NATIONAL

• Subramanian panel to submit GST report by December 5
• Are Indian supplies to Nepal falling at undisturbed gates, too?
• Punjab spinning industry pushed in crisis due to difference in VAT rate
• Prospects brighten for key tax reform; Arvind Subramanian panel may suggest 18% GST rate
• Indo-Malaysia joint commission to meet in 2016
• Global crude oil price of Indian Basket was US$ 40.37 per bbl on 23.11.2015

INTERNATIONAL

• Fall in Turkish cotton crop to boost import demand
• Cambodia PM urges US provide GSP to at least 97pc of its total commodities

Textile Raw Material Price 2015-11-23

Source: Global Textiles

Note: The above prices are Chinese Price (1 CNY = 0.15637 USD dtd.

23/11/2015)

The prices given above are as quoted from Global Textiles.com.  SRTEPC is not responsible for the correctness of the same.

Back to top

Subramanian panel to submit GST report by December 5

Officials did not comment on the likely rate. But there are various suggestions being floated by stakeholders.  The Arvind Subramanian-led panel on recommending revenue-neutral rates for the proposed Goods and Service Tax (GST) would submit its report in the first week of December, senior policymakers said on Monday. The government was in constant talks with members of the Opposition in a bid to pass the constitutional amendments to GST in the Rajya Sabha, they said. Just two days before the crucial winter session of Parliament, Finance Minister Arun Jaitley met Chief Economic Advisor Subramanian, Minister of State for Finance Jayant Sinha, Revenue Secretary Hasmukh Adhia and other officials. "We discussed the broad contours of what needs to be done," Adhia told reporters after the meeting. "The Subramanian-led committee has asked for some more time. They have already collated all the data that they need. They should submit the report by December 4 or 5." Sinha said: "We had a consultation with the chief economic advisor and his committee that has been working on revenue-neutral rates. They have pulled together a lot of data from many different sources, so we have a comprehensive set of numbers. We have finalised parameters that will be necessary to establish the rates. That is now being looked at. We will have something by the first week of December." Officials did not comment on the likely rate. But there are various suggestions being floated by stakeholders. While a sub-panel of the Empowered Committee of state finance ministers had suggested almost 27 per cent, it was deemed too high. Experts had suggested to a Rajya Sabha select panel that the rates should be within 20 per cent to make India's tax rates competitive with other markets. Congress, on the other the hand, wanted GST to be within 18 per cent. "The finance minister has already said several times that our goal is to be able to come up with a reasonable rate that will be good for the economy and that's what the CEA and his committee have taken under advisement. I am sure they will consider that as they put together their analysis," Sinha said. When asked if the constitutional amendment Bill will be passed soon, he said: "We are in continuous consultation with our colleagues in the Opposition. We are trying to talk with them about all of the aspects of GST... We all recognise how important this is for the economy, for India, and so we are in continuous discussion to see that it gets passed." Sinha said the government was working to ensure a consensus on GST and that it was aware of the demands raised by the Congress on 18 per cent rate in the Constitution amendment Bill, a dispute resolution mechanism and the removal of the 1 per cent manufacturing levy. "What the actual rate is in any case will be established not by the constitutional amendment but by the GST Bill, though of course we have had some inputs that there should be a rate that is fixed in the Constitution amendment itself. So that is an item under discussion. So as of now, our view is that it should be in the GST Bill and not in Constitution amendment," he added.

Source: Business Standard

Back to top

Are Indian supplies to Nepal falling at undisturbed gates, too?

