh’ to ‘not exceeding Rs. 2 crore’ and turnover from ‘not exceeding Rs. 2 crore’ to ‘not exceeding Rs. 20 crore’. This will benefit many companies in easing their compliance requirements.
5. Trims going to be costly!
Certain duty-free imports of items like motif, glue, veneer, polish, hooks, rivets, button, Velcro, chaton, badges, beads, sewing thread etc., on the basis of export made in the previous financial year, were allowed to handicraft, garments and leather exporters. Now rates will be applicable on these items.
These concessions shall duly end on 31 March 2021.
Methyl diphenyl isocyanate (MDI) for the manufacture of spandex yarn will also face duty of 7.5 per cent. So far it had nil duty.
6. Infrastructure in textile and apparel hubs
Funding will be provided to Chennai Metro railway phase-II of 118.9 km at a cost of Rs. 63,246 crore and Bengaluru Metro railway project phase 2A and 2B of 58.19 km at a cost of Rs. 14,788 crore.
The 3,500 km of National Highway work in the state of Tamil Nadu at an investment of Rs. 1.03 lakh crore is also planned. These include Madurai-Kollam corridor and Chittoor-Thatchur corridor. Construction will start next year.
Chennai-Salem corridor of 277 km Expressway will be awarded and construction would start in 2021-22.
7. Support for start-ups
Start-ups and innovators will be directly benefited as the Budget proposed to incentivise the incorporation of One Person Companies (OPCs) by allowing OPCs to grow without any restrictions on paid up capital and turnover, allowing their conversion into any other type of company at any time, reducing the residency limit for an Indian citizen to set up an OPC from 182 days to 120 days and also allowing Non Resident Indians (NRIs) to incorporate OPCs in India.
The eligibility for claiming tax holiday for start-ups is being extended by one more year – till 31 March 2022. Further, in order to incentivise funding of the start-ups, extension of the capital gains exemption for investment in start-ups has also been made for one more year till 31 March 2022.
8. Labour-specific
The Government has allowed a new tax exemption for the notified Affordable Rental Housing Projects as it will support the migrant workers. It has also proposed to allow women workers in all categories to work in night shifts with adequate protection and has reduced compliance burden on employers with single registration and licensing, and online returns.
9. Other important aspects
It has been proposed that all specified amendments by importer/exporter should be allowed on self-amendment basis. Hitherto all amendments were to be approved by the officer.
As improving tax compliance, a new provision is being proposed for any good entering for export, making wrongful claim of remission or refund shall be liable to confiscation.
A new provision is being inserted in the Customs Act to prescribe penalty in specific cases where any person claims refund of tax or duty discharge, using fraudulent invoices, on exports of goods.
The companies, having turnover of Rs. 10 crore and 95 per cent of their transactions digitally, are now exempted from audit. Earlier the limit was Rs. 5 crore only.
10. Important allocations
Rs. 700 crore for Amended Technology Upgradation Scheme (ATUFs)! The same was Rs. 545 crore in the last Budget.
Rs. 100 crore for Integrated Scheme for Skill Development, a need of the hour for the textiles industry.
Rs. 30 crore for Export Promotion Studies! The same was Rs. 5 crore in the last Budget
Rs.80 crore for Scheme on Integrated Textile Parks (SITP)
Industry reactions
“It is a pragmatic Budget presented to address all sectors’ issues at a time when our economy is getting revived back to normalcy. I appreciate allocation of Rs. 50,000 crore over five years for National Research Foundation to strengthen the ecosystem of the country and hopefully Tirupur would also get benefited out of this allocation,” Raja. M. Shanmugham, President, Tirupur Exporters’ Association
“We welcome the thrust given to textile sector in Budget with announcement of 7 Mega Integrated Textile Region and Apparel Parks. With the concept of these mega parks with a plug and play model, Indian textile and apparel sector – particularly SMEs – can work on large-scale and build competitiveness in manufacturing. Further these parks can be aligned with ESG (Environmental, Social and Governance) goals to attract international buyers as well as investors. The mention of 3-year time period is a welcome one to capitalise the opportunities emerging from brands’ China plus one strategy. Reducing the BCD rates on nylon also will help the MMF sector in a big way,” Prabhu Dhamodharan, Convenor, Indian Texpreneurs Federation (ITF), Coimbatore
“The Budget takes care of all the sectors including the apparel sector and will ensure robust economic recovery going forward. This is one of the finest Budgets considering the current situation due to the Coronavirus pandemic. All key sectors like health, agriculture, infrastructure, finance and skilling have been covered well. The focus on infrastructure highways, railways and ports is a welcome decision as it will go a long way in improving the logistics and reduce the cost of doing business. Further, the rationalisation of GST and customs will also help in easy access to raw materials and export of value-added products. A scheme to promote flagging of merchant ships in India will be launched by providing subsidy support to Indian shipping companies in global tenders floated by Ministries and CPSEs. This will help in reducing our shipping costs,” Dr A Sakthivel, Chairman, Apparel Export Promotion Council (AEPC)
“10 per cent import duty on cotton is a severe blow for the cotton textile value chain; we appeal to the PM for immediate withdrawal of the same to sustain the global competitiveness of Indian textiles and apparel industry and prevent huge job losses. This levy will not benefit the cotton farmers as the normal import of 12 to 14 lakh bales per year accounts only around 3 per cent of Indian cotton production and consumption and such cotton is not produced in India,” Ashwin Chandran, Chairman, The Southern India Mills’ Association (SIMA)
“Budget is growth-oriented but the imposition of BCD on Cotton – is a matter of deep concern. The imposition of 10 per cent BCD on Raw Cotton is surprising, this will make imports of extra-long staple cotton costly especially Giza Cotton from Egypt and Supima Cotton from the US. Regarding direct taxes, the Budget has reduced the time-limit for reopening of assessment to 3 years from the present 6 years. This is a welcome step and it will remove the uncertainty for the assesses,” Manoj Patodia, Chairman, The Cotton Textiles Export Promotion Council (TEXPROCIL)
Source: Apparel Online
The country’s exports grew 5.37 per cent year-on-year to USD 27.24 billion in January 2021, mainly driven by healthy growth in pharmaceuticals and engineering sectors, according to provisional data of the commerce ministry.
Imports during the month rose 2 per cent to USD 42 billion, leaving a trade deficit of USD 14.75 billion, the data showed.
Exports of pharmaceuticals and engineering grew 16.4 per cent (USD 293 million), and about 19 per cent (USD 1.16 billion), respectively.
Source: The Financial Express
Several measures initiated in the Union Budget 2021-22 are aimed at giving a boost to the textile and clothing sector, the Northern India Textile Mills' Association (NITMA) has said. The taxation changes proposed in the Budget will benefit MSMEs in a big way, however, there is an urgent need of raising customs duty on man-made yarns to 10 per cent.
The grant to the textiles and clothing sector in Union Budget 2021-22 is ₹3,614.64 crore, which is about 10 per cent higher than the revised budget of ₹3,300 crore in 2020-21. The budget also puts emphasis on Infrastructure Development and Research & Capacity Building as the grant for these sectors has been increased by about 43.7 per cent and 77.5 per cent respectively as compared to last year. Share of these sectors in total textile and apparel budget allocation for 2021-22 stands at about 6 per cent and 10 per cent respectively, NITMA president Sanjay Garg said.
Seven textile parks are to be established over 3 years under the Mega Investment Textiles Parks (MITRA) scheme. "With the active support and cooperation of the government, the textile industry will become globally competitive, attract large investments and boost employment generation and exports in the years ahead," said Garg.
The uniform reduction of basic customs duty (BCD) rates on caprolactam, nylon chips and nylon fibre and to 5 per cent will spur textile industry, MSMEs, and exports, according to Garg.
