Export organisations have asked the government for higher export incentives, cheaper credit, faster reimbursements of input taxes and lower transaction costs to help deal with the crisis of continuously falling exports.
In a review meeting chaired by Commerce Secretary Rita Teaotia and attended by 27 export organisations on Wednesday, exporters made a strong case for the government coming to their aid.
“The major issues highlighted by the export councils related to early refund of the duty drawback amounts, credit of interest subvention, increase in the incentives under the existing schemes and agreements with specific countries to promote exports of certain items,” a Commerce Ministry release said.
The Commerce Secretary, however, said that it was not likely that the incentives under the Merchandise Export from India Scheme would be enhanced as the scheme was firmed up after a lot of deliberations.
Export organisations from sectors including apparel, carpet, cashew, chemicals, cotton, leather, electronics & computer software, handicrafts, gems & jewellery, handloom, Indian silk, plastics, powerloom, sports goods, synthetic & rayon textiles, wool & woollen, oilseeds, telecom, pharmaceuticals and EOUs & SEZ, attended the meet.
Several export organisations stressed that the interest subvention scheme should be implemented without delay.
The Finance Ministry had made a provision for extending interest subvention — a scheme that allows loans to exporters at a lower interest rate of about 3 per cent — in this year’s budget, but it is yet to be implemented.
Exporters complained that banks also had not passed on the benefits of the recent rate cuts announced by the RBI, and credit was available to them at high interest rates of 13-14 per cent.
The Engineering Export Promotion Council (EEPC) pointed out that because of repeated increases in import duty and safeguard duty on steel HR coils, the engineering industry was facing an inverted duty structure, where duties on raw materials were higher than the finished products.
SOURCE: the Hindu Business Line
The government has increased the allocations under the export incentive scheme called Merchandise Exports from India Scheme (MEIS) to Rs 21,000 crore from Rs 18,000 crore earlier to give a boost to shipments.
Commerce secretary Rita Teaotia announced the increased allocation in a meeting with 27 export promotion councils in the wake of exports declining for the last nine months.
This amount is likely to be available for allocations in the coming week. MEIS rewards merchandise exports with different kinds of duty scrips, which can be used for paying duties or be monetized through permissible trade in them. The rates of duty credit scrips issued under MEIS currently range from 2 per cent to five per cent of the exports.
Government said it was not possible to give more benefits.
Teaotia said that the Foreign Trade Policy 2015-20 was drawn after extensive deliberations and it may not be possible to make changes very frequently and go back on the scheme, commerce department said in a statement.
Citing changing dynamics of the export market, the secretary asked exporters to be flexible to exploit opportunities.
"The secretary asked exporters to give specific requests for the Regional Comprehensive Economic Partnership agreement as it is moving fast and its negotiations are at a critical stage," said an official who was present in the meeting.
Teaotia said that special economic zones could be made as a fulcrum of Make in India. "Agricultural exporters cited non-tariff barriers as a problem while electronics exporters wanted MEIS incentive for software products. The issue of increasing transaction costs was also brought up," the official said.
A representative from one of India's traditional exports council said that it is unlikely for the government to increase benefits as it is bound by financial and regulatory concerns.
SOURCE: the Economic Times
The Indian textile machinery industry is expected to touch Rs 45,000 crore mark by 2022 from the present Rs 22,000 crore, buoyed by growing demand of textile and apparel market in the country.
"The textile machinery industry witnessed a growth of 8-10 per cent to Rs 22,000 crore in 2014 from Rs 20,000 crore in 2013. The size of the industry is poised to double to Rs 45,000 crore by 2022 in light of new projects and emphasis on setting up textile parks," India International Textile Machinery Exhibitions Chairman Sanjiv Lathia told PTI.
Modi government's 'Make in India' programme is also expected to help the textile sector by way of increase in demand for modern machineries.
India's textile and apparel industry is expected to grow from the current USD 107 billion to USD 223 billion by 2021. And India is expected to be a leading textile producing country in the world by 2020, Lathia said.
He said the country has the potential to become manufacturing hub in the textile machinery with abundance of skilled labour, low cost and natural resources available.