There is no Madhesi agitation in this part of Nepal. Yet, there is a long line of trucks waiting to enter Nepal at the Panitanki border in West Bengal, clogging up the two-lane highway fpr over 3 km. Is this usual? “Never,” says Naresh Sil, as he skilfully negotiates the taxi through narrow village roads to bypass the highway. “Ever since Nepal promulgated the new Constitution, against the wishes of the people from the plains (Madhesis) two months ago, India has been regulating supplies,” he alleges; the Indian government has been vehemently denying any stoppage. Nepal has been in the grip of a severe fuel crisis after the Madhesi agitators blocked the country’s main trade route at the Birgunj (Nepal)-Raxaul (Bihar) border, through which nearly 60 per cent of the country’s petrol and diesel imports from India, the entire supply of aviation fuel (ATF), and 70 per cent of LPG are transported. Nepal has preferred this route due to its proximity to the main consumption centre at Kathmandu (176 km away). In comparison, other prominent gates such as Sunauli (UP)-Bhairahawa, Jogbani (Bihar) and Panitanki-Kakarvitta are 300-450 km away from the capital. Rerouting the Birgunj cargo through other gates is difficult. First, Nepal will require more fuel tankers or gas bullets (specialised containers), which are not easily available. According to a Nepal Oil spokesperson, nearly 250 LPG bullets and many oil tankers have been stranded at Raxaul for the last two months. There is also a near-complete lack of basic infrastructure (like roads) on the Indian side of any border gate; they cannot take more load that that is scheduled. But what observers are asking is why have supplies through other gates that faced little or no agitation (like Panitanki) dwindled over the last two months. According to Nepal Oil Corporation data, Kathmandu imports nearly 1.10 lakh kilo-litres of liquid fuel from India every month during the winter. In the last two months, fuel supplies have barely exceeded 30,000 kl a month. In fact, till two weeks ago, the average was as low as 20,000 kl or around 20 per cent of the normal. Monthly LPG supplies at 6,000 tonnes are less than a fourth of the usual 25,000-26,000 tonne.

Traffic regulation The Panitanki gate, on average, handles 100 Nepal-bound and 25 India-bound containers a day. Nepal’s import cargo include coal, jute, 15-20 petrol and diesel tankers a day and, three-four LPG bullets a week. However, in the last two months, the daily average has dropped to 50 trucks. The movement of fuel is irregular. On November 19, for example, only 17 fuel tankers entered Nepal but there was none till mid-noon on November 20. Not a single LPG cargo crossed into Nepal during those two days. The scene is no better at Jogbani, the third most important gate for fuel supply after Raxaul-Birgunj and Sunauli-Bhairahawa. Before the closure of Birgunj gates, 200-250 containers, including 40-odd oil tankers and five gas bullets, were entering Nepal every day via Jogbani. The current daily average is barely half that. Though the fuel movement has picked up, it is irregular, it is well below normal. On November 17, for example, there was hardly any oil cargo. On November 18, oil was moving at normal pace but not cooking gas. “We are releasing cargo as per instructions,” said a Customs official. Truckers allege the flow has slowed “because of checking”. Also, the movement varies from gate to gate. While the situation has improved at Panitanki over the last week, it has not at Sunauli. According to Nepal Oil, LPG cargoes are waiting at Sunauli for the last couple of days. It means there will be a corresponding delay in sending empties for reloading. As per the trade agreement, fuel transportation is Nepal’s responsibility. “We load tankers as and when they are made available to us,” an IndianOil spokesperson told BusinessLine, describing Nepal as an important market for the company.

Black market thrives

The crisis threatens to deepen in Nepal in the week ahead as Madhesi parties have started blocking sections of the highway too. Those in the border areas are smuggling in provisions from India. All petrol pumps in Raxaul are crowded with bikers from Nepal. The rest of the country is at the mercy of black marketers. Taxis from the North Bengal town of Siliguri make daily rounds to Panitanki to empty fuel at nearly 100 per cent premium. To be re-sold at at least five times the regulated price in Kathmandu. “Valo poisa hochchhe, dada (making good money, sir),” says taxi driver Naresh.