The increase in customs duty on cotton from nil to 10 per cent and on raw silk and silk yarn from 10 per cent to 15 per cent will benefit domestic cotton and silk growers, Garg added.
Stating that the taxation changes proposed in the Budget will help and benefit MSMEs in a big way, Garg said, "Measures taken to simplify GST are praiseworthy with the hope that the government will take corrective measures to smoothen the GST further by removing anomalies such as the inverted duty structure."
He added that the custom duty policy announced has dual objectives of promoting domestic manufacturing and helping India get on to global value chain and export better. Garg said the domestic textile industry will get easy access to raw materials and exports of value-added products, which will make textile industry globally competitive.
NITMA president, however, added that there is an urgent need of raising customs duty on man-made yarns from 5 per cent to 10 per cent, which has not been considered by the Union finance minister in her Budget.
"The man-made yarn sector is one of the largest employment generating segments within the textile industry, and it is highly capital and labour intensive industry as well. The unreasonably low-priced imports of man-made yarn into India have been causing considerable amount of injury to domestic manufacturers for the last 5 years or so. Industry has deep concerns over the rise in import quantities being dumped into India, which can potentially cause a permanent damage to domestic MMF sector with the cascading effect, from closure of units to NPAs, and eventually resulting in huge employment loss," Garg said.
Source: Fibre2Fashion News
One of the most enigmatic elements of GoI’s approach towards the Covid-19 pandemic has been its dogged conservative approach towards fiscal management this year. We have seen how in the first half of 2020-21, when the economy was ravaged the most by Covid, central government spending was lower than it was in the corresponding period of the previous year. This was perplexing, to say the least, as that was when the economy needed the greatest help through increased government spending.
Then, in the third quarter, GoI finally loosened its purse strings. Government spending in October, November and December 2020 was 9.5%, 48.3% and 29.1% higher respectively, compared to the corresponding months of 2019. As a result, government spending in the first three quarters of 2020-21 was cumulatively 8.1% higher than it was in the same quarters of 2019-20.
On Monday, Finance Minister Nirmala Sitharaman told us in her budget speech that 2020-21 will end with government expenditure growing by a much larger 28.4%. Given a growth of just 8% till the end of three quarters, that leaves a huge task for the last quarter. Nevertheless, it would be a spend that could apparently do some justice, although belatedly, to the pandemic-infected year. Note that the central government spending grew by 24% in the global financial crisis year, 2008-09. The lockdown is much worse than a financial meltdown and, therefore, justifies a bigger spend.
Interestingly though, the finance minister’s speech did not betray any policy stance to indicate that GoI had finally decided to spend its way out of the pandemic. Understandably so, because there is a catch. The government is not going to increase spending by 28% as the numbers suggest. The growth is likely to be 17%, if we compare apples to apples, and if we are lucky.
First, we deal with the problem of apples-to-apples. The government had budgeted an expenditure of Rs 30.4 trillion in 2020-21. This is raised to Rs 34.5 trillion in the revised estimates. This increase is essentially because GoI has made a provision of food subsidy in 2020-21 for discontinuation of National Small Savings Fund (NSSF) loans to the Food Corporation of India (FCI).
Source: The Economic Times
Nice Denim Mills Limited (NDML), one of the leading manufacturers and exporters of denim fabric, a business unit of Saad Group started its journey in 2016 in Mawna, Sreepur, Gazipur with a vision to establish itself as the largest denim manufacturer in the world. Only within four years of journey, this denim mill has been able to stand out from others with its adoption of state-of-the-art technologies and industry best practices.
The ingenious arrangement of four rope dyeing machines with different capacities to capture both large and small orders, multi-layer inspection on various processes including the Long Chain Beaming, their lucrative side business of selling re-coned indigo dyed yarn, prudent decision of keeping direct warping machine, installments of automation like computerized beam storage system- Beam Stacker, state of the art auto leasing and auto drawing machine to keep up with the modern world, a youthful, energetic R&D team and prompt lab facilities have enabled them to offer great quality, shorter lead time and competitive price to their buyers.
Due to the combination of 16 ropes and 48 ropes under one shed, Nice Denim has a competitive price advantage over the local and international market. So, what is the secret sauce behind their success? Today we will look closely at each section of this denim mill and find out their best practices that are giving them such leverage.
Efficient Ball Warping
According to Engr. Ahammod Babor, the Senior DGM (Plant & Operations) of NDML, the factory is run by keeping three aspects in mind: quality, reasonable costing and faster lead time. NDML’s all the sections are orchestrated towards success by these three points.
Taking the quality yarn cones or cheese packages from NDML’s finely managed 1000-ton yarn sub-store, they make balls according to the number of total ends, length and equal tension in individual yarn using their Ball Warping machines efficiently. During production, individual yarn tension is measured for its uniformity.
Full advantage of Rope Dyeing is taken
Rope Dyeing is considered to be a superior dyeing technology where the dyeing uniformity achieved is better than other indigo dyeing technologies like slasher dyeing. Keeping the advantages of the rope dyeing technique in the background, NDML has installed 4 state-of-the-art rope dyeing machines with verities/multiple ropes including the Green Ville Rope Dyeing machine which is the biggest of its kind in Bangladesh.
It is a 48-rope machine having maximum Dye boxes with a big volume. With this machine, they can achieve the highest indigo dye shade percentage. They also have a Morrison Rope Dyeing Machine and two Smartech machines.
All the convenient features of these machines compared to Slasher Dyeing and their ingenious combination enable them to take both big and small orders in a very cost-effective way without any extra energy and chemical waste. As Green Ville is a giant machine having 48 rope capacity, NDML can dye at large volume with nominal shade variation and keep the quality by maintaining consistency.
At this point, Engr. Ahammod Babor, the Senior DGM (Plant & Operations) of NDML said, “All these features make Nice Denim Mills cost-effective and price competitive. As we can efficiently use our capacity and have strong backward linkage, we can achieve shorter lead time and offer a competitive price to our buyers.”
NDML also takes pride in some additional advantages of its rope dyeing process.
Engr. Nizamul Hossain, Sr. DGM (Production) of Nice Denim Mills Ltd. explained, “An advantage that we take from rope dyeing compared to slasher is, in slasher, the dyeing happens in sheet form where single yarns can get affected, which can ultimately affect the yarn quality. For the same reason, there is a possibility to have CSV (Cross-Shade Variation) in slasher dyeing which is not an issue in Rope dyeing as there is even stress on each yarn.”
“In the loom, every single thread is important. A weak thread can cause great wastage. So, we also take the advantage of rope dyeing in the loom,” Engr. Nizamul further added.
Yarn quality is checked in Long Chain Beaming
In NDML’s Karl Mayer Long Chain Beaming machines (LCBs), the yarn alignment in the dyed rope is changed from a rope form to a sheet form. NDML employees enjoy the advantage of checking each yarn quality while beaming. NDML workers check every weak point and knot them if there is any yarn breakage. As a result, their quality of the yarn is fantastic in the loom where good quality yarn means smooth running of the looms, greater efficiency and better quality.
Well creeling and yarn break controlling are maintained in Sizing
To increase the strength of yarn for the next weaving process, NDML uses its Karl Mayer and Tschudakoma sizing machines which have a total capacity of more than 2lac yards/day. The employees ensure well creeling and yarn break controlling to create a better final beam. They also ensure refraction, viscosity, size Pickup, tension, etc. parameters for each order and provide the best possible sizing which helps the warp yarns to tolerate the tension in weaving.