But for this, sufficient focus is to be given on research and development in order to ensure modern and innovative technologies are developed in the country.
However, the domestic textile engineering industry is unable to fulfil the industry demand and a large volume of textile machinery is sourced from European countries, which is relatively costly.
For textile machinery manufacturers from Switzerland, Germany, Belgium, Italy and Spain, India remains the most important market with the export worth millions of dollars, he added.
SOURCE: the Economic Times
Special economic zones may soon get a shot in the arm with the government considering two proposals to revive these once much sought after enclaves that are struggling without fiscal benefits.
The commerce department has proposed that tariffs and minimum alternate tax levied on SEZ units that sell goods in the domestic market should be brought down. The proposals may be discussed on Wednesday, when officials of the commerce ministry and trade councils discuss ways to boost exports, which fell 1.23 per cent to $310.5 billion in the year ended March 2015. Units in SEZs, which were set up with the objective of attracting foreign investment and boosting exports, are also allowed to sell.
India can import almost 200 kinds of electronic hardware without paying customs duty under the Information Technology Agreement. However, a manufacturer of these goods in an SEZ selling them in the local market will have to pay almost 28 per cent in duties. Electronics is one of the largest categories of imports, with August shipments of $3.44 billion, up more than 2 per cent from a year earlier. "SEZ units face competition from goods being sold in DTA (domestic tariff area) through the free tra ..
An expert on the matter said that a notification can be issued under Section 25 of the Customs Act to reduce the rate of duty payable on DTA sale by SEZ units and make it on par with FTA rates. Besides customs duty, SEZs have been hit by MAT and dividend distribution tax, which were imposed in 2011. SEZs contribute about a quarter of the country's exports but several licences were surrendered after the two taxes were levied.
Exports from SEZs declined to Rs 4.63 lakh crore in 2014-15 from Rs 4.94 lakh crore in 2013-14. The commerce department wants MAT of 7.5 per cent to be levied on manufacturing SEZs instead of the existing 18.5 per cent. "MAT reduction in manufacturing SEZs will benefit those in the auto components, garment manufacturing, ceramics and computer parts sectors located in Chennai, Noida and Kerala," said another official.
In November last year, the Comptroller & Auditor General had cited an imbalance in growth in the manufacturing sector and IT/ITES SEZs and pointed out that manufacturing units are discouraged by not being allowed other fiscal benefits. "There was a decline in the activity in the manufacturing sector in the SEZs...56.64 per cent of the country's SEZs cater to IT/ITES sector and only 9.6 per cent were catering to the multi-product manufacturing sector," the CAG had said.
SOURCE: the Economic Times
A day after Prime Minister Narendra Modi expressed the hope on a national roll-out of goods and services tax (GST) from 2016-17, the finance ministry on Wednesday released three reports on the processes for the new indirect tax regime. These suggested that the Reserve Bank of India (RBI) can act as the aggregator of payments, and businesses will have to mandatorily register with the goods and services tax network (GSTN) portal to avail of benefits of the new tax system.
The reports, prepared by joint sub-committees of the Union finance ministry and the empowered committee of state finance ministers, relate to registration, refunds and processes.
“A legal person without GST registration can neither collect GST from his customers nor claim any input tax credit of GST paid by him. There will be a threshold of gross annual turnover, including exports and exempted supplies (to be calculated on all-India basis), below which any person engaged in supply of goods or services or both will not be required to take registration,” said the report on registration.
The GSTN portal — tech backbone for the new indirect tax system — will be designed by Infosys by March 31, 2015. The company will also maintain it for the next five years. It won the Rs 1,380-crore contract from GSTN in September.
While the threshold limits are yet to be officially decided, the Centre is pressing for an exemption limit of Rs 25 lakh annual turnover.
The Constitution amendment Bill has already been passed by the Lok Sabha, but is stuck in the Rajya Sabha as the ruling National Democratic Alliance lacks the required numbers in the upper House.
The portal will have back-end integration with the respective information technology systems of the Centre and states.
On the payments, another report pointed out that RBI should play the role of an aggregator to make it convenient for taxpayers by getting larger number of banks on board. The government will allow GST payment by suppliers via bank transfers, credit and debit cards, and over-the-counter.
