This would enable a wider set of companies to avail of greater flexibility in the accounting standards, according to a notification issued on Wednesday The ministry of corporate affairs has expanded the definition of small and medium companies (SMC), raising their turnover and borrowing limits. This would enable a wider set of companies to avail of greater flexibility in the accounting standards, according to a notification issued on Wednesday. The 388-page notification has defined small and medium companies as unlisted entities which are not banks, financial institutions or insurance firms and have a turnover of up to Rs 250 crore and borrowings up to Rs 50 crore in the immediately preceding accounting year. The threshold has been Rs 50 crore and Rs 10 crore for turnover and borrowings under the general accounting standards. The change in definition is for accounting purposes, experts said. “SMC which is a holding company or subsidiary company of a non-SMC will not qualify as a small and medium company,” the notification said. “The notification is self-contained accounting standards tailored for the needs and capabilities of smaller businesses and acts as a common set of accounting standards that will be mandatory in its application to SMC in preparing its general purpose financial statements. The accounting standards for SMC, which were earlier notified in December 2006 and amended from time to time, are much simpler as compared to Indian Accounting Standards,” said Vikas Bagaria, Partner, Deloitte India. Experts have said that these accounting standards involve less complexity in its application in terms of the number of required disclosures which are less onerous. The notification also says that an existing company which was not a small and medium company previously but became so subsequently would not be able to avail of any exemptions in accounting standards. It can avail of these exemptions if it continues as a small and medium company for two consecutive accounting periods. “The limits are in line with a similar increase in threshold done by ICAI (Institute of Chartered Accountants of India) for non-corporate entities. The revised criteria will help a number of companies and will promote ease of doing business,” said Sanjeev Singhal, Partner, SR Batliboi & Co LLP. For companies which have a turnover of less than Rs 500 crore and net worth of less than Rs 250 crore, the general purpose accounting standards of ICAI apply. Rest of the companies follow the Indian accounting standards (IndAS). The MCA notification said that all significant accounting policies adopted in the preparation and presentation of financial statements should be disclosed by companies. “The disclosure of significant accounting policies as such should form part of the financial statements and the significant accounting policies should normally be disclosed in one place.”
Source: Business Standard
Currently, apprentices are allowed largely in the manufacturing sector. The definition of establishment needs to be changed to include any place where trade or commerce or industrial activity takes place, including educational and training institutions. Educational and other training institutes will be able to hire apprentices as the government looks to widen scope of the definition of establishments under the Apprenticeship Act. The skills development ministry is likely to move the bill to amend the Act in the monsoon session and will seek Cabinet clearance on the proposed changes soon, a top government official told ET. "Work is being fast tracked to finalise changes to the Apprentices Act to make it more holistic and aspirational to enable more youth to take up apprenticeship," the official said. Currently, apprentices are allowed largely in the manufacturing sector. The definition of establishment needs to be changed to include any place where trade or commerce or industrial activity takes place, including educational and training institutions.
Source: Economic Times
The GST Council meetings have become “acrimonious, vexing and almost toxic with erosion of mutual trust”, he said. Unpaid goods and service tax (GST) shortfall compensation to states stood at Rs 74,398 crore for FY21, West Bengal finance minister Amit Mitra said on Wednesday even as he slammed what the called erosion of the commitment to work out a consensus in the GST Council meetings. “We are passing through dangerous times for the GST regime itself, when states’ own revenues are in dire distress with a growth of (-) 3% during FY 2020-21. The gap between protected revenue and revenue collected has ballooned to Rs 2,75,606 crore. The actual compensation due to the states for 2020-21 has reached Rs 74,398 crores,” Mitra wrote in a letter to Union finance minister Nirmala Sitharaman. Fraudulent transactions hit a peak of Rs 70,000 crore according to Nandan Nilekani’s presentation to the GST Council, he added. The GST Council meetings have become “acrimonious, vexing and almost toxic with erosion of mutual trust”, he said. “Many of us as ministers are also concerned that the GST Implementation Committee (GIC) consisting of officers, from a few states and mainly from the Gol, have started amending rules and presenting them only for the information of the GST Council — not for discussion and ratification,” he added. Speaking to FE recently, Kerala finance minster KN Balagopal said that the weighted average GST rate declined to 11.5% or thereabouts (against the revenue neutral rate estimated of over 15%), causing loss of revenue. “Cooperative federalism is at stake. GST hasn’t yielded the promised revenue productivity. Let us at least learn from experience and restructure the tax. There are also genuine concerns over the (lack of) democratic functioning of the GST Council. It is up to the Union government to display statesmanship and remedy the damage caused by GST to states’ finances and fiscal powers,” he said.