The lucrative business of selling re-coned indigo dyed yarn
In Nice Denim Mills Ltd., there is a separate 40-ton capacity arrangement for re-coning indigo dyed yarn. There is a huge market for such kind of yarn which is used in knitting and sometimes in weft yarn also. As rope dyeing arrangement is a costly set-up and NDML has a strong position here, the buyers directly buy such yarns from them rather than manufacturing these yarns themselves. As a result, NDML can sell such dyed yarns which is a lucrative side-business for them.
A strong touch of automation: Beam stacker, Auto leasing and Auto drawing
Nice Denim Mills Ltd. is perfectly in line with the wave of the fourth industrial revolution. They have a computerized beam storage system: Beam Stackers where they can store 220 beams and find any specific beam with the push of a button, they have fully automated Auto leasing and Auto drawing machines which save a lot of working hours and increase efficiency. Most importantly they are error-free and have given NDML the room to take more orders and offer greater quality.
Efficient weaving
With an arrangement of the huge loom set up, NDML is meeting 6 million capacity /month. For producing perfect beams in the previous section, NDML gets a competitive advantage in weaving. Their weaving efficiency generally reaches up to 92% per shift. They also have an online monitoring system of loom efficiency.
Finishing with state-of-the-art machines
NDML has all branded finishing machines including mercerizing, stenter, sanforizing, singeing and Ozone finish machines. The Ozone finish machine (Jeanologia, Spain) has two Ozone generators that generate Ozone from the atmosphere in a sustainable way and substantially reduce the consumption of water, energy and chemicals.
Thorough inspection
At the final stage, Inspection takes place and if any problem is found NDML employees take the necessary steps to solve it. Nice Denim Mills Ltd. has STT Inspection machines which can meet the daily production capacity.
R&D Department- a collection of energetic and youthful people
After asking the question- why NDML’S R&D stands out from others, Md. Ismail Hossain, Manager, R&D at Nice Denim Mills Ltd. said in one sentence “Team spirit!”.
He said, “We have young, energetic people, all below the age of 35. We work as a team.”
He further added, “We give feedback in the fastest possible time. Moreover, our capacity, production and delivery- all are much more than others. Our sample lead time is only 3-7 days.”
He informed that NDML’s R&D department has two Turkish, one Italian and one Pakistani employee for technical support which makes them more competitive. Moreover, they have a subscription to WGSN which enables them to be ahead of time in trend analysis.
Ismail shared staggering information that after COVID-19, their order quantity and efficiency have been drastically improved.
He explained, “This is because we started scrutinizing ourselves and focused on the accuracy. Rather than sending too many options and waiting for comments from the buyers, we became more focused and began to send only one quality option. This made all the difference.”
A well-equipped Laboratory
NDML has a laboratory for quality assurance that is equipped with the latest equipment needed to meet buyers’ requirements. They have Wrap Reel, Electric Twist Tester, Board Winder (Electric), Universal Strength Tester (Titan5), Crock master, Gyro Wash, Incubator, Mettler Toledo (pH Meter), Orbital Shaker, Flexi Frame, Elmartear Digital Tear Tester, Shrinkage Scale with Template 35cm, Maxi-Martindale Abrasion and Pilling Tester, Stiffness Testers, Digital Weight Balance, Perspirometer, Acrylic Palates, Weight Piece (AATCC & ISO) and a lot of other testing equipment demanded by the buyers.
Sustainable good practices
Nice Denim Mills Ltd. has established a world-class Biological Effluent Treatment Plant having a capacity of 3600 m3/ Day that ensures environmentally compliant effluent conforming to standards set by the Bangladesh government.
They also have Aniline free, salt-free, advance, cradle to cradle, waterless and laser friendly dyeing facilities to promote sustainability. They also make organic products and follow zero cotton concepts to take part in ensuring the wellbeing of people and the planet.
Compliance issues and other managerial good practices
In Nice Denim Mills Ltd., the designated storage areas are separated from each other to allow for easy movement of personnel and movement devices like trolleys, forklifts, etc. The movement areas are marked. Moreover, the factory has separate unobstructed and marked emergency exits.
The factory also has a well-managed rejected area where they can store all the rejected goods and can find them when needed.
It also has proper ventilation, health and medical facilities, prayer room, dining facilities, proper parking area, training facilities, first aid, machine, electrical and fire safety, child care center, etc.
An effective ERP software is on the trial-error phase and on the way to full implementation in the mill. The top management believes that it will assist them to increase efficiency, create managerial transparency and keep them one step ahead to achieve their goals.
Certification and awards
Nice Denim Mills Limited has achieved different awards and certifications like SEDEX, BSCI, GOTS, OCS, OEKO-TEX, C-TPAT, RCS, GRS, certificate of COVID-19 Management System by GIZ and recognitions from a lot of other recognized institutions.
NDML has also got the certificate of achievement from LIDL and Baycity. This denim mill got first place from 28 textile participants of the Supplier Qualification Program.
Recently Saad group of industries /Nice denim Mills ltd. achieved USCTP (United states cotton Trust Protocol) certification which is very important because most of the USA customers ask for this certification before order confirmation.
“For superior quality and commitment customers knows the name Nice Denim Mills Ltd. From the beginning, we only focused on quality and that’s why we installed all world-class machinery and recruited experienced team members. We are working for the nation and we want to contribute more in the future by our good work,” said Nur E Yasmin Fatima, DMD of Nice Denim Mills Ltd.
Overall, Nice Denim Mills Ltd. stands out as one of the most sustainable, eco-friendly denim manufacturing mills in the world.
And undoubtedly, on their way to achieving their goal of becoming one of the top mills in the world.
Abdullah Mohammad Saad, Managing Director, NDML concluded, “We are already catering a large volume of denim fabric orders with high efficiency and quality (weaving, dyeing & finishing). Now we are sincerely focusing on Spinning and Printing production also. Our target is to be a complete solution provider as we are always concerned about customer satisfaction and ensure business sustainability.”Nice Denim Mills
Source: Apparel Online
Lauding the budget focus on nursing the nascent growth revival at the cost of fiscal consolidation, house economists at a Swiss brokerage has said budgetary math seems realistic but meeting privatisation targets are key.
Without increasing taxes and imposing new levies, the budget is focused on strong capex, which is the highest since FY08, and projected a fiscal deficit target of 6.8 per cent for FY22 as against a consensual 5.5 per cent and 9.5 per cent for FY21 as against 7.5 per cent and a budgeted for a Rs 34.5-lakh-crore budget expenditure, up from Rs 30.8 lakh crore in FY21.
FY22 budget math seems realistic, though privatisation targets are key and therefore we maintain our base case of a strong recovery in FY22 GDP growth to 11.5 per cent. We also believe the budget is laying the groundwork to help the country move towards a 7.5 per cent plus growth in the medium-term, Tanvi Gupta Jain, the economist at UBS Securities India, said in a note.
The revenue collection assumptions (revenue receipts projected to rise by 15 per cent in FY22 as against the nominal GDP growth of 14.4 per cent) used to arrive at the FY22 fiscal targets also look reasonable, she said, but adding the government continues to rely on one-off revenue receipts including dividend transfer (Rs 1,03,500 crore) and divestment (Rs 1.75 lakh crore) given the weak track record, it will be interesting to see if the divestment target is met this year.
Stating that the budget 2021 is all about growth, she notes the finance minister has pursued an expansionary fiscal policy to boost the nascent economic recovery with growth-boosting measures like the highest capex since FY08 when the fiscal deficit was at the lowest on record at 2.5 per cent), higher allocation for healthcare, added focus on divestment and asset monetisation, hiking FDI in insurance to 74 per cent, increased allocation for PSB recapitalisation (Rs 20,000 crore) along with a proposal to privatise two state-run banks.