“RBI should play the role of an aggregator through its e-Kuber system. Such role will ease participation of larger number of banks in GST receipts enhancing convenience for the tax payers and provide single source of information for credit of the receipts to government accounts and thereby simplifying accounting and reconciliation tasks,” the report noted.
SOURCE: the Business Standard
A gauge of expected swings in rupee slipped to a two-month low amid optimism demand for the nation's assets picking up as sentiment toward emerging markets improves.
Foreigners bought $137.3 million more Indian shares than they sold in the first two trading days of this month, after pulling $3.46 billion from the market in August and September. Holdings of rupee-denominated debt have risen 3.54 billion rupees ($54.2 million) in October. Developing-nation stocks and Asian currencies climbed on Wednesday as traders bet the Federal Reserve will hold off raising interest rates this year. Reserve Bank of India cut borrowing costs on September 29 by more than by more than economists estimate and allowed global funds greater access to local sovereign notes.
The rupee's one-month implied volatility, used to price options, slid eight basis points in a sixth day of declines to 6.54 per cent as of 11:52 am in Mumbai, data compiled by Bloomberg show. It fell to 6.53 per cent earlier, the lowest since August 11. In the spot market, the rupee strengthened 0.2 per cent to 65.2650 a dollar, advancing for the sixth time in seven days.
"Fresh dollar inflows have increased," said Rohan Lasrado, Mumbai-based head of foreign-exchange trading at RBL Bank Ltd. "The environment has changed since the Reserve Bank of India policy and we expect more money to come in."
Top Forecaster Rupee has been Asia's best-performing currency since the end of August. ABN Amro Bank NV, the top forecaster in Bloomberg's quarterly rankings, sees the currency maintaining that position on the back of higher inflows. RBL Bank expects it to trade in a 65.10-65.50 per dollar range this week, Lasrado said.
SOURCE: the Economic Times
Creative ‘Made in India’ anti-poverty policies, such as MGNREGA (rural job guarantee scheme) and PMGSY (rural road scheme), that helped stabilise and raise household incomes, continue to inspire the world, said a senior ILO official, adding that economic growth by itself is not enough to tackle growing income inequalities and create quality jobs.
“The rising tide (of growth) in India is not lifting every boat,” said Sandra Polaski, Deputy Director General (Policy) of the International Labour Organisation (ILO).
Delivering a lecture on ‘The Future of Work’ to mark 20 years of the Institute of Human Development here on Wednesday, she said to meet the UN’s Sustainable Development Goals to be achieved in the next 15 years, India will need to adapt its labour market policies as its economy transitions from agriculture to manufacturing.
For example, to curb growing migration, sectors that can absorb workers where they live can be encouraged, she said. Also, the country needs to move toward formalisation of labour and ensure greater participation of women in the workforce, as also ensure social protection to over 90 per cent of its workforce in the unorganised sector.
She said India should first build a social protection floor and then move on to amend or fine-tune the existing labour laws through dialogue.
“First place to start is, build your social protection floor meaning everybody can breathe a sigh. Well, we have certain level of income protection which will keep people above poverty line and contribute to macro economy (demand). Then you can fine tune that (strict labour laws),” said Polaski.
On falling work participation rate of women, Polaski said while India had seen some job growth, it had been mainly for men in urban areas. “Women in rural areas are withdrawing from work for various reasons, and most of the jobs created in India have been informal in nature, as seen in the rise of the number of contract jobs,” she added.
Polaski called for policy intervention to reverse the direction of the job market which had shifted away from inclusive growth and social justice, mainly impacted by technology and rising migration.
Calling for labour reforms suited to “country-specific market realities”, the ILO official said the challenge of India lay in balancing regulation with an employment-friendly development agenda.
SOURCE: the Hindu Business Line
The Union Cabinet on Wednesday gave its nod for the introduction of a ‘limitation of benefit’ clause in the double taxation avoidance convention (DTAC) with Israel. The ‘LOB’ Article is an anti-abuse provision aimed at preventing misuse of the convention.
The protocol that received the Cabinet’s nod also provides for exchange of information on tax matters, including bank information.