Source: Business Line

Back to top

Punjab spinning industry pushed in crisis due to difference in VAT rate

Spinning mill owners of Ludhiana demand level playing field with their counterparts in other states as the spinning industry of Punjab is dying and already in huge debts, units are closing down owing to losses on account of lack of orders. Punjab government is held responsible for pushing them in a crisis by not reducing rates of value added tax (VAT) on yarn that they manufacture. The association of spinning mill owners of the state, Punjab Spinners Association (PSA), has been demanding reduction of VAT from quite some time now. They have met deputy chief minister Sukhbir Badal and the excise and taxation commissioner (ETC) Punjab many a times demanding the same. But this issue has remain unsolved. A meeting was held to address issues of ailing industry on Saturday chaired by industries minister Madan Mohan Mittal. Industrialists apprised the minister of how 10 spinning mills worth close to Rs 800 crore have already shut down in the state. They alleged that this has happened only due to the huge difference between VAT rates of Punjab and other states. VAT on yarn in many states is either nil or 2% whereas for manufacturers in Punjab, it is at 6.05%. Due to this difference the cost of production of local manufacturers is higher by almost 6% as compared to the manufacturers of other states. The only solution of this problem is reducing the VAT rate. Thus the selling price of outstation yarn being less, the garment, knitwear and textile products manufacturers of the state have started preferring it rather than using the costly Punjab-made yarn.  According to Akhil Malhotra, MD Shiva Texfabs, ten mills and 1.5 lakh spindles have already closed down due to huge difference between VAT rates of Punjab and other states. At the meeting, Sanjiv Garg of Garg Acrylics brought to notice of industries minister the growing problem of influx of yarn made in other states in Punjab. Close to Rs 10,000 crore of yarn has been imported to Punjab last year from states like Uttar Pradesh, Himachal Pradesh, Delhi etc where VAT is nil. Garg also claimed that if the government decides to cut down VAT rates for their industry, the excise and taxation department would earn extra revenue of Rs 300 crores as department will not have to pay VAT refunds to the garment industry. Coming down heavily against the government and its policies, various industry representatives present in the meeting accused chief minister Parkash Singh Badal and deputy chief minister Sukhbir Badal of having indifferent attitude towards industrialists, despite being aware of the depleting condition of the industry in the state. State general secretary of Punjab Pradesh Beopar Mandal, Sunil Mehra urged Mittal to take a decision on VAT rates on the spot, but the latter refused. Mehra also said that the existing industry is on a ventilator and government is busy showering incentives on new investors who are yet to invest. More than 18,000 units have already closed down and 5,000 have been declared NPA by the banks, but the government is doing nothing and has given free hand to its officers, who are harassing industrialists by using tools such as CLU, VAT etc. There are around 100 large spinning mills in Punjab, out of which 45 belong to Ludhiana businessmen. Each of these mills employs approximately 5,000 to 10,000 workers. While Ludhiana's Shiva Tex Fab is the largest synthetic yarn producer among these units, Trident, SEL, Vardhman & Nahar are the largest producers of cotton yarn. Owner of one of the mills has disclosed that he has suffered a loss of close to Rs 350 crore just due to this VAT difference and his net worth has vanished.

Others present in this meeting included Shakti Sharma, chairman of Punjab Small Industries and Export Corporation Limited (PSIEC), former health minister Satpal Gosain, Sanjay Longia, Radhe Shyam Ahuja, Vinod Bharti, Pran Bhatia, Gurdev Sharma Debi, Parveen Bansal, Anil Sareen.

Source: Yarn and fibre

Back to top

Prospects brighten for key tax reform; Arvind Subramanian panel may suggest 18% GST rate

 A key panel on goods and services tax is likely to recommend a revenue-neutral rate of about 18 per cent. The group, headed by Chief Economic Adviser Arvind Subramanian, has zeroed in on the rate after considering various scenarios, brightening the chances for this important reform as the low rate should be acceptable to everyone. "It has worked out to about 18 per cent," a government official privy to discussions said. Another official said the range for the tax could be 16-18 per cent. GST, which seeks to replace a host of central and state indirect taxes on goods along with services tax, will create a pan-India market and is expected to help lift the country's gross domestic product ( GDP) by 1-2 per cent. A revenue-neutral rate means a rate at which there would be no revenue loss to the Centre or states under GST compared with current collections. Low rate will help boost compliance and also cut the pain from increase in tax rate on services, which is at 14 per cent. Under GST regime, tax on goods will come down substantially from 27 per cent now, but that on services will go up. The government is also likely to look at two rates in services tax to lower the tax burden on essential services. The report of the Subramanian panel, based on latest data, is expected to be a key input in deciding the rates. Experts bat for a reasonable rate and a neat structure. "The rate in the range of 17-18 per cent is a welcome suggestion as any rate above this would not be desirable," said Anita Rastogi, partner-indirect tax at PwC. "Also, it is imperative that goods and services are not .. The empowered group of state finance ministers has asked the National Institute of Public Finance & Policy to rework the revenue-neutral rate using latest data. The institute has worked out rates using various scenarios of exemptions. A final call on the GST rate is to be taken by the GST council proposed in the constitution amendment Bill, which is stuck in Parliament with the main opposition party, Congress, refusing to back it in the Upper House where the ruling National Democratic Alliance does not have the required numbers. The government has reached out to Congress, but the Bill's passage in the winter session still remains uncertain. Congress wants the government to scrap the 1 per cent tax proposed for manufacturing.