Though highest since FY08, this is effectively is only 1 per cent more than the FY21 estimate as FY21 saw 28 per cent growth over FY20 due to the pandemic-related stimulus measures.
Significantly, the quality of government spending seems to have improved with capex projected to remain strong at 4.6 per cent of GDP, while revenue expenditure is seen to slow to 13.1 per cent of GDP from 15.5 per cent of GDP in FY21, as the pandemic-related relief measures are rolled back.
While on the receipts side, the tax structure is kept stable for corporates and individuals, there is some higher tax on savings/investments for the rich. There is some reallocation of welfare spends proposed among the various schemes, thus lending support for consumption.
However, Gupta Jain said the finance minister has inflicted a body blow to the bonds market. The budget is a big blow to the bond markets on three fronts: higher-than-expected borrowing at Rs 12 lakh crore (against consensus of Rs 10.6 lakh crore); relaxation in medium-term fiscal deficit trajectory from 3.1 per cent to 4.6 per cent by FY26 implying elevated-for-longer market supply burden; and relaxation in states' net borrowing limit to 4 per cent of GSDP.
She is of the view that this special budget will need a special RBI support on both bond purchases and the liquidity front, absent which yields can easily break out higher especially as risks of rating downgrade resurface over the course of the year.
She sees an upside risk to benchmark bonds at 6.5 per cent as RBI is likely to come out dovish on CPI inflation later this week.
Source: The Economic Times
The GST revenue shortfall faced by the states is likely to come down with the improved collections in the last few months, Finance Secretary Ajay Bhushan Pandey said on Tuesday.
He said the Budget proposal of taxing interest on employee contributions to provident fund over Rs 2.5 lakh per annum is aimed at correcting anomalies and is based on “principles of equity” and large depositors into the Employee Provident Fund (EPF) should pay tax on assured 8 per cent return.
According to the Budget, interest on employee contributions to provident fund over Rs 2.5 lakh per annum would be taxed from April 1, 2021.
Pandey said people with less than Rs 25 lakh annual income can continue to deposit 12 per cent into the EPF without paying any tax.
“There were anomalies in the system … There are some cases which are depositing crores of rupee into the fund and there you are getting 8 per cent assured tax-free return. This is a question of equity. This is against the Principles of Equity. If you have surplus money, you invest, but you have to pay tax,” Pandey told PTI.
Less than 1 per cent of the total six crore EPFO subscribers actually contribute more than Rs 2.5 lakh in the fund.
Pandey said the Budgeted 16.67 per cent growth in tax revenue is realistic and the pre-filled income tax return forms with details on interest from bank and Post Office, capital gains on listed securities and dividend income would be made available next fiscal.
“In this year, even though we have shown some improvement in the last few months, but for 14 per cent y-o-y GST revenue growth there will be a compensation gap. Next year also there will be a compensation gap. But with the improved collection, compensation gap would be there but it would be lower than what was being anticipated a few months back,” he said.
January was the fourth straight month of over Rs 1 lakh crore tax collections, which is a sign of strong recovery.
The GST collections surged to an all-time high of about Rs 1.20 lakh crore in January, while the second-best was in December 2020 at over Rs 1.15 lakh crore.
The collections, which directly reflect the state of economic activity, had plummeted to a record low of Rs 32,172 crore in April 2020, after the government imposed a nationwide lockdown to curb the spread of coronavirus.
The sharp decline in GST collections has led to Rs 1.80 lakh crore shortfall in GST revenues on states. This includes Rs 1.10 lakh crore revenue loss on account of GST implementation and Rs 70,000 crore on account of COVID-19 pandemic.
The Centre had set up a special window to borrow funds and pass on to the states for meeting the Rs 1.10 lakh crore GST revenue loss.
“This year a decision was taken to borrow a part of gap through the special window and pass it on to the states. Now for next year, let us see when a decision is taken,” Pandey added.
Source: The Financial Express
Welcoming the first paperless Budget presented by Union finance minister Nirmala Sitharaman in Parliament, the Confederation of Indian Textile Industry (CITI) has said it will lay a strong foundation for future growth of the textiles and clothing industry in India. However, the levy of 10 per cent import duty on cotton has come as a severe blow, it added.
The announcement of setting up of seven textile parks within three years under the scheme Mega Investment Textile Parks (MITRA) will create world class infrastructure with plug and play facilities to enable create global champions in textile exports, CITI chairman T Rajkumar said in a press release.
"The Production Linked Incentive (PLI) scheme for man-made fibres and technical textiles with a total outlay of ₹10,683 crore will also help the textile industry to become globally competitive, attract large investments and boost employment generation. Moreover, to achieve the target of $350 billion from the current size of $167 billion, our manufacturing sector has to grow in double digits on a sustained basis. Our manufacturing companies need to become an integral part of global supply chains, possess core competence and cutting-edge technology," Rajkumar said.
He pointed out that that the government well recognises the fact that the textile industry significantly contributes to the Indian economy and creates huge employment opportunities to the masses, especially to the poorer sections of the society majorly covering illiterate and down-trodden women. "To further enhance this scope and achieve the target of making Indian economy a $ 5-trillion economy by 2025, reduction of customs duty on caprolactam, nylon chips and nylon fibre & yarn to 5 per cent is step in the right direction. This will bring nylon chain on par with polyester and other man-made fibres."
Rajkumar also welcomed rationalisation of exemption on import of duty-free items as an incentive to exporters of garments, leather, and handicraft items. "All these items are domestically produced in excellent quantity and quality by our MSMEs and help the textile industry and exports too," he said.
"However, the levy of 10 per cent import duty on cotton and cotton waste has come as a severe blow for the ailing cotton textiles and apparel industry," the release said. Cotton and cotton waste which is currently under nil rate of import duty is being subjected to 10 per cent import duty through the budgetary announcement comprising of 5 per cent Basic Customs Duty and another 5 per cent Agriculture Infrastructure and Development Cess (AIDC) on cotton and 10 per cent BCD on cotton waste.
Rajkumar appealed to the Prime Minister to consider the immediate withdrawal of the levy of 10 per cent import duty on cotton and cotton waste to sustain the global competitiveness of Indian textiles and apparel industry, and prevent job losses for several lakhs of people, prevent fall in the exports and also curb cheaper imports of value added products from the SAFTA countries like Bangladesh, Sri Lanka, etc.
The move of allowing women to work in all categories and also in the night-shifts with adequate protection, as well as the modified definition of small companies: companies with a paid-up capital not exceeding ₹2 crore and a turnover not exceeding ₹20 crore are to be considered small companies, implementation of the 4 labour codes, minimum wages to all categories of workers, and all will be covered by the Employees State Insurance Corporation (ESIC) are welcome decisions for the upliftment of Indian economy, CITI said.
Source: Fibre2Fashion News
Nonwoven disposable apparels’ import of USA reached US $ 4.13 billion under HS Code 6210105000, growing by 467 per cent on Y-o-Y basis during Jan.-Nov. ’20 period.
In terms of quantities, a total of 310.54 million nonwoven disposable apparels entered into USA during the mentioned period, which is 195.77 per cent more than the corresponding period of 2019.
China, Vietnam and Mexico were the dominant shippers sharing 87 per cent of total disposable apparel value imported by USA.
China shipped US $ 3.16 billion worth of disposable apparels to USA in Jan.-Nov. ’20 period as against US $ 392.80 million in the same period of 2019. This is a whopping surge of 704 per cent on Y-o-Y basis.
Vietnam remained on the second spot with shipment worth US $ 251.89 million, growing 416 per cent on yearly basis.
As far as Mexico is concerned, the Latin American country clocked US $ 204.38 million from its disposable apparel shipment to USA in the first 11-month period of 2020, marking 55.60 per cent Y-o-Y growth.