The Cabinet also gave its nod for a protocol to amend the existing double taxation avoidance agreement (DTAA) with Vietnam, which also provides for exchange of information on tax matters, including bank information and information without domestic tax interest.
Neeranchal project
The World Bank-assisted ‘National Watershed Management Project’, or ‘Neeranchal’, also received approval for implementation by the Cabinet.
The project aims to fulfil the watershed component of the Pradhan Mantri Krishi Sinchai Yojana (PMSKY) to reduce surface runoff of rainwater, increase groundwater levels and better water availability in rain-fed areas.
The cost of the project is estimated at Rs. 2,142.30 crore, of which the Centre will be pitching in with Rs. 889 crore, while Rs. 182 crore will be provided by the respective State governments. The remaining 50 per cent of the project cost will be financed by a World Bank loan.
It will be implemented across nine States – Andhra Pradesh, Telangana, Madhya Pradesh, Maharashtra, Gujarat, Odisha, Chhattisgarh, Jharkhand and Rajasthan.
“These States have been picked since irrigation coverage is quite poor and this project will help increase water levels to benefit farmers. Of these, Jharkhand has the lowest irrigation coverage at just 5.6 per cent,” Nitin Gadkari, Union Minister for Shipping, Road Transport and Highways, told reporters.
According to the Department of Land Resources, irrigation coverage across Maharashtra is estimated 15 per cent and 24 per cent in AP, while in MP and Gujarat it is about 32 and 34 per cent, respectively.
Stating that small check dams could help improve agricultural output, Gadkari said “If irrigation increases, then agricultural production rises 2.5 times. It costs between Rs. 2,000-2,500 crore to build a large dam but check dams cost Rs. 200-300 crore to construct and water will reach as many people.”
The Cabinet also approved the setting up of three new All India Institutes of Medical Sciences (AIIMS) at Nagpur (Maharashtra), Mangalagiri (Andhra Pradesh) and Kalyani (West Bengal).
The new establishments, as announced by Finance Minister Arun Jaitley during the 2015-16 Budget, are being introduced under the Pradhan Mantri Swasthya Suraksha Yojana (PMSSY) at a cost of Rs. 4,949 crore.
While the Mangalagiri facility has an allotted sum of Rs. 1,618 crore, the institutions in Nagpur and Kalyani will be set up at a cost of Rs. 1,577 crore and Rs. 1,754 crore, respectively.
Skill development
The Cabinet also approved the introduction of a new service called the Indian skill development service.
NEW SCHEMES
SOURCE: the Hindu Business Line
LONDON: Emerging market stocks extended their rally into a sixth day on Wednesday, reaching seven-week highs, and currencies strengthened against the dollar on expectations US rate rises would be delayed into 2016.
Last Friday's weaker-than-expected US jobs data has put off the prospect of a rate increase, helping emerging market assets to stabilise after selling off in August and September.
The benchmark emerging equity index was up 2.2 per cent, with Hong Kong shares leading the gains, closing more than 3 per cent higher. Stocks rallied more than 1 per cent in Russia, Turkey and South Africa.
"What may have changed in the past two months is that while growth momentum across emerging markets is still negative, the pace of deterioration seems to be slowing," said Maarten-Jan Bakkum, investment strategist for emerging market funds at NN Investments. "It's not super good news, but it's good news all the same. It seems to be bottoming out."
Investors pulled some $3.2 billion from emerging market equity exchange-traded products in September, global data from asset manager BlackRock showed, and net outflows are at almost $30 billion for the year to date. But BlackRock said outflows seemed to be abating.
"Q3 outflows for the category remain significant, and while it might be too early to call the bottom of the market for EM, it is an area to watch," said Ursula Marchioni, chief strategist EMEA, at BlackRock iShares.
Morgan Stanley said it was time to increase equity exposure to emerging and commodity markets and trim European stocks.
"The real kicker should come from an improvement in news flow around China - on both economic growth and policymaking - which should drive a pick-up in sentiment more broadly across the emerging market space," analysts wrote in a research note.
Some of the most beaten-down emerging market currencies rallied against the dollar. The Indonesian rupiah was on course for its best daily performance in seven years, up around 3.3 per cent against the dollar, after gaining all week.