Source: Financial Express
Gross FDI inflows had risen by 10% to touch an all-time-high of $81.7 billion in FY21, although the pace of growth decelerated in the March quarter. Still, the inflows remained very encouraging last fiscal, given the devastation and disruption caused by the pandemic across the globe. Gross FDI inflows rose 38% year-on-year in April and FDI in equity surged by 60%, aided by a conducive base. However, the inflows were still higher than the April 2019 (prepandemic) level and appeared to have beaten the damaging impact of the second Covid wave this year. Gross inflows – which include FDI in equity, reinvested earnings, equity capital of unincorporated bodies and other capital — hit $6.24 billion in April, against $4.53 billion a year before, showed the data released by the commerce and industry ministry on Wednesday. Inflows of FDI in equity rose to $4.44 billion in April from $2.77 billion a year before. The inflows take place at a time when domestic private investments have remained elusive in recent years. Investments remain critical to the country’s economic resurgence, as private consumption has been badly bruised by income losses in the aftermath of the pandemic. Going forward, the bigger challenge would be to sustain the high growth in FDI inflows, once the favourable base effect wanes from August. Interestingly, FDI inflows last fiscal were greatly boosted by those into the digital sector. Analysts have already pointed out that a sizable chunk of the FDI was drawn by Reliance Jio alone. Gross FDI inflows had risen by 10% to touch an all-time-high of $81.7 billion in FY21, although the pace of growth decelerated in the March quarter. Still, the inflows remained very encouraging last fiscal, given the devastation and disruption caused by the pandemic across the globe. According to the World Investment Report 2021 by the UN Conference on Trade and Development (UNCTAD), released on Monday, FDI inflows into India rose 27% to $64 billion even when global inflows crashed by 35% in 2020. Mauritius emerged as the top investing country, with a 24% share of the FDI Equity inflows, followed by Singapore (21%) and Japan (11%). ‘Computer Software & Hardware’ was the top sector to have received the FDI in April, with about 24% share, followed by the services (23%) and education (8%). Karnataka remained the top recipient state, with 31% share of the total FDI in equity inflows, followed by Maharashtra (19%) and Delhi (15%).
Source: Financial Express
Once tariffs are eliminated, the markets of the FTA partners can be served from a single unified location. This allows some firms to grow beyond what is achievable in the national market of a single country The thrust on FTAs with large developed markets like the US, Canada and the European Union has been gaining momentum for some time. The Indian stakeholder-industry has shown a more affirmative attitude to bounded trade deals with the US, Canada, the UK and the EU, albeit with an approach that can best be described as one of cautious optimism. These are large markets and have the potential to become big export destinations for Indian products. While the larger picture appears to be trade, one can’t ignore the attendant potential benefit the preferential access to these large markets brings—an inducement for FDI in manufacturing. Of course, traditional wisdom states that FDI in manufacturing gets attracted to protected markets, where it is cheaper to set up a manufacturing unit rather than pay the tariffs required to serve the market through exports. This type of FDI has a long history, going back to the industrialisation of the UK, Canada and Australia. A 2002 World Bank report cites studies that confirm high tariff rates on imported goods induced FDI inflows into the UK, Canada and Australia, at that point in time. While an MNC’s decision to undertake foreign investment is guided by many factors such as infrastructure, human capital, tax policy consistency and such endowments in the recipient country, the size of the market is a significantly decisive factor in the choice of the FDI recipient country. Most studies find a highly-pronounced positive effect of the size of the host market on FDI inflows. Therefore, to the extent that an FTA creates an extended market by including access to the FTA partner countries’ market, a positive relationship between FTAs and FDI would emerge. Due to tariff eliminations, the markets of the FTA partner countries can be served from a single unified location. This effect allows some firms to grow beyond what they would have been able to achieve in the national market of a single country. Empirical studies have shown that trade pacts and investments are complements when the partner countries differ in relative endowments and are at different stages of development, while trade pacts and investments could be substitutes when the partner countries are similarly endowed and competing for the same FDI. This assumes a greater significance in the wake of the recent events which the pandemic has brought into focus—the importance of reliable and resilient supply chains over, simply put, the lowest cost supply chains. There is a diversification move by MNCs seeking plurality of production and to secure uninterrupted supply chains in order to avoid disruptions; a move which has prompted investments to move horizontally rather than vertically—a more risk-neutral model. A country with a modest market size but FTA access to large markets is likely to score over a large country with a big standalone market, especially if it can offer other incentives and create a more conducive environment. For example, Vietnam, which in itself is not a very large market, has successfully leveraged its preferential tariff access to many large Western and Asian markets through its trade agreements. This (making Vietnam a preferred destination for FDI in manufacturing) has been one of the major determining factors for MNCs diversifying under a China-plus-one strategy. Many ASEAN and South Asian countries (including India) have been competing for the same FDI. Another example is Bangladesh, which has duty-free access to the EU, UK and Canada in textiles under their GSP (General System of Preferences) for LDC countries, thereby making Bangladesh a preferred destination for FDI in textiles and a competitor for Indian textiles that do not have similar duty-free access to these large markets. Given India’s stage of development, it would only be prudent to seek a parity in tariff concessions in these large markets, through FTAs. Finding FTA partners in large Western markets would indisputably be a boost in the arm for the manufacturing industry in the country and would allure many more.