Source: Apparel Online
Finance minister Nirmala Sitharaman, while presenting the Budget, was well aware of the impact on revenue collection from those who were indulging in the practice of filing fake invoices to claim input tax credit fraudulently.
The Budget for 2020-21 empowers the tax authorities to attach the properties of those who use fake invoices to evade tax. "In order to protect the revenue, it is proposed to provide that the penalty proceedings initiated for fake invoice/sham transactions of more than Rs 2 crore shall also be eligible for provisional attachment of assets," the Finance Bill reads.
Last year's Budget penalised taxpayers who fudged their books and claimed input tax credit fraudulently. The taxpayers who manipulated their books had to pay an amount equal to the false entry/omission made in their books as penalty.
Fake invoices have caused a shortfall in government's revenue collection. GST for December and January showed record collections on the back of economic recovery and a crackdown on evaders. GST authorities have cracked down on those filing fake invoices to claim GST input tax credit.
Source: The Economic Times
The Indian textiles and clothing industry has broadly welcomed the Union Budget 2021-22 presented by finance minister Nirmala Sitharaman in Parliament on February 1. Setting up of 7 mega textiles parks under MITRA, and reducing duty on nylon raw materials are welcomed by all trade bodies, while there is a mixed reaction to 10 per cent import duty on cotton.
The grant to the textiles and clothing sector in Union Budget 2021-22 is ₹3,614.64 crore, which is about 10 per cent higher than the revised budget of ₹3,300 crore in 2020-21. The budget also puts emphasis on Infrastructure Development and Research & Capacity Building as the grant for these sectors has been increased by about 43.7 per cent and 77.5 per cent respectively as compared to last year. Share of these sectors in total textile and apparel budget allocation for 2021-22 stands at about 6 per cent and 10 per cent respectively.
The Budget allocates ₹700 crore for Amended Technology Upgradation Scheme (ATUFs) against ₹545 crore in last Budget, which will help to clear the pending capital subsidy. It allocates ₹30 crore for Export Promotion Studies against ₹5 crore in last Budget, and ₹100 crore for Integrated Scheme for Skill Development.
Welcoming the first paperless Budget presented by Union finance minister, the Confederation of Indian Textile Industry (CITI) has said it will lay a strong foundation for future growth of the textiles and clothing industry in India.
The announcement on setting up of seven mega textiles parks is the highlight of the Union Budget 2021-22, directly impacting the textile industry, The Clothing Manufacturers Association of India (CMAI), the apex association of the apparel industry of the country, said. While the Tiruppur Exporters Association (TEA) termed the Union Budget 2021-22 as 'pragmatic' as it addresses issues of all sectors at a time when the Indian economy is getting back to normalcy.
"With the active support and cooperation of the government, the textile industry will become globally competitive, attract large investments and boost employment generation and exports in the years ahead," the Northern India Textile Mills' Association (NITMA) president Sanjay Garg said.
"The Production Linked Incentive (PLI) scheme for man-made fibres and technical textiles with a total outlay of ₹10,683 crore will help the textile industry to become globally competitive, attract large investments and boost employment generation. Moreover, to achieve the target of $350 billion from the current size of $167 billion, our manufacturing sector has to grow in double digits on a sustained basis. Our manufacturing companies need to become an integral part of global supply chains, possess core competence and cutting-edge technology," CITI chairman Rajkumar said. He added that the reduction in customs duty on caprolactam, nylon chips and nylon fibre & yarn to 5 per cent is step in the right direction, as it will bring nylon chain on par with polyester and other man-made fibres.
Rajkumar also welcomed rationalisation of exemption on import of duty-free items as an incentive to exporters of garments, leather, and handicraft items. "All these items are domestically produced in excellent quantity and quality by our MSMEs and help the textile industry and exports too," he said.
As per Union Budget 2021-22, cotton and cotton waste which is currently under nil rate of import duty is being subjected to 10 per cent import duty through the budgetary announcement comprising of 5 per cent Basic Customs Duty (BCD) and another 5 per cent Agriculture Infrastructure and Development Cess (AIDC) on cotton and 10 per cent BCD on cotton waste. The new import duty came into effect from February 2, 2021.
CITI and The Southern India Mills’ Association (SIMA) has described this as a severe blow for the ailing cotton textiles and apparel industry. The associations appealed to the Prime Minister to immediately withdraw the levy of 10 per cent import duty on cotton and cotton waste to sustain the global competitiveness of Indian textiles and apparel industry and prevent job losses for several lakhs of people, prevent fall in the exports and also curb cheaper imports of value added products from the SAFTA countries like Bangladesh, Sri Lanka, etc.
"The levy of 10 per cent duty will not benefit the cotton farmers as the normal import of 12 to 14 lakh bales per year accounts for only around 3 per cent of Indian cotton production and consumption and such cotton is not produced in India. But this is essential to sustain the share of value added / niche markets of India, both in global and domestic markets," SIMA chairman Ashwin Chandran said in a press release.
He added that after the introduction of Bt cotton that accounts for over 97 per cent of the cotton produced in the country, the cotton textile industry has to import extra-long staple (ELS) cotton, organic cotton, contamination free cotton to the tune of 10 to 12 lakhs bales per year to meet the demands of the global customers and also the value added made-ups and apparel segments of the domestic market.
"The sudden announcement of levying import duty on cotton has come as a rude shock for the industry that is just coming out of the ill effects of COVID-19. The levy on cotton has also defeated yet another government policy of addressing inverted duty structure in the GST, as the cotton value chain attracts 5 per cent GST and will add the cost to the customers and discourage value addition," he added.
The imposition of 10 per cent BCD on raw cotton was surprising, said The Cotton Textiles Export Promotion Council (TEXPROCIL) chairman Manoj Patodia in a media statement. This will make imports of ELS cotton costly, especially Giza cotton from Egypt and Supima cotton from the US.
He expressed his apprehension that the imposition of import duty on cotton will increase the domestic prices of cotton, which will now be based on the import parity price plus the BCD, which in turn will increase cost for value-added products like fabrics, made ups and garments. He also pointed out that there has been a decline in imports of cotton by a sharp 77 per cent during January-November 2020 as compared to the same period in 2019, and as such there is no case for an imposition of import duty on cotton.
He added that if the BCD on cotton is not withdrawn immediately, it will have an adverse impact on employment and investments in the value-added textile and clothing sector.
Among other Budget announcements, CITI welcomed the move of allowing women to work in all categories and also in the night-shifts with adequate protection, as well as the modified definition of small companies: companies with a paid-up capital not exceeding ₹2 crore and a turnover not exceeding ₹20 crore are to be considered small companies, implementation of the 4 labour codes, minimum wages to all categories of workers, and all will be covered by the Employees State Insurance Corporation (ESIC).
SIMA chairman thanked the government for announcing the Production Linked Incentive (PLI) Scheme by allocating ₹1.97 lakh crore, including ₹10,683 crore for textile industry, giving thrust to develop the global competitiveness in the MMF textile value chain. He said that the focus product incentive scheme under PLI Scheme for MMF and technical textiles would give enormous opportunity for the growth of Indian MMF and technical textile products.
On the MITRA scheme, Chandran said that Tamil Nadu being the largest textile manufacturing state, is planning to develop three mega parks under the scheme, as Andhra Pradesh and Telangana are already having one such park each. "This would facilitate attracting large scale investments including FDI and JVs."
While applauding the government's intention to encourage mega projects and increasing the scale of operations in the textile Industry, CMAI president Rajesh Masand added a note of caution: "The government also has to very closely study why the textile parks have not really succeeded in the past. It is very crucial to avoid errors of omission and commissions in the past. Otherwise, this will remain one more well intended scheme which fails to lift the fortunes of the textile industry."