Central bank interventions have helped to put a floor under the currency, and a third round of stimulus measures will be announced on Wednesday, aimed at supporting consumption and reviving economic growth.
Malaysia's ringgit was poised for its largest daily gain in two years, up more than 5 per cent against the dollar at a five-week high.
Malaysia's August exports were better than expected, up 4.1 per cent year-on-year, thanks to rising shipments to Singapore, China and the United States.
The ringgit was named by star Templeton bond investor Michael Hasenstab as one of the emerging market currencies he is buying. He also said valuations on some assets provided a "multi-decade" buying opportunity.
The Russian rouble strengthened 1.4 per cent, matching a rise in Brent crude futures. Nickel and palladium giant Norilsk Nickel issued the first big Russian Eurobond. That signalled companies are gearing up to tap international markets again after a 10-month hiatus caused by the conflict with Ukraine.
South Africa's rand and Turkey's lira also extended gains, rising 0.4 per cent and 0.5 per cent respectively. Yet the general outlook remained discouraging. The International Monetary Fund cut its global growth forecasts late on Tuesday and predicted the biggest hit to growth would come from emerging markets. It lowered its forecast for them to 4 per cent growth, although China is seen growing at 6.8 per cent this year.
China's foreign exchange reserves posted their biggest quarterly decline on record in July-September, down $180 billion, after the central bank intervened to stabilise the yuan.
SOURCE: the Economic Times
NEW DELHI: Crude oil futures surged 2.96 per cent to Rs 3,230 per barrel today as speculators enlarged positions, tracking a firming trend in Asian trade.
At the Multi Commodity Exchange, crude oil for delivery in current month gained Rs 93, or 2.96 per cent, to Rs 3,230 per barrel, with a business turnover of 9,279 lots.
The November contract moved up by Rs 92, or 2.88 per cent, to Rs 3,283 per barrel with a business volume of 572 lots.
The November contract moved up by Rs 92, or 2.88 per cent, to Rs 3,283 per barrel with a business volume of 572 lots.
Softening of the US currency helped bolster prices as the dollar-priced commodity becomes cheaper for holders of weaker units, spurring demand, marketmen said.
Meanwhile, West Texas Intermediate crude prices for November delivery was up 55 cents to $49.05, while Brent crude for November, rose 40 cents to USD 52.32 a barrel in late morning trade on the New York Mercantile Exchange.
SOURCE: the Economic Times
Optimism toward global economic growth boosted risk appetite and drove the U.S. dollar higher against the euro and Swiss franc on Wednesday, while the yen gained against the dollar after the Bank of Japan left monetary policy unchanged.
Expectations for the first Federal Reserve rate increase since 2006 have been pushed out to 2016, analysts reiterated, while the potential for more stimulus from the European Central Bank and Bank of Japan have also contributed to a backdrop of accommodative central bank policy.
Analysts said the view that central banks will uphold easy monetary policy over the near term has reassured traders and helped oil prices, which were also lifted by data showing falling supply and higher demand, rise on Wednesday. The rise in oil prices also boosted risk appetite.
The U.S. dollar benefited from the greater risk appetite by rising against the euro and Swiss franc, which traders tend to buy and hold during times of concern given their low yields and sell in times of greater risk appetite.
Concerns that a later Fed rate hike would limit investment flows into the United States capped dollar the gains against the euro and Swiss franc, analysts said.
The dollar slipped slightly against the yen after the Bank of Japan left monetary policy steady despite talk the central bank would ease. The dollar was last down 0.2 percent against the yen at 120.005 yen.
The dollar also slipped against riskier emerging market currencies such as the Brazilian real and Russian ruble, while commodity currencies such as the Australian and New Zealand dollars also rose against the greenback.
The dollar was last down 1.5 percent against the real at 3.7956 reals, while the Australian dollar was last up 0.78 percent against the greenback at $0.7221.
The euro was last down 0.39 percent against the dollar at $1.12280. The dollar was last up 0.43 percent against the franc at 0.97135 franc. The dollar index, which measures the greenback against a basket of six major currencies, was last up 0.15 percent at 95.592.