Source: Financial Express
It pared the growth forecast for calendar 2021 to 9.6% from 13.9%. Last month, Moody’s had cut the fiscal year 2021-22 growth estimate to 9.3% from 13.7% projected earlier. Calendar 2022 growth is seen at 7%. The economic impact of India’s second Covid-19 wave is likely to be restricted to the June quarter and is expected to be softer than that of the first wave last year, Moody’s Investor Service said on Wednesday. Centralised vaccine procurement will support recovery if it boosts inoculation coverage, Moody’s said in a note on India. It expects economic activity to accelerate in second half of the year as the pace of vaccination picks up.
Source: Economic Times
Industry observers said the reading of the norms suggest that growth of certain private label brands like Amazon Basics may take a hit. The new draft e-commerce rules issued by the consumer affairs ministry earlier this week is likely to increase the compliance requirements of e-commerce companies and have the potential to stunt the business growth of the firms as the proposed amendments attempt to curb broad discounts, restrict the expansion of private labels, strategies companies often bank on to get more users, experts said. Nikhil Narendran, partner at Trilegal, said that the term flash sale has been very loosely worded in the draft regulations and it appears that the definition implies a check on events that typically run for a certain duration like grand Diwali sales or something akin to heavy discount events like a Black Friday or Cyber Monday sale that is prevalent in the West. “This to my mind is anti-consumer in nature. It is not something a consumer protection law should say. Malls run grand shopping festivals but barring e-commerce entities from doing the same does not make sense,” Narendran told FE. Flash sales happen when a company offers immediate discounts to buyers to dispose of a large stock of products; that is the general understanding, Narendran explained. Although the government issued a clarification stating that conventional flash sales are not banned but only certain flash sales or back-to-back sales that limit consumer choice and increase prices will not be allowed, uncertainty remains. “What do you mean by large number of consumers, predetermined period of time? (as per the definition of flash sale in the rules) I could have a sale running throughout the year. There is no guidance provided in this to interpret. That is where I feel that businesses do not know how to create (discount) strategies while it gives unreasonable discretion to regulators,” said Gowree Gokhale, partner at Nishth Desai Associates. Industry observers said the reading of the norms suggest that growth of certain private label brands like Amazon Basics may take a hit. As per the draft rules, “no e-commerce entity shall permit usage of the name or brand associated with that of the marketplace entity for promotion or offer for sale of goods and services on its platform in a manner so as to suggest that such goods or services are associated with the marketplace e-commerce entity”. (In the case of Amazon Basics, the word Amazon is there). Atul Pandey, partner at Khaitan & Co., said the proposed amendments require all ecommerce entities to register with DPIIT which was not the case earlier, thereby increasing the compliance burden. Also, it appears that the scope of e-commerce has been broadened to include third-party entities engaged in providing operational support to platforms in fulfilling the orders (like logistics service providers). If the rules take shape, marketplace platforms will have to take responsibility if a customer incurs losses due to the actions of a seller. “So far, companies used to take the benefit of being an intermediary,” said Khaitan. Legal analysts said the move to include the appointment of chief compliance officer, nodal contact person and resident grievance officer is a blatant replication of the recently introduced new IT rules and completely unwarranted. “Most of the e-commerce platforms will be intermediaries to a larger sense and they will be compliant with due diligence under the intermediary liability rules. So, there is no need for such clauses in e-commerce rules,” said Trilegal’s Narendran. Pandey said most of the proposed regulations are already in place in one form or the other. “The amendments appear to be in the nature of regulating trade and commerce and not just protecting the interests of the consumers. It looks like there is an overreach and the government should draw a fine balance,” said Khaitan. For instance, the rules state that none of the related parties of e-commerce entities should be enlisted as sellers. The DPIIT has already mandated e-commerce firms having foreign direct investment (FDI) to reduce their shareholding in preferred sellers to not more than 25%. “It seems that the government wants to do away with this completely. However, this time around, it will apply to all companies,” said an analyst.