The permission to form a one-person company may also indirectly benefit the smaller apparel manufacturers, many of whom are in the micro sector and one-man shows. They are likely to get much more banking support than before. The increase of the tax audit slabs should also benefit the smaller members of the apparel sector, according to CMAI.
“I sincerely thank the finance minister for taking care of all the sectors including the apparel sector. This is one of the finest budgets considering the current situation due to the coronavirus pandemic. All key sectors like health, agriculture, infrastructure, finance and skilling have been covered well. It will improve the economy,” Apparel Export Promotion Council (AEPC) chairman Dr A Sakthivel said in a media release.
Sakthivel thanked the government for the Budget decisions that will promote production and export of MMF based garments. “Our main request was related to MMF garments and that has been considered by the government. The ₹10,683 crore Production Linked Incentive (PLI) scheme for MMF garments and technical textiles, along with new Mega Investment Textile Parks scheme for setting up seven textile parks in India over three years will bring in huge investment in the MMF sector,” he said.
The focus on infrastructure highways, railways and ports is a welcome decision as it will go a long way in improving the logistics and reduce the cost of doing business, according to Sakthivel. Further, the rationalisation of GST and customs will also help in easy access to raw materials and export of value-added products.
“The reduction in custom duty on nylon will further promote the MMF garments,” said AEPC chairman, adding that the doubling of budget provision to micro, small and medium enterprises (MSME) sector with the allocation of ₹15,700 crore in the coming fiscal will strengthen the sector crucial for employment, manufacturing and exports.
Coimbatore-based Indian Texpreneurs Federation (ITF) welcomed the thrust given to textile sector in Union Budget 2021-22, particularly with the announcement of establishment of seven mega textile parks. "With the concept of these mega parks with a plug and play model, Indian textile and apparel sector, particularly SMEs, can work on scale and build competitiveness in manufacturing. Further, these parks can be aligned with ESG (Environmental, Social and Governance) goals to attract international buyers as well as investors," ITF convenor Prabhu Dhamodharan said. "The mention of 3-year time period is a welcome one to capitalise the opportunities emerging from brands' China plus one strategy. Tamil Nadu with a robust manufacturing eco-system should work towards getting 2 parks."
Meanwhile, the Tiruppur Exporters Association (TEA) has termed the Budget as 'pragmatic' as it addresses issues of all sectors at a time when the Indian economy is getting back to normalcy. TEA president Raja M Shanmugham welcomed the fund allocation to roads and highways infrastructure facilities, specifically to Tamil Nadu State. In her Budget speech, Sitharaman proposed 3,500 km of National Highway works in the state of Tamil Nadu at an investment of ₹1.03 lakh crore. She also announced the Chennai-Salem corridor: a 277 km expressway will be awarded, and construction would start in 2021-22.
In its pre-Budget memorandum to the finance minister, TEA had sought support for migrant workers. Shanmugham thanked the minister for allowing a new tax exemption for the notified Affordable Rental Housing Projects. The proposal to allow women workers in all categories in the night shifts with adequate protection, and reduction of compliance burden on employers with single registration and licensing, and online returns, are also welcome steps, TEA said in a press release.
While stating that the taxation changes proposed in the Budget will benefit MSMEs in a big way, NITMA's Garg said there is an urgent need of raising customs duty on man-made yarns to 10 per cent. "The man-made yarn sector is one of the largest employment generating segments within the textile industry, and it is highly capital and labour intensive industry as well. The unreasonably low-priced imports of man-made yarn into India have been causing considerable amount of injury to domestic manufacturers for the last 5 years or so. Industry has deep concerns over the rise in import quantities being dumped into India, which can potentially cause a permanent damage to domestic MMF sector with the cascading effect, from closure of units to NPAs, and eventually resulting in huge employment loss," Garg said.
According to him, the increase in customs duty on cotton from nil to 10 per cent and on raw silk and silk yarn from 10 per cent to 15 per cent will benefit domestic cotton and silk growers. He said the custom duty policy announced has dual objectives of promoting domestic manufacturing and helping India get on to global value chain and export better. He added that the domestic textile industry will get easy access to raw materials and exports of value-added products, which will make textile industry globally competitive.
Source: Fibre2Fashion News
Assessing officers will be able to begin inquiry based on third party information from audit or agencies, rather than anonymous information, which will reduce harassment of taxpayers and lead to reduced litigation, Central Board of Direct Taxes (CBDT) chairman PC Mody told ET.
“Earlier, the provision for that (beginning inquiry) was that if the assessing officer has reason to believe, and that reason to believe was a very nebulous concept. Now, we are trying to straitjacket into certain situations… now it will be information-based,” said Mody.
The move is aimed at simplification and providing compliance certainty to taxpayers, said Mody. The provision, announced in the budget for 2021-22 on Monday, along with limiting the time to three years from six years for opening cases for re-assessment, will provide tax certainty to assessees, Mody said in a post-Budget interview.
The two provisions will contribute to reducing tax litigation, as the number of disputes relating to the reopening of assessments formed a huge chunk of overall disputes.
Mody further said that the clarifications on equalisation levy have been provided since certain issues were “agitating the minds of the taxpayers”. However, he said, the law has been the same since the introduction of the levy.
The Budget defined ‘liable to tax’ under the levy. Mody said the definition has been given since sometimes taxpayers may be liable to tax but by a supplementary position or later on, they may be exempted. “There is a very fine distinction between the two situations. You are obliged to file but you are exempt and that is why you are not liable. But the original liability still remains. It's not that I was originally not liable to tax and that that’s a very subtle distinction,” he said.
Mody said the revised estimates for direct tax collections pegged at Rs 9.5 lakh crore for FY21 were realistic, even though current proceeds totalled nearly Rs 6.64 lakh crore net refunds, which are 7% higher year-on-year. He expressed confidence in surpassing the revised estimates.
“Now the business is back on course and collection figures in the last quarter have always been a significant portion of the total realisation, so put together I think I would be reasonably confident in achieving the target, perhaps even (overshooting it),” said Mody.
On further extending Vivaad Se Vishwas scheme till February-end, Mody said that while the direct tax dispute resolution scheme could not be endlessly extended, the decision was taken after representations from several quarters.
Source: The Economic Times
The most-spoken phrase before Budget 2021-22– “raise resources without raising taxes” – has now become reality, with the Hon’ble Finance Minister’s delivery of the Union Budget proposals. The thrust of the Government’s revenue augmentation strategy has shifted from the traditional bias towards tax collection to measures such as asset monetisation and disinvestment. The increase in budgeted capital expenditure from 1.9 to 2.5% of GDP, without a corresponding increase in tax rates, is a credit to policymakers. The Government has laudably opted to take a big punt on buoyancy in the economy, which it will attempt to achieve through significant infrastructure spends by asset monetisation.
In the last couple of years, the Government has been rationalising the rates of corporate tax, slashing them to 15% for new manufacturing entities, and 22% for all corporates. These rates are now amongst the lowest across the globe. In doing so, the Government took an important step forward to attract investment and incentivise manufacturing in India. While this was a great move, it did not yield the investor interest in India as expected.
One of the likely reasons for this is that India has suffered a relatively poor reputation when it comes to the stability of its tax regime. By not tinkering with tax rates this year – whether corporate tax, personal income tax, peak rates of Customs duty or GST – the Government has sent out a strong signal to the larger global community of investors that India is indeed a stable tax regime where they should be looking to invest.