Source: Economic Times

Back to top

Indo-Malaysia joint commission to meet in 2016

India and Malaysia have agreed to have the next meeting of the joint commission established between the two countries sometime in the first half of next year. India and Malaysia have agreed to have the next meeting of the joint commission established between the two countries sometime in the first half of next year. A joint statement issued by the two sides after delegation-level talks said foreign ministers of the two nations would lead their respective delegations at the next meeting of the joint commission. Both sides also agreed that regular exchanges would take place at the cabinet level between ministers in charge of trade and industry, transport, public works and infrastructure, in line with new developmental initiatives introduced by India, and the investment and trade opportunities opening up in each other’s country. The joint statement further said that both sides would hold regular foreign office consultations to enable both countries to monitor the progress of bilateral cooperation, including on regional and strategic issues of mutual interest. The two sides also reaffirmed their continued commitment to parliamentary democracy and to promote further cooperation between the parliaments of both countries, and underlined the importance of regular and enhanced exchange of visits between parliamentarians from India and Malaysia. The Prime Ministers of the two countries also witnessed the signing of one agreement on cultural exchange programme for the period 2015-2020. In addition, two Memoranda of Understanding (MoU) – one on cooperation in project delivery and monitoring, and the second on cooperation on cyber security were signed in the presence of the two leaders. It was also agreed that the leaderships of the two countries would hold regular summits, including on the margins of multilateral events.

Source: The Financial Express

Back to top

Global crude oil price of Indian Basket was US$ 40.37 per bbl on 23.11.2015

The international crude oil price of Indian Basket as computed/published today by Petroleum Planning and Analysis Cell (PPAC) under the Ministry of Petroleum and Natural Gas was US$ 40.37 per barrel (bbl) on 23.11.2015. This was higher than the price of US$ 40.35 per bbl on previous publishing day of 20.11.2015.

In rupee terms, the price of Indian Basket increased to Rs 2678.22 per bbl on 23.11.2015 as compared to Rs 2666.88 per bbl on 20.11.2015. Rupee closed weaker at Rs 66.35 per US$ on 23.11.2015 as against Rs 66.09 per US$ on 20.11.2015. The table below gives details in this regard:

Source: Ministry of Textiles

Back to top

Fall in Turkish cotton crop to boost import demand

The Turkish cotton to see lower returns compared to other crops such as corn in cotton growing regions seen, the fall in production was the result of lower planting, at 370,000 hectares, down from 430,000 hectares in the previous season according to the Ankara bureau. The government recently announced that the production bonus paid to farmers was to be raised to 0.65 lira per kilogramme of seed cotton, up from last season's bonus of 0.55 lira. Seed cotton is the unprocessed crop from which cotton fibre is ginned. But the Ankara bureau said that the increase in price support this season was "late to be announced, and hence had a limited effect on farmers' planting decisions. Rains also had adverse effects during the picking season, mainly lowering quality. According to the US Department of Agriculture, cotton crop will fall 17% this season which will help boost import demand, despite stagnant local consumption from the world's second largest cotton buyer, in the face of an ongoing anti-dumping investigation against US exports.

The USDA's Ankara bureau forecast Turkish cotton production to fall to 2.66m bales, or 580,000 tonnes, in the year from August 2015, down 17% on the previous season. This compares to the official USDA forecast of 2.80m bales in 2015-16. Turkish cotton imports were seen at 4.016m bales, up from the 3.800m bales previously forecast by the USDA. This is up 9% from 3.675m bales in the previous season. And imports from the US were seen at 1.720m bales, up from 1.554m bales in the previous season. The rise in imports from the US comes despite uncertainties about an ongoing antidumping investigation being carried out by the Turkish government, which was instituted in October last year. There have been fears that the investigation may impose retroactive duties on importers of US product. According to the Ankara bureau, the Turkish textile industry is hoping the investigation will be finalized without any antidumping duties, claiming that such a move will make Turkish textile exports more expensive and will cause Turkish products to lose market share in international markets.