Source: Financial Express
Pakistan’s exports to the European Union (EU) market have increased by 33 per cent, mostly in the textile sector, since it got the generalised system of preferences (GSP) plus status in late 2013, according to EU ambassador to Pakistan Androulla Kaminara, who recently said the EU would review progress on reforms and implementation of conventions by Pakistan after every two years. If Pakistan fails to fully abide by the obligations required, special trade incentives like GSP plus status would be withdrawn immediately, she told the Sarhad Chamber of Commerce and Industry. “There is a huge potential for the export of Pakistani fresh fruits and food items to the EU markets,” she was quoted as saying by Pakistani media reports. The EU Review Report 2020 said Pakistan had signed 27 conventions in different sectors and improvement was seen on some of them, including human rights, development of transgender persons, and protection of journalists, she said. Kaminara hoped Pakistan would further expedite the legislation process and reforms as part of EU commitments. An EU-Pakistan Business Council would be formed to cement trade and economic ties, the envoy added.
Source: Fibre2fashion
After 7 months of investigation, Brazil was able to prove, with textile sector entrepreneurs, that national exports do not affect Peruvian producers. After 7 months of investigation, Peru has backtracked in surcharging textile imports (clothing and bed, table and bath products) from Brazil. The decision was announced yesterday, June 22, by the Ministries of Economy and Foreign Affairs. In a joint note, the portfolios informed that the safeguard would have a negative impact on Brazilian exports and that Brazil was able to prove, with textile sector entrepreneurs, that national exports do not affect Peruvian producers. "The Brazilian government took part in all stages of the investigation, in defense of the interests of national exporters. Brazil's positions were . . .
Source: The Rio Times
The Council for the Development of Cambodia (CDC) recently approved three garment-related projects worth nearly $15 million that are expected to generate more than 3,200 jobs. The projects are located in Kandal province’s Takhmao town, northern Takeo province’s Bati district and Phnom Penh’s Russey Keo district. CDC said it will issue final registration certificates for JAK Garment Co Ltd’s $2.4-million factory in Sitbou commune’s Kampong Pring of Takhmao town and Premier Tech Garment (Cambodia) Co Ltd’s $4.3-million venture in Sophy commune’s Trapaing Chhouk village of Bati district, both of which are expected to create 1,053 and 1,748 jobs respectively. The third company to receive the go-ahead was Chanco Textiles (Cambodia) Co Ltd’s $8.2-million garment, blanket, pillow and pillowcase plant in Tuol Sangkae commune’s Chong Khsach village of Russey Keo district. The unit is predicted to generate 424 jobs, Cambodian media reported citing a CDC statement. CDC approved 238 investment projects worth a total of $8.2 billion last year, down by 12 per cent from 2019.
Source: Fibre2Fashion
American intimatewear manufacturer Vibrant Body Company has announced its support for Victoria's Secret’s new branding direction and has urged the newly formed VS Collective and VS Global Fund to incorporate eliminating the unnecessary use of wires and chemicals. Victoria's Secret transition includes model diversity and research projects for women's cancers. The new branding direction of Victoria’s Secret also includes body and gender inclusivity and racial diversity in its marketing. "This is a big step for one of the most recognised brands in women's intimates and we applaud this critical initiative, along with the extraordinary group of women and thought leaders they have partnered with. While it is a wonderful and needed step, we urge the VS Collective and the VS Global Fund to incorporate eliminating the unnecessary use of restrictive wires and potentially harmful chemicals in bras and underwear into these new initiatives,” said Michael Drescher, founder of Vibrant Body Company. The use of potentially harmful chemicals in the US intimates and greater textile industries at large, is virtually unregulated. Europe has banned over 1,000 chemicals in products touching the skin, while the US has banned 40. That means in the US toxic chemicals such as formaldehyde, chlorine bleach, lead, heavy metals and flame retardants can be found in materials used for workout clothes, jeans, baby clothes and yes, bras and underwear, the company said in a press release. Women need to be concerned about toxic chemicals in their clothing as bras and underwear lay on top of the two of the most porous areas of a woman's body. Heat, moisture and sweat can create off-gassing of any chemicals in the fabrics, dyes and foams, enabling the chemicals to then seep through the skin, like a nicotine or vitamin patch. "We invite Victoria's Secret and the extraordinary women of the VS Collective to join us in the campaign to demand textile regulations from our government and transition to offering ‘clean’ intimates for women everywhere." said Drescher.
Source: Fibre2Fashion