The low corporate tax rate, especially when coupled with the increasing digitalisation of tax compliance and mechanisms for early dispute resolution, should serve to improve investor sentiment. On this count, the Government has taken some bold steps in this Budget to usher in certainty and ease of doing business, such as halving the time limit for reopening of assessments, further reducing the deadline for completion of assessments, extending faceless proceedings to the Income Tax Appellate Tribunal and creating a new Board to issue timely advance rulings on tax positions (having recognised that vacancies in the current Authority had resulted in significant pendency).
On the Customs side, the rate changes proposed are purely to incentivise the growth of domestic manufacturing in sectors such as mobile parts, certain heavy capital equipment etc., given the stiff competition faced by these manufacturers from imports into India. Such increase in tariffs is a global trend, aimed at reducing imports to nurture the development of local industries. While certain steps in this direction had already been taken as part of the “AatmaNirbhar Bharat” initiative, including favouring local suppliers under Government procurement contracts, the proposed increase in import duties will help further bolster manufacturing within India and in turn aid economic recovery.
The Hon’ble Finance Minister also indicated that a larger exercise of weeding out outdated customs exemptions is being undertaken, with 80 such instances having already been eliminated, and a further 400 exemptions to be reviewed in the course of the coming year.
Rate changes aside, similar digitalisation and ease-of-doing-business measures have been brought in under Customs as well, with the introduction of a common portal on which notices/ summons/ orders etc. will be e-served, and on which importers will be permitted to make certain amendments to their bills of entry themselves, without the cumbersome process of seeking permission from Customs. In a first, a cap of two years from the date of initiation of audit/ search/ seizure/ summons has been fixed for Customs investigations.
Source: The Financial Express
In a move to protect the industry from cheap imports, India has introduced changes in the process and levy of anti-dumping duties, countervailing duties and safeguard duties.
As per the budget for FY22, with effect from July 1, the final findings in cases of reviewing anti-dumping and countervailing duty are to be issued at least three months before expiry of the duty. The Directorate General of Trade Remedies under the commerce and industry ministry issues these findings and recommends the duty to the finance ministry, which takes the final call.
“This is a clarification to streamline the process and give adequate time to the finance ministry to issue the required notifications,” said an official.
Countervailing duties are additional levies to counter subsidised imports while anti-dumping duties are against a specific producer, exporter or country.
Separately, to protect against the misuse of free trade pacts through circumvention, the budget proposes that duty will be imposed from the date of initiation of anti-circumvention investigation and for up to five years at a time.
“Earlier, this duration was not up to five years and the duty could be imposed for a lesser period as well,” the official added. In case either of these duties is temporarily revoked, the suspension period cannot exceed one year at a time.
Another proposal deals with anti-absorption provisions that prevent countries from reducing the price of their exported products to neutralise the effect of the duty imposed by India.
The budget also seeks to amend rules to allow India to impose a safeguard duty along with a duty in the nature of Tariff Rate Quota.
Duty suspension
The budget has temporarily revoked anti-dumping and countervailing duties on certain steel products to bring down input costs for domestic user industries such as engineering products.
Anti-dumping duties have been suspended from February 2, 2021, to September 30, 2021, on straight length bars and rods of alloy steel from China, high-speed steel of non-cobalt grade from Brazil, China and Germany and flat-rolled product of steel, plated or coated with alloy of aluminium or zinc from China, Vietnam and South Korea.
For the same period, countervailing duties are being revoked on imports of certain hot rolled and cold rolled stainless steel flat products from China and flat products of stainless steel from Indonesia.
Source: The Economic Times
Sri Lanka and China recently signed a memorandum of understanding (MoU) to boost bilateral apparel trade that was severely affected by the COVID-19 pandemic. The China National Textile and Apparel Council signed the agreement with Sri Lanka’s Joint Apparel Association Forum (JAAF) to strengthen the working relationship between the two associations.
Other key objectives of the agreement are to promote value chain cooperation in the two countries, increase mutual visits, promote exchanges and improve mutual trust among industry personnel.
The effort was initiated by the embassy of Sri Lanka in Beijing, JAAF chairman A Sukumaran and China National Textile and Apparel Council vice president XuYingxin, according to a Sri Lankan newspaper report.
Sri Lanka also invited investors from China to explore investment opportunities in the upcoming textile park in Eravur.
Apparel and textile trade between China and Sri Lanka has expanded over the last three years and in 2019, the total textile and apparel trade between the two countries reached $1.24 billion
Source: Fibre2Fashion News
British Clothing retailer New Look’s newly acquired Brighton store has been bought by Frasers Group.
The acquisition comes in the wake of retailer’s recent purchase of Psyche’s online and store operations.
The Brighton store is situated on 188-191 Western Road.
Last September saw New Look’s company voluntary arrangement (CVA) get approval from over 75 per cent of creditors – including landlords.
The approval meant that that New Look would shift over 400 of its UK stores to turnover-based rent model and a 3-year rent holiday on its remaining 68 stores.
Since the CVA did not include any store closures, over 11,000 jobs could be saved. Founded in 1969, New Look is known for selling womenswear, menswear and apparels for teenagers.
Meanwhile, Frasers Group, which has had a good beginning in 2021 following the acquisition of Psyche and now New Look’s Brighton store, has announced the shutting down of its Jenners store in Edinburgh.
The closure of the Jenners store was due to Group’s inability to reach an agreement with the owner of the Jenners building to go ahead with their tenancy.
Source: Apparel Online
The Indian embassy in Yangon, Myanmar has advised all Indian citizens in the country to take due precautions and avoid unnecessary travel after its armed forces carried out a coup d’etat and detained de-facto leader Aung San Suu Kyi and other political leaders due to a disputed election. The embassy has said that travellers may contact them if required.
"In view of the recent developments in Myanmar, all Indian citizens are required to take due precautions and avoid unnecessary travel. They may be in touch with the Embassy if required," the embassy said.
The Ministry of External Affairs (MEA) said that it was deeply concerned and was closely monitoring the situation in Myanmar.
We have noted the developments in Myanmar with deep concern. India has always been steadfast in its support to the process of democratic transition in Myanmar...We believe that the rule of law and the democratic process must be upheld. We are monitoring the situation closely," it said.
The National League for Democracy (NLD), led by Suu Kyi won the 2020 elections by a landslide but the country's military claimed that the polls were marred with irregularities and termed the results 'invalid'. They questioned the legitimacy of almost 9 million votes, suggesting the possibility of 'voting malpractice.'
The United Elections Commission (UEC), a national level electoral commission responsible for organising and overseeing elections, dismissed the allegations, stating that there was no evidence of electoral fraud.
The military detained democratically elected leader Aung San Suu Kyi and imposed a one-year state of emergency. However, they said that they would return power after a fair and free election.
Detained leader Aung San Suu Kyi's and 24 other ministers' whereabouts are still unknown after 24 hours of his detention. The army named 11 ministers as replacements to oversee ministries including finance, defence, foreign affairs and interior.
The country was under military rule for nearly five decades before a democratic transition in 2011.
Source: The Hindustan Times
The European Union (EU) SWITCH-Asia Switch Garment project participated in the European Chamber of Commerce Cambodia Breakfast Talk last month on ‘How can European brands meet RE100 and other global climate goals in Cambodia?’ Switch Garment is working with key actors in the sector, including the government, brands, technology providers and factories.
The event that took place in Phnom Penh was attended by Karolien Casaer-Diez, Global Green Growth Institute (GGGI) Cambodia country representative and Switch Garment project manager, Matthew Armstrong, representative from Adidas, and Peter Ford, environmental sustainability responsible at H&M Group in Cambodia, Vietnam and Myanmar. GGGI is a treaty-based international organisation headquartered in Seoul.
“Factories we engage with are starting to see that greening equals competitiveness. Thanks to initiatives like the RE100, they understand that being green is a strategic benefit, and can help them secure contracts with international brands,” Casaer-Diez was quoted as saying in a SWITCH-Asia press release.