Source: Yarn and fibre

Back to top

Cambodia PM urges US provide GSP to at least 97pc of its total commodities

The US government currently provides duty-free status to over 5,000 types of products produced in Cambodia as part of its Generalized System of Preferences (GSP) Program. Washington granted Cambodia GSP trade privileges in 1996, along with Most Favoured Nation (MFN) status, which reduces tariffs on eligible products.  The combination of GSP and MFN status has allowed many Cambodian products to access the US market, making them more price competitive against the products of countries that do not enjoy the privileges.  At the third ASEAN-US Summit held in Kuala Lumpur on Saturday, Cambodian Prime Minister, Hun Sen said that his country would like to request that the US provide Generalized System of Preferences (GSP) to at least 97 percent of its total commodities, with tariff exemptions and quota-free [access], to least developed countries ( LDC) member states, in accordance with the previous agreement under the WTO framework. He urged the policymakers in Washington to expand its preferential treatment of goods imported from least-developed countries (LDCs) including Cambodia by increasing the amount of goods permitted duty- and quota-free access to the US market. The prime minister’s request refers to a 2005 ministerial meeting of the World Trade Organisation (WTO) in which developing nations pledged to provide extend duty-free and quota-free status to “at least 97 per cent of products originating from LDCs, defined at the tariff line level. Economist Srey Chanthy said that the request is just to remind rich countries such as the US to implement the [WTO] agreement under a broad framework, which may not have been legal binding. Many developed economies, including Australia, Canada and the EU, have enacted special programs that extend duty- and quota-free treatment to all imports from LDCs with the exception of arms. While the WTO decision to grant duty-free and quota-free access to 97 percent of products originating in LDCs appears potentially crippling to US domestic industries, the requirement is based on tariff lines and not on a trade-weighted basis. This loophole has allowed the US to exclude many of the chief export commodities of LDCs, such as sugar, cocoa and tobacco. Ho Sivyong, director of the export-import department at the Ministry of Commerce, said that the US government’s GSP program covers most of the items that Cambodia exports, but excludes its largest export category by value: garments. However, Garments and textiles exported to the US are not eligible for the GSP scheme. They are covered under the MFN scheme, which requires importers to pay a tariff of around 10-15 percent. While Sivyong said that he did not know how many of Cambodia’s tariff lines were covered by the GSP, he expects the US will continue to find ways to exclude garments from the programme. If the US were to extend its GSP scheme to cover 97 percent of all commodities, it could help Cambodia to export more agricultural and other products to the US.  However, according to Sivyong, garments and textiles are in the remaining 3 percent that the US will not include in the GSP. In 2014, Kingdom’s garment and footwear exports to the US reached $1.8 billion. According to the Garment Manufacturers Association in Cambodia, a total export to the US represents about 63 percent.

Source: Yarn and fibre

Back to top

Euro zone business growth at 4-year high as firms cut prices

Business activity in the euro zone picked up at its fastest pace since mid-2011 this month - and far faster than expected - as a weak currency and price cutting helped drive new orders, a survey showed on Monday. While the upturn in activity may be welcomed by European Central Bank policymakers the discounting by firms suggests the ultra-loose monetary policy is doing little to get inflation anywhere near their 2 percent target ceiling. "These are good numbers. For the region as a whole you are looking at growth of 0.4-0.5 percent. You are not only seeing activity hitting highs but also employment, backlogs and new business," said Chris Williamson, chief economist at survey compiler Markit. "The caveat to that is it's not that different to what we have seen throughout the year, and the ECB is going to be disappointed with the growth rate given the stimulus already in place." A Reuters poll published earlier this month suggested growth would be 0.4 percent. Markit's Composite Flash Purchasing Managers' Index , based on surveys of thousands of companies and seen as a good guide to growth, jumped to a more than four-year high of 54.4 this month from October's 53.9. That beat the median forecast for 53.9 in a Reuters poll. The index has been above the 50 mark that separates growth from contraction since July 2013. Markit said nearly half the feedback was collected before last week's Paris attacks and an earlier French composite PMI slumped to a three-month low of 51.3 from October's 52.6. This was offset by Germany's, which rose to 54.9 from 54.2. However, some of that growth was driven by firms cutting prices for a second month. The composite output price index for November was unchanged from October's 49.6. "It's a sign this growth is only taking place at the expense of margins. The ECB is not going to look at these numbers and think everything is alright. They are going to think it still needs a push," Williamson said. Despite the ECB injecting 60 billion euros a month of new money through its bond-buying programme since March to support growth and inflation, prices rose only 0.1 percent last month. It is expected to expand the programme in December. Factories also benefited from a weaker euro, which makes their goods and services cheaper for foreign buyers. The common currency has fallen around 12 percent this year. New export orders came in at their fastest rates in six months, with the sub-index registering 52.8 compared with October's 52.7. That drove the manufacturing PMI up to a 19-month high of 52.8 from 52.3. An index measuring output, which feeds into the composite PMI, rose to 53.9 from 53.6. The bloc's dominant service industry expanded at its fastest rate since May 2011. Its PMI reading climbed to 54.6 from 54.1, encouraging firms to increase headcount. The service sector hired staff at the fastest rate in five years, with the related index climbing to 52.8 from 52.3.

Source: The Financial Express

Back to top