RE100 is a global initiative that joins together some of the world’s most influential businesses, including major fashion brands, committed to reaching centper cent renewable energy.
Their 2020 annual report stated that 42 per centof new RE100 members are from the Asia-Pacific Region, showing that although the region has some of the most challenging markets for businesses to source renewable energy, it also presents some of the biggest opportunities for green investment and growth.
International brands are under pressure to meet climate targets, and nations that can facilitate this will likely have a competitive advantage. Armstrong urged the audience to see this as an opportunity for growth.
Beyond meeting climate targets, the event highlighted the potential and demand for green jobs in Cambodia. GGGI's economic modeling found that increasing resource efficiency in Cambodia's key manufacturing industries could create half a million jobs by 2030.
The SWITCH-Asia programme is managed by the European Commission’s Directorate General for International Partnerships (DG INTPA).
Source: Fibre2Fashion News
Mimaki USA – a wide-format inkjet printer’s provider – recently introduced two textile and apparel inkjet printers named TS100-1600 sublimation transfer inkjet printer and Tiger-1800B Mk III which is a high-speed textile inkjet printer with a belt conveying system.
The TS100-1600 is an entry-level, high-performance sublimation printer that meets a diverse range of on-demand production.
As claimed by Mimaki USA, it’s able to produce highly detailed, photographic quality prints with a wide array of colours and gradient capabilities. The tonal quality is possible with print speeds up to 753 ft2/hour.
On the other hand, the Tiger-1800B Mk III is a new high-speed textile production model which features the new Mimaki Printer Controller (MPC).
MPC is touch-screen operation software that enables faster operation and tighter control of production and quality.
The Tiger-1800B Mk III combines high productivity with a maximum print speed of 4,144 ft2/hour and long operating stability. The 10 kg ink tanks increase run-times and lower running costs.
Depending on ink type and print mode, four different droplet sizes are available to achieve smoother colours and transitions.
According to the company, the needs of the textile and apparel customers today have drastically evolved and a shift from mass production to just-in-time production of more personalised goods can clearly be seen.
“Customers increasingly request shorter lead times, which require greater agility to produce goods quickly and efficiently, regardless of production run size. These textile printers serve all these purposes,” said Mimaki USA.
Source: Apparel Online
A group of buyers engage in business simultaneously with more than 300 readymade garment (RMG) factories in Bangladesh, underscoring the industry's major vulnerability, a survey found. Zara, H&M, Li & Fung and Walmart are the top four brands out of 3,600 retailers that had business during the last four years with around 300 Bangladeshi RMG factories.
KiK, C&A, Next, LPP, Kmart and Mango are the six brands that have been sourcing from more than 200 local garment factories. Lidl, Pep & Co, nkd, Matalan, JC Penny, Gap and Target are among the 11 brands that have business with more than 100 factories.
Data collected by Mapped in Bangladesh (MiB),which tracks export-oriented garment factories digitally, and the Centre for Policy Dialogue (CPD) found a total of 3,600 global brands, buyers and retailers have been sourcing locally RMG items from 3,211 export-oriented garment factories located in Dhaka, Gazipur, Narayanganj and Chattogram during last four years.
Experts said the dependence on a small number of buyers is a major weakness not only for small-scale enterprises but also for large factories, according to a report in a Bangladeshi newspaper.
Due to such dependency, exporters had no other option but to accept arbitrary demands like discounts, deferred payments and order cancellations during the pandemic.
There are 29 brands and retailers that have business with more than 50 but fewer than 100 factories and 175 buyers do business with five to 49 factories while more than 1,300 brands did business with a single factory, the MiB data showed.
According to the study, the majority or 86 per cent of the surveyed 610 factories said that brands or buyers did not take supportive measures for caring about workers' health and financial peril of factories during the pandemic.
It also found the discontinuation of normal business ties with the buyers immediately after the pandemic, which it termed a ‘major challenge’ for suppliers.
Small and medium factories as well as Chattogram-based units were found to be behind in maintaining normal contacts.
Buyers and brands are supposed to maintain normal business contact particularly during the crisis period, discuss the issues and challenges confronted by the suppliers and try to provide predictability to the suppliers with regard to orders, prices and market situation, it said.
About a third of the factories alleged that at least some of their orders were cancelled and necessary payment was not made. Some 30 per cent factories reported that a section of buyers deferred shipment with timely payment while 20.5 per cent factories said buyers settled with deferred payment.
About 16 per cent factories claimed that buyers settled part of their orders at a reduced price and 1.8 per cent factories complained that buyers cancelled orders but agreed to pay the cost of raw materials.
The application of 'force majeure' clause in such incidences was widely discussed, the report said, adding a section of buyers reinstated the cancelled orders. Besides, some buyers filed for bankruptcy, which caused problems for local suppliers.
The report suggested that apparel trade bodies should encourage factories to diversify their buyers' base by including not only large scale buyers but also small-scale brands.
Source: Fibre2Fashion News
Going by the Export Promotion Bureau (EPB)'s data, the export of handicraft has demonstrated a steady growth over the years. Actually, foreign currency earnings from the sector have about doubled over the past half a decade. In the last six months between July and December of this fiscal (2020-21) export has registered a robust performance, earning US$16.58 million. This is a growth of close to 49 per cent if compared to the earnings over the same period in the last fiscal year. Quantity-wise, however, the said export earnings may not look so impressive. But what cannot be made light of is the fact that unlike many other industrial sectors, the handicraft has performed vigorously despite the pandemic. Moreover, though the strategic performance target for the period was set at around 13.50 per cent, the actual performance has been 23.36 per cent.
Undeniably, this is a welcome development at a time when the clamour for diversifying the country's export basket has reached a crescendo. True, past records with the EPB also testify to this assessment about handicraft sector. As for instance, in FY 2015-16, the country's export earnings from handicraft goods were around US$ 10 million. But during the FY (20118-19), it was nearly US$ 20 million, whereas in FY 2018-20 it was over 20.50 million. So, what is especially noteworthy about the current fiscal's growth pattern? First, though handicrafts are regarded as non-essential goods, still recently their demand in the international market has been on the rise. Second, far from diminishing, it has further increased during the pandemic, a time when business in general has suffered, let alone exports. So, it appears that the handicrafts sector has somehow escaped the overall depression affecting the economy. Industry insiders, however, hold that the pandemic has created a new awareness among the global consumers about environment-friendly products. And, being made by hand using indigenous raw materials found in nature, its appeal is greater than artificial commodities. Furthermore, it is not a passing whim that overseas consumers are buying handicraft items. The signs are strong that consumers are nowadays preferring green products more than ever before. The jute-related products, for example, including other Bangladeshi handicrafts are learnt to have been gaining popularity in the international market in recent times. Also, addition of new products to the export basket like the soil-based terracotta and handmade carpet, or satranji, of the Rampur area have definitely played their part in increasing the popularity of our handicraft goods abroad.
The external demands apart, one needs also to consider the local factors contributing positively to the sector. Mention may be made here of the factors like low production cost, loan accessibility at a single digit rate, exploration of untapped markets and availability of raw materials. On this score, the Small and Medium Enterprises Foundation (SMEF) of the government deserves commendation for the way it has been promoting new entrepreneurs in this sector with its easy credit support.
Notably, the major players including China, Vietnam and Thailand in the international handicrafts market have, of late, been switching to high-tech products. To add to that, the global handicrafts market, too, has been growing fast in recent years. Clearly, the overseas handicraft market looks highly promising. The policymakers of this sector should formulate a befitting strategy to make the most of this development.
Source: The Financial Express
